Michigan CPAs More Optimistic About Business Growth in 2012
TROY -- According to a new multistate survey, certified public accountants in Michigan and surrounding states are slightly more optimistic about business growth in their respective states for 2012 than the nation as a whole. Those polled were most confident about their own industries and their own companies with Michigan CPAs expecting marginal or substantial revenue growth.
The University of Toledo Urban Affairs Center conducted in late 2011 the Business Outlook Poll for the Michigan Association of Certified Public Accountants (MACPA) and statewide CPA organizations in Indiana, Ohio and Pennsylvania. It polled nearly 13,000 CPAs who are partners or sole owners of public accounting firms or serve as CEOs, CFOs or presidents of companies in various industries. More than 2,100 CPAs completed the survey.
Information technology tops the list of capital investments planned in 2012, and survey respondents anticipate new jobs to fill in the next 12 months. Health care costs continue to be a chief concern of businesses, along with government regulation and uncertainty about tax laws.
“The poll shows optimism about the economy in Michigan and business growth despite all of the economic challenges of the past few years,” said John Pridnia, a certified public accountant and MACPA’s chair. “There are some key issues such as the state tax structure, and increasing costs for health care and regulatory compliance that must be addressed.”
Cautious Optimism – Jobs and Spending
Only 6 percent of CPAs who responded predict robust growth in the U.S., but the numbers climb as they evaluated Michigan’s economic future, in terms of growth (11 percent), industry (19 percent), and organizational (26 percent) growth.
The CPAs surveyed in the four states did not report significant decreases in workforce or revenues since the financial crisis took hold, and say they expect both areas to increase marginally in the next year. These CPA business leaders expect marginal (7 percent) to substantial (53 percent) revenue growth in the next year, with marginal (2 percent) to substantial (32 percent) growth in employment. Less than 10 percent of respondents predict a reduction in employment
In Michigan, 61 percent of surveyed CPAs expect revenue increases this year in their own organizations, and 33 percent expect increases in employment. When discussing their investment and spending plans in the next year, nearly 36 percent of Michigan CPAs expect to spend more this year, versus 40 percent in the four states combined. Information technology is a top priority, with 60 percent of CPAs in Michigan planning to spend more in 2012. Nearly 60 percent of Michigan CPAs polled said they expect wages and salaries to increase in the next 12 months. Almost one-third expected no change. Product development and marketing/advertising will remain relatively flat with more than 60 percent of Michigan CPAs citing no change in either category.
Business and State Concerns
CPAs and their clients listed the ability to obtain funding as a significant area of concern. About 74 percent in Michigan and 76 percent overall do not think small businesses have access to adequate credit to grow or sustain their operations. The financial crisis and forecasts for slow growth have resulted in a tighter lending market.
CPAs also cite health care costs as a concern, with 98 percent of all those surveyed responding affirmatively when asked if the cost of health care benefits was a worry for businesses in their state. Some are looking into this area for savings, with 95 percent of Michigan CPAs agreeing that companies are reevaluating employee/benefit costs, while 67 percent are aware of Michigan companies dropping or reducing employee health insurance coverage.
Half of Michigan CPAs say that their companies or their clients are using non-salary rewards such as flexible work hours or increased vacation time to retain staff in the past two years. Almost two-thirds agree that employees are retiring later in the past two years.
About 80 percent of Michigan CPAs polled also see the “brain drain” as a top concern for the state’s economy. Another two-thirds also said that finding and retaining qualified employees is a problem for their companies. Labor costs, infrastructure, K-12 education, and public pension funding also were seen as key concerns in Michigan, with infrastructure taking the highest percentage.
Taxes and Government Regulation
Many respondents, 73 percent, somewhat or strongly agree that the current tax climate is a problem for businesses in their state (also 73% of Michigan respondents). More than half of the respondents (61 percent) agreed that companies are taking advantage of available tax breaks, but few were using current low-interest rates as an opportunity to grow. Despite a general attitude that taxes, including specific taxes on business, and regulatory costs are a hindrance to businesses overall, CPAs overwhelmingly said those factors would not cause them to move their business/practice to another state. In Michigan, only 15.5 percent of the CPAs surveyed said they had considered relocating to another state.
But Michigan CPAs strongly believe there is room to improve the tax structure in Michigan. Many (66 percent) agree decreasing the commercial activity tax rate in the state should be a top goal in any Michigan reform effort. Slightly more than 50 percent favor reforming the correct tax structure in Michigan.
When asked to rate which factors would make Michigan more attractive to out-of-state job creators in this year’s multistate poll, CPAs listed among top choices better economic development packages and local government cooperation.
About the Survey
The Survey was conducted between Nov. 11 and Dec. 7, 2011 by The University of Toledo’s Urban Affairs Center for The Michigan Association of Certified Public Accountants, The Ohio Society of CPAs, The Indiana CPA Society, and The Pennsylvania Institute of CPAs. Combined, these organizations represent the professional interests of more than 70,000 CPAs. The survey focused on current economic conditions and the impact on businesses. The questions were selected to quantify what CPAs are seeing in their day-to-day operations, as well as to gather opinions on how best to improve economic conditions in their respective states.