One of the Mackinac Center's sister free-market think tanks has asked her siblings to share their states' best laws for a "best practices" guide. Notwithstanding our current economic troubles, Michigan is generally considered a "good government" state (which is not the same as good public policy), and we actually do have some institutions that might serve as models for other places. Here's the list we compiled:
Kelo Reform: A+
Michigan did perhaps better than any other state in reforming its law on government taking private property not for public use, but for "economic development" projects benefitting other private actors. Our success was thanks in part to the Mackinac Center's Senior Legal Analyst Patrick Wright, who provided an important information resource to then-state Rep. Leon Drolet, who took point on the issue in the Legislature. Michigan enacted strong language preventing de facto "economic development" takings masquerading under nebulous "blight" definitions. We succeeded because there was one lawmaker who cared deeply while most of the rest were indifferent.
Progressive Income Tax Constitutionally Prohibited: A-
No income tax would be A+.
State Employees Hired Since 1997 in Defined Contribution Pensions: A+ (but incomplete)
A gift from Gov. John Engler that keeps on giving. Engler tried to get it for school employees also, but the MEA school employees union was just too politically powerful.
Transparent and Accountable Legislative Process: A
It's shocking that several states require no roll call vote by their legislators on final passage of bills. Theoretically, a huge tax hike could pass on a voice-vote only and every lawmaker could claim to have opposed it. Not here. Also, we have constitutional "germaneness" and no-amending-statutes-by-reference prohibitions. As someone who has looked closely at a dozen different legislatures, I can affirm that these things matter.
1994 Proposal A School Funding Formula and Property Tax Cap: B/B+
This is a very complicated measure that generated many perverse and pernicious distortions into the property tax system, but nevertheless solved the problem of gross funding disparities across school districts in a way that avoided the horrible excesses of such exercises in some other areas (like New Jersey and St. Louis). It also solved the problem of people on fixed incomes being forced out of their homes due to large tax assessment increases. Assessment hikes are now capped at 5 percent or the rate of inflation, whichever is lower. This is creating some problems in an environment of declining values. Still, on balance, it's been a positive that few would go back on.
1978 Headlee Tax Limitation Amendment: Mixed Grades
This is Michigan's version of the 1970s California "Proposition 13" tax limitation revolt. It caps state revenue at 9.49 percent of state personal income; bans unfunded state mandates on local governments; requires popular votes on local property tax and debt increases; and requires local millage rates to be lowered if aggregate property value growth raises the local tax base. On all but the first item Headlee has earned a grade of B-.
Unfortunately, the state revenue cap is now a dead letter that provides no effective limit. The reason is that over the years an ever increasing proportion of total state personal income has come from state and federal government social welfare transfer payments, rather than from actual wealth-producing economic activity (see more on this here). Yet relatively higher levels of income received from social welfare programs like Social Security, welfare or unemployment benefits are hardly an indication that our state's economy is better able to afford more government. In fact it is just the opposite.
We would do better to adopt the Colorado "Taxpayer Bill of Rights" amendment's index, which caps government growth at the inflation rate plus population growth. The revenue limitation component of Headlee imposed some modest fiscal discipline in the mid-1990s, but has earned a grade of "F" since then. The other parts have worked reasonably well.
Some Reasonable Tort Reforms: B+
Another Engler legacy: No joint-and-several-liability, no lawsuits on FDA-approved drugs, pretty strict medical malpractice expert witness screening procedures.
Privatization as a "Prohibited Subject of Bargaining" in School Union Negotiations: B-/incomplete
This is a weak substitute for giving employees right-to-work protections or banning government employee collective bargaining, but it's a good thing as far as it goes.
Honorable Mention — Term Limits
Lifetime limits of three two-year House terms, and two four-year terms for Senate, Governor, Attorney General and Secretary of State haven't "fixed" the state, but they haven't wrecked it either, despite incessant political-class whining and efforts to undo these. What term limits have done is expose the political careerism of elected officials to public view much more than before their adoption.
Recommendation: Adopt TABOR, and Prohibit Collective Bargaining for Government/School Employees
Look around the nation at what's worked and what hasn't, and two things stand out: Colorado enacted the only successful tax limitation with its Taxpayer Bill of Rights amendment capping state spending growth to the rate of inflation plus population growth, and the states that are the worst basket cases are those with strong public employee unions. Adopt the one and prohibit the other and you have the makings of a successful state government.
#####
Jack McHugh is senior legislative analyst at 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 author and the Center are properly cited.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
Please consider contributing to our work to advance a freer and more prosperous state.
