For years, bipartisan majorities of Republicans and Democrats approved massive tax credits to select corporations and industries. The bulk of these coincided with the “lost decade” in Michigan, in which the state lost more jobs than any other. These credits have caused a nearly $9 billion hole in the state budget. This hole is crushing citizens who must now pay higher taxes for an increasing state budget to fund basic government services such as road maintenance.
The state’s 2012 retirement reforms changed the way that pension benefits offered in Michigan school districts are paid. It capped a school district’s contributions to the retirement system, with the state pledging to pay the amounts required above the district cap. But this may not have changed the policy picture as much as legislators hoped.
According to the Detroit Free Press, the city of Detroit must make a $195 million balloon payment to its pension systems in 2024, which is some 71 percent higher than the amount approved in city’s bankruptcy plan. New hiring, delayed pension cuts, and longer life expectancies have left the city responsible for a growing retirement-benefit liability.
Patrick Wright, vice president for legal affairs at the Mackinac Center, gave an interview on The Frank Beckmann Show to discuss the latest win in the August window saga.
In September, the Michigan Employment Relations Commission concurred with an administrative law judge and found the MEA's August window (the policy of requiring all resignations to occur in August) illegal. MERC ordered the MEA to begin taking resignations year round, but the MEA filed with the Court of Appeals, asking it to reconsider the decision and to order a stay in the meantime, which would keep the August window in effect for at least a year.
Monday morning, reporters Zoe Clark and Rick Pluta published a radio story and article about how Lansing Republicans “had adopted the tax break religion” on targeted tax breaks. As evidence, there is apparently a deal in the works that would provide taxpayer funds of some sort to a particular business in exchange for a promise to locate or expand in West Michigan.
In The Detroit News, business columnist Dan Howes cites a real estate developer in arguing for more spending on state economic development:
“It’s not competitive,” says Albert Berriz, CEO of McKinley Inc., an Ann Arbor-based real estate investor with a $4.6 billion portfolio spanning 33 states. “It’s a nuclear arms race, and everyone wants to put you out of business. We need to talk less and win more.”
By Jack McHugh
Now with one click you can approve or disapprove of key votes by your legislators using the VoteSpotter smart phone app. Visit votespotter.com and download VoteSpotter today!
Senate Bill 280, Ban schools and governments paying union officials to do union work: Passed 20 to 17 in the Senate
“We’ve got to do something about Detroit Public Schools!”
This sentiment is frequently expressed in education policy discussions in Lansing.
A review of the crisis confirms the need for action: The district teeters on the edge of bankruptcy, with more than $500 million in operating debt and more than $1.5 billion combined capital and bond debt. DPS is nearly $100 million behind in payments to the state pension system. Enrollment has plummeted — the district is one-third the size it was just ten years ago. Since 1992, district enrollment declined from 161,000 children to 46,500. (But to be clear, declining enrollment isn’t necessarily evidence of a crisis.)
Two important bills that would prevent some special union deals have passed the state Senate.
Senate Bill 279 would “prohibit public school districts and unions from adopting ‘release time’ arrangements in which a school employee who goes to work full time for a teachers union remains an employee of the district for purposes of collecting a government pension.” This came to light as a result of Michigan Capitol Confidential breaking several stories about the past three Michigan Education Association presidents entering special deals where they worked for a private union but continued to be officially “employed” and paid by school districts. This scheme allowed them to count their time and earnings with the MEA as credits toward their taxpayer-funded pension, artificially boosting their eventual payout compared to what it would have been based strictly on their time and pay actually working as public school employees.
By Jack McHugh
Now with one click you can approve or disapprove of key votes by your legislators using the VoteSpotter smart phone app. Visit votespotter.com and download VoteSpotter today!
House Bill 4738, Increase gas and diesel tax: Passed 20 to 18 in the Senate
To increase the state gasoline tax from 19 cents per gallon to 26.3 cents starting in 2017, and after that index the amount to inflation. Also, to increase the state diesel tax from 15 cents to that same 26.3 cents per gallon level, plus inflationary increases.
If you think the rule of law and fiscal responsibility are key components to growing economic prosperity in Michigan, you probably don’t often look to Illinois for new policy ideas. But there’s at least one lesson Michigan could borrow from the Land of Lincoln: full electricity choice. A recent study from the Compete Coalition estimates that electricity consumers in Illinois saved $41.3 billion from 1999 to 2014 as a result of the state opening up its electricity markets. The state now features the lowest electricity prices in the Midwest.
Lawmakers in Lansing have been debating a series of bills aimed at increasing the amount of money available to repair Michigan roads. The House plan, which passed in late October, would provide $1.2 billion to repair roads by raising fuel and vehicle registration taxes to the tune of $600 million over time, and dedicating $600 million over time from increasing income tax collections.
There was welcome news recently as the Communist ruling party in China announced that it would loosen restrictions on the number of children couples are allowed to have. For 35 years, most people were limited to having only one child.
China instituted the policy in 1979 as a “temporary measure” to curb its population and, according to the Associated Press, to “limit the demands for water and other resources.” The AP adds, “The government credits the one-child policy with preventing 400 million births and helping lift countless families out of poverty by easing the strain on the country's limited resources.”
With the right tools and the right people, sound government can be an achievable goal. Consider the case of the Traverse Area District Library. About 10 years ago, during the housing boom, the library was flush with cash. That sounds like a desirable problem, but it was not.
By Jack McHugh
Now with one click you can approve or disapprove of key votes by your legislators using the VoteSpotter smart phone app. Visit votespotter.com and download VoteSpotter today!
House Bill 4195, Limit some government “venture capital investment” spending: Passed 36 to 0 in the Senate
By Kahryn Riley
On Oct. 27, the Michigan Senate Judiciary Committee met in Lansing for a hearing on two bills that address an aspect of overcriminalization that has been the subject of many Mackinac Center studies and commentaries, namely, the failure of criminal statutes to specify a culpable mental state for the commission of a crime. The bills were Senate Bill 20, sponsored by Sen. Mike Shirkey, R-Clarklake, and House Bill 4713, sponsored by Rep. Ed McBroom, R-Vulcan.
The school pension system is in dire need of reform. It owes school employees and retirees $26.5 billion — 13 times more than the state owes its general obligation bondholders. Yet some policymakers think that they have already solved the problem with changes to the system made in 2010 and 2012. What has happened since shows why the state needs to get out of the defined-benefit pension business entirely.
By Jack McHugh
Both the Michigan House and Senate have included a provision in their competing road funding proposals to cut the state income tax in 2019, but only if the amount of revenue deposited in the state general fund increases at a rate faster than inflation.
REI recently announced it will be closed on Black Friday this year. The outdoor retail chain says it is encouraging its 12,000 employees from 143 locations to make a new tradition of spending time outside that day rather than shopping.
In years past, like many other retailers, REI offered customers special deals the day after Thanksgiving. But now, REI is hoping to capitalize on the idea that a lot of people are turned off by holiday shopping around Thanksgiving. It launched an #OPTOUTSIDE campaign, encouraging the public to upload personal photos of their outdoor adventures or use photos provided by REI to try to convince others to spend Black Friday at a lookout spot rather than a check out line.
By Jack McHugh
Now with one click you can approve or disapprove of key votes by your legislators using the VoteSpotter smart phone app. Visit votespotter.com and download VoteSpotter today!
House Bill 4738, Increase gas and diesel tax: Passed 56 to 50 in the House
To increase the state gasoline and diesel taxes to 22.3 cents per gallon starting Oct. 1, 2018, and after that index the amount to inflation. The current gas and diesel tax rates are 19 cents and 15 cents per gallon, respectively. The bill would increase the diesel tax to 19 cents on Oct. 1, 2017.
Last night, the state House passed a road funding package that will raise $600 million in new revenues to help fund road repair and improvements. An additional $600 million for roads would be redirected over time from the state’s income tax.
While not ideal, this plan is better than the one the state came up with earlier this year when it tried to extract $2.0 billion from taxpayers via Proposal 1. The reader will recall that the proposal failed by a historic 80-20 margin. The new revenues from tax and fee increases expected to be generated by the yesterday’s House bill amount to only half of what Gov. Rick Snyder has long wanted. The entire package would be completely phased in by 2021.
With a high number of drivers exceeding the posted speed limits on Michigan interstates and rural highways, one has to wonder why anyone would oppose legalizing higher speeds. For insight, look no further than the five hours of testimony before the House Transportation and Infrastructure Committee on House Bills 4423 to 4427 given on Sept. 29, Oct. 6 and Oct. 13. The bills modify speed limits on roads to reflect what is known as the 85th percentile, or the speed not exceeded by 85 percent of drivers.
Opponents of electricity choice make two common arguments against injecting more competition in the energy industry: it will lead to higher prices and it will decrease investment in new energy generation. Fortunately, data are available to assess each of these claims, and a recent report by the Compete Coalition, a group of hundreds of electricity stakeholders, does just that.
Gov. Rick Snyder recently signed into law a package of bills that institutes new limits on how civil asset forfeiture is conducted and reported.
The new laws increase the standard for a forfeiture from a preponderance of the evidence to the more stringent clear and convincing standard. They also require greater disclosure from law enforcement agencies about the property and profits from seizures.
By Jack McHugh
Now with one click you can approve or disapprove of key votes by your legislators using the VoteSpotter smart phone app. Visit votespotter.com and download VoteSpotter today!
Senate Bill 103, Reduce “student growth” portion of teacher rating criteria: Passed 97 to 8 in the House
