Two releases from government statistical agencies this week show that the state's economy is still pretty bad, but that its long fall may have finally bottomed out. The state unemployment rate is 14.1 percent, down from its peak. Michigan's per capita personal income was down again, but Michigan was not the worst state in the country.
This week, both the Michigan House and Senate are holding hearings on how the state's economic development apparatus managed to offer a $9.1 million tax credit to a convicted embezzler. Sen. Jason Allen, R-Traverse City, is presiding over the Senate event. ("Legislature's Most Persistent Targeted-Incentives Booster to Run Hearings on Embezzler's Tax-Break Deal.")
The trampling of states' rights by the federal government seems to know no bounds. Fueled by the TEA Party movement, which recognizes the importance of the principles of constitutional government and federalism, states are pushing back. One of the latest examples is an effort coming from the Arizona Senate called the "Freedom to Breath Act." The proposed law states that, "Arizona, through its Legislature, has the exclusive authority to regulate carbon dioxide emissions produced by humans and other greenhouse gases and substances produced by mechanical or chemical processes, including agricultural operations and waste operations."
The Mackinac Center Legal Foundation has appealed to the Michigan Supreme Court its lawsuit defending the rights of small-business owners who were shanghaied into a union, according to WEYI-TV 25 in Saginaw.
The plaintiffs in the case, three home-based day care owners, are independent contractors who receive subsidy checks from the state of Michigan on behalf of low-income parents who need child care while they are working or enrolled in school. A shell corporation created by the Michigan Department of Human Services and Mott Community College led to the forced unionization of some 40,000 day care operators, with some $3.7 million in "union dues" being taken from their state payments.
In her first public statements since it was revealed that the Michigan Economic Growth Authority approved a $9.1 million tax credit deal for a convicted embezzler, Gov. Jennifer Granholm was quoted by the Gongwer Michigan Report as saying, "And obviously, a mistake was made, and it cannot happen again."
If Michigan wants to recover from its economic doldrums, it would help if local governments could get their finances back in balance. And if local governments are going to balance their books, it would help if they could get some relief from labor laws that empower unions at the expense of taxpayers.
This week, the Michigan House and Senate are both holding hearings on the Michigan Economic Development Corp. after a convicted embezzler on parole duped the Michigan Economic Growth Authority into offering his company a $9.1 million tax credit. The real issue they should examine is not whether the occasional criminal wins an "incentive" deal, but the lack of transparency that characterizes this entire operation.
The parole violation arrest last week of convicted embezzler and Michigan Economic Growth Authority tax credit winner Richard A. Short has caused deep embarrassment for state officials. Faces are even redder given that Short shared the dais with Gov. Jennifer Granholm at a press event announcing his and other MEGA awards; at her invitation he even took the microphone for several minutes to relate all the wonderful things his apparent shell-company was planning to do.
The Michigan House and Senate plan to hold hearings this week on how a convicted embezzler on parole duped the Michigan Economic Development Corp. and Michigan Economic Growth Authority into offering his company — which was being run out of a Flint mobile home park — a $9.1 million tax credit. (This could have become a "refundable" credit, meaning the state would likely be writing checks to the embezzler.)
In the wake of the state granting a targeted tax credit to a convicted embezzler's company, much sound and fury has come from the Michigan Legislature and executive agencies. Unless decision-makers recognize the root problem, however, it will all signify nothing.
New Census Bureau data published today confirm a trend shown in previous releases: While the amount of tax revenue flowing into the Michigan treasury has fallen, the state's tax trends look brighter than the state's economy.
From 2008 to 2009, Michigan's tax revenue fell 4.9 percent. However, its number of payroll jobs fell by 6.9 percent.
The Center's "Show Michigan the Money" project is an "idea that makes sense in this information age," according to an editorial in today's Port Huron Times Herald.
Thanks to the project, an increasing number of public school districts are agreeing to put their checkbook registers online for taxpayers to inspect.
Recently passed federal legislation allowing for a government takeover of health insurance will have negative implications for Michigan.
"It could not happen at a worse time for Michigan," Michael Jahr, senior director of communications, told WEYI TV-25. "Our taxes are already too high. We're having a hard time getting people employed in this state and now we add a whole new federal bureaucracy that's going to require higher taxes ..."
Combining the departments of Environmental Quality and Natural Resources into a single agency will cause confusion and reduce efficiency. The organizational chart for the Department of Natural Resources and Environment embraces matrix management. Rather than clear lines of authority and responsibilities, the new agency instead utilizes an organizational structure that creates regional ecosystem managers (Lake Erie, Lake Huron, Lake Michigan, Upper Peninsula) who will compete with resource managers (wildlife, fisheries, water, forest, recreation) for control and authority. Matrix management in the DNRE, which has considerable environmental permitting authority, will lead to bureaucratic infighting and power struggles resulting in additional time and cost for businesses to obtain required permits.
The Detroit News' March 22 editorial says the Department of Human Services has more explaining to do about why it continues to operate the Michigan Home Based Child Care Council, even though the Legislature voted to defund the agency.
The Livingston Daily Press and Argus reports that legislation has been introduced to outlaw the forced unionization of small-business owners, such as what has occurred with home-based day care operators.
A Detroit Free Press column written by Rochelle Riley suggests that if Detroit parents took a bus ride out to the suburbs to witness what high-performing schools look like and the positive impacts they make, they would demand the same for their children. Riley is right, but there’s a way this could happen with no trip to the ‘burbs required: Universal tuition tax credits.
Russ Harding, senior environmental policy analyst and director of the Property Rights Network at the Center, will take part in a live chat hosted by The Grand Rapids Press at 11:30 a.m. on Tuesday, March 23 (see grey box in Press story titled "Michigan 10.0" for details). The talk will be about how Michigan can best use its natural resources to drive economic recovery.
The award of a $9.1 million Michigan Economic Growth Authority tax credit to a convicted embezzler has raised serious concerns about the lack of transparency in MEGA and its parent agency, the Michigan Economic Development Corporation. Specifically, how many of the agency's targeted tax break and subsidy deals have been awarded on the basis of fraud?
By Jack McHugh
In the wake of the news that the Michigan Economic Growth Authority awarded a $9 million tax break/subsidy deal to what appears to be a "shell company" created by a convicted embezzler, Sen. Jason Allen, R-Traverse City, has been assigned the task of managing Senate hearings on the vetting procedures used by MEGA and its parent agency, the Michigan Economic Development Corp.
Lou Schimmel, former director of municipal finance and an adjunct scholar with the Center, has been hired for his expertise to solve the city of Warren's $10 million overspending crisis.
The Detroit Free Press reports that Schimmel has been named Warren's executive administrator. He previously was appointed receiver for the city of Ecorse, eliminating that city's $6 million overspending crisis by renegotiating union contracts and privatizing many services. He's also the former emergency financial manager for the city of Hamtramck.
Henry Payne, editorial cartoonist for The Detroit News, writes about the Mackinac Center's climate change panel, in which he participated, at National Review Online.
You can watch the event here.
A Detroit News editorial today calls a plan to cap salaries of public school superintendents and teachers based on what politicians are paid, "gimmicky," and cites this commentary by Mike Van Beek, director of education policy, which states that only 1 percent of school expenses go toward superintendent pay and benefits.
More Michigan public school districts are posting their checkbook registers online as a way for taxpayers to see exactly how their money is spent, but most districts get a failing grade when it comes to transparency.
"After two years, we know who cares most about telling the taxpayers where their money goes," Ken Braun, director of the Center's "Show Michigan the Money" project, is quoted in today's Grand Rapids Press. "All of the 'A' students in the transparency class have been identified, and the rest are apparently celebrating Sunshine Week 2010 by skipping class," Braun continued.
The Michigan Economic Growth Authority yesterday approved its latest batch of tax credits to lure large business projects to Michigan.
Despite the press release, these big business projects are just not that consequential to Michigan's total economy.
That's because the state's economic development programs are involved in the bulk of business news stories, but an incredible minority of the state's job creation.
The Associated Press is reporting that a convicted embezzler currently on parole has been approved for business tax credits under the state's Michigan Economic Growth Authority program. The article also noted that when the deal was announced, the embezzler, Richard A. Short, "shared the stage" with Gov. Jennifer Granholm.
