LANSING (AP) — Gov. Jennifer Granholm said Tuesday that Michigan's struggling economy is growing more diversified, with new jobs cropping up in movie studios, solar panel plants and centers where electric car batteries are being designed.

But she also warned during her seventh annual State of the State address that Michigan will see its economy falter even more and state government fight to make ends meet in the year ahead.

"The days when government could be all things to all people are behind us," said Granholm, dressed in a sober black suit indicative of the speech's tone. "It's a time that demands relentless focus and discipline."

Noting that government has to shrink, she said she wants to cut the budget by getting rid of a variety of state departments, including the Department of History, Arts and Libraries. She also wants to stop funding the two state fairs and cut elected officials' salaries by 10 percent. She plans to return wetlands regulation to the federal government.

She's asking others to protect Michigan residents' pocketbooks by freezing college tuition and auto insurance rates. Universities and community colleges that agree not to hike tuition next fall would be rewarded with extra cash from a federal stimulus package.

Insurance companies that don't freeze rates for 12 months while lawmakers work on insurance reforms her administration plans to unveil today could be punished by the Office of Financial and Insurance Regulation, she said.

The call for a yearlong freeze met with skepticism from at least one insurance advocate.
"Unless the governor can freeze medical, litigation, motor vehicle crash and other costs, this is simply anti-competitive, anti-business and anti-consumer grandstanding," said Jeffrey L. Junkas, spokesman for the Midwest Region American Insurance Association.

Granholm also had suggestions for the utility industry, saying companies should rethink their proposals to build new coal-fired power plants and instead look for ways to invest in energy conservation.

She wants to reduce the state's reliance on electric plants powered by coal and natural gas 45 percent by 2020, enlist jobless workers in a new Michigan Energy Corps to weatherize 100,000 homes and 1,000 schools in the state this year to reduce energy consumption and have more homes and schools install solar and wind energy systems.

"I will ask the Legislature to make Michigan the first state in the nation to let every homeowner, every business, become a renewable energy entrepreneur who can make money by installing solar panels or wind systems on their home or business and selling that renewable energy back to the power company," she said.

Anne Woiwode, director of the Sierra Club's state chapter, welcomed the proposals.
"At this point, the numbers make it clear that renewable energy is cheaper or would be the same price as coal would be, and it doesn't ... send money out of state," she said. "This is a much smarter way for the state of Michigan to go."

Some of these renewable energy projects will benefit from the federal stimulus package, which could bring around $8.9 billion into the state over the next two years. But Granholm pledged the state won't rely on the federal help to enlarge state government.

"I have a veto pen and I will use it," she said.