One way to gauge the merit of a specific state Legislature is to assess whether its work favors the politically well-connected at the expense of everyone else. By this measure, Michigan Legislatures have experienced varying degrees of success. Longtime observers may recall the tax-raising 1983
Legislature or the 1967 fathers of the state income tax as the worst ever. But a relentless string of destructive policy initiatives must rank the current
Legislature right down with those classics. Here’s a scorecard:
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| | In the midst of Michigan’s continued economic downturn, the Michigan Legislature has made several decisions exacerbating the situation.
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Spring 2007: Borrow-and-Spend
The Legislature papers over an $802 million gap between desired
spending and expected revenue with some $400 million from a sneaky form of
(supposedly unconstitutional) deficit financing, shortchanging pension
contributions, raiding so-called "restricted funds" and pushing disbursements
into the next year.
Summer 2007: Meet the New Boss . . . (Michigan Business Tax)
The burdensome and complex Single Business Tax is replaced with
an equally burdensome and complex Michigan Business Tax. The main component is a pernicious gross receipts tax that, while promising "stable" revenue for the
government, is widely recognized as being intrinsically unfair and economically
destructive.
Fall 2007: Tax-and-Spend Part I
The Legislature imposes $1.4 billion in business and income tax
hikes on a state economy already in near-freefall.
Fall 2007: Tax-and-Spend Part II
The Legislature spends all that new money in a budget that
increases state spending by some $900 million and includes almost no real
reforms.
Spring 2008: Feed the Wolves?
Having looked out for Number One (themselves, government
employees, status quo government operations), the Legislature looks to feed the
largest state "rent seekers" (businesses seeking wealth through exclusive legal
privileges):
Blue Cross Blue Shield of Michigan
– House-passed legislation would create a uniquely absurd system in which the
state’s "health insurer of last resort" for high-risk customers — the nonprofit
BCBS, which fills this role in return for some $100 million in tax benefits —
could also collect fees from competing for-profit insurers to pay for those
high-risk customers. It amounts to a "double dip" for BCBS, which has
contributed to every single sitting legislator and already controls 70 percent
of the state’s health insurance market.
Detroit Edison and Consumers Power
– A 2000 law partially removed the monopoly privileges of the state’s dominant
electric utilities. Although the reform (and the lower commercial rates it
created) was mostly gutted by a 2004 Public Service Commission ruling, the old
monopolists hope to completely finish off the 2000 law. So their legislative
allies have attached that to massive (if phony and impossible) "renewable
energy" mandates the political establishment is promoting to cater to middle
class "green guilt" and global warming fears.
If passed, these two special-interest giveaways will make
Michigan even less economically competitive, leading to even less employment,
lower incomes and reduced property values.
Spring 2008: Increase Arbitrary DEQ Power?
The Legislature may be poised to enact a major expansion of
Department of Environmental Quality regulatory power in the area of groundwater
use. Passage would represent a major coup for radical environmentalists, who
realize that while no "groundwater shortage" exists here, there’s no greater
tool for stopping future development than to control access to water.
Spring 2008: Corporate Welfare on Steroids
Several unprecedented expansions of discriminatory, targeted
business tax breaks are enacted. These failed policies will see Michigan
taxpayers actually writing huge checks to politically "sexy" enterprises favored by political elites. It’s reported that the "cost per job" of one of the measures will be some $900,000.
Is there anything good?
Legislation was passed forcing disclosures from the MEA teachers union’s money machine — its MESSA health insurance subsidiary — that will enable competitive bidding and lower prices on school employee health coverage. MESSA is stonewalling, so it’s unclear whether the promise will be realized, but credit is still due for bringing about this overdue reform.
Also, the electricity competition repeal package does include a
provision to end the subsidies that business customers pay to residential
customers, which will at least lessen the measure’s economic destructiveness.
But these and a few more modest reforms are thin gruel compared to the hearty
stew of bad public policy this Legislature has already served up.
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Jack McHugh is the senior legislative analyst for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the authors and the Center are properly cited.
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