DEBT-STRAPPED MICHIGAN TO SELL U.P. TO WISCONSIN
Sources close to the administrations of Michigan and Wisconsin confirm the two states are close to finalizing a deal which would transfer the Upper Peninsula of Michigan to Wisconsin.
The price tag is reported to be $2 billion, with half paid immediately and the other half over ten years.
While the transaction is unprecedented in the history of the United States, lawmakers cite no specific prohibition in the Constitution.
One Michigan official drew a parallel to similar transactions in the business world. “You see this all the time. One company’s having some struggles, but they have a division that’s attractive to another company. The healthier company expands, the weaker company gets the cash it needs, and everyone’s happy.”
Michigan will devote the initial payment to reducing its projected $1.6 billion shortfall in fiscal 2011. “They’ve seen S&P cut their credit rating three times this year alone,” said a bond analyst at Hale Yessai Sherwood.
“They really can’t run back to the bond market anymore. This is a very creative way to raise capital.”
He cautions, “I think you’ll see downgrades of Wisconsin bond issues for the foreseeable future. But it may prove out in the long run. In the short run, it helps Michigan far more than it hurts Wisconsin.”
A Wisconsin official acknowledged the acquisition will be dilutive, at least initially.
“We obviously don’t expect to recoup the first billion in new tax revenues right away. But over the ten years we project the net present value of the peninsula to be strongly positive. And anything after ten years, as they say in business school, is just gravy.”
While mining and logging have traditionally been the backbone of the Upper Peninsula’s economy, the official hinted at bigger plans. “By integrating the U.P. with our existing northern territory, we create the finest winter tourism destination between New England and the Rockies. Midwesterners will no longer have to board a plane to enjoy all the skiing, hiking, fishing, snowmobiling and casino gaming they want.”
He declined comment on the possibility of raising the elevation of the Upper Peninsula’s highest point—currently 1,979 feet at Mt Arvon—to appeal to skiers accustomed to Colorado’s mile-high slopes.
Residents in both states expressed displeasure at the sale.
“Are you ****ing kidding me?” said Jon V, of Holland, Michigan. “They screw up the budget year after year and think they can fix it by selling half the damn state?”
In fact, the Upper Peninsula makes up only one-third of Michigan’s land area, and just 3% of its population.
Paul D, of La Croix, Wisconsin, said, “Two billion? For what? A bunch of old iron mines and some cross-country skiing? I don’t like it.”
Reactions were mixed in the Upper Peninsula itself. Jane A. of Menominee said, “I already work over in Marinette (Wisconsin) anyway. I’m a Packers fan. It’s all good.”
But Carl P. of Iron Mountain was adamantly opposed.
“What gives them the right? My land isn’t theirs to sell. Next thing you know they’ll want to sell us off to Canada, or maybe Dubai.”
Randall L. of Houghton expressed a third point of view. “I don’t vote or pay no taxes anyway, so I don’t really give a ****.”