There are good reasons why so many Americans are disgusted by the current state of politics, and a story in today's MichiganCapitolConfidential.com captures many of them. It describes progress in the Legislature of a modest school employee pension reform proposed by Gov. Jennifer Granholm. Here's the gist: Most Democratic and many Republican lawmakers are self-interestedly serving the system, not the people.
News reports often refer to the larger figure in the headline as the amount of underfunding in Michigan state and school employee pension funds.
However, the figure includes not just pension liabilities, but also future retiree health benefits, which according to a recent Michigan Supreme Court case are not considered an enforceable obligation on the state and its taxpayers. When the amount not set aside for these non-obligations is removed, the actual retirement benefit obligation pre-funding shortfall is $11.5 billion.
The Royal Oak Daily Tribune and the Macomb Daily both editorialize today against Senate Bill 1285, introduced by Sen. Bruce Patterson, R-Canton, which would mandate that newspaper publishers charge a deposit on each paper sold equal to 50 percent of the paper's cost and use the money to create recycling programs and redemption centers. Any unclaimed deposit money would be turned over to the state and put in the school aid fund.
Senior economist David Littmann told The Oakland Press that Thursday's large stock market drop is an indication the United States could face a "very, very serious secondary recession."
Rep. Tom McMillin, R-Rochester Hills, has introduced a resolution that would withdraw Michigan from the Midwestern Greenhouse Gas Reduction Accord. Similar resolutions will be introduced by legislators in Wisconsin, Iowa and Minnesota. Gov. Jennifer Granholm joined the governors of Wisconsin, Minnesota, Illinois, Iowa and Kansas in signing the accord, which calls for a 20 percent reduction of CO2 emissions below 2005 levels by 2020 and would require extensive economic pain with little to no environmental gain.
Politicians raiding various pots of tax money to fix their self-created overspending crises and balance the state budget have left certain line items short, according to this Detroit News editorial.
The News cites this report by Jack McHugh, the Center's senior legislative analyst, as one example.
Patrick J. Wright, director of the Mackinac Center Legal Foundation, is scheduled to be on The Frank Beckmann Show on WJR-AM760 at 9:19 a.m. to discuss several e-mails that shed light on how 40,000 home-based day care owners were shanghaied into a union despite being small-business owners. The Mackinac Center obtained the e-mails through a Freedom of Information Act request
In today's Wall Street Journal, former mayor of Los Angeles Richard Riordan and investment adviser Alexander Rubalcava describe the looming bankruptcy hanging over Los Angeles, caused by the same process of "Detroitification" that plagues Michigan: A political class progressively hollowing out the private economy to prop up the perks and privileges of an unsustainable government establishment.
On Monday, a Michigan Capitol Confidential story brought to light a series of e-mails between Nick Ciaramitaro, director of legislation and public policy for AFSCME Council 25, and representatives from the Michigan Department of Human Services and the Michigan Home-Based Child Care Council (MHBCCC).
As described in a previous post and essay here, people often respond to government-generated disincentives such as high taxes by voting with their feet, migrating to places with greater economic freedom and opportunity.
The lesson is reinforced by a recent article written by the highly regarded economist Richard Vedder, "High Taxes Lead to Population Losses," published in the magazine of the American Legislative Exchange Council. He compared the state and local tax burdens of the 10 lowest-tax and 10 highest-tax states with their migration patterns (Michigan falls in neither group). This showed that from 2000 through mid-2009, 4.2 million more people moved out of the 10 highest-tax states than moved in to them. In contrast, the 10 lowest-tax states enjoyed a net in-migration of 2.8 million souls.
The revenues of Michigan school districts are directly linked to enrollments: More students means more money for a district's operations, and fewer students means less.
In Michigan, enrollments are falling in many if not most districts, which means that labor costs must also be trimmed. The process of trimming can pit different school employee groups against one another.
There is no shortage of bad ideas coming out of Lansing. Senate Bill 1285 introduced by Sen. Bruce Patterson, R-Canton, would require customers to pay a deposit on each newspaper they purchase equal to one-half the retail price of the newspaper. The proposed law would operate much like Michigan's bottle deposit law. Newspapers would be required to be returned to a redemption center, with each publisher in the state required to operate at least one such center.
On Thursday, April 29, 2010, Dr. Margo Thorning was the keynote speaker at a Mackinac Center Issues & Ideas forum titled "Global Environmental and Economic Challenges." Thorning, vice president and chief economist for the American Council for Capital Formation, discussed the impact cap-and-trade and other climate change legislation would have on Michigan's economy.
Michael Van Beek, director of education policy, corrects a common myth about school funding in "Special Report: The Changing Face of Education in Michigan," by WILX-TV in Lansing.
Public school funding in Michigan has increased significantly since the passage of Proposal A, Van Beek explains, while enrollment has decreased and student performance has been flat.
An article last week in The New York Times, "Greek Wealth Is Everywhere, Just Not on Tax Forms," described a wealthy Athens suburb where just 324 households admitted on tax forms that they own a swimming pool. Curious, tax officials obtained satellite imagery of the area and counted 16,974 pools.
In a recent article, political writer Peter Luke reiterates the case for a service tax. Included in the argument are the claims that, "Compared with the rest of the nation, Michigan is about in the middle, in terms of per capita state and local tax collections. Compared with itself, Michigan is a lower tax state than it was a decade ago."
A package of 17 bills sponsored by State Rep. Justin Amash would eliminate or reduce targeted business tax breaks in favor of across-the-board business tax relief. According to Amash, his proposal would:
Amash says that an analysis by the state's Treasury department shows these changes would reduce the MBT burden on all firms by $591 million next year. The foregone revenue would be replaced by eliminating a number of selective tax breaks enjoyed by a relative handful of companies.
Every week MichiganVotes.org sends a report to newspapers and TV stations showing how just the state legislators in each publication's service area voted on the most important and/or interesting bills and amendments of the past seven days. The version shown here instead contains a link to the complete roll call tally in either the House or Senate. To find out who your state Senator is and how to contact him or her go here; for state Representatives go here.
My recent blog post titled "Connecting the Day Care Dots," cited numerous documents, video clips and websites in an exhaustive and comprehensive effort to piece together the inception of the Michigan Home-Based Child Care Council (MHBCCC). The MHBCCC is the state entity against which home-based day care owners were unionized by the AFSCME/UAW-bred Child Care Providers-Together Michigan (CCPTM).
Earlier this year Gov. Jennifer Granholm proposed requiring that school and state employees contribute an additional 3 percent of their pay into their traditional "defined benefits" pension fund, in return for a 6.6 percent early retirement pension benefit "sweetener." This week the House of Representatives passed its version of the school pension measure, Senate Bill 1227, which was loaded down with "poison pills" and costly giveaways to unionized school employees, presumably extracted by the politically powerful Michigan Education Association union.
As comedy it was so-so, but as an indicator of political change Saturday Night Live’s “2010 Public Employee of the Year Award” might prove to be among the most consequential sketches in the show’s 35-year history.
The sketch, available here (be advised, the material is meant for a relatively mature audience) opens with an emcee, apparently in good health, who had been placed on disability from his job as a bus driver because the workman’s comp board was under the impression that he was paralyzed from the neck down. Then we are introduced to the three finalists for Public Employee of the Year along with their “talents”: an officious DMV Clerk who recites the absurd DMV rules (daydreaming in line is not allowed) a court clerk who reads his own poem (in which a court clerk reacts in shock to a request that he get a file from the courthouse basement) and a school janitor who is already on break when the time comes for him to perform in the talent competition.
Perhaps sensing its future may truly be at stake, representatives of the Michigan Home Based Child Care Council (MHBCCC) complied with lawmakers' requests for comment at a legislative committee meeting. It was at least the fourth attempt since last fall to get the MHBCCC on the record about its role in the stealth unionization of Michigan's 40,000-plus home-based day care owners and providers.
A recent Livingston Daily Press & Argus editorial takes to task the Michigan film subsidy program, saying the state has failed "to produce any hard data that would allow the public — or state lawmakers, for that matter — to determine" if the giveaway is working.
An recent Oakland Press editorial says that small-business owners who were forced into a union "weren't treated fairly" and that "the process of adding them to the union seems skewed and wrong."
The Mackinac Center Legal Foundation lawsuit challenging the scheme by which home-based day care providers were shanghaied into a union is before the Michigan Supreme Court.
In a previous post, I described a new Federal Reserve study that found an empirical link between economic liberty and employment growth. I also noted that two economic freedom indexes (one of which was used by the Federal Reserve authors) had found that Michigan ranks low in measures of state economic freedom, and that our ranking has fallen over time.
