January 1993 marked the half-way point of Governor John Engler's first term. In this review of the Engler administration, the Mackinac Center notes, "While the nation opts for change in one direction, progress in another is taking place here under the leadership of Governor Engler toward putting government in its proper (read: smaller) place." The report cites the strengths and weaknesses of the administration and concludes by assigning Governor Engler an overall grade of "A-." In addition, several new initiatives are suggested for 1993 and 1994 including civil service reform, property tax cuts, budget reductions, and privatization. 8 pages.
The lesson of the 1992 presidential election can be found in a paraphase of an often-quoted Biblical passage: "Without vision, the candidate perishes."
George Bush, riding in polls as high as 90 percent approval after the Persian Gulf War, managed to garner a paltry 38 percent of the vote a year and a half later. Millions of Americans had come to view their president as a man without a vision, a man devoid of deep philosophical roots that could define his mission and keep it on a clear and consistent course.
He declared "No new taxes!" in 1988, then signed the second largest tax hike in U.S. history two years later. He promised to veto a quota bill disguised as a civil rights measure, but signed precisely that anyway. He said he would continue the Reagan era restraints on spending and regulation, then presided over a regulatory explosion and the fastest growth in domestic spending since Franklin Roosevelt.
As it turned out, those few issues on which the president held firm (largely social concerns such as abortion), could not salvage his presidency. On the major economic matters – taxes, spending, regulation, the proper role of government – he squandered his power to speak with authority and capture the imagination of Americans.
These policy reversals did much more than undermine the president's credibility. They contributed mightily to pushing the economy into recession and millions of voters into the hands of Bill Clinton and Ross Perot.
Again – without a vision, George Bush the incumbent was swept into history.
Michigan, meanwhile, has a chief executive whose rhetoric matches his deeds with moreconsistencythan any predecessor the state's voters can remember. He is perceived by friend and foe alike as a forceful leader who knows where he wants to take the state – toward less government, lower taxes, and a revitalized private sector. Governor John Engler, now at mid-term, has managed to earn respect across the political spectrum as a man who works hard to deliver what he promises.
The Macomb Daily said it well in its evaluation of the Governor's first year:
Engler is right on target when he attributes the state's problems to high taxes, schools that fail too many children, state spending that was allowed to get out of control and a society unable to bring under control the cycle of poverty and welfare dependency ...
The governor has kept his word. And with this kind of continued leadership, we will again be first in educating our children, keeping our people healthy, first in letting taxpayers keep more of what they earn, and first in the kind of jobs that will be good for our families and Michigan.
Another year has passed since those words appeared in print, but nothing has happened in Lansing to alter such a positive appraisal of our chief executive. The citizens of Michigan are no less certain today than they were a year ago about where he aims to take this state. While the nation opts for change in one direction, progress in another is taking place here under the leadership of Governor Engler – toward putting government in its proper (read: smaller) place.
The Governor is, in fact, an example of a rare commodity on the American political scene. He has held public office for half his life – since his college days, no less – and yet he understands and empathizes with the travails of hard-working taxpayers and struggling small businesses. He has not insulated his thinking from the hardships that ordinary people must endure as they cope with intrusive government.
Among the Governor's critics are those who claim a desire to make government "compassionate." They say that attempts to roll back the dimension of government are inherently "mean-spirited" or "anti-people." The implication is that unless government is either doing something to you or for you, it cannot be your friend. The Governor's instincts that form the backbone of his vision have led him to challenge this superficial approach as both faulty and culturally backward.
The fact is, that nothing about government could be more "compassionate" than policies which respect the rights of individuals to enjoy the fruits of their labor, to come to the aid of others with their own resources, to build enterprises, to develop free and mutually beneficial relationships, to be a part of their children's education beyond merely paying the bill, to be safe to go about their lives and businesses in peace, to profit from both their successes and their failures, to be themselves. Nothing about government could be more uncompassionate and anti-people than policies which repress the spirit of inventiveness, dictate the minutiae of interpersonal relations, deprive workers of their earnings, or substitute the cold, indifferent hand of the State for the nurture of family, church, and community. These are the principles by which leaders – and their policies – ought to be judged.
Though we at The Mackinac Center for Public Policy believe that the "Engler Revolution" remains very much an unfinished one, we applaud the Governor for staying the course in his second year.
We stated in our evaluation of his 1991 performance that "the danger now is of the revolution sputtering and giving way to 'business as usual.'" Fortunately, that has not happened and indeed, with the change in the composition of the Michigan House of Representatives, the Engler Revolution, we hope, will actually gather momentum in 1993. So far, Governor Engler shows no sign of mirroring the mistakes of President Bush.
The Mackinac Center for Public Policy gives Governor Engler high marks for the following positions and initiatives he took in 1992:
For the second year in a row, he tackled and resolved a serious budget deficit without raising taxes. That's another way of saying that he managed the state's finances without making it more difficult for citizens to manage theirs – and that's an essential ingredient in reviving hope, opportunity and jobs for Michigan.
Despite strong pressure from within both the legislature and his own administration, he refused to endorse boosts in either the gasoline tax or the cigarette tax.
He has almost completely redirected the activities of the Commerce Department, away from the sort of "industrial policy" of endless and dubious subsidy programs that characterized the 1980s and toward one which emphasizes "a fair field and no favor."
As General Motors deliberated over the fate of its Willow Run plant, the Governor held firm on his plan to replace selective favors, subsidies and tax breaks for particular, politically-favored firms with a general reduction in the overall burden of government in the state. He refused to get into a futile and counterproductive bidding war with other states.
He pushed hard for his "cut and cap" proposal at the polls. Though that effort failed when special interests mounted an expensive and deceptive campaign to defeat the measure, the outcome was neither a repudiation of the Governor nor a signal from voters that they no longer want property tax relief. The Governor can now achieve a substantial property tax cut via the legislative route, given the likely working majority he should have in the House of Representatives.
He has implemented reductions in the onerous Single Business Tax by raising the threshold at which a business is required to file and pay SBT.
He put in place one of the boldest welfare reform plans in the nation, designed to encourage recipients to work their way off public assistance, strengthen families, keep children in school, and save taxpayers' money.
Though the progress has been glacial, he has prodded the state's education establishment in the direction of greater choice and accountability, and he has pushed for needed revisions in teacher tenure and certification rules.
With varying degrees of success, he has sought to advance enterprise zones, liability reform, departmental reorganization, trucking deregulation, and renewed voluntarism in Michigan communities.
Since taking office, he has overseen a reduction in the state's permanent work force of 8.4 percent, from 64,400 two years ago to approximately 59,000 today. He has successfully negotiated agreements with virtually all of the state's classified civil service employees that restrain wage and benefit costs, in part by introducing incentives for employees to assist in controlling those costs for the first time.
He has demonstrated real leadership by his aggressive use of executive powers in reorganizing the executive branch of government. In the past two years, he has done more in this regard than perhaps any other governor. He has abolished one of Michigan's 19 principal departments (Licensing and Regulation), eliminated the Corrections Commission and assumed direct responsibility for the Michigan prison system, moved to provide accountability and responsiveness in the Department of Natural Resources, and eliminated the plethora of cabinet councils of the previous administration.
He has put the Michigan Education Trust on ice (no new contracts were sold in 1992) and proposed tax-free bonds as a better way to help parents save for their children's college education. As pointed out in a 1990 Mackinac Center report, MET was a seriously flawed program that needed to be either scrapped or privatized.
He vetoed an interventionist auto insurance "reform" bill which would have vastly increased regulation of a competitive market, caused good drivers to pay higher premiums so that bad ones could pay less, and mandated rate reductions without any corresponding reductions in claim payments.
He has publicly supported – on more than one difficult occasion – the North American Free Trade Agreement, understanding the job-creating potential that free and competitive international trade can bring.
He vetoed a bill that would have allowed legislators (as well as the governor) to retire earlier than under current law at a cost of $4.5 million a year.
In what could prove to be the start of a revolutionary change in the way the state does its business, he has pursued the privatization option for making government less costly. By pushing for privatization of the Accident Fund, moving to contract out more services within departments, and creating the Michigan Public/Private Partnership Commission, Governor Engler has put Michigan on the very cutting edge of the national privatization movement. By aggressively implementing recommendations of his Task Force on Contractual Personal Services, he has demonstrated a sensitivity to privatizing sensibly and with appropriate safeguards against abuse.
On November 14,1990, The Mackinac Center released a twenty-point advisory document entitled, "Road Map for a Michigan Renaissance" (copies available upon request). It suggested a short list of 20 items for the incoming governor to place on his reform agenda. In reviewing the Engler record against the program advocated in that document, we find that nearly all of those 20 items have indeed been accomplished or at least endorsed by the Governor.
Needless to say, we are generally very pleased with this Governor's performance. He ranks, in our view, first in the nation among chief executives in implementing an agenda for downsizing government and reordering its priorities. Not even Governor Weld of Massachusetts, often lauded as a budget cutter, has achieved as much change in the past two years as Governor Engler. His tenure so far stands in stark contrast to the interventionist policies of Governors William Milliken and James Blanchard.
Our review of the Governor's second year is not uncritical. Even the best of records leaves room for improvement, if for no other reason than the blocking actions of the political opposition. Here are some of the areas where we have identified problems or concerns:
The Governor's 1991 pledge to phase out state subsidies for the arts lobby over a three-year period saw scant progress in 1992.
Schools-of-choice likewise went forward at a snail's pace this year. For most districts, it was "business as usual" in spite of a state mandate to broaden choice options.
The rationale for the Governor's mental health reforms has not been put forth in a way that educates the public or allays legitimate anxieties.
Welfare reform, though sweeping by any standard, nonetheless fell short of its potential. Even a slight reduction in Michigan's already above-average benefit levels coupled with a cap on benefits for people moving here from other states or having additional children while on welfare would have been helpful.
The Governor took no major action to address the coercive power of the state's labor unions and their political clout, such as requiring that workers be informed of their rights under Supreme Court decisions to refrain from joining or supporting unions beyond the costs of collective bargaining.
All things considered, The Mackinac Center for Public Policy gives Governor Engler the grade of "A-" for his performance in 1992, compared to the "B" we assigned him in 1991. The "Engler Revolution," which we graded an "Incomplete" in 1991, receives that same grade for 1992, though it is clear that this governor ismaking an indelible mark on the course of state government. We hope that it may be possible before the end of his first term to judge major elements of the revolution, if not "complete," at least far-reaching and permanent.
Keeping the Engler Revolution on track should be an easier task in 1993, given the change in the composition of the House of Representatives. With gubernatorial leadership, gridlock should give way to greater cooperation between the executive and legislative branches of state government.
The Mackinac Center urges the Governor to stiffen his already firm resolve to re-shape state government. In the next two years of his first term, he should take advantage of the new legislative opportunities to employ innovative, market-based prescriptions for public policy. He should take risks, experiment, shake up the status quo – because many of Michigan's longstanding and intractable problems are not amenable to resolution through mere tinkering at the edges.
The Governor is his own greatest asset when it comes to selling his ideas. He should step up his already considerable efforts at communicating with the people of Michigan. More regular television and radio appearances and commentary on his part could do much to educate people of the need for his '"Taxpayer's Agenda."
We see no reason to moderate this bit of advice first offered in our January 1991 evaluation of his first year in office:
... We urge the Governor not to shrink from the politics of (constructive) confrontation, for surely his opponents will not. That means keeping on the offensive with the Legislature, holding the feet of the big spenders to the fire. Make them explain and defend why Michigan should remain a high tax state. Make them tell us why we should forget that tens of thousands of residents pulled up stakes and left the stare in the 1980s, in great measure because Michigan's business climate had become overburdened by public sector intrusion. Make them account for every dime of misspent public monies in failed, wasteful programs. Make them justify why Michigan should pursue policies of welfare dependency, counterproductive regulation, and subsidized boondoggles while the rest of the world embraces enterprise, competition and free markets....
The Governor should use his forthcoming State of the State message to articulate a bold, detailed, and integrated vision for Michigan built around these themes: citizen empowerment over growth of bureaucracy, choice over coercion, accountability over indifference, competition over monopoly, incentive over dependency, individual liberty over state dictates, and a strengthened role for the states over federal encroachment.
Accordingly, we urge Governor Engler to marshal legislative and public support for the following measures in 1993:
Property tax cut. Michigan's high property tax burden is intolerable. The lifting of the freeze early this year means devastating assessment hikes in many communities. A legislated reduction should be a top priority. This, we are happy to acknowledge, was indeed the Governor's stated position as of mid-December 1992.
Further budget reductions. In spite of all that has been done in this area, the state's share of personal income has hardly budged from its level of two years ago. The Governor should follow through on his commitments to phasing out subsidies for the arts, reducing pork barrel expenditures, eliminating duplicative or wasteful boards, commissions and agencies, and resisting legislative initiatives the state cannot afford. Basic premises of every department should be reviewed; no activity of state government should be immune from a periodic review and justification of its continued existence.
Civil Service reform. A death and a resignation have given the Governor a majority of the 4-person civil service commission in his first two years in office. The extraordinary power of the civil service commission in its area of responsibility makes it a possible vehicle for change, a fact enhanced by a strong State Employer in the person of William C. Whitbeck. We urge the Governor to seize with renewed vigor the opportunities these developments make possible for the purpose of changing outdated civil service rules to increase management flexibility and reward superior performance in state government.
Privatization.
The Governor should move swiftly to implement recommendations of the Michigan
Public/Private Partnership Commission and to remove all existing state
barriers that inhibit privatization by local government.
It is vitally important, however, that appropriate
safeguards and procedures accompany any privatization to avoid cronyism, no-bid
contracting, low-ball bidding, and sloppy contract writing and monitoring. The
bottom line must be this: privatization should be pursued not for its own sake,
but because it can be shown to reduce costs, prevent tax hikes, make markets
more competitive, and provide for service equal to or better than possible with
current government employees.
Proper cost accounting must
be a cornerstone of the privatization process: none of the true costs of state
provision of a service can be obscured, nor can the costs of implementing and
monitoring private sector contracting be ignored. Wherever possible, government
employees should be encouraged to form ESOPs (employee stock ownership plans) to
take a publicly-provided monopoly service into the realm of a competitive
privately-provided service. In other words, care and creativity should be
watchwords of the privatization process.
Trucking
deregulation. Michigan's antiquated system of trucking regulation should be scrapped without delay. It has cartelized the industry, driven up business costs and
consumer prices while profiting only narrow special interests, and even
contributed to air pollution by requiring many miles of unnecessary driving.
It simply makes no sense to
require a Michigan-based firm to charge more to carry goods from Holland to
Grand Rapids than a non-regulated Illinois
carrier charges to take similar freight from Chicago to Grand Rapids.
Legal reform.
The Governor should press for measures to discourage frivolous lawsuits and
excessive damage awards; encourage alternative dispute resolution mechanisms
such as grievance hearings, arbitration, and mediation to help avoid
time-consuming and costly courtroom litigation; reduce abuse of the discovery
process; revise joint and several liability for products liability so that
manufacturers are not liable for more than their share of "fault"; and
introduce modified comparative negligence so that persons more than 50 percent
at fault in an accident cannot recover from other parties.
He should also
consider creative solutions in which persons are allowed to opt out of the tort
system for non-economic losses, such as pain and suffering, in exchange for
payment of other losses without the need to establish fault or negligence.
Federal Mandate Relief.
Unfunded federal mandates – new programs Congress requires the states to pay for – are becoming a major burden on Michigan taxpayers. They also strike at the
very heart of the state-federal relationship as outlined in the United States
Constitution. The states were not meant to be vassals of Washington. Governor
Engler has brought this matter to the attention of federal authorities on
numerous occasions; we suggest here an innovative strategy for alleviating the
problem, a strategy that attempts to make our representatives in Congress more
accountable for the mandates they vote to foist on Michigan.
We
recommend that the Governor call upon Michigan's 16 federal representatives and
two senators to appear before the Legislature (or a special joint committee
therof) on a regular annual basis to provide an account of how they have
fulfilled their constitutional responsibilities in representing the people of
the state. At such an occasion, they should be invited to explain and justify the
particular mandates the federal Congress has imposed. The Governor should use
the weight of his office to encourage our representatives and senators to
participate. He should ask the Michigan Legislature to adopt a resolution
expressing its desire to see this happen.
Auto insurance reform.
The overwhelming defeat of Proposal D last November may suggest a general
satisfaction with Michigan's no-fault law, but there certainly are ways to
improve the system. Consumers need more control over the types and amounts of
insurance they buy. Access to non-economic loss damages through the tort
system should be limited to severely injured persons and should be denied to
those more than 50 percent at fault in an accident.
Most importantly, the
highly intrusive nature of regulation needs to be eliminated, especially that
which requires subsidies from rural and suburban policyholders to those in urban
areas, so that market forces can operate for the benefit of consumers.
Educational Choice.
The tepid effort at choice that was implemented last year should be augmented
by bold moves toward genuine, meaningful public/private choice.
Work should begin now
to reformulate state funding and tie it directly to the enrollment decisions of
parents. State aid should follow students to their schools of choice, including
schools in neighboring districts. Greater autonomy for teachers and local
administrators on-site and a reduction in the educational bureaucracy ought to
be ingredients in the mix. Ultimately, choice ought to embrace private schools
as well, and in a way that does not involve state interference with the
operation and diversity of private education.
Labor reform.
The State of Michigan should seek to make organized labor more accountable to
its membership and a more positive contributor to the state's economy by a)
enforcing worker "Beck" rights, and b) repealing the Prevailing Wage Act.
Under the Supreme Court's 1988 decision in Communications Workers of America
v. Beck, workers are entitled to refunds of union dues that go for
political or other non-collective bargaining purposes. The Prevailing Wage law
raises construction costs in Michigan by effectively mandating that projects
receiving any state money employ union labor.
We
further urge that the State of Michigan enforce laws which prohibit public
employees from striking and local governments from using tax dollars or
tax-funded facilities to support or oppose ballot issues. In the case of the
latter, the law was openly flouted last fall by a number of school districts
where teachers and/or administrators sought to defeat the Governor's "cut and
cap" property tax cut proposal.
Removing Barriers to
Enterprise.
Some of the above recommendations, such as selected tax cuts, trucking
deregulation and legal reform, would serve to enhance the Michigan
job-creation climate. We further urge, however, a much more comprehensive
thrust: to search out and eliminate all unnecessary barriers to the creation
and growth of productive enterprise.
The Governor is
considered by too many (inaccurately, we believe) as a man with a meat axe.
Husbanding taxpayer resources is important – and we would like to see more of it
– but more attention must be focused on the numerous ways in which government
hobbles, discourages, and harasses both existing and would-be entrepreneurs
through its red tape, arbitrariness, and stifling regulations. This approach
starts with a renewed appreciation of the entrepreneurial ethic, the spark that
prompts men and women of all educational and economic levels to take initiative,
assume risk, and strike out in hopes of profit.
Whereas some who dabble in the public policy arena put their faith in what the state
can coerce, we suggest a more promising option – putting our faith in what free
and creative people can accomplish. In essence, the interventionist approach is
a condescending and elitist one: it says that politicians and bureaucrats are
smarter and better people than working men and women who send them to Lansing
and pay their bills. That view is usually wrapped in appealing rhetoric about
"compassionate government" even though it is culturally backward, if not
downright medieval. We urge an enlightened
perspective across state government, one that seeks to eradicate anything that
suffocates peaceful, productive activity.
Accordingly, all department directors should be instructed to search for any and
all instances where needless or overly burdensome licensing requirements act as
barriers to individual and business enterprise. A statewide conference of small
businesspeople should be called to solicit instances of unfair state competition
with the private sector, as well as proposals to end it. And state government
should review zoning laws and building and construction codes which – if not
amounting to outright "takings" of dubious constitutionality in many cases – are
becoming significant hindrances to low-income people and start-up entrepreneurs.
It must not be forgotten that Michigan was headed down a destructive path by the time of the fateful 1990 gubernatorial election. State government had grown at twice the pace of either inflation or personal income in the 1980s. Its intrusiveness was driving people and businesses elsewhere. Our income levels, once higher than the national average, had fallen below the national average. Our inner-city schools were failing increasing numbers of children. It was time for a change.
John Engler's election has provided a window of opportunity for change to actually happen. He has demonstrated decisive leadership in many areas, and has kept to his word. State government is no longer something that just grows and grows without question and without accountability. Things are changing, but the challenge of completing that change and making it stick is as great as ever. This is a revolution in its formative stages, and it can still be aborted by a weakening of resolve, a penchant to compromise, or inattention to detail.
We congratulate Governor John Engler for his performance these last two years as our chief executive. And we earnestly implore him to re-charge his energies, fire up his troops, and press on for the sake of Michigan's future.
