The MC: The Mackinac Center Blog

Civil Asset Forfeiture Laws Need Reform

Transparency, rule of law should be the focus

A Michigan medical marijuana card.

A recent CapCon story and video documented the Michigan State Police using civil asset forfeiture to freeze the bank accounts and take the property of two men for months without even charging them with a crime.

Forfeiture is a complicated process, but essentially allows for an end-run around what most people see as basic constitutional rights. Michigan should join other states, like North Carolina or Minnesota, in requiring a criminal conviction before assets can be seized. That won’t happen anytime soon, but in the meantime there are other reforms that politicians should consider during this lame-duck period.

The bill with the greatest chance is House Bill 5081, which was passed out of the House Oversight Committee last June. It now sits on the House floor. This bill would provide more transparency for the assets seized — something extremely important because law enforcement agencies use seized assets to supplement their budgets.

There are other proposals that would help change the incentives in place right now. That’s the key to respecting individual rights and a strong rule of law.

December 5, 2014, MichiganVotes Weekly Vote Report

Road funding, religious freedom, film subsidies & more

Senate Bill 1149, Authorize new state Senate office building: Passed 25 to 13 in the Senate

To authorize the sale of the Farnum Senate office building in Lansing and construction of a new building for Senators’ offices.

Who Voted “Yes” and Who Voted “No”

Senate Bill 1073, Grant medical facility rationing exception to McLaren Health Systems: Failed 11 to 26 in the Senate

To authorize a special exception to the health care facility rationing imposed by the state’s “Certificate of Need” law that would allow McLaren Health Systems to build a new facility in Clarkston. The CON program prohibits new or expanded health care facilities and technology unless providers get permission from a state commission.

Who Voted “Yes” and Who Voted “No”

Senate Bill 1150, Reduce maximum truck weights: Failed 15 to 22 in the Senate

To reduce the maximum weight of trucks allowed on Michigan roads from 164,000 to 80,000 pounds. This would not necessarily reduce the maximum weight per axle, which could mean more trucks to carry the same weight.

Who Voted “Yes” and Who Voted “No”

House Bill 5217, Limit employer liability for ex-con with state “certificate of employability”: Passed 27 to 11 in the Senate

To limit the liability of employers in personal injury, property damage and wrongful death lawsuits arising from the actions of an employee who is an ex-convict hired after the individual was granted a “certificate of employability” by the state Department of Corrections, as proposed by House Bill 5216.

Who Voted “Yes” and Who Voted “No”

Senate Bill 952, Establish new local and school budget process requirements: Passed 24 to 14 in the Senate

To prescribe procedures, notification and budget-cutting requirements, and monitoring for a public school district that experiences a gap between projected revenue and actual spending (a deficit), or is in the midst of “rapidly declining financial circumstances,” including substantial declines in enrollment. The state Department of Education could potentially assume authority over financial and academic matters, or withhold funding from a district that fails to take the required actions.

Who Voted “Yes” and Who Voted “No”

Senate Bill 953, Authorize emergency manager for school district that fail to address deficits: Passed 23 to 15 in the Senate

To authorize appointment of an emergency manager for a public school district that fails to comply with actions required to correct a deficit or address “rapidly declining financial circumstances.”

 Who Voted “Yes” and Who Voted “No”

Senate Bill 1130, Mandate Hepatitis disclosure to sex partner: Passed 28 to 10 in the Senate

To make it a felony for an individual who knows he or she has Hepatitis C to have sex without telling the sex partner about having the disease. This already applies to AIDS.

Who Voted “Yes” and Who Voted “No”

Senate Bill 247, Authorize some 4 a.m. liquor licenses: Passed 22 to 14 in the Senate

To allow bars and restaurants in a “central business district” of a city to stay open until 4:00 a.m. on weekends if they pay a $10,000 annual fee and have extra bouncers and security cameras.

 Who Voted “Yes” and Who Voted “No”

House Bill 4998, Appoint “entrepreneurs-in-residence” at Michigan Strategic Fund: Passed 30 to 6 in the Senate

To require the state agency responsible for granting and overseeing selective tax breaks and subsidies granted to particular corporations or developers to appoint up to 10 “entrepreneurs-in-residence” to recommend ways to expand and improve the these programs.

 Who Voted “Yes” and Who Voted “No”

Senate Bill 1135, Impose new child car seat mandates: Passed 36 to 1 in the Senate

To require a child who weighs less than 30 pounds to be transported in a rear-facing child seat; and a child who weighs from 30 to 50 pounds to be transported in a forward-facing child seat. Age would not be a factor in the above mandates. A child under age 10 who is less than 57 inches tall would have to be transported in a booster seat.

 Who Voted “Yes” and Who Voted “No”

House Bill 5958, Enact a “religious freedom restoration act”: Passed 59 to 50 in the House

To establish that the state or a local government “shall not substantially burden a person's exercise of religion, even if the burden results from a rule of general applicability,” unless this is done “in furtherance of a compelling governmental interest” and uses “the least restrictive means” to further that interest.

 Who Voted “Yes” and Who Voted “No”

Senate Bill 1103, Extend film producer subsidies: Passed 73 to 37 in the House

To extend the law authorizing state subsidy payments to some film productions until 2022 (under current law it ends in 2017), and make some changes to the subsidy allocation formula. This year $50 million was appropriated for these subsidies.

 Who Voted “Yes” and Who Voted “No”

House Bill 4539, Phase out sales tax on fuel sales: Passed 56 to 53 in the House

To phase out charging the 6 percent sales tax motor fuel sales over six years. House Bill 5477 would gradually increase the motor fuel tax by an equivalent amount. The bill requires the legislature to continue funding schools and local government revenue sharing at least as much as the previous year (this is where most sales tax revenue goes). If it did not, then the 6 percent sales tax would automatically be re-imposed on fuel sales. The bills would shift about $1 billion more from current state spending to roads each year when fully phased in.

Who Voted “Yes” and Who Voted “No”

House Bill 5477, Replace per-gallon fuel tax with higher wholesale tax: Passed 58 to 51 in the House

To replace the current 19-cent per gallon gas tax and 15-cent diesel tax with a 7.5 percent wholesale fuel tax, gradually increasing to 13.5 percent over six years. When fully phased-in this would represent a tax hike of around $1.0 billion at current wholesale fuel prices. However, House Bill 4539 would phase out the state sales tax on fuel sales over the same period if enacted, resulting in no net tax increase.

Who Voted “Yes” and Who Voted “No”

Prohibition Repealed 81 Years Ago Today

Similarities exist in cigarette market due to high taxes

On this date in 1933 the nation said goodbye to one of the biggest social experiments in its history: Prohibition of alcohol. The experiment was a disaster, but the remnants are still with us today in the form of archaic and unnecessary laws and regulations. (See the Mackinac Center’s work on alcohol control here.)

I’ve detailed — with co-author Todd Nesbit — Michigan’s experience with Prohibition in a 2008 appendix to a large study on cigarette smuggling. The purpose of doing so was to compare the many unintended consequences of well-meaning policy changes like Prohibition to high excise taxes on cigarettes, something we called “Prohibition by Price.” That Appendix, titled, “Prohibition in Michigan and the Avenue de Booze” can be read here.

Technically, cigarettes are perfectly legal for adults today, but the price is made so artificially high by excise taxes imposed by governments that they encourage people to buy outside the legal market. These high taxes encourage smuggling by individuals and organized crime cells to escape high taxes or to arbitrage price differentials for profit.

Through 2012 we estimate about 27.6 percent of all cigarettes consumed in Michigan were smuggled into the state. But smuggling isn’t the only parallel with the actual era of Prohibition.

Nationwide we have seen high cigarette excise taxes lead to violence against police, property and people. We have seen police and other government officials corrupted by illicit profits, truckloads of product hijacked, murder for hire scenarios, adulterated products (Bathtub gin anyone?) and — not surprisingly — ingenious distribution tactics.

The distribution of “loosies” (single sticks of untaxed cigarettes sold illegally on the street) has been in the news recently. This, too, has a Prohibition parallel to when traffickers used to sell shots of whiskey to workers leaving auto manufacturing plants in the Detroit area.

Government officials frequently have good intentions. Prohibition of alcohol is one example. Unfortunately, the law of unintended consequence is at work always and everywhere and can serve to undermine the many laudable goals they pursue. The sooner lawmakers realize this the sooner we can see them avoid bad laws and write better ones. 

A Michigan House Committee just approved House Bill 5951 introduced by Rep. Tim Kelly, R-Saginaw Township, which would create a statewide regulatory framework for transportation network companies, such as Uber and Lyft. State-based regulations can be worse than locally derived ones, but these proposed rules are reasonable and would make Michigan a leader in innovative transportation services. But how will these services benefit Michiganders?

In a recently published report by the Mercatus Center at George Mason University, scholars Stewart Dompe and Adam C. Smith make the case that customers with lower levels of income will likely benefit most from the expansion of ride-sharing services.

They explain that companies like Uber and Lyft are primarily competing with taxi cab services in urban communities. Taxi regulations artificially limit the supply of cars for hire, driving up the price and pushing this service out of reach for low-income residents. By increasing the competition for customers, ride-sharing companies will force taxi cab companies to expand their customer base – in other words, lower prices and serve more low-income consumers.

For these reasons, allowing companies like Uber and Lyft to operate in Michigan would primarily benefit lower income residents. Yes, people who can afford taxis will gain from reduced rates as a result of increased competition, but those who cannot currently afford any cars for hire will gain the most. For the first time, these consumers will have the opportunity to capture the benefits of private transportation services that currently only their wealthier neighbors could afford.

On these theoretical grounds the case seems strong. But the empirical case is solid, too. A 2006 study by Adrian T. Moore and Ted Balaker found that the empirical evidence overwhelmingly supports reducing taxi regulations. Further, a recent survey of 43 leading economists (from a wide range of political perspectives) found unanimous agreement that increased competition from ride-sharing services would benefit consumer welfare. (Getting any group of economists to all agree on something is quite remarkable!)

Both the theoretical and empirical evidence suggests that expanding ride-sharing services in Michigan would be on net beneficial, especially for residents with lower incomes. Michigan policymakers should ignore the predictable complaints from the taxi cab companies who fear increased competition, and roll out the welcome mat for new innovations that will drive down costs and extend the benefits of car services to more Michiganders.

When a School 'Cut' Is an Increase

As shown by the House road funding plan

In the subscription-only MIRS newsletter, Mitch Bean discusses how Michigan House Speaker Jase Bolger’s road funding plan would have affected the state budget had it been in place over the previous decade. While his takeaway was to say that schools would have had less money, it also points to the importance of economic growth to delivering both more school revenue and more road funding.

Rep. Bolger’s plan is to gradually replace the sales tax levied on gasoline with taxes that would go to the transportation budget.

The fuel taxes go to fund the roads, making fuel taxes work like a user fee. Michigan, however, is one of the few states that levy both a sales tax and fuel taxes on gasoline. This means that Michigan has high fuel levies but low road spending. When phased in, Rep. Bolger's plan would change this feature.

As Bean, former director of the Michigan House Fiscal Agency, noted in his analysis, there are no free lunches. Rep. Bolger's plan would mean that sales tax revenue going forward would be mitigated by the move. Currently, sales tax revenue goes to schools, is shared with local governments, and supports the state budget.

But Bean overstates his case when he calls this a cut in school revenue. Spending less than would otherwise be the case is not a "cut." A reduction from current levels is a cut. (This was gubernatorial candidate Mark Schauer’s big mistake.)

Rep. Bolger’s plan instead mitigates schools’ potential growth increase from the sales tax on fuel. This has fiscal consequences, but unless the economy takes a dive school revenue will continue to grow. Major sources of school revenue like the sales tax, the income tax and the property tax depend on economic growth and recessions strain the revenue from these taxes.

Yet Bean’s results note that school revenue would still have increased had Rep. Bolger's plan been implemented in 2004, a period when things were not especially good for the state.

The state economy is entering its fifth year of recovery and state tax revenue reflects that trend. Rep. Bolger’s plan devotes more of the state’s resources to the roads without reaching deeper into taxpayer pockets. Continued growth can ensure that you can have both more funding for schools and more funding for roads without a tax hike


How Outraged Is the Right, Really?

They could learn from their liberal counterparts

(Editor’s note: Jack Spencer is capitol affairs specialist for Michigan Capitol Confidential and a veteran Lansing-based journalist. His columns do not necessarily represent the views of the Mackinac Center for Public Policy or Michigan Capitol Confidential.)

Those on the “political right” in our nation aren’t nearly as aggressive as they could be.

Taken as a whole, the political right is probably underestimating its potential resources. For a movement claiming it wants to “take back America,” its focus is too narrow and should begin including opportunities beyond the voting booth. Ultimate success may require “full engagement,” not just “comfortable engagement.”

The “political right” in the United States has been in a nearly constant state of frustration a long time. Witnessing the most treasured principles of our constitutional republic being misrepresented and turned upside down is infuriating. Perceiving the prevailing disinterest of so many as freedom and liberty are being undermined by an overreaching government is like watching a loved one sleep-walk near the edge of a cliff.

Almost daily we hear propaganda telling us our individual rights must be sacrificed for the good of the many. Trumped up and made up threats in the form of pseudo-science, manipulated statistics, and out and out lies are ceaselessly advanced to justify the subjugation.

Those who understand the real world, know history, and know human nature see all this for what it actually is. With few exceptions these things are façades; cardboard hobgoblins painted in bright colors to mislead uninitiated and preoccupied segments of the public.

Over the past decade and a half the situation has worsened. In response, the political right has risen up in protest; its warning bark is heard, but too often it fails to bite. While one faction of our leaders sets about the work of discarding parts of the U.S. Constitution that they consider inconvenient, the alternative choices on the ballot talk tough but repeatedly balk when real action is required.

Meanwhile, the mainstream news media seems to operate under a code of self-censorship, picking and choosing which topics to focus on. Stories that deserve coverage are ignored or downplayed, while the escapades of sports stars and celebrities are treated as if they were important.

Clearly all this angers and saddens the political right but one senses that these reactions remain largely compartmentalized. Perhaps, because the political right consists of individualists, it often seems restrained by a natural aversion toward taking collective action. Too often, the sense of threatened values gets handled by reaching for the remote instead of reaching for the telephone.

Activism by the political right is currently too tame, too timid and lacks the true sense of rebellion needed to keep an organized movement vital. Those on the political right can abhor the way a certain national TV network covers politics; yet if a football game they want to watch is broadcast by the very same network, they’ll tune in. If they want the products advertised by the same companies that sponsor one-sided news coverage — no problem — they’ll purchase them anyway.

Admittedly, much of this comes from a feeling of helplessness. What can the complaints or boycotts of two or three former viewers mean to a big national network? But national networks depend on local affiliates, and those local affiliates depend on local advertisers. Two or three complaints to an advertiser about how a network covers (or doesn’t cover) “the news” probably wouldn’t have much impact — but two or three dozen well-orchestrated complaints could.

A few years ago when the outrage of the political right reached critical mass, grass roots movements began springing up across the nation. It was only natural that these movements targeted politicians, a political party and elections. Articulate candidates and the money it takes to run modern campaigns to challenge the status quo were and continue to be scarce. That approach should not be abandoned; it is still worth pursuing, but activism by the political right need not be limited to this alone.

So far the political right has failed to set its sights on areas where the liberal establishment might be more vulnerable. Organized consumerism can be a powerful tool and one that serious activists should consider. Some economists like to describe making a purchase as essentially casting a vote for a product and the business that sells it. But how many on the political right ever think in those terms?

Liberal activists seem more willing to translate their convictions to their lifestyle. They boycott businesses that support things they don’t like and they are vocal about doing so. In general the political right either fails to connect the dots and realize where it could exert influence, or it is too reluctant to make a fuss. Although this subconscious “reasonableness” may be seen as an attribute of conservatism, it bodes poorly for a movement seeking to bring about change.

House Road Plan Is Solid

A way to fix roads without raising gas taxes

Editor's Note: On Dec. 4 the state House approved a road reform package similar to the one described below that does not raise taxes. The state Senate earlier took the opposite approach, hiking taxes by $1 billion. Now the two chambers must hammer out a compromise. Any deal should favor the House plan, which is superior.

Should the Senate insist on partially funding a road package through a tax increase, the House could demand other reforms that stabilize the state’s finances and relieve burdens on families and taxpayers. Among the reforms the House could pursue are eliminating the prevailing wage law, closing the Michigan Public School Employees Retirement System or perhaps adopting a proposal to put a Taxpayer Bill of Rights on a future ballot.

The first idea could save $224 million a year just for schools (more could be saved on road repair) and other two could save billions more in the coming years.

Every once in a while Lansing politicians give me a good reason to offer praise. House Speaker Jase Bolger, R-Marshall, has advanced a plan to fund roads without imposing new taxes or fees on Michigan families (Editor's Note: The plan has now passed the Michigan House). These ideas deserve attention and applause.

Mackinac Center experts have pointed out repeatedly that the Legislature is right to set road repairs as a high priority, and that it should examine how to reorganize existing revenue or eliminate non-essential spending to facilitate greater infrastructure investment.

The road financing debate in Lansing is now front and center. House Republicans want to redirect $1 billion in existing state revenuesto roads. Meanwhile, the Senate has already voted (23-14) to individual tax revenues than it did less than four years ago simply due to some policy changes and an improving economy. That makes the Senate’s proposal to take an additional $1 billion from motorists all the more troubling.

Will the Senate’s desire for more of our money be sated? Will a different tax hike – say on Internet transactions – greet us in the New Year? It’s a reasonable question.

At least the House is trying to get the state to live within its means. Linking road taxes to road spending is sound policy. It helps improve accountability because those who pay know precisely how revenues are being deployed in their service. It also becomes something more akin to a user fee for services rendered.

The House road plan, however, does have minor drawbacks. It relies on taxes imposed at the wholesale level instead of at the pump and relies on revenue growth to maintain other spending. Taxing at the wholesale level reduces the transparency of that which is paid by motorists to support the state’s transportation infrastructure. Levying the tax at the pump would remind taxpayers of government’s costs more clearly.

Another solution has been provided by Mackinac Center analysts time and again: cut spending. Just last month we released a list of 35 ideas for cutting state spending by $2.1 billion. There’s no need to wait for a recession to adopt or adapt these in part or whole.

The House plan to fund roads deserves applause for its creativity, political courage and thoughtfulness. It should be preferred to the Senate’s proposed tax hike idea should any compromise legislation be borne of the two efforts.

RTW 'Freeloader' Claim Still a Farce

MEA is the one freeloading off of teachers

In the debate over whether or not people should be forced to pay money to unions as a condition of employment, opponents of right-to-work laws often claim that workers who exercise their rights under the law are “freeloaders.” That is, that they are taking advantage of benefits from union bargaining while not paying their “fair share.”

The Michigan Education Association, like most unions, supports collectively representing workers whether they are in the association or not because of the leverage it gives them at the bargaining table. Still, no private organization should have to provide benefits to people who aren’t paying for them.

But a look at the MEA’s just-released financial reports shows it is the union that is freeloading off of dues-paying members. According to the organization’s LM-2 form, just 11 percent of total spending goes toward “representational activities.” The majority of spending is for the salaries and benefits of the union’s central staff. The retiree pension and health care costs for the organization also have liabilities totaling about $190 million – and those costs have been skyrocketing.

In other words, the vast majority of what school employees in the state of Michigan pay as union dues go for things other than directly representing them at the bargaining table. The good news is that as contracts expire, those people now have a choice of whether they want to keep spending their money that way.

Top 10 Charter High Schools in 2014

Center's report card accounts for student background

The Mackinac Center has just released its biennial high school Context and Performance report card. Though there are several report cards for Michigan schools, the Center is the only organization in the state to publish a school report card that adjusts for student socioeconomic background, which allows schools serving diverse communities to be compared throughout the state.

Below are the Top 10 public charter high schools. These schools are some of the highest-scoring in the state. Star International Academy is, once again, ranked No. 1 among all public high schools

Of the 10 public charter schools listed below, six were ranked among the best high schools in the Center's 2012 report card, as well (Star International Academy, Cesar Chavez High School, Riverside Academy, Universal Academy, Excel Charter Academy-Grand River Prep and International Academy of Flint).

Other schools, including Wellspring Preparatory High School and Detroit Edison, made this Top 10 list in their first few years of serving high school students.

Vernuccio on Fox News, in The Hill

Discussed bogus Black Friday protests, the future of unions

Labor Policy Director F. Vincent Vernuccio was a guest on Fox News recently, discussing worker centers and labor front groups involved in Black Friday protests. He also wrote about the issue in The Hill and explains why unions need to move away from politics and embrace workers’ needs in order to adapt and stem membership losses. You can read more in his recent study: “Unionization for the 21st Century: Solutions for the Ailing Labor Movement.”