"Financial Disaster"

In his sixth straight term as Michigan's Governor, Democrat G. Mennen Williams is awash up to his green bow tie in money troubles. Last week he sputtered that the Republican majority in the Michigan senate had "doomed the state to a financial disaster" by rejecting his plea for a $50 million bond issue to meet state payrolls and other pressing expenses.

The fiscal troubles of wealthy "Soapy" Williams (Mennen powder, shaving cream, etc.) arose partly because welfare legislation passed at his urging gobbles up a lot of revenue. But the immediate cause of the state's crisis is the recession. With Michigan hard hit by unemployment, especially in automaking Detroit, the 3% state sales tax brought in $43 million less than Soapy had counted on, and at the same time the state had to increase its total outlays for relief.

Barred by the state constitution from borrowing more than a piddling $150,000 directly, Soapy turned last February to Michigan's big businessmen, many of whom deeply dislike him. To the heads of 23 corporations he sent personal letters asking them to pay in advance some $28 million in state business taxes due between mid-March and mid-May. Despite their distaste for Soapy's big-spending habits and his longstanding political palship with United Auto Workers President Walter Reuther. the corporation bosses helped out; General Motors alone put up $13 million. But this bailout only postponed the crisis.

When the senate rejected his bond-issue plan, Soapy's only hope for getting enough money to meet state payrolls in late April and beyond was to ignore the outcries of veterans' organizations and tap the state's $50 million veterans' trust fund, set up in 1946. Even if he can find a way to get at the trust fund, Soapy will still have to push for tax increases to keep the state solvent. Republicans in the legislature have proposed to blot up the red ink by upping the sales tax to 4%, but Soapy Williams adamantly opposes any sales tax boost, urges instead a progressive state income tax on middle and upper bracket incomes and a new 5% levy on corporation profits--which would worsen Michigan's already severe problem of attracting, and keeping, diversified industry.

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