The MC: The Mackinac Center Blog

Center Adds New Scholar to Team

Jason Taylor, CMU professor and economist

The Mackinac Center is pleased to announce that Jason E. Taylor has accepted an invitation to join its Board of Scholars. Taylor is the Jerry and Felicia Campbell Chair Professor of Economics at Central Michigan University, and a well-established scholar of 20th century economic history in the United States.

Taylor has been published widely in scholarly journals, including The Journal of Law and Economics, Journal of Economic History and Southern Economic Journal. He is also editor-in-chief of Essays in Economics & Business History. He recently published a paper examining the impact of marginal tax rates on U.S. growth in the Cato Journal. His work has also been published in Forbes, The Wall Street Journal, USA Today and The Detroit News. In 2010 he was invited to present his research findings as official testimony before the U.S. Congress.

As a member of the Board of Scholars, Taylor will contribute to the Center’s work of educating the public about sound public policies that can improve the quality of life in Michigan.

Center Scholar in Wall Street Journal

Mark Perry on alleged gender pay gap

Mark J. Perry, a member of the Center’s Board of Scholars and a professor of economics at University of Michigan-Flint, writes in today’s Wall Street Journal about the alleged gap in pay equity between men and women.

RIP Ranny Riecker

Mackinac Center mourns loss of founding director

Margaret Ann "Ranny" Riecker

(Editor's note: Funeral services for Margaret Ann "Ranny" Riecker will be held at 11 a.m. on April 14 at Memorial Presbyterian Church in Midland, Mich. A full obituary can be found here.)

The Mackinac Center for Public Policy mourns the loss of one of its founding directors, Margaret Ann “Ranny” Riecker, who passed away Monday at the age of 80 in Midland, Mich.

The Mackinac Center and the people of Michigan have lost an inspirational giant of informed public policy, civic service and philanthropy.

Ranny was one of five Michigan residents who formed the Mackinac Center's board of directors after its founding in 1987. When she left the board in 1994, the organization was emerging as a strong voice in Michigan policy and a leader in a nationwide movement of state-based policy research centers. Then-Gov. John Engler wrote, "When the Mackinac Center speaks, we listen."

Ranny, along with Midland resident Alan Ott, co-chaired the Center's $2.4 million building campaign in 1997 that produced its current headquarters on Main Street in Midland.

In 2004, the Mackinac Center dedicated its board room to Ranny and her husband, John Riecker, who said at the dedication ceremony, "Ranny and I look upon the Mackinac Center as an anchor to windward, a seeker of true economic and political principles …." John joined the board in 2006 where he remained a director until his passing in 2008.

Ranny was a trustee, and later also president, of The Herbert H. and Grace A. Dow Foundation, which has supported major Mackinac Center projects in education policy, science education, and more since the mid-1990s.

Ranny was also a founding trustee of the Council of Michigan Foundations, the chair of the Mid-Michigan Medical Center, and a trustee of Central Michigan University and Carleton College (her alma mater), as well as the Harry A. and Margaret D. Towsley Foundation. She held additional leadership roles with numerous other organizations including the Gerald R. Ford School of Public Policy at the University of Michigan and the Republican National Committee.

Ranny's imprint is etched into our goal to improve people's lives through policies enlightened by the nation's founding principles.

I could always count on Ranny for straight talk and a reminder to stay true to first principles. She was always amazingly prepared to discuss or debate any subject. I knew if I could make my case to Ranny, I was ready for any challenge.

RIP, Ranny Riecker.

April 4, 2014, MichiganVotes Weekly Vote Report

Bills on militarized police, tax assessors, topless bars

The House and Senate are on a two-week spring break. Therefore, this report contains several recently introduced bills of interest.

Senate Bill 682: Impose additional charter school restrictions, mandates and taxes
Introduced by Sen. Hoon-Yung Hopgood, D-Taylor, to impose property taxes on charter schools; prohibit for-profit firms from managing charter schools; prohibit charter school authorizing bodies from authorizing any new schools unless students in the ones they have already chartered outperform conventional schools in the same school district by at least 20 percent; and more. Referred to committee, no further action at this time.

Senate Bill 689: Authorize "patient centered" Medicaid alternative
Introduced by Sen. Bruce Caswell, R-Hillsdale, to create a "patient centered" alternative to the Medicaid medical welfare program that would include low-cost "direct primary care" contracts between individuals and a physician for routine and preventative health care services, high-deductible type insurance plans, health savings accounts and more. Also, to ask federal permission to allow employers subject to the federal health care law (Obamacare) employer mandate to provide high-deductible insurance policies to workers as an alternative to paying the mandate's penalties. Referred to committee, no further action at this time.

Senate Bill 706: Restore ban on nude entertainment in liquor license law
Introduced by Sen. Rick Jones, R-Monroe, to ban fully nude performers at topless bars, or the display of explicit pornography at bars. This relates to a 2007 federal appeals court ruling that struck down Michigan's previous law banning fully nude performers in bars, holding that it was a violation of the First Amendment. Referred to committee, no further action at this time.

Senate Bill 727: Give new school employees 401(k), not pensions
Introduced by Sen. Mark Jansen, R-Gaines Township, to close the current defined benefit pension system to new school employees, and instead provide 401(k) benefits. Employees could contribute up to 5 percent of salary to their account, and the local school district would have to contribute an amount equal to 80 percent of this. Referred to committee, no further action at this time.

Senate Bill 732: Ban employers asking about employee contraceptive use
Introduced by Sen. Jim Ananich, D-Flint, to prohibit employers from asking employees or job applicants about their use or nonuse of contraceptives. Referred to committee, no further action at this time.

Senate Bill 743: Repeal mandate that lawyers belong to certain private organization
Introduced by Sen. Arlan Meekhof, R-West Olive, to repeal the law that an individual who has attained a Michigan attorney license must also belong to and pay annual dues to the Michigan Bar Association, a private organization for lawyers, as a condition of being able to practice law in Michigan. The bill has been dubbed "right to work" for lawyers. Referred to committee, no further action at this time.

Senate Bill 789: Transfer concealed pistol license board duties to county clerks
Introduced by Sen. Michael Green, R-Mayville, to eliminate county concealed weapon licensing boards, and transfer the responsibility for issuing concealed pistol licenses to county clerks, with the State Police performing the background checks required by the law. The bill revises a number of other details in the CPL law. Reported from committee, pending before full Senate.

Senate Bill 843: Authorize establishment of welfare agency police force
Introduced by Sen. Rick Jones, R-Monroe, to give the Department of Human Services (the state welfare department) the authority to appoint agents with the same powers as peace (police) officers and warrantless arrest powers. Referred to committee, no further action at this time.

House Bill 4914: Require militarized police agency disclosures
Introduced by Rep. Tom McMillin, R-Rochester Hills, to require law enforcement agencies with SWAT teams to file reports every six months disclosing the number of times these were deployed, where, the reason, the legal authority for the raid, the result, the number of arrests made if any, the type of evidence and property seized, whether a forcible entry was made, whether a weapon was discharged by a SWAT team member, and whether a person or pet was injured or killed by a SWAT team member. Referred to committee, no further action at this time.

House Bill 4965: Impose tax on horse-drawn vehicles
Introduced by Rep. Joel Johnson, R-Clare, to empower counties to impose a registration fee (tax) of up to $50 on horse-drawn vehicles. A vote of the people would be required. Referred to committee, no further action at this time.

House Bill 5079: Let more cities impose additional public safety property tax
Introduced by Rep. Marilyn Lane, D-Fraser, to allow cities with more than 15,000 residents impose special assessment property taxes to pay for police and fire services. These taxes would be imposed over and above regular property taxes, and would require a vote of the community. Referred to committee, no further action at this time.

House Bill 5097 and Senate Bill 850: Exempt public safety from no-contract "step pay hike" ban
Introduced by Rep. John Walsh, R-Livonia, and Sen. Patrick Colbeck, R-Canton Township, respectively, to exempt law enforcement and fire department employees from a 2011 law that banned automatic seniority-based automatic pay increases for individual government employees (step increases) while the previous union contract has expired and no replacement has been negotiated. Referred to committee, no further action at this time.

House Bill 5133: Require agencies disclose federal aid requests to legislature
Introduced by Rep. Mike Shirkey, R-Clarklake, to require state agencies that apply for any form of federal or other financial assistance to notify legislative leaders, relevant committees and the legislature’s fiscal agencies within 10 days, with the notice including any conditions or stipulations associated with receiving the assistance. Referred to committee, no further action at this time.

House Bill 5143: Reduce allowable truck weights
Introduced by Rep. Marilyn Lane, D-Fraser, to reduce the maximum weight of trucks allowed on Michigan roads from 164,000 to 80,000 pounds. This would not reduce the maximum weight per axle. Referred to committee, no further action at this time.

House Bill 5172: Ban assessors entering property without written permission
Introduced by Rep. Robert Genetski, R-Saugatuck, to prohibit government property tax assessors from entering a private dwelling or structure without the written permission of the owner, and prohibit assessors from increasing assessments based on an assumption that unobserved improvements may exist. Referred to committee, no further action at this time.

To read more about these bills, and others in the Michigan Legislature, go to michiganvotes.org.

A Better Way to Protect Detroit Pensioners

Make it a 'contract city'

Recent press accounts describe the potential for steeper pension cuts for Detroit retirees if they reject a bankruptcy proposal made in February, and instead accept a new plan that, among other things, would insulate works in the city's art museum from potentially being sold off to satisfy both pensioners and creditors. The amended plan would also require a partial state bailout of the city.

LaFaive

Pensioners and residents would do better if Detroit took a more aggressive approach to selling assets, contracting out some services and eliminating others that are "nice to haves" rather than "need to haves."

The best outcome for retirees would probably come if Detroit dramatically downsizes city government, in effect converting itself into a "contract city" along the lines of Sandy Springs, Georgia, or Pontiac.

The Mackinac Center for Public Policy has argued it is unfair to use state dollars to once again bail out the Motor City rather than address other critical statewide needs. Moreover, the state's bailout-for-art deal doesn't actually solve Detroit's financial or infrastructure problems. And by inflicting greater losses on lenders, it may also risk increasing borrowing costs for other communities in the state.

Gov. Rick Snyder and the leaders of some large foundations want the state to commit $350 million to Detroit over 20 years. That would be enough to annually fill more than 875,000 potholes around the state for the next two decades.

That's one measure of the price a state bailout would inflict on residents in other communities who were not responsible for the well-known fiscal and managerial malpractice committed for decades by politicians Detroit voters chose.

Michigan taxpayers have already been forced for years to help fund Detroit's mismanagement through generous financial favors.

For example, a 2013 Citizens Research Council report showed that in 2010 alone Detroit received $335 per person in state support, compared to the second most generously supported city that year, Pontiac, which got $176 per person. Mackinac Center researchers James Hohman and Jarret Skorup have detailed many other ways in which Lansing politicians have previously bailed out Detroit.

The Mackinac Center has warned that a pension reckoning was inevitable without reform. It has offered many constructive proposals for this, such as a special issue of the Mackinac Center's Michigan Privatization Report back in 2000 that focused on Detroit. 

There was simply no excuse for dismissing the warning signs years ago, when the city may have been able to prevent the cuts in their long-term obligations that are being discussed now.

This should not be rewarded with yet another special deal. Indeed, doing so creates the likelihood that other municipalities will also demand bailouts.

Pensioners and creditors both stand the best chance of being kept whole by the city fundamentally rethinking how it delivers services to residents, dramatically downsizing its bureaucracy, selling off more assets, aggressively contracting out many services and ending certain others altogether. 

These steps also increase Detroit's potential to become a vibrant regional center that attracts residents and employers rather than driving them away.

March 28, 2014, MichiganVotes Weekly Vote Report

Votes on soccer, roadkill, nuke plants

Senate Bill 862, Allow alcohol at Michigan Stadium international soccer game: Passed 37 to 0 in the Senate

To allow the sale of alcohol at the University of Michigan football stadium in Ann Arbor during a potential soccer game in August 2014 between the Manchester United and Real Madrid international soccer teams.

Who Voted “Yes” and Who Voted “No”


Senate Bill 786
, Give tax breaks to aquaculture and hydroponics: Passed 36 to 1 in the Senate

To exempt aquaculture and hydroponics production facilities from property taxes. Senate Bill 787 would instead impose a new “specific” tax equal to 25 percent of the regular property tax.

Who Voted “Yes” and Who Voted “No”


House Bill 4288
, Restrict use of “indirect” tax audits: Passed 37 to 0 in the Senate

To prohibit the Department of Treasury from levying a delinquent sales tax assessment on a person or business based on an “indirect audit,” if a taxpayer has filed all the required returns and has maintained and preserved adequate records as required. The bill also establishes minimum standards for such “indirect audits.”

Who Voted “Yes” and Who Voted “No”


House Bill 5282
, Allow deadly force to defend nuclear plants: Passed 37 to 0 in the Senate

To explicitly allow an officer providing security at a nuclear generating plant to use deadly force if he or she “honestly and reasonably believes" it is necessary to prevent a person from breaking in with the intent to inflict harm, engage in radiological sabotage or steal nuclear material. This would include immunity from lawsuits.

Who Voted “Yes” and Who Voted “No”


Senate Bill 821
, Replace local revenue from reduced tax on business tools and equipment: Passed 107 to 2 in the House

To earmark enough state "use tax" revenue to local governments to fully replace (or nearly so) any revenue they lose due to related reductions in the "personal property tax" they impose on business tools and equipment. Under Senate Bills 829 and 830, some revenue the state gives up to the earmark would be replaced by imposing a new state "essential services" tax on some but not all of the businesses getting a personal property tax cut, with the political appointees on the board of the state economic development agency also empowered to grant exemptions to particular firms they select. The package still provides a net tax cut for businesses. For any of this to happen voters must approve related changes to the state use tax in an August, 2014 ballot initiative; the current proposal is intended to forestall local government opposition to that measure.

Who Voted “Yes” and Who Voted “No”


House Bill 4135
, Let foreclosing banks claim homestead tax exemption: Passed 85 to 23 in the House

To grant the 18-mill homestead property tax exemption for up to three years to a bank or other financial institution that has foreclosed and taken possession of a home because the borrower failed to make payments on the mortgage loan, as long as the property is for sale and not leased out.

Who Voted “Yes” and Who Voted “No”


Senate Bill 613
, Permit keeping road kill: Passed 37 to 0 in the Senate

To allow a driver who kills or injures a game animal other than bird on the road to keep it, and give the driver first priority if more than one person wants it. The Department of Natural Resources would be required to issue a “salvage tag” if requested, which would be required to get the carcass stuffed or tanned by a taxidermist. The driver would have to keep a record of the circumstances until the game is consumed or discarded.

Who Voted “Yes” and Who Voted “No”


SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit
http://www.MichiganVotes.org.

Michigan Education Association Misleading Voters

'Kids Not CEOs' website rife with misinformation

The Michigan Education Association has unveiled a new website that uses misleading information to try to make the case for more education funding.

Education spending is becoming an increasingly central issue to this year's gubernatorial campaign, and as a result, misinformation is rampant.

Under the catchphrase, "Kids Not CEOs," the MEA alleges that millions have been cut from public school budgets. But this allegation is not based on fact. The MEA's website ignores billions of dollars provided by state taxpayers to support public schools.

Unfortunately, the MEA is manipulating the misperception that the state foundation allowance is the total amount of money districts receive from state and local sources for educating a child.

The "Kids Not CEOs" website only considers foundation allowance money. In reality, state taxpayers provide more than $2 billion per year in additional funding. This money pays for special education costs, support for at-risk students and teacher retirement costs, among other things.

The MEA's latest effort to peddle this misinformation is not a new tactic. Michigan Capitol Confidential, the Detroit Free Press and other media outlets spent a good amount of time earlier this year fact-checking attempts by Democratic gubernatorial candidate Mark Schauer, the MEA, and some school officials claiming that school funding cuts had occurred — when they had, in fact, not.

Paul Egan, from the Detroit Free Press, called attempts like the MEA's to characterize education funding "a false accusation."

MLive reviewed both Schauer's and Gov. Rick Snyder's claims and concluded that: "Bottom line: State school aid funding is up since Snyder took office..."

"There has been an increase in the last few years, that's true...," David Arsen, a Michigan State University professor, who often is cited by the MEA, told the Michigan State Board of Education. "I've seen a commercial ... [The commercial claims] 'the governor cut a billion dollars from school funding.' Well, that's not quite right."

And yet, some continue to push the incorrect — and frequently corrected — narrative that school spending has declined.

The latest misinformation gaffe comes from MEA President Steve Cook, who recently took to the pages of The Detroit News to advertise the "Kids Not CEOs" website, saying that the Wayne-Westland school district lost $40 million in state funding in recent years.

But the people actually running the Wayne-Westland school district begged to differ. In fact, Wayne-Westland officials said that if state payments for teacher retirement costs are included, state funding for the district has increased.

The MEA is running a cynical campaign for increased education spending. Rather than argue that increased spending will result in better outcomes for Michigan children — an argument the organization likely knows it will lose on merits — the MEA is pushing misinformation.

The Michigan Senate Fiscal Agency, the Detroit Free Press, MLive, and the very school district the MEA president attempted to use as a cornerstone of his commentary, all agree: Total state funding for schools has increased.

The MEA should respect the intelligence of Michigan voters enough to shift to a fact-based campaign.

MEA President's Math in Detroit News Questioned

District says Cook's claim "cannot be substantiated"

MEA President Steve Cook in The Detroit News Wednesday repeated the myth that school funding is down $1 billion since 2011. He used the Wayne-Westland schools in suburban Detroit as an example, claiming the district’s funding is down about $40 million since 2011.

When contacted by Michigan Capitol Confidential, a spokesperson for the district said Cook’s claims “cannot be substantiated,” and in fact funding for Wayne-Westland is up $12 million since 2011.

This is not the first time Cook has made inaccurate statements in his monthly “Labor Voices” column in The News.

In December, several instances of plagiarism were found in AFL-CIO President Karla Swift’s “Labor Voices” column.

Medicaid Expansion Studies Weren't Trustworthy

Analysis reveals multiple flaws

It may be water over the dam, but one report on the potential impact to employers if Michigan did not adopt the Obamacare Medicaid expansion has been exposed as being essentially bunk due to flagrant misuse or misrepresentation of the data it cited.

This is worth noting because the claims from Jackson Hewitt were widely cited by Republican lawmakers here who supported the expansion, and probably tilted others into that camp. Its conclusion was that "employers may pay substantially higher federal tax penalties under the ACA (Affordable Care Act) in states that do not expand Medicaid." Jackson Hewitt estimated Michigan employers would pay between $42 million and $63 million in penalties without the expansion.

Not so fast.

The Foundation for Government Accountability's Jonathan Ingram took a closer look at the Jackson Hewitt report and has just released a paper describing its shocking shortcomings. Here's the gist, as distilled by a useful daily digest produced by the National Center for Policy Analysis:

  • The reports do not estimate the number of full-time employees between 100 percent and 138 percent of the FPL (federal poverty line) correctly. Rather than look at state population data, the authors make an assumption about states' low-income population distribution, leading to wildly divergent numbers. For example, the studies estimate that more than twice as many people are in the 100 percent to 138 percent FPL group in Utah than there are in reality. These miscalculations lead to incorrect calculations of employer costs.
  • The studies include individuals who are already eligible for Medicaid without the state expansion (and who therefore could not trigger employer penalties) in their calculations.
  • Seasonal workers and part-year workers do not trigger penalties either. The Jackson Hewitt calculations, however, include these workers, who constitute one-third of full-time employees within the 100 percent to 138 percent FPL group. Again, this overestimates the potential employer cost.
  • Only 14 percent of full-time employees at large employers are not offered affordable health insurance, yet Jackson Hewitt assumes that 93 percent of employees are not offered affordable health insurance, triggering penalties.
  • The reports assume that employers will subject themselves to these penalties, rather than find ways to work around them. This is unlikely. Employers will restructure their workforce and reduce their workers to part-time work to avoid penalties.
  • The Jackson Hewitt study assumes that the employer mandate will be enforced as it was enacted in 2010, but given the frequency of delays, this is doubtful.

As all Americans have since learned, beware the promises (or warnings) of Obamacare supporters and apologists

Center Scholar's Commentary at MLive.com

New Red Wings arena should not get corporate welfare

Dr. Christopher Douglas, an associate professor of economics at the University of Michigan-Flint and a member of the Center’s Board of Scholars, writes at MLive today that the proposed new arena for the Detroit Red Wings should not receive any corporate welfare.

Center analysts have written on the same topic here and here.