The Kalamazoo Valley Enforcement Team, which is a joint operation of police officers from the cities of Kalamazoo and Portage created to run drug investigations, then used an informant to agree to be a prostitute for the sting operation.
On March 31, 2016, a Western Michigan University student answered the fake advertisement. When he paid the informant $100, police were listening from an adjoining hotel room and through the door. The student was not arrested but admitted to paying for sex.

The WMU student was never charged with a committing a crime because this would have required the police to name the informant. Yet police seized his cellphone and $100 anyway and kept it through a process known as civil asset forfeiture.

In Michigan, one in 10 people whose property is taken and kept by police in forfeiture actions is never charged with a crime. A state report shows that more than $15.3 million in cash and property was forfeited last year.

That WMU student was one of 523 people who had seized property forfeited without being charged with a crime. In this case, police created the circumstances for the crime to be committed and then did not charge the individual they lured. But they did keep his money and cell phone.

Michigan Capitol Confidential has sent Freedom of Information Act requests to dozens of local and state agencies asking for the reports involving cases in which property was seized and then forfeited to police. The information for this story came from the public records received from a FOIA request.

The Kalamazoo Department of Public Safety and City Manager Jim Ritsema didn’t respond to emails seeking comment.

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DECEMBER 2017

IRON MOUNTAIN SCHOOLS DRAWS FLAK FOR NOVEL HOMESCHOOL CO-OP
'I don’t think it’s a fair way of doing it,' says neighboring superintendent
By Evan Carter, Nov. 15, 2017

A school district near the Michigan-Wisconsin border in the Upper Peninsula is getting pushback over the structure and funding of a co-op it runs with some homeschool families in the area.

The resistance is coming from other schools in its area. The co-op offers virtual courses on subjects like Spanish, cooking and gymnastics, but also offers regular off-campus activities that allow local experts, who aren’t necessarily licensed teachers, to give hands-on instruction.

The homeschool co-op not only provides classes to homeschool families, but Iron Mountain also receives partial per pupil funding from the state for each student who takes an online course. It is currently working to reduce more than $427,000 in debt.

Allowing homeschool students to take noncore classes at public schools – subjects other than science, math, language arts and social studies classes – is not new for Michigan public schools. But the practice of offering regular off-campus activities that are connected to the class differs from what has typically been offered before.

Ben DeGrow, director of education policy at the Mackinac Center for Public Policy, said he sees these types of partnerships as a positive development that provides families a wider range of options to help children succeed.

“More and more Michigan parents are being drawn to these homeschool partnerships as a way to enhance their ability to customize their children’s learning,” DeGrow said. “Districts that embrace the partnership model get the opportunity to learn innovative approaches that help them serve all students better.”

Opponents of this type of homeschool co-op claim Iron Mountain is skirting the rules set up to govern programs offered by school districts to nontraditional students. Since the Iron Mountain school district offers off-campus activities connected to the classes during the school day, some opponents, like Craig Allen, superintendent of Breitung Township Schools, say the programs aren’t truly available to all students.

Allen said he isn’t opposed to public school co-ops with homeschool families in general. But he doesn’t agree with how Iron Mountain’s co-op is set up.

“This new-wave homeschool partnership is to offer classes for homeschool students and to offer classes in a segregated way. I don’t think it’s a fair way of doing it and traditionally not what shared time was about,” Allen said.

In an interview with Michigan Capitol Confidential, Iron Mountain Superintendent Raphael Rittenhouse defended his school district’s program, saying that conventional public school students can set up their schedules so they can attend the off-campus activities.

According to Rittenhouse, the real disagreement between his school district and the surrounding ones is Iron Mountain’s frequent use of off-campus activities, which he believes have made them popular with homeschool families.

Offering online courses or even allowing homeschool students to take noncore classes at their local public school is not uncommon.

“Everybody is using the same resources that are available to run school districts,” Rittenhouse said. “There’s nothing being done here in Iron Mountain that isn’t being done somewhere else. This is a question of scale.”

Emelie Fairchild has six children who range from kindergarten to high school in the co-op program, where she helps teach Spanish. Fairchild appreciates the extra hands-on learning experiences the co-op provides for her children, not only for the educational value but also because her children can make friends with other kids their age.

“My kids would probably tell you that, that is the most fun part of the class,” Fairchild said. “The [hands-on activities] are the bonus and that’s the most fun part of the class.”

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NOVEMBER 2017

TAXPAYERS DESERVE TO KNOW DETAILS OF BUSINESS SUBSIDY DEALS
State officials are hiding what should be public information
By James M. Hohman, Oct. 5, 2017

Businesses that inked special deals with the state are going to collect $681 million from taxpayers this year. But residents cannot be told which businesses are cashing in and how much each gets. This is a failure of basic government transparency.

As a citizen, you are entitled to know how your government is spending your money. The state and local governments put a lot of effort into this — for instance, posting every annual financial report of every government and every contract the state agrees to.

And, with few exceptions, people can access any government document available with a Freedom of Information Act request. That includes detailed records of spending by governments, even checkbook registers and credit card statements. A simple FOIA request is all that is needed, for instance, to find out how much your school district spends on paper clips.

All of this shows how abnormal it is that the state does not disclose the recipients of a large number of business subsidy programs. Some of this information is available: There’s a report on the recipients of certain programs here, but not all of them. The subsidies that are delivered through tax credit programs are deemed to be confidential information.

They shouldn’t be. These deals allow select companies to collect dollars — in the form of refundable tax credits — from other taxpayers and have contracts with the state that determine the size of the subsidy. These are subsidies administered through the tax code.

There are some obvious reasons why this information should be public. Economists can use it to determine the full costs and benefits of the program. It can be used to compare the alleged benefits of this spending to that of other state programs or government services. And it can be used to hold politicians accountable.

But there is a more important reason: Citizens should be entitled to it. This is their money that is being spent and they deserve to know who is getting it and what they are getting in return.

Thankfully, some lawmakers also think that the public has a right to know where all their taxpayer dollars are going. Rep. John Reilly, R-Oakland Township, introduced bills that would allow this information to be disclosed. It’s a simple bill that would clarify that payments through these programs are disclosable.

And that’s the kind of thing that both Republicans and Democrats should support. It’s bad enough that subsidy programs put select businesses ahead of the taxpaying public and businesses that don’t find favor with politicians. These groups ought not have to foot these bills under a veil of secrecy.

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OCTOBER 2017

THE QUIET GOOD NEWS: US ECONOMY IS DOING REALLY WELL
Middle-class incomes are setting new highs, poverty is down, yet no one’s talking about it
By Tom Gantert, Sept. 13, 2017

The median household income of Americans grew to an all-time high of $59,039 in 2016 according to a U.S. Census Bureau report released Sept. 12. That’s a 3.2 percent increase from the 2015 median of $57,230.

The nation’s poverty rate, meanwhile, is down, falling to 12.7 percent in 2016. This is very close to the 12.5 percent rate that prevailed in 2007, before the Great Recession of 2008-09 and the slow-growth recovery that followed. In 2010 the national poverty rate was 15.1 percent.

While 40.6 million Americans still lived in poverty in 2016, that was 2.5 million fewer than the previous year, according to the Census Bureau.

“Has anyone noticed how well the economy is doing?” said University of Michigan economist Don Grimes. “Middle-class income at the highest level ever and the poverty rate back to where it was before the recession. Where is the champagne?”

Data on Michigan median household income and poverty rates will be released later this month.

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SEPTEMBER 2017

STATE OF MICHIGAN'S GREAT LAKES INVASIVE CARP CHALLENGE
Crowdsourcing the state’s carp strategy
By Jason Hayes, Aug. 9, 2017

On Aug. 1, the state of Michigan posted its Great Lakes Invasive Carp challenge on the Innocentive.com website. The announcement began:

The State of Michigan has appropriated 1 million dollars for a Challenge seeking to prevent the movement of invasive carp species into Lake Michigan from the Illinois River through the Chicago Area Waterway System (CAWS). The Seeker is looking for new and novel ideas to function independently or in conjunction with those deterrents already in place to prevent carp movement into the Great Lakes or other locations.

Reading through the challenge can be initially unsettling for two distinct reasons.

First, the threat of Asian carp becoming established in the Great Lakes should bother all of us. Two of the species grouped under the umbrella of “Asian carp” – bighead and silver carp – can grow up to 100 pounds and four feet long, and can eat as much as 40 percent of their body weight each day. Both species are so effectively intrusive that researchers compare them to cancer cells. When introduced into a lake or river system, their populations can grow so rapidly that they take up most of the available nutrients and space. Eventually, they push the native fish species out. Missouri’s Department of Conservation estimates that these carp species make up 95 percent of the biomass in some Missouri rivers.

If Asian carp become established in the Great Lakes, they could decimate Michigan’s fisheries and would have a significant negative impact on Michigan’s $2.43 billion fishing industry.

Second, the announcement suggests government may not be up to the task of stopping invasive species. While the Department of Natural Resources does have an invasive species plan, it doesn’t appear to provide an answer to the problem. That can be unsettling for those who believe that government should have answers to difficult management questions.

The economist Friedrich Hayek provides a word of caution and hope here. In his 1945 paper, The Use of Knowledge in Society, Hayek provides an interesting look at the idea that government can always have answers to important questions.

Knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. … The ‘data’ from which the economic calculus starts are never for the whole society ‘given’ to a single mind which could work out the implications and can never be so given.

He was saying that one person or group can’t possibly be the source of all wisdom on a given topic. And although we must admit that the knowledge dispersed throughout our population may not have the answer to the invasive species challenge, when pulled together in a coherent form, it is far more likely to contain an answer.

Faced with the reality that they have a legal and financial responsibility to tackle the issue, but have not yet solved it, DNR officials have reached out for help. They should be applauded for their willingness to crowdsource novel ideas for this challenge. Applying an economic incentive – in the form of a financial reward – may also help to encourage creative responses.

Using incentives to gather dispersed knowledge on an important issue is a far superior option to hunkering down and relying on a single entity – in this case the DNR – to possess all knowledge on invasive species. This $1 million expense appears imminently reasonable when weighed against the potential losses to Michigan’s fisheries if Asian carp do become established in the Great Lakes.

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JUNE 2017

HOW MUCH ARE GOLDFISH WORTH? $4.3M IF CALLED 'GREAT LAKES RESTORATION'
Legislator wanted Michigan taxpayers to replace federal spending cuts
Michigan Capitol Confidential, May 8, 2017

When President Donald Trump proposed eliminating $300 million in annual spending labeled the Great Lakes Restoration Initiative, many politicians and media voices warned of catastrophic consequences for the nation’s largest bodies of fresh water.

The money is disbursed through hundreds of grants to state and local governments, universities, Indian tribes and others, often for activities that have little to do with the lakes. Previous stories here have described it being spent on better moose management in Minnesota, training Mohawks to write fish advisories and reverting an Ottawa County golf course to a “more natural state.”

Yet a Democratic member of the Michigan House of Representatives recently tried to backfill any reductions to this spending with money collected exclusively from Michigan taxpayers. State Rep. Kristy Pagan, D-Canton, proposed an amendment to next year’s state budget on May 2 that would have allocated $37.5 million for this, mostly from state income tax collections. Pagan’s amendment failed on a voice vote.

A $4.3 million project in Chicago shows the tenuous relationship between these federal grants and the stated intention of restoring the Great Lakes. Approved in 2013 and scheduled to be completed by 2019, it would replace 162 acres of pond and marsh on the city’s south side with savanna and grassland riparian habitats.

One benefit of the $4.3 million project, as stated by Jackson Park Advisory Council President Louise McCurry, would be exposing city children to a native habitat. McCurry also said in a local newspaper that the money could control goldfish and carp, considered invasive species, that were in the park’s lagoon.

Jackson Park is along the shore of Lake Michigan. The original park was designed by Frederick Law Olmstead as part of the 1893 world’s fair called the World’s Columbian Exposition. It is also the intended site of the Barack Obama presidential library.

Spiffing up a Chicago park may have value for the city, but that project shows how far this spending veers from the goal of “cleaning up and maintaining” the Great Lakes, which many media stories and politicians claim is the purpose.

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MAY 2017

PLANTING TREES IN VACANT LOTS TO SAVE GREAT LAKES
Michigan Capitol Confidential, April 4, 2017

The city of Detroit received $1 million from a federal spending program called the Great Lakes Restoration Initiative in 2014 for two projects.

The city would turn 40 publicly owned vacant lots into green space consisting of meadows, trees and other vegetation. And it would also install drainage ditches and porous pavement on roadways and developed sites near the Recovery Park area, about 3 miles north of downtown. Both federally-funded projects were intended to deal with rainwater runoff.

President Donald Trump's budget proposes cutting most Great Lakes Restoration Initiative spending, which has prompted critics to say the funding is critical to protecting the Great Lakes.

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MAY 2017

HOW LANSING DODGES TAX CUTS
Never admit state government is taking more
Michigan Capitol Confidential, March 31, 2017

In a March 29 newspaper story about Gov. Rick Snyder’s proposed budget, Democratic politicians warned about “de-investment” in the state.

“In my opinion, Michigan has been a state where we’ve de-invested in so many things, that I’m not looking for de-investment now,” said Sen. Curtis Hertel Jr., D-Meridian Township, in a report out of The Detroit News. “If we want to give tax relief to the middle class, we can do it by actually making sure that corporations pay some part of their fair share.”

State Rep. Yousef Rahbi, D-Ann Arbor, echoed Hertel’s comments about more investment needed in the state.

ForTheRecord says: Most of the political establishment in Lansing appears determined never to acknowledge that the amount of taxpayer money flowing into the Michigan Department of Treasury has risen every year since 2010-11. They instead try to create a perception of continual belt-tightening.

This bipartisan party line makes it harder to pass even a modest tax cut, as the Speaker of the House and most of the Republican caucus discovered in a failed Feb. 23 roll call vote on a 0.2 percent income tax cut.

State spending from state taxes and fees — not including federal money — has risen for seven consecutive years and is projected to rise again for an eighth time in the 2016-17 fiscal year.

The state spent $25.2 billion in 2009-10 and its spending in the current fiscal year will reach $31.1 billion. Snyder’s budget proposes to make state spending climb to $31.9 billion next year. These figures do not include federal dollars in the budget.

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APRIL 2017

$581K IN GREAT LAKES RESTORATION MONEY FOR MOHAWK TRIBE TO TALK FISH, TRIBAL BELIEFS
Michigan Capitol Confidential, March 20, 2017

Opponents have loudly criticized President Trump’s proposal to stop spending $300 million annually on a Great Lakes Restoration Initiative, some calling it “critical.”

One of the program's line items was $581,851 in 2010 to help the St. Regis Mohawk Tribe write advisories for members and “communicate benefits and risks of consuming fish caught from the St. Lawrence River Basin.” The project would also “engage the community in the design and development of new fish advisory communications, increase awareness and understanding of advisory messages, and maintain and respect traditional tribal customs and beliefs.”

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APRIL 2017

$135K TO STUDY INSECTS CALLED 'GREAT LAKES RESTORATION'
Michigan Capitol Confidential, March 14, 2017

Michigan State University was given a $135,668 grant from the Environmental Protection Agency in 2010 via the Great Lakes Restoration Initiative. The money was to be used to study the Mitchell’s Satyr butterfly and the Hine’s Emerald dragonfly in the Great Lakes region.

A document from a White House budget office suggested possible reductions in Great Lakes Restoration Initiative spending. In an editorial, the Detroit Free Press called reductions to the initiative “irresponsible.”

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APRIL 2017

$750K 'GREAT LAKES' GRANT INCLUDED REVERTING GOLF COURSE TO NATURAL STATE
Michigan Capitol Confidential, March 10, 2017

Ottawa County's parks department bought the 122-acre Holland Country Club in 2008. The county then received a $750,000 Great Lakes Restoration Initiative grant from the U.S. Environmental Protection Agency in 2010. Part of that money was used to restore 62 acres of golf course turf grass to a more natural state.

According to a White House budget document reported by different media outlets, the president’s budget will include large cuts in the ongoing Great Lakes Restoration Initiative.

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APRIL 2017

GREAT LAKES CASH 'CRITICAL' -- REALLY?
Michigan Capitol Confidential, March 6, 2017

In 2010, Michigan State University received $1.5 million in taxpayer dollars from the “Great Lakes Restoration Initiative,” a federal initiative. According to MSU, the money paid for researchers to “work with physicians and other health care providers in Michigan to provide them with the tools and information they need to identify at-risk patients and inform them of the benefits and potential dangers of eating fish.”

President Donald Trump has been criticized in the media for proposing cuts to the Environmental Protection Agency’s budget. These include money for the programs and grants covered under the GLRI rubric. One newspaper headline read: “Trump to Great Lakes: Drop dead.” U.S. Sen. Debbie Stabenow said the spending was critical and the cuts outrageous.

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MARCH 2017

WHAT HAPPENS WHEN THE ECONOMIC DEVELOP CORPORATION ENDS?
State Could Save Millions by Stopping Ineffective Subsidies
By James M. Hohman, Jan. 24, 2017

In April 2019, the administrator for the state’s economic development programs, the Michigan Economic Development Corporation, will officially close. The closing ought to force lawmakers to reassess the state’s economic development policies.

The MEDC is an “interlocal agency,” created by an agreement between the state’s Strategic Fund Authority and a number of local government economic development agencies. This agreement has a 10-year term and, by agreement, can be renewed for two five-year terms.

Its partners renewed the organization by default in 2009 and in 2014, and the agreement creating the agency will dissolve in 2019.

Even if the state wants to keep administering its economic development programs, the MEDC ought to go away. There is no point to having a quasi-state agency do it.

The MEDC is not a third party entity since the state has direct control over its operations. It makes economic development activities more complex, with no benefit. The state still runs its own economic development agency, the Michigan Strategic Fund, but currently has to have an agreement with the MEDC to delineate each party’s responsibilities.

But the state’s economic development activities do little good in the first place. As we’ve argued before, these programs are more about press releases than job creation, they invite corruption and they do not justify their costs. Taking money from some people and giving it others through a political process in the name of job creation has been a losing policy.

The state is spending $181 million a year on economic development programs. The MEDC gets additional income from the state Indian Gaming Compacts, and the state would need to agree on what to do with that money if the MEDC is eliminated.

But that money is only a portion of the savings Michigan would reap from eliminating the state’s economic development apparatus. The MEDC’s financial statements report that the organization has $98 million in unrestricted non-capital assets — money lawmakers can direct elsewhere. If the state is out of the selective subsidy game, it should also reconsider the fund balance of the 21st Century Jobs Fund, which stands at $81.6 million, and it should consider selling any of its speculative financial investments. Financial reports indicate a $147 million fair market value for its investment programs, for instance. Exactly how much can be directed elsewhere if the MEDC and its programs end is a good question for legislators to ask.

All told, there is likely more than half a billion that can be saved and spent elsewhere if the MEDC closes and the state stops its business subsidies.

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JANUARY 2017

MICHIGAN'S PENSION BUREAUCRATS MISLEAD POLICYMAKERS AND THE PUBLIC
Friday, Dec. 2, 2016

Midland — Pension managers who oversee Michigan’s school pension system testified Wednesday in a Michigan Senate committee that a reform bill lawmakers are considering would cost the state billions in upfront costs. Their analysis of Senate Bill 102 is inaccurate as the bills explicitly prohibit the state from incurring these added expenses, as they are entirely optional.

Legislators are considering offering new school employees 401(k)-style retirement plans instead of adding them to Michigan’s school employee pension system, which carries $26.7 billion of unfunded liabilities. The move would keep Michigan from making pension promises to future teachers that it may be unable to keep. But representatives of Michigan’s Office of Retirement Services misleadingly claimed in testimony that this would lead to massive “transition costs,” arguing that the state needs to follow so-called “best practices” of public pension finance.

ORS’s claims are false and should be disregarded. So-called “transition costs” had been the main objections to previous attempts to reform the pension system, so the legislation currently under consideration in the Senate was written to specifically prohibit the state from incurring these optional costs. ORS’s own testimony showed they had not taken that language into account and were instead analyzing previous versions of legislation no longer on the table.

Additionally, ORS’s sudden commitment to “best practices” flies in the face of the department’s repeated willingness to ignore prudent pension funding practices.

“ORS presides over a retirement system that has been underfunded for 33 of the past 34 years,” said James Hohman, assistant director of fiscal policy at the Mackinac Center. “They’ve used far-from-best practices to shortchange the dollars going into the system and their mismanagement has made retirees the largest creditors to the state.”

Additionally, examples of ORS’s failure to maintain or ignore other pension-funding “best practices” include:

•Continuing to assume that school payroll will grow 3.5 percent annually when it has steadily decreased. From 2008 to 2014, school payroll fell 15 percent — ORS assumed it would increase by 23 percent and has not changed this assumption moving forward.
•Pledging retirement assets to guarantee the bonds on a speculative movie studio.
•Failing to pay the annual required contributions of the pension system 14 out of last 20 years.
•Rejecting state auditors’ recommendations to lower payroll growth assumptions and warnings about optimistic investment return assumptions.

ORS representatives claimed SB 102 would trigger five different additional costs and only one of those is legitimate. That additional cost comes from offering new employees benefits that would be more generous than are offered under the current "hybrid" retirement plan. The other costs are optional or prohibited by SB 102. It’s clear that ORS did not read, did not understand or did not tell the truth about the legislation.

“Lawmakers and workers who depend on state systems for their retirements should be outraged that ORS seems more interested in protecting the status quo and their jobs than accurately analyzing and representing the legislation under consideration,” Hohman added. “The current state of affairs is bad for teachers, bad for kids in schools being shortchanged by pension funding requirements and bad for taxpayers who are stuck with the bill.”

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OCTOBER 2016

MICHIGAN HOUSE PASSES BILLS ROLLING BACK ARBITRARY 'HANDYMAN' LICENSING
Projects costing less than $4,000 would face fewer restrictions
By Jarrett Skorup, Sept. 24, 2016

Some contractors, like roofers, would see fewer requirements.

If you want to earn some cash in Michigan painting a barn, be prepared to take 60 hours of educational courses and pass a state-mandated test. It will set you back hundreds of dollars in total. But to obtain an amateur pilot’s license, the Federal Aviation Authority mandates only a book and flight test with 40 hours of flight instruction.

The state of Michigan licenses nearly 200 occupations, including more than dozen “maintenance and alternations” contractors. But a review of who is required to be licensed and who is able to work legally without state permission is seemingly arbitrary. A new bill lessens restrictions on many contractors while preventing mandates on those doing limited amounts of work.

If you put up siding in Michigan, you are required to have a license — but if you build a fence you are exempt. Laying down wood food floors is subject to extra mandates; laying down carpet or vinyl is not. Putting up drywall is no problem, but painting that wall requires a license. Siding means extra hours and fees, but constructing a fence does not. Paving with asphalt requires no license, laying down concrete does. Moving a house can be done unregulated; wrecking a house requires a license.

Most contractors have to take 60 hours of licensing classes, pass a $160 test and pay $125 worth of state fees. The continuing education classes mandated by the state cost hundreds of dollars.

House Bill 4282 is sponsored by Rep. Ray Franz, R-Onekama and was recently passed by the Michigan House. The bill would drop the number of class hours for residential maintenance and alteration contractors down to five. It would also exempt from stringent licensure any person who worked on projects that cost less than $4,000. The current limit is $600.

Michigan licenses many different types of contractors that other states do not. The proposed law would allow people the ability to choose from a larger pool of contractors, while the burdens on people trying to work would be lessened.

“It can quickly become overly burdensome to be required to hire a licensed residential builder or contractor to perform everyday projects or improvements to your house,” said Franz in a statement. “Even simple projects can get very expensive. There needs to be a system in place to make sure people aren’t charged an arm and leg for a small job.”

A companion bill, House Bill 4281, would eliminate the fees for the deregulated jobs. It also passed.

“Hiring a family friend or neighbor to complete a project on your house is much easier,” Franz added. “In some cases, it can make a person feel more comfortable hiring someone they know. Requiring a licensed residential builder for something a friend or relative could do with ease seems unnecessary.”

The bill was approved 66-40, with all Republicans and some Democrats in favor.

Over the past few years, the Michigan Legislature has been the most active in the nation when it comes to licensing reform. The state has eliminated hundreds of work rules and repealed seven licenses. But most of those have been relatively minor — like ocularists and community planners — affecting only a small number of people. If the bill overseeing trades workers passes the Senate, it would be a major government obstacle removed from in front of workers.

“By raising the threshold for minor home repair projects, the bill would provide welcome relief to handymen across the state,” said Lee McGrath, the legislative counsel for the Institute for Justice, which works to lessen licensing requirements. “Homeowners shouldn’t have to fear Michigan’s array of arbitrary and costly contractor licenses to fix up their own homes.”

The licensing for larger scale residential builders, who build homes from the ground up, would not be significantly changed. The bill mostly affects the following occupations: carpentry, concrete, excavation, insulation work, masonry, painting and decorating, siding, roofing, screen and storm sash, gutters, tile and marble, house wrecking, swimming pools and basement waterproofing.

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OCTOBER 2016

STATE'S '21st CENTURY FUND' SPENT $100 MILLION FOR JUST 1,052 JOBS
'. . . You're going to be blown away' promised previous governor about these subsidies
By Derek Draplin, Sept. 16, 2016

The state’s 21st Century Investment Fund (CIF) has spent nearly $100 million on various types of subsidies and other forms of involvement in businesses since 2006, yet only 1,052 jobs have been created or retained because of it, according to the fund’s 2015 report. In addition, some investment groups received millions through the fund but created zero jobs and no proceeds.

The state describes the fund as a program that “encourages the growth of emerging Michigan companies, diversifies the state’s economy by creating and retaining knowledge-based jobs and grows a community of investors to create a long-term, sustainable capital ecosystem within Michigan.”

According to the report, $98.5 million in so-called “capital called for investments,” or money spent by the state, has been used for investments.

"In 2005, policymakers deluded themselves into putting tax money into high-risk investments to pump up the economy," said James Hohman, the assistant director of fiscal policy at the Mackinac Center for Public Policy. "Since then, there have been millions spent and little to show for it."

A number of examples are cited.

Nth Power IV, which the report lists as a venture capital firm in Detroit, got $8.9 million of a $10 million commitment from the state and created $400,000 in proceeds and zero jobs.

Microposite, a company that produced environmentally friendly siding products before going out of business in 2009, got $1.6 million from the state but created zero jobs. The state got back $55,737 in proceeds.

Quad Partners II received $9.8 million of a $10 million commitment for private equity investment from the state, but the investment created zero proceeds for the state and zero jobs.

Relativity I also created zero proceeds and zero jobs despite receiving $6.1 million from the state’s investment fund.

Midwest Mezzanine IV got $9.6 million and $6.3 million was returned to the state, but zero jobs were created.

Not all the investments have been failures. Arboretum II received $7.1 million for venture capital yet had $78 million in proceeds for the state and also created 49 jobs.

Arboretum III got $8.3 million for venture capital investments and created 199 jobs, but the state only got back $200,000 in proceeds, according to the report. Pegasus Fund IV received $9.1 million, got zero back in proceeds, but created 250 jobs.

The investment fund uses four different types of investments: venture capital investments, private equity investments, mezzanine investments, and direct investments.

The program was created by the Public Act 225 in 2005 and was sponsored by former Rep. Bill Huizenga, R-Zeeland.

The fund’s updated progress report including 2015-16 is being released today. The Michigan Economic Development Corporation did not respond to emails seeking comment.

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SEPTEMBER 2016

MICHIGAN TO WRITE $1 BILLION IN SECRET CORPORATE WELFARE CHECKS IN 2016
Which firms get the money? Taxpayers kept in the dark
By Tom Gantert, July 29, 2016

The state of Michigan will write more than $1 billion in subsidy checks this year to favored businesses selected by politicians and government economic development officials. These are dollars paid by Michigan taxpayers, which the state then redistributes to corporate beneficiaries.

The subsidy checks are styled as "refundable tax credits," and a significant portion of them were approved during a subsidy binge in the last two years of former Gov. Jennifer Granholm's administration, in 2009 and 2010. Each company has its own agreement with the state, and many of the agreements call for tax breaks and cash payments for as long as 20 years.

Many of these credits were not designed to encourage companies to make new investments or hire more people. Instead, the deals were offered to companies (including the Big 3 automakers) in return for them simply “retaining” existing jobs and facilities.

Companies have some discretion over when to claim these credits, which means the Department of Treasury never knows for certain how large the bill will be in any year. According to the Senate Fiscal Agency, as of June, the state has already written checks to companies totaling $851.5 million. The state’s fiscal year ends Sept. 30.

The law that authorized the handouts originated in the administration of Republican Gov. John Engler. It created an entity called the Michigan Economic Growth Authority (MEGA) with the power to give subsidies. Republicans and Democrats alike later changed the law many times to expand and loosen the criteria for granting subsidies.

The state stopped awarding new MEGA credits in 2012. They were replaced by a smaller subsidy granting regime. Not counting the MEGA credits, these and some other subsidy programs will cost the state another $217 million this year.

The Michigan Economic Development Corporation oversees the state’s corporate welfare programs, including MEGA, and refuses to say which businesses get the payments or how much they are paid.

“The state is expected to give over $1 billion of other people’s money to companies it selected for favors. It’s bizarre that taxpayers are not allowed to be told which ones are collecting,” said James Hohman, the assistant director of fiscal policy for the Mackinac Center for Public Policy.

The MEDC didn’t respond to an email seeking comment.

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AUGUST 2016

COURT OVERRULES LICENSING BOARD, EXONERATES VET WHO SAVED DOG
Reality TV viewer complained after Dr. Pol helped Mr. Pigglesworth
By Derek Draplin,| July 12, 2016

Veterinarian and reality TV star Dr. Jan Pol. Photo via Nat Geo Wild channel.

The Michigan Court of Appeals handed down a ruling in what it called the “Curious Case of Mr. Pigglesworth,” exonerating celebrity veterinarian Dr. Jan Pol of misconduct in a case that spanned five years. Its 3-0 decision overturned a fine and probation for Pol’s supposed negligence that was reported by another veterinarian who had watched his cable television show and took issue with his procedures.

Pol, of Weidman, Michigan, is the star of the TV show "The Incredible Dr. Pol” on Nat Geo Wild, which focuses on his rural Mount Pleasant-area veterinary practice.

In 2011, Pol treated a Boston terrier named “Mr. Pigglesworth” that had been hit by a car. He agreed to keep the cost of Mr. Pigglesworth’s surgery under $300, which was the budget set by his owners, Mable and Loyd Frisbie. The Frisbies, who were longtime customers of the veterinarian, would otherwise euthanize the dog.

Pol removed Mr. Pigglesworth’s damaged eye, stitched lacerations in his mouth and x-rayed his fractured pelvis, which he said would heal. The pet went home with his owners the day after his operation and made a full recovery, the court said.

Despite the successful procedure, a state licensing subcommittee called the Board of Veterinary Medicine punished Pol with a $500 fine and probation. The board acted after a Kentucky veterinarian filed a complaint against the 73-year old doctor, objecting to his treatment of the terrier, which had been documented on the TV show. The board is part of Michigan's Department of Licensing and Regulatory Affairs.

After an investigation, the Bureau of Health Care Services, also part of the licensing department, issued a complaint against Pol, alleging mistreatment of Mr. Pigglesworth. It cited his failure to wear surgical gear (mask, gown, gloves) and to provide the patient with IV therapy. The bureau also faulted Pol for not placing a warming pad or blanket in the dog’s kennel during his recovery.

The complaint also highlighted two violations of the public health code, which allowed for a disciplinary subcommittee to punish Pol with a fee and probation, and require him to take part in continuing education classes.

“As we said in the beginning, this case is curious. A dog’s life is saved, yet the veterinarian faces sanctions,” the court said. “The evidence submitted does not establish a clear standard of care that respondent violated.”

Pol told MIRS News he was "very glad that they came out with this opinion." He added that for clients who can’t afford the best care for their pets, he tries to provide care and avoid euthanasia.

House Speaker Kevin Cotter, R-Mt. Pleasant, who had previously defended Pol, expressed his support for the court’s decision in a statement.

"I am very glad to see Dr. Pol vindicated and justice served in court," Cotter said, according to MIRS News.

In 2013, Cotter sponsored House Bill 5176, which sought to prohibit authorities from investigating reports of misconduct or allegations “based upon information obtained from viewing the broadcast of a reality program.”

The bill, which Dr. Pol testified in favor of, was referred to the House Health Policy Committee in December 2013. The committee held one hearing the following May but never took a vote on the measure. It died with the end of the 2013-14 session and has not been re-introduced.

“This is common sense,” Pol said of the bill. “We all know that not everything we see on television is how it really happens 100 percent of the time. There simply isn’t enough time to show every single step of the process or procedure. By using television editing, my viewers are given a snapshot of what life is like for a rural veterinarian. But we are just as caring and professional as any big city vet.”

Linda VanVoorhis, who described herself as a concerned taxpayer and pet owner, attended an official hearing on the complaint against Pol in January 2015. She also attended the licensing board’s disciplinary subcommittee meeting in March 2015.

"Why in the world the state of Michigan picked up on this complaint from an out-of-state, former veterinarian was beyond [my] comprehension," said VanVoorhis. "The owners of the dog were happy with the dog’s complete recovery and actually brought him to the subcommittee meeting."

VanVoorhis added, "I think it’s ridiculous that as a taxpayer I paid for this judge for an entire day, this courtroom for an entire day, the attorney general’s representative, the prosecutor. That’s a ridiculous amount of money that was wasted. And [Pol] probably paid for attorney fees for four years to get this far."

“A tremendous amount of state time and money was wasted, and I’m sure a lot of agony for [Pol] and his family and his practice,” she said.

Michael LaFaive, who directs the Morey Fiscal Policy Initiative at the Mackinac Center, said the case is another example of regulatory bureaus hampering for-profit service providers.

“Regulatory bureaus are another layer of government that add often unnecessary and sometimes inconsistent applications of force to otherwise peaceful commercial transactions. This is a case in point,” he said. “Both the veterinarian and the owners of the dog assented to the transaction and the latter have testified to being happy with the results. The case should have ended there. Unfortunately, regulatory bureaus provide a means for officious private and public busybodies to interfere with and even attempt to punish for-profit service providers. It is hard not to applaud the court of appeals for their thorough (and sometimes humorous) takedown of this particular bureau.”

LaFaive added that a competitive market is a better solution than regulatory bureaus.

"One reasonable solution to this regulatory overreach is obviously to have less of it. Short of that would be to consider a voluntary alternative. Maintain these bureaus and their work for those who think them necessary, but permit an alternative. If adult customers of veterinarians wish to choose a vet that dispenses with static 'best practices' as defined by some regulatory body, let them alone enjoy the benefits — or the costs — associated with such a decision," he said. "Over time, I believe the evidence would show that the market makes a better regulator than your average state bureau."

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JULY 2016

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APRIL 2016

NEW STUDY SAYS PURE MICHIGAN NOT AS ADVERTISED
By Michael D. LaFaive, Feb. 16, 2016

The Mackinac Center is scheduled to release its study, “Pure Michigan: State Promotion Generates Negative Return on Investment” in March. The early results were released last year and found that state promotion efforts do have a tiny, positive impact in one respect, but on balance remain a net negative for Michigan. The authors make a number of recommendations; chief among them is ending the program altogether.

The Pure Michigan campaign — which marks its 10th anniversary this year — is a taxpayer-funded effort to promote the Great Lake State. As part of its advertising effort it runs attractive television commercials featuring narration by Michigan-born actor Tim Allen. The idea behind the program is to spur more tourism in and to the state and thus encourage economic development. The program is operated by Travel Michigan, a government agency inside the state’s “jobs” department, otherwise known as the Michigan Economic Development Corporation.

To measure the impact that state-subsidized promotion has on the state’s economic fortunes, scholars Michael Hicks and Michael LaFaive built a statistical model around 39 years of data about spending by the 48 contiguous states to promote tourism. The model attempts to take into account other factors that might drive tourism spending. These include geographic features such as distances to a large body of water or mountains, as well as recessions, changes to population and trends in tourism.

Hicks and LaFaive found that every additional $1 million the state of Michigan spent on promoting tourism generated the state’s hotel and motel (accommodations) industry a miniscule amount of additional economic activity, or revenue. In fact, the benefit was so small that it is absolutely swamped by the cost of obtaining it. In other words, the cost of the program cannot justify the benefits. The Pure Michigan advertising campaign is even less impressive if one remembers that the money used to fund the campaign would likely have been spent more profitably had it been retained by taxpayers, or even used for a different public program such as road maintenance.

Unlike the official reports used to justify the Pure Michigan campaign, the Mackinac Center’s analysis is 100 percent transparent. The model will be explained in detail in the study’s appendix and its related dataset made available on the center’s website.

From the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan. Permission to reprint in whole or in part is hereby granted, provided that the author and the Mackinac Center are properly cited.

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MARCH 2016

YOUR TAX RETURN FUNDRAISES FOR THESE NONPROFITS
Politics and lobbying' influence who gets the privilege
By Jack Spencer, Feb. 6, 2016

Determining which nonprofits will be granted the privilege of collecting contributions through the Michigan income tax return and its checkoff options is up to the Legislature. The number of nonprofits that can take advantage of this high-visibility placement is limited by law, and right now there are six candidates for two openings. The checkoff boxes allow taxpayers to contribute tax refund money to a designated grant program or organization.

The openings were created when two checkoffs failed to yield the $50,000 threshold last tax season. (One was for the Girl Scouts of Michigan; a second one covers expenses related to Amber Alerts.) By law, only 10 at a time are allowed, and those that collect less than $50,000 two years in a row get dropped.

“We talked about just getting rid of it [the checkoff list] altogether,” said Rep. Jeff Farrington, R-Utica, who sponsored the bill that eventually became the current law governing the practice, Public Act 151 of 2012. “My concern was that, if we were going to keep doing it, there ought to be some kind of process involved. In the end, we decided to keep the list and adopt new guidelines for how it would operate.”

“The governor said he was willing to allow up to ten charities on the list and so that’s the limit we put in the bill,” Farrington continued. “Under the new law, charities don’t get added to the list arbitrarily. There are requirements and if they don’t meet those requirements they won’t be on the list.”

Leon Drolet, chair of the Michigan Taxpayers Alliance, said his opinion on the checkoff list has changed over the years. Drolet was a state representative from 2001 to 2006.

“When I was in the Legislature my position was that any taxpayer dollar that could be sent somewhere other than to government coffers was a plus. So I wasn’t necessarily opposed to having the list.” Drolet said. “But since then I’ve sort of come over to the view, expressed by the Mackinac Center and others, that government shouldn’t be in the business of creating advantages limited to just certain entities — and that includes charities.”

“It sounds like the new law, to an extent, mitigates some of my objections to the checkoff list,” Drolet continued. “It seems to be an improvement over the way things were done when I was in the legislature. But you can bet that politics and lobbying will still play a major role in which charities get placed on the list. It’s too bad but it really seems like we’re increasingly becoming a society in which less energy and effort is directed toward making sure we’re providing value while more and more is directed toward lobbying.”

One possible change would be to put a blank box on the tax form and allow taxpayers to write in a charity of their choice. But Farrington dismissed that possibility as unworkable.

“That would create a lot of administration problems for the Department of Treasury,” he said. “There are literally thousands of charities; for instance, there are numerous ones just within the Girls Scouts organization. That’s why one of our requirements for the charities on the list is that they have only one specified address for Treasury to use.”

Drolet said he hasn’t given much thought to a blank box approach but he believes there could be intriguing ways to expand upon on the checkoff list.

“Whether it would be practical or not, I think we can be pretty sure that nobody’s lobbying for the blank box,” Drolet said. “But if we’re going to have a checkoff list, how about one where taxpayers could checkoff the government programs they want their tax dollars to go toward? That would be the kind of checkoff list I’d be interested in seeing.”

There are four charities and four government grant programs that will stay for now on the checkoff list. The charities are United Way of Michigan, the Alzheimer's Association of Michigan, ALS of Michigan (Lou Gehrig's disease), and an organization that promotes Special Olympics programs. The four state grant programs are ones that help needy veterans and their families, fund child abuse prevention activities, provide college tuition subsidies for veterans and their children, and promote dog and cat sterilization and adoption.

Lawmakers have to decide by mid-September which two additional charities or grant program checkoffs should be on next year’s tax forms. At this point, six possible replacements are represented in separate bills currently before the Legislature: American Red Cross of Michigan, the Boy Scouts of Michigan, a foundation that supports education opportunities for foster children, Junior Achievement, a prostate cancer screening and awareness group, and the Lions Clubs.

From the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan. Permission to reprint in whole or in part is hereby granted, provided that the author and the Mackinac Center are properly cited.

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DECEMBER 2015

DETROIT PUBLIC SCHOOLS BANKRUPTCY COULD COST THE STATE $3.4 BILLION
Treasury report outlines what Michigan taxpayers would be liable for
By Tom Gantert, Nov. 23, 2015

The Detroit Public Schools' $1.3 billion in pension obligations is the major roadblock to the school district filing for bankruptcy, according to a recent state of Michigan analysis.  That $1.3 billion is how much the district must pay into the pension system from 2016 to 2031, according to Kurt Weiss, spokesman for the state Treasury department.  “Our estimates are actually quite conservative,” Weiss said in an email.  Pension legacy costs for public school employees have skyrocketed statewide, not just in Detroit.  Required employer contributions to the statewide school pension system have increased by 92 percent from 2007 to 2014, increasing from $835 million to $1.6 billion.  Overall, the state projects that if Detroit Public Schools filed for bankruptcy today it would enter the process with $3.4 billion in outstanding liabilities, most of which are owed to the state.

While discussions have taken place over how to fix the troubled school district, some people ask why it just doesn’t file for bankruptcy like the city of Detroit did.  “Unlike the City of Detroit, DPS would not benefit from a bankruptcy as it would predominantly shift liabilities onto other municipalities,” the Oct. 27 report stated.  That’s because the state is ultimately on the hook for so much of the district’s debt that a default would mean less state resources available to back the loans of other school districts and local governments.  The state’s analysis broke down Detroit school debt into three categories — direct, potential direct and indirect.  “Direct” debts are those that immediately fall on the state or statewide municipalities. DPS owes $196 million to a school loan fund, on top of its $1.3 billion obligation to the state-run school pension fund.  “Potential direct” debts are ones for which the state could be liable depending on the details of a bankruptcy ruling. The analysis shows $1.5 billion in long-term bonds in this category.  “Indirect” debts would negatively affect other local and statewide market participants that in turn could default. That includes $464 million in short-term bond/notes and another $50 million in unpaid bills (accounts payable).  Various bailout plans are currently under discussion in Lansing as an alternative to entering federal bankruptcy court. One plan pitched by Gov. Rick Snyder comes with a $710 million price tag.

Permission to reprint this article in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.

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DECEMBER 2015

IF AT FIRST YOU DON'T SUCCEED, SIGN AND SIGN AGAIN
Coalition trying to repeal prevailing wage starts petition drive again
By Jack Spencer, Nov. 6, 2015

After discovering that its first shot at a petition drive had gone awry, the coalition seeking to repeal Michigan’s prevailing wage law is starting over.

“We’re continuing to collect petition signatures,” said Chris Fisher, vice president of Protecting Michigan Taxpayers, the coalition pushing to rid the state of the 50-year-old law. “The June 1 [2016] deadline has not changed. So, we’re getting out there and working to repeal the prevailing wage.”

On Sept. 14, Protecting Michigan Taxpayers turned 388,000 signatures over to the secretary of state, significantly more than the 252,523 required for the measure to qualify as citizen-initiated legislation. But the signatures were challenged and shown to include a high percentage of duplicates. The coalition acknowledged the problem, withdrew the signatures, and is starting over.

“It set us back four or five months,” said Fisher, who is also president of the Associated Builders and Contractors of Michigan trade group. “Now we’re looking at wrapping up the process in the spring instead of this fall. We’re working now with a different signature collecting company to ensure the validity and integrity of the signatures. But we’re still working with the same dedicated volunteers who are standing up for fiscal responsibility.”

Under Michigan’s prevailing wage law, public schools, state government and local governments are prohibited from awarding construction contracts to the lowest bidder unless the contractor agrees to pay wages based on union pay scales on the project. It is estimated the prevailing wage law costs Michigan taxpayers $224 million annually.

The target dates for the repeal effort may have changed, but the ultimate goal remains the same. If Protecting Michigan Taxpayers hands in enough valid signatures before June 1, 2016, the repeal would qualify as citizen-initiated legislation. That would mean the Legislature would be required to take a vote on the measure within 40 days. If the Legislature failed to pass the repeal, it would be placed before the voters on the November 2016 statewide ballot.

Both the GOP-controlled House and Senate have made repealing the prevailing wage law a priority. Reportedly, Protecting Michigan Taxpayers is pursuing the citizen-initiated process to avoid a possible gubernatorial veto. A governor plays no role under the citizen-initiated process.

Permission to reprint this article in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.

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NOVEMBER 2015

STRETCH TAXPAYER DOLLARS AND PROMOTE EQUALITY IN GOVERNMENT: REPEAL THE PREVAILING WAGE
By F. Vincent Vernuccio, Oct. 5, 2015

On Sept. 14, organizers to repeal Michigan’s prevailing wage law submitted almost 400,000 signatures to the state elections bureau.

The 50-year old law requires bidders for construction contracts with state and local governments and schools to pay union-scale wages. It also requires these companies to abide by myriad Byzantine requirements for job classifications and reporting.

Prevailing wage artificially increases the cost of taxpayer-backed construction contracts. A recent study by the Anderson Economic Group estimates that “Michigan’s prevailing wage law has increased the financial obligation for education construction by an average of $127 million per year for the last 10 years.” Education-related construction and repair costs for local governments during the period 2003 – 2012 could have been about $1.3 billion lower without prevailing wage, according the to report.

Repealing the prevailing wage burden will save taxpayers money, result in more jobs, make new schools more affordable and level the playing field for the vast majority of construction workers in the state. 

Timeforrepeal.com, a website published by the Associated Builders and Contractors of Michigan, details the cost to individual schools districts in Michigan. According to the website, Michigan could have built hundreds of  “brand new, average sized elementary schools with the money that was lost to prevailing wage.”

Earlier this year, both Wisconsin and Indiana considered the problems with their own prevailing wage laws — and repealed them. In 1996, Ohio exempted school construction from a prevailing wage requirement; in a 2002 report, the Ohio Legislative Service Commission said the state saved 10.7 percent on school projects as a result.

Michigan is something of an anomaly in the country when it comes to prevailing wage. Eighteen states do not have any prevailing wage law (federal law would apply to federally funded projects). Of the remaining states, only six calculate the wage as Michigan does, which is to only look at union contracts and not all wages in the geographic area of the project.

Almost 80 percent of the construction industry in Michigan is nonunion. Despite its name, the prevailing wage is not the wage most frequently paid, since it is based on data from — at most — only one-fifth of the contracts in the state. That puts the other four-fifths of construction workers at a disadvantage by favoring the small minority of unionized firms. 

According to data cited by The Detroit News there are over 350,000 different wage classifications for Michigan’s prevailing wage, creating what the news outlet calls “a construction company’s red tape nightmare.”

Considering that Michigan has roughly 150,000 construction workers, there are over two job classifications in prevailing wage law for each worker. Construction companies must monitor workers on prevailing wage projects to make sure they comply with the law. This may mean that the same worker may get paid several different rates on the same job depending what work he is doing. Monitoring and complying with the several pay rates increases costs for the employer and, as a result, the taxpayer. 

Companies and as a result taxpayers are paying more to simply comply with prevailing wage regulations; the extra money spent on compliance is not used to actually increase wages.

The law was suspended for two and a half years in the mid-1990s. During this period, economics professor Richard Vedder estimates, more than 11,000 new jobs were created as a result.

Prevailing wage’s close linkage to collective bargaining may be driving jobs out of state. Under state law, 50 percent of people working on state construction contracts must be Michigan residents. According to the Michigan Department of Technology, Management, and Budget, the requirement is waived for employees of companies with collective bargaining agreements. So the very firms the law benefits are exempt from Michigan hiring requirements, meaning they can import out-of-state workers to do Michigan jobs.

Legislative approval of the petition language may happen this fall; if it does, the measure would bypass the need for Gov. Rick Snyder’s signature and automatically become law. If the Legislature does not give its assent, voters will decide in the November 2016 election.

The governor reportedly made a backdoor deal with unions to oppose a repeal in exchange for organized labor’s backing of the disastrous spring ballot proposal for a tax hike for roads and a bevy of other issues.

Repealing the prevailing wage burden will save taxpayers money, result in more jobs, make new schools more affordable and level the playing field for the vast majority of construction workers in the state.

F. Vincent Vernuccio is the director of labor policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan. Permission to reprint in whole or in part is hereby granted, provided that the author and the Mackinac Center are properly cited.

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SEPTEMBER 2015

POLITICIANS MISREPRESENT ROAD FUNDING BILLS TO PROMOTE TAX HIKE
Slower Spending Growth is not a 'cut'
By James M. Hohman, Aug. 17, 2015

In Lansing, reducing the rate of a projected spending increase is considered a “budget cut.” It is no surprise, then, that when the two chambers of the Michigan Legislature each passed a plan to allocate a slice of future revenue to the road repair budget, some people cried foul. Under the political logic of the state capitol, those plans by definition cut spending for other areas in the state budget — even though the only question for those other areas is likely not “Will they have less money than today,” but rather “How much will they grow?”

Both the House- and Senate-passed bills have been subjected to this odd criticism.

Gov. Rick Snyder is one of those criticizing, stating, “You should also say where you’re going to cut because I think that’s going to be one of the challenge points.”

He is not alone. Senate Minority Leader Jim Ananich (D-Flint) said of the Senate plan, “You can’t break the rest of the system to pave the roads.”

This characterization sounds odd to taxpayers because even with a shift, the state would gather the same amount of money. The proposals would simply allocate some of the growth of income tax revenue to a different area of the budget. Overall spending levels would not be disturbed by the earmarking.

The talk of “cuts” misrepresents how the state budget works and invariably moves the conversation toward higher taxes. It also presupposes a static state economy in which state government’s revenues do not grow. In reality, that growth should be more than enough to cover the proposed earmarks. To claim otherwise is to assume that the economic growth Michigan has enjoyed since 2010 will soon come to an end.

But in fact, the state is now collecting more income tax revenue year after year. This levy is expected to bring in $1.2 billion more in fiscal year 2017 than last year. The increase is more than either the House-passed or Senate-passed plan recommends for diverting to roads.

Neither plan guarantees that revenues will come in as expected, just that road funding gets priority for portions of it. Policymakers will be able to adjust as new information comes in. Revenue estimates are updated twice yearly and exactly how much revenue will increase is subject to how the economy fares.

Both the House and the Senate plans phase in the income tax earmark, with the House plan devoting $792 million in fiscal year 2019 and the Senate plan devoting $700 million in fiscal year 2018. The Legislature has already earmarked $400 million in non-road tax dollars for roads for the upcoming fiscal year, so the first $400 million of either plan represents essentially no change from current policy. Ignoring this point is one way of overstating the impact of either the House or the Senate plan on the rest of the budget.

If there were looming fiscal crises that demanded all the extra cash that’s expected to arrive into the state treasury, then critics may have a valid argument. But while new challenges may arise, there are also favorable budget trends underway.

For example, the state has fewer prisoners. There are fewer state employees. State economic growth has meant fewer people applying for government assistance, though the Obamacare-driven expansion of Medicaid will mean some increased spending. And while government pension costs are still high due to current and past underfunding, this expense has tapered off recently.

State spending interests would prefer large (or larger) taxes on fuel and vehicle registration rather than reprioritizing existing revenue streams. But they must also know this option is less likely after the resounding defeat of Proposal 1.

Michigan can use more of its projected revenue increases for road repairs and experience few or no cuts in other areas of the budget. Those who refuse to accept this possibility may be less concerned about so-called cuts and more miffed that extra money they hoped to spend on other programs would go to roads instead. They need to be reminded that a reduction in the rate of a program’s increase is not a “cut.”

Permission to reprint this post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.

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AUGUST 2015

'LEARNING IN PROGRESS' ON LEGISLATIVE ROADS PROPOSALS
How to Make Senate's Tax Cut Trigger the Real Deal
By James M. Hohman and Jack McHugh, July 21, 2015

Both the Michigan House and Senate have passed their own road funding plans after the colossal failure of Proposal 1. Both plans show that lawmakers have learned from that debacle.

The House proposal contains only a small tax hike on diesel, plus modest new assessments on electric, hybrid or “alternative” fuel vehicles (whose owners pay little or no gas tax). The rest of its new revenue for roads comes from earmarking a portion of future income tax revenue to road funding.

The Senate likewise earmarks some income tax revenue for roads, but also hikes the gas tax from 19 cents per gallon to 34 cents and the diesel tax from 15 cents per gallon to 34 cents. The Senate seeks to sweeten this pill with a plan to lower the state income tax rate — sometime, maybe.

There are ways to strengthen the provision, however, and an income tax rate cut could more than mitigate the proposed fuel tax hike.

The 4.25 percent income tax is the second-largest levy imposed in Michigan — only property taxes take more — so reductions in its rate can have a large economic impact.

In its current version, the Senate’s plan would reduce the state income tax rate whenever the state’s General Fund has been allowed to increase faster than inflation. “Allowed,” because the Legislature has ample opportunities to game the GF in ways that would allow its members to avoid promised tax cuts with minimal accountability.

They might not even have to play games to make the provision a dead letter. Even as total state tax revenue increased strongly from 2009 to 2014, official budget reports show that revenue allocated to the GF rose by less than the rate of inflation. In other words, had the Senate’s tax cut “trigger” been in effect during the past five years of steady tax revenue growth, it would have triggered no income tax cut.

One reason for sluggish GF growth was the rampant expansion of corporate welfare by previous administrations. Specifically, the practice of doling out “refundable” business tax credits to favored businesses, in agreements extending up to 20 years into the future. This created a $9 billion unfunded taxpayer liability that is being paid down by taking money from the GF.

Future lawmakers could also dodge the tax (and spending) cuts the Senate’s trigger might cause with various gimmicks; the simplest would be to just transfer some money from the GF to the state’s “rainy day fund.”

And in any event, other less objectionable earmarks divert most state tax revenue away from the GF (to school funding, for example). The state collected a total of $27.4 billion in taxes last year, of which only $8.8 billion was directed to the GF.

These problems could be easily avoided by simply placing future income tax rate cuts in statute. This would put taxpayer savings on autopilot, with no opportunity for politicians to game away promised rate cuts in ways that dodge public accountability.

That’s still no guarantee that rate cuts would actually happen. A 2007 income tax rate increase also baked future cuts into statute, but these evaporated in the 2011 corporate and individual income tax overhaul that abolished the Michigan Business Tax.

But at least the politicians would have to cast a fairly unambiguous roll call vote to cancel a tax hike.

Alternatively, a Republican-run House, Senate and governor’s office could summon the political will to make a large gas tax hike revenue-neutral by offsetting it with equivalent income tax rate cuts, or continue to look within the budget to find more money for roads.

Or the Senate could just go along with the House-passed road plan, which reprioritizes current revenue with no big fuel tax hikes.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.

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JULY 2015

WHAT YOU NEED TO KNOW ABOUT THE INITIATIVE TO REPEAL PREVAILING WAGE
If Sponsors Gather Enough Signatures in Time, then Legislature Votes
By Jack McHugh, May 27, 2015

As part of the negotiations to get Proposal 1 on the May 5 ballot, Gov. Rick Snyder reportedly promised to veto a potential repeal of the state's “prevailing wage” law. This law prohibits awarding government construction contracts to the lowest bidder, unless the contractor pays the equivalent of union wages that often exceed market rates. Studies have shown that this adds hundreds of millions of dollars annually to the cost of government infrastructure projects, including school construction and road repairs.

Snyder has not denied those reports, and even though voters turned down the proposed sales tax hike in May, there are still concerns that he may feel bound by the alleged deal and veto a prevailing wage repeal bill that has already passed the Senate.

That’s the back-story behind an announcement that the Bureau of Elections has approved petition language submitted by a coalition, calling itself “Protecting Michigan Taxpayers,” which wants to repeal the prevailing wage law through a process called “initiated legislation.” As prescribed by the state constitution, this allows a new law to be enacted (or an old one repealed) by a vote of the people and the Legislature, and “over the head” of a governor.

Here’s how it works:

Michigan’s constitution provides three ways for citizens to change the law, or “take the initiative.” The first is an initiative to amend the constitution itself, which requires gathering signatures from registered voters equivalent to 10 percent of the total votes cast in the last election for governor. Doing so places the proposal on the next general election ballot for an up-or-down vote by the people.

The second is a referendum on a law passed by the Legislature. By gathering signatures equal to 5 percent of the votes cast for governor, a group of citizens place a new law “on hold” until voters decide on it in the next general election. Lawmakers have, though, exploited a loophole that bans referendums on appropriation bills — they simply add a modest appropriation to controversial new laws, making them "referendum proof." But that’s another story.

The third method is the one being used in the effort to repeal Michigan's prevailing wage law. It requires sponsors to gather signatures in favor of a proposed statute equal to 8 percent of the votes cast in the last governor election. (According to Ballotpedia that currently means 252,523 signatures.) Sponsors have a 180-day window to collect signatures.

If sponsors gather this number, the measure is placed before the Legislature for an up-or-down vote within 40 days, with no amendments allowed and — critical in this instance — no approval from the governor required.

If a simple majority of those elected and serving in both the House and Senate vote in favor, the measure becomes law with no further action required. The new law can only be amended by future legislatures with a supermajority vote of three-quarters in both the House and Senate.

If the Legislature does not approve the initiated legislation, then it is put to voters in the next general election. The Legislature can also place a competing alternative on the ballot, and the one that gets the most votes over 50 percent becomes law.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.

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JUNE 2015

OBAMACARE EXCHANGE: MICHIGAN DODGED A BULLET
By Jack McHugh, May 1, 2015

In a news story titled “Nearly half of Obamacare exchanges are struggling over their future,” The Washington Post reports the following:

Nearly half of the 17 insurance marketplaces set up by the states and the District under President Obama’s health law are struggling financially, presenting state officials with an unexpected and serious challenge five years after the passage of the landmark Affordable Care Act.

Many of the online exchanges are wrestling with surging costs, especially for balky technology and expensive customer-call centers — and tepid enrollment numbers. To ease the fiscal distress, officials are considering raising fees on insurers, sharing costs with other states and pressing state lawmakers for cash infusions. Some are weighing turning over part or all of their troubled marketplaces to the federal exchange, HealthCare.gov, which is now working smoothly.

That last claim — “the federal exchange is now working smoothly” — is a stretch, given that important parts of the “back end” of the process by which subsidies are determined and insurance companies are paid (or not) are still “under construction,” but I quibble. The important fact for Michigan is that our Legislature did not create a state exchange, and in consequence likely avoided a mountain of grief.

Longtime, free-market health policy analyst John Goodman explains in Forbes why the exchanges are (and always will be) struggling, with a state-by-state roundup of their specific woes.

Michigan came close to creating a state Obamacare exchange. The Senate passed a bill to do so, and only in waning days of the 2011-12 legislative session did the House leadership capitulate to the reality of a reluctant Republican caucus. (The House Speaker hadn’t yet got in the habit of violating the “Hastert rule” and rolling the caucus majority by passing bills with Democratic votes, which is how Medicaid expansion became law the following year.)

There are no “wooden stakes” in Lansing though — bad policy proposals never die. If the U.S. Supreme Court rules in June that Obamacare subsidies can only be provided through an exchange created by a state, we can expect an explosion of pro-Obamacare activism pressuring Michigan legislators to “fix the problem” by creating a state exchange.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff

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JULY 2014

TO HELP OUR FURRY FRIENDS, DON'T GIVE NATIONALLY
Diana Culp, June 3, 2014

With 70 million households in America owning pets, it’s no surprise that the TV ads with sad music showing needy cats and dogs tug at our heartstrings.

Americans give hundreds of millions a year to national animal charities. Sadly, a good chunk of that money isn’t going to help those animals. It’s going to pay a racketeering lawsuit settlement.

Last month, several animal-rights groups including the Humane Society of the United States agreed to pay $16 million to settle a suit over their alleged behavior in a different lawsuit.

The payout settles claims that they’d engaged in illegal payments to a witness as well as bribery, fraud, obstruction of justice and other wrongdoings. That’s on top of $9.3 million the American Society for the Prevention of Cruelty to Animals paid in 2012 to settle.

The conduct at issue is far from cuddly. Animal-rights activists sued a circus company over a decade ago, claiming elephant abuse. That suit was thrown out after years of litigation, with the court calling it “frivolous” and “vexatious.”

In its dismissal, the court pointed to a scheme by which the activists had paid the key witness in the case nearly $200,000. That witness had also lied to the court, and so naturally the court found him to be discredited and essentially a “paid plaintiff.” The animal-rights law firm representing plaintiffs was even sanctioned by the court.

You wouldn’t know any of this is going on from those ads with sad dogs and cats.

In fact, a lot goes on behind the scenes at national animal groups. Not all of it is bad. But many of these groups have troubling priorities.

As a 30-year veteran of the animal-welfare community, I know there’s a difference between local and national groups that the public does not understand.

One reason is the similarity in names. The American Society for the Prevention of Cruelty to Animals, or ASPCA, is separate from local SPCAs.

The Humane Society of the United States, or HSUS, isn’t affiliated with local humane societies, and only 1 percent of the money it raises goes to local pet shelters.

I used to work as director of education for the Humane Society of the United States.

Everything always seemed to revolve around constant fund-raising, with publicity second and lobbying also important. Direct care of animals was far from the main priority.

Unsurprisingly, then, the overhead of national animal groups can be quite high.

The independent charity evaluator CharityWatch finds that the ASPCA spends up to 35 percent of its budget on overhead. HSUS is worse, spending up to 45 percent of its budget on overhead. That adds up to tens of millions in fund-raising expenses.

Essentially, lots of money is spent on fund-raising in the name of some crisis. Then much of that money gets pumped right back into more fund-raising on the next crisis.

The big winners are the firms that send out the mail and make the commercials. The animals? Not so much.

In contrast, I have worked for local animal control and with local humane societies for most of my life. These groups need money, but they just aren’t as good at marketing themselves as a large national group with mega-sized direct-mail and TV campaigns.

These local organizations are too busy providing hands-on care for animals in their communities.

National awareness or lobbying campaigns can serve a purpose. But donors need to know where their money is going.

National groups wouldn’t raise as much money if their ads didn’t show dogs and cats, but instead the highly paid executives, lawyers and lobbyists who get so much of the cash.

The tear-jerking ads from national groups should come with a warning: If you want to help pet shelters, give to your local ones directly.

That’s a disclaimer these ads will never voluntarily include, but it is a message that any animal lover can spread to others.

Diana Culp is the managing director of the Humane Society for Shelter Pets, a nonprofit dedicated to creating a sustainable base of local support for the nation’s network of local pet shelters.

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JUNE 2014

FALSE FEARS ABOUT FRACKING
Bridge Magazine cites dishonest 'Gasland' scene
By Jarrett Skorup, May 21, 2014

A pamphlet from 1965 from the Michigan Department of Public Health. Natural gas in the water supply has long existed unrelated to gas drilling.

Bridge Magazine, a publication of The Center for Michigan, had a recent series of articles on hydraulic fracturing ("fracking"), and while the author provides some value, including good interviews with residents and a look at the externalities of drilling, the pieces make some errors — one in particular is egregious enough that it should be corrected.

The author cites the anti-fracking film, "Gasland," and references an infamous scene in the movie where a man is shown lighting methane coming out of his faucet on fire. This has become a defining scene for the anti-gas left.

In the piece, author Jacob Wheeler says, "These movies boast facts and evidence that appeal to the viewer's critical thinking, but like many motion pictures, they also offer an emotional punch to the gut."

He adds, "[Gasland's] most memorable scene features Weld County, Colo., landowner Mike Markham igniting gas from a well water faucet in his home with a cigarette lighter, and which the film's director attributed to natural gas exploration in the area." The scene and movie is cited favorably elsewhere.

But the evidence shows that incident has nothing to do with gas drilling and it certainly has nothing to do with fracking.

According to the Colorado Department of Natural Resources, an extensive investigation showed that the gas in Markham's water supply "was not related to oil and gas activity." The report goes on to note that it has been well known for decades that the water aquifer in the area is contaminated with naturally occurring methane.

The director of "Gasland," Josh Fox, was questioned about this, and admitted he knew people were lighting water on fire unrelated to fracking, and stated "it's not relevant." On a related note, the Michigan Department of Public Health was putting out pamphlets as far back at least as 1965 warning about flammable methane coming out of faucets — totally disconnected from the issue of gas drilling or fracking.

Wheeler did not respond to a request for comment.

Last year, Michigan Capitol Confidential featured a series of stories on the issue of hydraulic fracturing by talking with a series of experts (including one who was featured in "Gasland"). Here is what they said when asked about the film scene:

Terry Engelder, a professor of geosciences at Penn State University, said that "all reasonably objective reporters regard the film as misinformation."
Anthony Ingraffea, a professor of engineering at Cornell University, said, "In the strict sense of the word, that [lighting water on fire] has nothing to do with the word [fracking]."

Donald Siegel, a professor of earth sciences at Syracuse University, noted that while "gas migration to home water supplies looked spectacular when lit up like a candle … study after study has shown that many homes have groundwater naturally with methane in it, and many with methane sufficient to set on fire."

If people believe the risk and damage from gas drilling is not worth the economic productivity, they should try and prove it. But that should be done with real proof — not unrelated propaganda masquerading as evidence.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.

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MARCH 2014

VAGUE CRIMINAL LAWS THREATEN INDIVIDUAL LIBERTY AND BURDEN THE JUSTICE SYSTEM
By Michael J. Reitz, Feb. 3, 2014

The area of environmental regulation is especially dense with strict liability offenses that carry significant penalties. In a recent case, a man convicted of improperly disposing scrap tires was sentenced to 270 days in jail and a $10,000 fine.

You may be a criminal without even knowing it.

Centuries ago, there were only nine felonies under English Common Law. The common law dealt with behavior that is widely understood to be culpable — murder, theft, rape, etc. — but in today’s state legislatures and in Congress, innocuous behavior is too often criminalized. In Michigan, a person can be convicted of a crime for betting in an office March Madness pool, or mocking a person who refuses to duel.
It is a misdemeanor for a person to cause a pet ferret “discomfort” … Transportation of a Christmas tree without a bill of sale is illegal.

Accompanying this over-criminalization is the failure of legislatures to define the intent necessary for a prosecutor to prove a crime has occurred. A fundamental principle of our legal system, rooted in centuries of tradition, is that a crime occurs only when there is both a wrongful act and wrongful intent. William Blackstone, an 18th-century English jurist, wrote: “[A]n unwarrantable act without a vicious will is no crime at all.” Thus, a person could only be convicted if he committed an unlawful act and knew (or should have known) that the conduct was illegal.

Notable exceptions include strict liability crimes, which don’t require the proof of criminal intent to secure a conviction. In certain instances it is an effective means of regulating criminal behavior: Statutory rape, for example, penalizes a person regardless of their belief about the age of the minor.

Since the mid-19th century, however, the number of strict liability crimes has skyrocketed. Due in part to industrialization and urbanization, legislatures began enacting new criminal prohibitions to promote public health and safety. Traffic laws, selling alcohol on Sundays, sale of adulterated foods and workplace regulations; many early strict liability laws were aimed at promoting social order. These laws were also favored because of the ease of conviction —there was no need for prosecutors to prove criminal intent.

The skyrocketing continues: A study by The Heritage Foundation and the National Association of Criminal Defense Lawyers determined that of the new laws creating nonviolent offenses adopted by Congress in 2005 and 2006, 64 percent of those laws contained inadequate intent provisions. This is not an indication that Congress necessarily wished to create strict liability crimes; a bill’s mere silence on the element of intent can be interpreted as imposing liability.

Michigan has dozens of strict liability crimes on the books. It is a misdemeanor for a person to cause a pet ferret “discomfort.” Transportation of a Christmas tree without a bill of sale is illegal. It is a crime to sell poultry without maintaining detailed records. Dancing during a performance of “The Star Spangled Banner” is prohibited. Intent is not a necessary element to win a conviction of any of these crimes.

The problem isn’t confined to petty crimes with minor penalties. The area of environmental regulation is especially dense with strict liability offenses that carry significant penalties. In a recent case, a man convicted of improperly disposing scrap tires was sentenced to 270 days in jail and a $10,000 fine.

The Michigan Legislature could greatly improve the clarity and frequency of criminal statutes by adopting a provision that establishes a default standard of intent. Terms like “purposely,” “knowingly” or “recklessly” define what must be proven in court. If a criminal law is silent on intent, the default level of intent would apply. The Legislature could still adopt strict liability crimes, but would need to explicitly state its desire to do so.

Fourteen states have acted to improve criminal intent standards; Michigan should be next. Such a reform would improve the administration of justice, protect individuals from unwarranted prosecutions and concentrate the potency of criminal sanctions on truly objectionable behavior.

Michael Reitz is the executive vice president of 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.

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DECEMBER 2013

IRS BACKS DOWN:  MICHIGAN FORFEITURE CASES VOLUNTARILY DISMISSED
Bob Ewing, November 15, 2013 (703) 682-9320

IJ client Terry Dehko and his family have owned and operated the Schott's Market in Fraser, Michigan, for 35 years. The Dehkos had $35,000 taken from them by federal law enforcement officials through a process known as “civil forfeiture."

Arlington, Va.—Just hours after the Institute for Justice announced it was joining another civil forfeiture lawsuit in Michigan against the federal government, the IRS filed motions to voluntarily dismiss two forfeiture actions against innocent Detroit-area small-business owners. Terry Dehko of Fraser, Mich., and Mark Zaniewski of Sterling Heights, Mich., will each get back all of the money seized without warning from their business’s bank accounts (over $100,000 in total) by the federal government.

While today’s victories vindicate the property rights of Dehko and Zaniewski, they do not solve the nationwide forfeiture problem. As recently demonstrated in the New Yorker and The Economist, civil forfeiture is now one of the greatest threats to property rights in America today. A separate federal lawsuit filed in September by the Institute for Justice on behalf of Terry Dehko and his daughter, Sandra Thomas, seeks to reform civil forfeiture law to protect the constitutional rights of property owners. That lawsuit will continue.

“The IRS should not be raiding the bank accounts of innocent Americans, and it should not take a team of lawyers to put a stop to this behavior,” said IJ Senior Attorney Clark Neily. “We are thrilled that Terry, Sandy, and Mark will finally get their money back, but their fight does not end today. Our constitutional lawsuit against the federal government seeks to rein in the shameful practice of civil forfeiture.”

On September 25, Terry Dehko and his daughter Sandy joined with the Institute for Justice to file a constitutional lawsuit challenging the federal government’s use of civil forfeiture. That case seeks a federal court ruling declaring that property owners are entitled to a prompt hearing either before or immediately after their property is seized, and enjoining the federal government from using civil forfeiture without providing such a prompt hearing. Further, the lawsuit asks the court to clarify that it is not illegal for law-abiding businesses to make frequent cash deposits for legitimate business purposes. Like most small-business owners, Terry Dehko and Mark Zaniewski make regular cash deposits at their banks, and that is the sole reason the IRS seized their money.

Civil forfeiture allows the government to take private property from Americans without ever charging them with, let alone convicting them of, any crime. Astonishingly, the proceeds of civil forfeiture are used to pad the budgets of the very agencies that seize the property. Even worse, when the federal government seizes cash—even your entire bank account—the law provides no prompt way to get a court to review the seizure. After seven months, Mark Zaniewski never received a hearing before a judge to contest the seizure of his property. Terry Dehko waited over ten months. The government never charged anyone in either case with any crime.

“Last year alone, the government took in more than four billion dollars in forfeiture money,” said IJ Attorney Larry Salzman. “Taking money from innocent people like Terry Dehko and Mark Zaniewski is wrong, and it needs to end immediately.”

IJ has come to the defense of Americans nationwide to fight civil forfeiture, including the owners of the Motel Caswell in Massachusetts, the owner of a small commercial building in California, and the owner a truck seized in Texas. In 2010, IJ published the landmark report on civil forfeiture, Policing for Profit.

For more on IJ’s forfeiture lawsuits in Michigan, visit www.ij.org/MIForf.

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NOVEMBER 2013

MICHIGAN CIVIL FORFEITURE
United States v. $35,651.11 (The cash in the account of Schott's Supermarket)
Feds Seize Family Grocery Store’s Entire Bank Account

Can the government use civil forfeiture to take your money when you have done nothing wrong—and then pocket the proceeds?

That is the question to be answered by a major federal lawsuit filed by Terry and Sandy Dehko—owners of a family grocery store in Fraser, Mich.—and the Institute for Justice (IJ). In January 2013, Terry and Sandy were astonished to discover the federal government seized their entire checking account without warning, even though the Dehkos did nothing wrong.

“Federal forfeiture law allows the government to take your entire bank account just because it doesn’t like the way you deposit or withdraw your money,” said IJ Senior Attorney Clark Neily. “The government should not be allowed to just show up at your doorstep like a playground bully and take away your milk money. But that’s exactly what the government did to Terry and Sandy.”

Like most grocery store owners, Terry and Sandy receive cash every day from their customers. Their commonsense practice has always been to avoid letting too much cash accumulate in their store. Moreover, their insurance policy specifically limits coverage for theft or other loss of cash to $10,000—a common provision for small-business policies.

Over the past several years, however, the government has been collecting vast amounts of private information about Americans, including entrepreneurs like Terry and Sandy that deal in cash. In 2001, the Patriot Act amended federal law to make it easier for the government to seize money and other private property through civil forfeiture. Federal law requires banks to report cash transactions above $10,000, and it is illegal to “structure” cash deposits for the purpose of avoiding this requirement.

In 2010, the IRS visited Terry and Sandy and reviewed their banking practices. In 2012, the IRS conducted an anti-money-laundering examination of Terry and Sandy’s store, thoroughly reviewing their books and policies, and gave the Dehkos a clean bill of health. After the audit, the IRS sent Terry and Sandy a letter clarifying that “no violations [of banking laws] were identified.”

But nine months later, the IRS obtained a secret warrant and cleaned out Terry and Sandy’s entire bank account (over $35,000) on the grounds that their frequent cash deposits—deposits of which the IRS should have been well aware when it issued its clean bill of health—violated federal “structuring” law. The government never charged Terry and Sandy with any crime and refuses to return their money.

Terry and Sandy are still waiting for a hearing before a judge. Unfortunately, civil forfeiture allows the government to violate due process by seizing private property from Americans without ever convicting or even charging them with wrongdoing. Perversely, the government then pockets the proceeds while providing no prompt way to get a court to review the seizure.

“Last year alone, the government took in more than four billion dollars in forfeiture money,” said IJ Attorney Larry Salzman. “Taking money from innocent people like Terry and Sandy is wrong. Thankfully, the Dehkos are prepared to go all the way to the Supreme Court if that’s what it takes to vindicate the right to private property for Americans everywhere.”

“We didn’t do anything wrong,” said IJ client Sandy Dehko. “That’s why we teamed up with the Institute for Justice, to protect the rights of all Americans against civil forfeiture.”

The Institute for Justice has come to the defense of Americans nationwide to fight forfeiture abuse, including the owners of the Motel Caswell in Massachusetts, the owner of a small commercial building in California, and the owner of a truck seized in Texas. In 2010, IJ published the landmark report on civil forfeiture, Policing for Profit.

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OCTOBER 2013

ENTITLEMENTS
Dave Agema, Michigan Republican National Committeeman

One of the biggest and growing expenses to taxpayers is entitlement programs. Entitlements (I hate the term) are taking the biggest share of our Federal and State budgets. Politicians use these to garner votes. Socialist countries have bankrupted themselves because they couldn't say no. They have bred an attitude that their citizens deserve something they didn't earn from another's labor. Truly we are no different. President Obama has pushed his socialist "hope and change" agenda in such a rapid fashion that our country is falling into a fiscal abyss from which we can never recover. Our dollar has lost its value. Our debt has doubled (perhaps tripled). Our middle class is disappearing due to businesses limiting workers to 30 hours to avoid the ramifications of ObamaCare. They fear expanding over 50 employees which, in turn, stifles growth. Our unemployment is unchanged in the August Jobs Report, but the actual number, when you include those that have stopped looking or termed out of unemployment benefits, is closer to 14% (13.6% unadjusted, 13.7% after seasonal adjustment). Our federal government tries to centralize control of an economy when they can't even control themselves and their own expenditures.

Socialism always fails because it's an artificial stimulus that the laws of economics do not support in a real economy. Socialist politicians always promise much, deliver little, and always at a greater cost. I never thought I'd say we are becoming what we used to fight against, but we are!

Your Republican National Committee has reaffirmed our platform (yes we have one) that opposes much of what Obama and his democrat platform supports. But what good is this if the states disregard the platform and fall in line with the left's agenda? We are a party of common sense, but that common sense seems to be departing. We must elect State Representatives and Senators that hold to the principles the party espouses, and have the backbone to say no to their fellow legislators, and their governor, if they push for more socialistic programs. If we just follow the lead of Governors, Senate Leaders, or House Speakers, then we might as well have a dictatorship and disband the rest of the legislature. The purpose of the three branches is to have checks and balances, not blindly follow the leader.

The recent Medicaid expansion yet again starts another program that will never end and further bury us in debt. I see nowhere in the constitution that says healthcare is a right, nor do I see that the government can force you to purchase what you don't want to. The Feds do not have the money to fund this. I believe it will fall on the states, via higher taxes plus higher premiums for individuals which we already see in other states. Increased premiums in other states have ranged widely with some increases from 40% - 190%.

ObamaCare includes 23 new taxes, abortion funding, a constabulary military type force which can be used against the civilian populace, and is one of the largest grabs of our economy by the federal government. Our Republican Congressmen want to pass a budget, but one that does not include funding for ObamaCare. I suspect Obama will veto that and then blame the Republicans for shutting down the government - he will be the one shutting it down, like a child that didn't get his way, via his veto. Pray I am wrong!

In the past, Michigan Republicans didn't pass bills unless the Republicans had the votes in their own caucus to pass the bills (or at least a majority of the caucus in favor of the bill's passage). Now it changes, and important bills are being passed with the vast majority of democrat votes, not Republican votes. I applaud those legislators that have stood firm against Medicaid expansion and ObamaCare. We need more leaders and not followers.

It's my opinion that a free society should limit the authority and power of government. History demonstrates that a republic lasts only about 200 years, before transitioning into either a direct democracy or outright anarchy, and then becoming an oligarchy. We are there. I believe the role of government is to provide a fair and level playing field, where people can do as much or as little as they want and then reap the rewards or lack thereof, with a basic safety net (not a hammock) for those in actual need. We are making a hammock the norm. The results will be similar to the PIGS (Portugal, Italy, Greece, and Spain) - a broken economy.

Pray for those in authority over you. Pray common sense once again will reign.

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JULY 2013

FILMS OR POTHOLES?
Cost of film subsidy program would repair over 5 million potholes
By Jarrett Skorup, June 7, 2013

The Republican-controlled Michigan Legislature has passed a budget allocating $50 million for the state's film subsidy program.

Previously, the budget from House Republicans proposed eliminating the program, while Gov. Rick Snyder, who has said he is philosophically opposed to the program, asked for $25 million. But the GOP and Democratic leadership in the Michigan Senate wanted a minimum of $50 million annually.

Meanwhile, Michiganders are being told by the governor, legislators and outside groups that the state needs to devote more money to fixing the roads. That is true, but before legislators impose a tax increase on residents they should end the film program and use the money for infrastructure.

After all, if road funding is so important that it would literally "save lives," as advocates of increased road spending say, how many lives are the Legislature and governor risking by spending millions on subsidies to Big Hollywood?

Here is what taxpayers could get for the $50 million lawmakers are pledging toward films for the upcoming fiscal year (all numbers are approximate):

•5,313,496 potholes repaired;*
•More than five years of pothole repairs on the state trunk line highway system;
•The salaries of 1,200 Detroit police officers;
•The salaries of 792 conventional public school teachers;
•The salaries of 1,166 charter school teachers;
•A year of education at Michigan's public universities for 4,796 students;
•A year of education at K-12 schools for 7,116 students; and
•A year of Great Start preschool for 14,706 students.

For a lot of reasons, film subsidies are one of the least efficient ways to use public dollars. Since the program began in 2008, the state has spent $400 million — that's an awful lot of unfixed potholes.

* There are few sources for the cost of repairing potholes. According to the Calhoun County Road Commission, it costs an average of $9.41 to fix a pothole.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.

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APRIL 2013

NATURAL GAS PLANTS BETTER THAN WIND TURBINES
Natural gas is cheaper with few emissions -- why is the state pushing wind?
By Kevon Martis, March 12, 2013

Climate change activist James Hansen has said, "Suggesting that renewables will let us phase rapidly off fossil fuels in the United States, China, India, or the world as a whole is almost the equivalent of believing in the Easter Bunny and Tooth Fairy." But this has not prevented the Michigan Environmental Council and its affiliates from making a full-throated appeal for far higher renewable energy mandates at Gov. Rick Snyder’s statewide series of energy roundtable meetings.

The Michigan Environmental Council (MEC) and its allies have chosen one unifying theme for these events: coal-fired electrical generation kills people and renewable energy (wind) is the cure.

To that end, the MEC commissioned a report called: "Public Health Impacts of Old Coal-Fired Power Plants in Michigan." Analyzing the health care impacts of fine particulate emissions from Michigan's nine oldest coal fired generation plants, MEC concludes: "… the Michigan-specific health-related damages associated with [fine particulate] emissions from the nine coal-fired facilities [are] $1.5 billion annually…" and "…[cause] 180 premature [coal emissions] deaths per year in Michigan."

Such large numbers certainly deserve scrutiny. For the sake of argument let us assume that fine particulate emissions truly do have such an outsized financial and human impact. If so, what is the cheapest and most effective means to protect our citizens?

The MEC has consistently promoted renewable energy as the best cure for these coal emissions. But is this just faith in James Hansen’s "Tooth Fairy"?

By the end of 2013, roughly $2.5 billion will have been spent in Michigan on industrial wind turbines, including the $500 million "Thumb" transmission loop. These 900 megawatts (MW) of wind turbines will combine to create a wind plant that will have an annual capacity of just one fourth that size, perhaps 225MW. This is because wind is a fuel that has a mind of its own, often showing up at the wrong time and wrong quantity — and always the wrong quality — when it is there at all.

The nine Michigan coal plants in MEC's study have an effective capacity of approximately 4,200MW. Charitably assuming that 225MW of wind generation replaces the same quantity of coal generation, those $2.5 billion in wind turbines plus transmission will have eliminated only 5 percent of the fine particulate emissions from coal.

This means $2.5 billion of wind turbines and transmission lines will at best save only $75 million per year in coal emissions related health costs, or nine lives annually.

What the MEC wishes for us to ignore is that there is a far more efficient way to combat those emissions: natural gas-fired combined cycle gas turbine plants (gas plants), which emit almost no particulates or mercury.

Modern gas plants are among the lowest cost ways to generate electricity. CMS Energy is currently constructing a new 750MW gas plant at a cost of $1 million per megawatt. By way of comparison, CMS Lakewinds wind farm near Ludington cost $2.5 million per megawatt, or two-and-a-half times the price of gas plants.

Not only are gas plants cheap to build, they produce our cheapest electricity. The federal Energy Information Administration projects that by 2017 the cost of energy from gas plants will be only two-thirds the cost of wind energy.

This is a serious blow to MEC's renewable energy "Easter Bunny."

By the end of 2013, and despite having spent $2.5 billion, Michigan's nine oldest coal plants will continue to operate while having their emissions trimmed by no more 5 percent. But had we chosen to build gas plants instead of wind plants, that same $2.5 billion could build 2,500MW of gas generating capacity instead of only 225MW. This is enough to permanently close half of the nine "dirty coal" plants in question.

Doing so would, according to MEC’s own data, slash Michigan's health care costs from coal by $750 million annually. It would also save 90 lives per year at a cost of $27 million per life.

But under MEC's renewable energy plan, 81 of those 90 lives would be sacrificed. And the nine people saved would cost a staggering $277 million per life. That is 10 times the price per life.

Further, had we constructed 5,000MW of gas plants instead of wind turbines, we would close all nine coal plants and thereby lock in annual health care savings of $1.5 billion dollars per year while simultaneously extending the lives of 180 people each year in Michigan. Just those health care cost savings alone would pay for the construction costs of those new gas plants in only 3.3 years.

While our cost-benefit analysis is simplified to be sure, we are still forced to face some sobering conclusions.

Because wind generation cannot replace coal plants but gas plants can, we are currently wasting $1.42 billion per year in health care costs that could have been eliminated without renewable energy mandates.

By following the MEC’s lead and mandating wind energy instead of encouraging the construction of natural gas plants, we continue to needlessly kill nearly 180 people per year.

In truth, no one knows the true health care costs of coal emissions. But we know that whatever that true cost is, wind energy is the most expensive and least effective means of eliminating those costs and certainly should not be mandated by state policy.

It is high time the MEC and its affiliates like the Michigan Land Use Institute, League of Conservation Voters, Union of Concerned Scientists and the Sierra Club abandon childlike faith in fairy tales and start endorsing a science-based "no regrets" energy policy for grownups.

Kevon Martis is the senior policy analyst for the Interstate Informed Citizen’s Coalition Inc., a bipartisan grassroots renewable energy watchdog group based in Blissfield. The IICC is not sponsored by any industry or advocacy group and is funded by a tiny stream of small donors across the state.

Permission to reprint this article in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.

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JANUARY 2013

ANOTHER LOOK AT HYDRAULIC FRACTURING
By Jarrett Skorup, Dec. 3, 2012

In a speech recently, Gov. Rick Snyder reiterated his support of natural gas extraction via hydraulic fracturing (“fracking”). This is a good sign for taxpayers, job seekers and environmentalists.

Despite the alarmism, fracking is safe — and much safer than the alternatives. Most of the fear about gas extraction comes from a disingenuous scene from a film in which people light the methane coming through their water pipes on fire because of alleged improper well construction, which has nothing to do with fracking.

The Michigan Department of Environmental Quality says gas drilling by hydraulic fracturing has been going on for 50 years in about 12,000 wells across the state with no environmental damage or jeopardization of public health. The state already has strong regulations and there has never been a serious incident.

Today, Americans get almost all of their energy from coal, oil, natural gas and nuclear power; the contributions from “green” energy are negligible. Outside of nuclear, which leading “environmentalist” groups also oppose, the alternatives to natural gas are far worse for the environment in almost every way: more carbon dioxide, more carbon monoxide, more nitrogen oxide, more sulfur, more mercury, more soot, more smog and just more pollution period. Coal mining also kills twice as many workers as oil and natural gas extraction.

Also, fracking is why the United States has reduced its carbon footprint faster than any industrialized country in the world over the past six years — with CO2 emissions at a 20-year low.

As natural gas extraction has led to a boom in jobs around the nation, there has been increasing pressure on Michigan to follow suit. And with some of the highest reserves in the country, we should be.

But there has also been increasing opposition. A decade ago, environmentalists saw natural gas as the wave of the future — and a way for America to wean itself off of oil and coal.

Now that it’s working, the fear is that it will prevent wholesale adoption of “renewable energy” (excluding nuclear, of course). But there is no free lunch in energy policy, and since natural gas is both a job creator and better for the environment, it is a win-win.

Permission to reprint this article in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.

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OCTOBER 2012

GOV. SNYDER'S OBAMACARE 'PARTNERSHIP' MISGUIDED
Posted by Jack McHugh on August 23, 2012 http://www.mackinac.org

Just 10 weeks before an election that could place Obamacare on a very different trajectory, The Detroit News reports that Gov. Rick Snyder has chosen to bypass the Legislature and enter a “joint partnership” with the federal government to create the “exchange” through which the law’s mandates and subsidies will be administered. A spokesperson for the Snyder administration told The News that the governor is concerned with meeting timelines mandated by the law.

He shouldn’t be, because it's all but certain those timelines will not be met regardless of what state and federal policymakers do. A useful memo just published by Dr. Robert Graboyes of the National Federation of Independent Business brings this reality into sharp relief. Here’s the relevant portion from the memo’s “Q&A” section:

Will PPACA’s key institutions be up and running by 2014? The exchanges and other provisions will require a massive new information technology infrastructure that merges individual-level data (on all 310,000,000 Americans) from the U.S. Departments of Health and Human Services (HHS), Labor, Justice, Homeland Security, Treasury (and the Internal Revenue Service), plus Social Security, Medicare, Medicaid, 50 states, exchanges, and hundreds of insurers. Governors of both parties reported a year ago that HHS was missing crucial deadlines related to the construction of this IT infrastructure. Indeed, some skeptics (I am one) question whether this unparalleled IT integration will ever be feasible.

Graboyes isn’t the only one. As reported here earlier, in a recent interview Wisconsin Secretary of Health Dennis Smith also explained why the law’s deadlines are beyond unrealistic:

We have no other plan that we are taking because we think the reality is the federal government cannot meet its deadlines for implementing PPACA,” Smith said. “No one knows what a federal exchange looks like. The two major components that an exchange is supposed to do, which is determine eligibility and to complete the business transaction to pay premiums to health care plans that millions of Americans are supposed to pick, nobody knows what those look like. The administration has failed to release a credible business plan where objective observers could conclude that they’re going to pull this off.”

Smith’s extensive prior experience lends weight to his prognosis: Prior to his current position he ran the federal Medicaid program for President George W. Bush, and was a health care analyst at the Heritage Foundation.

Also reported here, a letter to President Obama from Virginia Gov. and Republican Governors Association Chairman Bob McDonnell posed a lengthy series of detailed questions that exposed the depth of uncertainty surrounding the law’s implementation even within the federal bureaucracy.

It appears that Gov. Snyder is bypassing the Legislature to pursue a goal that simply isn’t going to happen, and meet deadlines that Attorney General Bill Schuette has aptly characterized as “phony as a three-dollar bill.”

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.

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SEPTEMBER 2012

OTHER BALLOT PROPOSALS

The 'Protect Our Jobs' Amendment

Of the proposals expected to appear on the ballot in November, the “Protect Our Jobs" amendment is the most far-reaching. The proposed constitutional amendment would make unionization of government and private-sector employees a constitutional right, repeal a number of existing laws that reduce the scope of union power, limit the ability of the Michigan Legislature to alter laws concerning unionization and place the provisions of government union contracts above the provisions of current and future state law. The proposed amendment would primarily affect the unionization of state and local government employees, since private-sector unionization is governed by federal law.

Repeal of the Emergency Manager Law

This is a referendum that would repeal a state law enacted in 2011 expanding the authority of an emergency manager appointed by the state to take over the management of a fiscally failing school district or local government, where the primary alternatives are either a federal bankruptcy filing or a state subsidy. The expanded powers include invalidating government union labor agreement provisions that are unaffordable or unsustainable, if state officials approve. Since enactment, emergency managers have been appointed to reform the finances of seven cities and school districts

The Two-Thirds Majority Tax Limitation

If this proposal were placed on the ballot and approved by voters, no state taxes could be imposed, increased or broadened unless by a two-thirds majority of the Michigan House and of the Michigan Senate, or by voters in a statewide November election. According to the proposal's language, existing tax limitations in the Michigan Constitution would remain unaffected. The proposed constitutional amendment is backed by a group known as the Michigan Alliance for Prosperity.

Permission to reprint in whole or in part is hereby granted, provided that the author and the Mackinac Center are properly cited. http://www.michigancapitolconfidential.com

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SEPTEMBER 2012

HOME HEALTH CARE BALLOT INITIATIVE WOULD USURP POWER FROM THE GOVERNOR
SEIU-backed proposal would lock union perks into the state constitution
By Jack Spencer, July 31, 2012

Wording in a proposal to lock a forced home health care worker unionization scheme into the state constitution could also usurp power from Gov. Rick Snyder.

It looks likely that the union-backed proposal “Keep Home Care Safe” will be on the November ballot. The proposal is an attempt by the Service Employees International Union to continue receiving dues money from the Medicaid checks of people in the federal Home Help Program.

Language in the proposal would constitutionally place current members of the Michigan Quality Community Care Council (MQC3) board onto the board of a new entity, called the Michigan Quality Home Care Council (MQHCC). What's more, it locks those members into new four-year terms.

Gov. Snyder can name, replace and remove members of the MQC3 board. However, if the SEIU–backed proposal passes, he wouldn’t be able to do that for at least four years.

“Some people have to stop thinking of the constitution as a coloring book where if they don’t like something they just try to change it,” said Rep. Al Pscholka, R-Stevensville, chair of the House Appropriations Subcommittee on the Department of Licensing and Regulatory Affairs.

Sara Wurfel, a spokeswoman for Gov. Snyder, said all the potential ballot proposals are being reviewed by the governor's office but could not comment further until that process was complete.

In 2005, the SEIU targeted Michigan’s share of the federal Home Help Program as a dues-producing source. Under the federal Home Help Program, elderly patients and others suffering from various ailments and afflictions can be cared for at home instead of being placed in nursing homes or other institutions.

While Jennifer Granholm was governor, an “election” was held that set up the MQC3 as the dummy employer that made the scheme possible. Most of those who were unionized didn’t know they were being sent ballots.

As a result, Michigan’s 44,000 Home Help Program participants (since then it’s been as many as 61,000) were labeled as “home health care workers.” Dues started being deducted from their Medicaid checks after the forced unionization was accomplished. The union has taken more than $31 million from unsuspecting workers and, as its lawyer stated in a court hearing, is using that money largely for political purposes.

Roughly 75 percent of these so-called “home health care workers” are relatives or friends of the patients.

It is no coincidence that the dummy employer (MQC3) in the 2005 forced unionization and the MQHCC, which would be created by the proposal, have similar-sounding names. Basically, the proposal would place the framework of the SEIU scheme right into the constitution, with MQHCC serving as the new dummy employer.

Currently, the MQC3 board serves at the pleasure of the governor. Gov. Snyder could replace the members, but he has not chosen to do so. He could do so anytime before the November election.

If Snyder fails to act before the election and the proposal is added to the ballot and passes, the current MQC3 board members would start serving constitutionally mandated terms on the new MQHCC. Those terms would last through 2016.

Having a board appointed by Gov. Snyder that was less sympathetic to the SEIU’s forced unionization could make a difference even if the proposal were to reach the ballot and pass. It would conceivably give Gov. Snyder a voice in issues such as turning down contract extensions, asking for a new unionization election and reducing the administration fee, which is the amount of money that would come out of the Medicaid checks for those who choose to leave the union.

The pertinent language in the proposal reads as follows:

The Council shall be governed by a board of eleven (11) members, including:

a) Nine individuals appointed by the governor with expertise regarding participant needs, no fewer than seven of whom shall be current or former program participants, participant representatives, or participant advocates; however such positions shall initially be filled by those similarly qualified members of the Michigan Quality Community Care Council board who last filled those positions prior to the passage of this section. Upon expiration of each such initial member’s term of appointment, the position to be filled under this paragraph shall have a term of four years.

Permission to reprint in whole or in part is hereby granted, provided that the author and the Mackinac Center are properly cited. http://www.michigancapitolconfidential.com

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JUNE 2012

THE DANGERS OF PAINTING ---
State Law Requires Training, Exam, Fees For the Right to Earn a Living 'Irrational' licensing requirements
force painters, floor sanders, glaziers to give time and money
By Jarrett Skorup, May 29, 2012

Want to make a little extra cash painting houses this summer? Thanks to Michigan’s licensing apparatus, it’ll cost you.

Michigan law requires painting contractors to pay $235, take 60 hours of state-approved prelicensure education, pass two exams and be over 18 years of age, according to the Institute for Justice, a libertarian public interest law firm. Michigan is one of only 10 states that licenses painters — and only five states require any education to paint for a living.

Lisa Knepper, director of strategic research at the Institute for Justice, worked on the firm’s recent report on licensing in all 50 states. She says that occupational licensing has "rapidly become a burden" on middle-class citizens across the nation.

"We looked at 102 occupations affecting low or middle-income workers. What we found is that these licensing burdens are not only widespread, but irrational," she said. "[States force] workers [to] spend a lot of time getting licensed rather than working."

Michigan requires licensing in a variety of areas not commonly done in other states.

Floor sanding and finishing contractors, those who "scrape and sand wooden floors to smooth surfaces using floor scraper and floor sanding machines," are required to pay $215, take 60 hours of state-approved education, pass an exam and be over 18 years of age. Michigan is one of only nine states who require licensing for floor sanders, and only five states require any extra education to perform this task.

If citizens want to install security alarms, the state requires $200, over 1,400 hours of training, an exam and a minimum age of 25, according to the Institute for Justice. Sixteen states require no license for security alarm installers.

Glaziers, those who install glass, are licensed in only nine states. Michigan requires a license, $215, 12 days of experience and an exam. Only four states require any extra education to perform this task, the Institute found.

Belinda Wright, a licensing manager with the Department of Licensing and Regulatory Affairs for the State of Michigan, said that painters who receive more than $600 for a project need to be approved by the state.

“The law says that residential builders and residential alteration contractors (painters) require a license,” she said.

Occupational licensing proponents often point to the requirements for safety reasons. But Kneppler said it is unlikely that this licensing has made Michigan a less dangerous place to work and live.

“We are not aware of any epidemic of harm from residential painters or floor sanders around the nation from unlicensed workers,” Knepper said. “This undermines the case that it is truly a safety issue.”

The state Office of Regulator Reinvention has recently suggested 18 occupations that should be deregulated. One industry, barbers, are required to spend 2,000 hours in training — more than lawyers in Michigan.

House Bill 5326 submitted to the Michigan legislature by Rep. Ray Franz would exempt individuals and contractors from a variety of licensing mandates, including painting. It currently sits in committees for the State House and Senate.

Permission to reprint in whole or in part is hereby granted, provided that the author and the Mackinac Center are properly cited. http://www.michigancapitolconfidential.com

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NOVEMBER 2011

MICHIGAN SHOULD LOWER ITS RENEWABLE STANDARD REQUIREMENTS TO ZERO
By Daniel Hager, Sept. 9, 2011

Clean, renewable energy will power America’s future. Or so we’ve been told. If such is the case, personal investing in the production of clean, renewable energy should be a sound wealth-enhancing strategy. Can we clean up on solar?

The recent bankruptcy of Massachusetts-based Evergreen Solar and the closing of its Midland, Mich., plant raise a cautionary flag. Subsequently a California company, Solyndra LLC, shut down with bankruptcy intentions and a reported job loss of 1,100. SunPower Corp., another California company, tallied a net loss of nearly $150 million for its latest quarter.

Let’s look instead at Energy Conversion Devices of Auburn Hills, a respected half-century-old pioneer in solar-based electricity generation. It is famed for its numerous breakthroughs in the field.

ECD’s stock price has fluctuated widely over the years, but recent history is more revealing as momentum has built for clean, renewable energy. The price was below $9 a share in early 2004 after being buffeted down from plus-$30 highs by the recession of a decade ago. Good time to buy? In early 2006 the price was above $50. But a slump followed and brought it down to about $23 in early 2008.

Perhaps a new rush was due by then. States were mandating renewable portfolio standards, forcing electricity providers to generate specified percentages of their total output from renewable energy sources. The Michigan RPS, enacted three years ago, is 10 percent by 2015.

ECD did well in 2008. By late summer its stock price was above $75 — more than a tripling in value in little more than half a year. Sky’s the limit, ride the wave up on renewable hope and hype?

Not so fast. The 70s were still pertinent in the ECD price through much of this past August — 70 cents. More tumbling has occurred since, down to 62 cents on Sept. 6. For ECD, the radiant solar future has yielded a present that makes it a penny stock.

Part of ECD’s problem appears to be unique; a slippage in competitiveness. The research firm Morningstar Inc. notes that ECD “has gone from an industry cost leader to inefficient laggard.”

The larger problem is the solar industry’s “global oversupply,” as a Solyndra press release put it. Several European nations have caused demand to slump by reducing solar subsidies because they realized such subsidies are unaffordable.

The core issue is that renewable energy is an unnatural, forced and politicized market. Politics is fickle and unpredictable. The government subsidies that may make an industry possible can vanish.

The subsidies are in place because renewable energy is so inefficient. Our ancestors grasped that shortcoming and abandoned renewables like wind and biomass at the first opportunity. The economic planning lobby has resurrected these outmoded forms in a highly questionable strategy. The capstone is the law authorizing the Michigan RPS, Public Act 295 of 2008. It is titled, with an exquisite touch of irony, “The Clean, Renewable and Efficient Energy Act.” The law promotes wind-based energy, which is a parody of efficiency. A wind turbine spends most of its working life as vibrant as a corpse.

The question arises why P.A. 295 provided for an RPS of 10 percent. Why not 8 percent, or 6 percent or 4.34 percent? The act presupposes that economic planners are wise enough to know what kind of energy future we must have. If so, the planners should have sufficient knowledge to guide us in the minutest detail to that future. The 10 percent figure suggests they simply landed on a convenient, round number. The conclusion to be drawn is that the economic planners are without sufficient knowledge to be economic planners.

The RPS, rooted in subsidized inefficiencies, is a sideshow that detracts from Michigan’s main mission of working to efficiently move back into prosperity. The smart thing for Michigan legislators to do is reduce the RPS to zero.

#####

Daniel Hager is an adjunct scholar with 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.

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AUGUST 2011

MICHIGAN PRESIDENTIAL PRIMARY SELECTION PROCESS

This year lays the foundation for one of the next fights for the future of our country with the election of a new president. In 2012 we have the opportunity to take our country back. The presidential election process is starting now with the determination of the primary selection process. Michigan needs to determine its selection process and the Michigan State Republican Party (MSRP) is set to vote on the process at the August 13-14 State Committee meeting.

The options are (summary provided to Policy Committee):

1. Open Primary. Election officials conduct elections according to the Michigan Election Code. No declaration of party preference required. No cost to the MRP.

2. Closed Primary. Election officials conduct elections according to the Michigan Election Code. Declaration of party preference required. Must confirm ability to conduct closed primary with Secretary of State and Attorney General. No cost to the MRP.

3. Caucus Site Elections. Local parties conduct election at political party - operating polling locations. Elections are conducted according to state party rule. 2012 presidential preference primary would become a beauty contest. Very costly to MRP.

4. State Convention. State convention delegates only vote for presidential candidates. Election is conducted according to state party rule. 2012 presidential preference primary would become a beauty contest. Some cost to MRP.

5. State Committee. State Committee elects presidential candidates. Election is conducted according to state party rule. 2012 presidential preference primary would become a beauty contest. Some cost to MRP.

6. Congressional District Committees. Congressional district committees elect presidential candidate. Election is conducted according to state party rule. 2012 presidential preference primary would become a beauty contest. Some cost to MRP.

7. County Executive Committees. County executive committees elect presidential candidate. Election is conducted according to state party rule. 2012 presidential preference primary would become a beauty contest. Some cost to MRP.

Based on current Michigan law, there will be an open primary at the end of February 2012. If the State Committee takes no action, this open primary will take place and Michigan Republicans will lose half of its votes at the national convention, in addition to other penalties. There can still be a primary but it must move to March, which requires the Michigan legislature to change the date. State Party must take action if we don’t want the RNC penalties applied to our delegation.

Each option has a cost, which are paid for by the state, the state party or local party organizations. Each process can be more favorable to one Presidential candidate over another, as a well funded candidate may favor a one method versus a candidate with less funding may favor a different one. There may be other benefits or consequences, including having Democrats influence our selection process.

These options have been described by the State Party to a member of the Policy Committee, which voted on July 12th to make a recommendation to the State Party Committee, on which Adam Hume is a member, and will be voting on August 13-14.

IOSCO COUNTY REPUBLICANS VOTE ON THEIR PREFERENCE

At the monthly meeting of the Iosco County Republicans on July 8, we considered the alternative methods of choosing our presidential nominee.

Both the open primary and closed primary would allow snowbirds to vote by absentee ballot and participate in the selection.  They would also allow Democrats to vote in the Republican primary.  Even under the the "closed" primary, the Democrats might have to register as a Republican for the primary, vote for the Republican nominee and vote Democrat for president.

While the caucus option was not discussed, these can be very complicated and involve a great deal of work to make certain that the caucus sites are staffed, the results tabulated and forwarded to the County and then State Parties.

The choice unanimously adopted at our meeting was to use county conventions as we now do to choose our lieutenant governor, secretary of state, attorney general, state department of education and university board candidates.

In this process, a county convention would be held in which people could run for delegate or alternate.  Preference, by State Party rules goes to precinct delegates and those who are present at the convention.  If more people wish to be delegates that slots that are available, attendees at the  county convention will vote for those that will be elected.  This has the benefit of helping develop county parties and getting people involved in their activities.  Our county has never filled all of its precinct delegate spots.  Giving them a preference in delegate selection would encourage people to run.  Once the County Party selects its delegates and alternates, they attend the State Convention.

The delegates to the State Convention will then select the presidential nominee.  It would probably take more than one ballot because of the number of candidates who seek nomination.  At the end, however, Michigan will have selected its presidential nominee and will choose delegates from the State Convention who will attend the National Republican Convention.

Adam Hume, our county chair will make our preference known at the next 1st District meeting.  He believes that quite a number of counties in the 1st District also favor the Convention route.

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JULY 2011

FLOOD INSURANCE MAY LEAVE YOU HIGH AND DRY

By Russ Harding, 5/25/2011

Property owners in the state may be in for an expensive surprise due to a federal government initiative they have probably never heard of, called the National Flood Insurance Program Map Modernization Initiative. The Federal Emergency Management Agency, in conjunction with the Michigan Department of Environmental Quality and county floodplain managers, are developing new floodplain maps.

If the community you live in is participating in the NFIP and if the map indicates that your property is located in a floodplain, expect to pay hundreds of dollars more per year for insurance if you have a federally insured mortgage. As with many government programs you have no choice as your lender will require the insurance.

The FEMA maps are supposed to indicate if your property is in a 100-year floodplain (a flood so severe that it occurs on average only once in 100 years). The problem is that the maps are usually constructed by a technician sitting in an office and looking at a contour map. For floodplain maps to be accurate they should be checked in the field.

A federal government that has spent itself broke is looking for more revenue; requiring more people to buy flood insurance seems like an easy way to generate more money for the government.

Property owners who believe their land has been inaccurately included in a floodplain will have to hire a licensed professional surveyor or engineer to accurately locate your property on the map and do an elevation survey. It’s not cheap, but will most likely save the property owner money in the long run compared to years of paying for flood insurance. It is important that property owners look out after their own interests as they should not rely on the government to have their best interest in mind.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.  http://www.mackinac.org

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JULY 2011

REAPPORTIONMENT MAPS

The Republican plans which will be submitted for approval for Congressional and State Senate and House Districts are shown.  They are expected to be adopted and signed into law.  From there, the Democrats will probably appeal.  Since Michigan is losing a Congressional seat, the districts in southern Michigan were redrawn to place Democrats Sander Levin and Gary Peters in the same District.  Iosco moves to the 5th District, which is represented by Democrat Dale Kildee. Iosco stays in the 36th Senate District.  Iosco also moves to the 106th House District which is now represented by Pete Pettalia.

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JUNE 2011

TRUST FUND BABY
By Russ Harding, 5/4/2011

The Michigan Natural Resources Trust Fund is funded from oil and gas royalties that have provided millions of dollars the state has used to purchase large tracts of lands. Those purchases have provided untold outdoor recreation opportunities for residents and visitors. A significant downside, however, is that public ownership effectively takes these lands off tax rolls. Traditionally, the state reimburses local units of government for the lost revenue using general fund money, even though Article IX of the state Constitution allows interest and earnings of the Natural Resource Trust Fund to be used to for these “payments in lieu of taxes” to local government.

Rep. Joel Johnson, R-Clare, has introduced House Bill 4577, which would direct that PILT money come from interest and earnings of the Natural Resource Trust Fund as provided for in the Constitution. One has to wonder why legislators have not already availed themselves of this opportunity to save money that can be used to help close the state’s budget deficit.

When state officials and lawmakers place more private land in public ownership, there is a cost to the taxpayers for that action. HB 4577 is a good start in addressing the consequences of the use of trust fund dollars to buy state land. This is just a start, however, and more will need to be done.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.

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MAY 2011

STATE DEBT ALERT! BEWARE MASSIVE BORROWING DISGUISED AS "LOTTERY PRIVATIZATION"
By Jack McHugh, April 23, 2011

In the past few days, politicians in the Republican-controlled Michigan Legislature have begun murmuring about “lottery privatization.” Don’t be misled, however – this has nothing to do with saving money by contracting out operation of the Michigan lottery to a private company.

The fact that the talk is coming from appropriations committee members angsting over spending cuts is suggestive of what’s really being contemplated:

Debt. Hundreds of millions or even billions of dollars of new borrowing that future Michigan taxpayers will have to repay.

The borrowing would be done by pledging to lenders some or all of the lottery revenue for years or even decades into the future. In return, the lenders would write up-front checks that the politicians could start spending right now.

As part of the scheme, a lender would also operate the lottery, just as in good-faith privatization programs, but that’s just cover. You can tell because, depending on the size of the loan, rather than flowing into the state Treasury, some or all of the future lottery revenue would go into the pockets of the operator to repay the interest and principle on the debt. Depending on the size of the loan, the amounts would be tens or hundreds of times more than the few millions a private company would earn each year for just managing the lottery.

The clincher is when the arrangement also involves turning over the operation for decades into the future. Hardly any legitimate management outsourcing contracts extend more than five years or so, at the end of which the state can choose to renew or not depending on the manager’s performance. Because of the debt owed in these loan-masquerading-as-privatization deals, the state has essentially no recourse if the lender/operator causes problems.

As for future taxpayers deprived of up to $700 million in annual lottery revenue that currently supports public schools — too bad: They have no representation in these borrow-and-spend discussions.

To be sure, the politicians will swear on stacks of Bibles that those big up-front loan proceeds will go right into an airtight “lockbox,” with ironclad guarantees to spend the money gradually and only for specified Really Important Things (specifically, educational things, since the state constitution earmarks lottery profits to schools). Many lawmakers will even believe it themselves as they assure taxpayers that this money will never be tapped for any other purpose. Unless, that is, during some future budget “crisis” a simple majority of lawmakers plus the governor agree that dipping in is easier than finding more spending cuts.

There are already quite a few such ‘lockboxes” enshrined in state statutes, called “restricted funds.” The Legislature never, ever taps these funds to cover other spending … never more than a few times a year, that is. (See also “How Fees Fuel Big Government.”)

Handing politicians pools containing hundreds of millions or billions of dollars is never a good idea. When the cost of doing so is massive interest and debt service payments imposed on taxpayers for decades to come, plus the loss of ongoing revenue from a lucrative source like the lottery, it's an even worse one.

Permission to reprint this article in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. http://www.mackinac.org.

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MARCH 2011

GOV. SNYDER TO BREAK MICHIGAN'S MEGA HABIT
By Michael D. LaFaive, 1/28/2011

Although details are not yet clear, according to early reports Gov. Rick Snyder’s proposed Michigan Business Tax replacement appears to be good news for advocates of sound economic policy. Whatever the final details, lowering the tax burden on job providers and making the system much less complex will surely provide a boost for commerce in the Great Lakes State.

Arguably of equal importance, press reports are saying the governor’s proposal would also end the Michigan Economic Growth Authority’s selective corporate tax break and subsidy program, and the state film subsidies as well. Research by Mackinac Center analysts shows that, at best, MEGA creates no new net jobs, and it may actually destroy them.

Specifically, Mackinac Center scholars have performed two separate statistical analyses of MEGA, using different methodologies and time periods. A 2005 study found that for every $123,000 in tax credits offered by the program, just one construction job was created, all of which had disappeared after two years.

In 2009, the Center zeroed in on MEGA’s effect on manufacturing jobs, and discovered an apparent link — a negative one. That is, for every $1 million in tax credits actually earned by MEGA companies, 95 manufacturing jobs were lost in the counties where the recipient firms were located.

Two other organizations have performed detailed reviews of MEGA program. One also found it to be a job killer, at least relative to an alternative tax regime of lower overall taxes, and the other found modestly positive job creation, but with overall fiscal effects that were still negative.

If the early reports hold up, Gov. Snyder’s proposal appears to be a bold and fresh approach to tax policy in Michigan. Responding to the news, Mackinac Center President Joseph Lehman posed a regretful question: “Imagine how many of Michigan’s 858,800 lost jobs could have been saved if Gov. Snyder’s predecessors had done what he is doing now?”

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited. http://www.mackinac.org.

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SEPTEMBER 2010

 CONSTITUTIONAL CONVENTION WON'T FIX MICHIGAN'S PROBLEMS
By Joseph G. Lehman, April 13, 2010

On Nov. 2, Michigan voters will face Proposal 1, which will ask whether a convention should be held to rewrite Michigan's constitution. Although we can certainly improve that foundational document, most of Michigan's problems could be solved without rewriting it. Furthermore, there is no guarantee that a constitutional convention would fix, or even address, whatever problems might prompt voters to call the convention in the first place.

Proposal 1 will be on the ballot because the current constitution, passed in 1963, requires the question to appear automatically every 16 years, starting in 1978. That year, 77 percent of voters rejected the constitutional convention and 72 percent did likewise in 1994. Recent polling indicates voters may be more open to the idea this year, but they disapprove by more than 2-to-1 when told the cost could be as much as $45 million.

The fundamental purpose of the state constitution is to limit government’s ability to infringe on people’s rights.

Nevertheless, a few convention proponents have organized around specific reform ideas. Examples include lengthening legislative term limits, converting to a part-time Legislature, modifying selection of judges, altering the budget process, expanding water regulation, increasing taxation and more.

Others who have long sought specific changes in Michigan law are considering supporting a convention for the sake of their single issue. Some in the highly energized Tea Party movement wonder if a constitutional convention might let them effectively open the hood of state government and fix what's broken at a time when the state seems unable to cope with its alarming economic decline.

The problem is, that's not the way it would likely work. A constitutional convention is not like handing your car to a certified mechanic; it's more like giving it to 148 trained and untrained mechanics and letting them do anything a majority of them can agree to, including replacing your car with something much worse. After a lot of time, trouble and expense, you and fellow voters collectively choose between the mechanics' handiwork and exactly what you started with.

The passage of Proposal 1 would set a process in motion. Two elections — a partisan primary and a general — would be held by May 2011 to elect the 148 convention delegates, one from each state House and Senate district. They would convene by October, select their own officers and create their own rules. They'd meet in Lansing and could continue through July 2012. Whatever they produced would go to voters for approval within 90 days. If it passed by a simple majority, the new constitution would take effect.

Nothing about this process would address our problems any better than the current legislative system. Our most serious economic problems involve chronic overspending in the face of weakening state revenue, which is worsened by rising levels of taxation and regulation that drive people and businesses from the state.

If our current lawmakers can't fix that, it's not because the constitution prevents them from doing so. More likely it's because voters haven't yet held individual lawmakers responsible for reckless spending (although this may be changing). If voters aren't yet holding legislators accountable for spending, it's not clear how they would hold convention delegates accountable for potentially bigger decisions. The fundamental purpose of the state constitution is to limit government's ability to infringe on people's rights. Where constitutional changes are needed, the voter initiative process is a better alternative than a convention, which could be unlimited in scope and cost millions of taxpayer dollars.

Neither is there a convincing reason to believe convention delegates would be more capable than current legislators. Delegate elections would be highly partisan and influenced by the same special interests that dominate regular elections.

The prospect of rewriting a constitution could attract some truly exceptional, public-service minded candidates, but it would probably attract even more of those who would typically run for the Legislature, along with term-limited former lawmakers. It might especially draw highly charged, single-issue candidates whose priorities could make the convention agenda read like the contents of Pandora's box.

Michigan has serious problems, but they should be fixed without a constitutional convention. The problem with Michigan government isn't so much what's under the hood, it's what we're letting the driver get away with. If your teenage driver is irresponsible, no mechanic can change that. Instead, you need better control and accountability of the driver.

Joseph G. Lehman is president of 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.  http://www.mackinac.org

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JULY 2010

MICHIGAN TAXPAYERS HAVE ALREADY MADE COMPROMISES
By James M. Hohman | June 7, 2010

The Michigan Legislature recently passed reforms that slightly lower the cost of employing state and public school workers by requiring modest employee contributions for future retiree benefits. The reforms may be cited by legislators who want to enact a service tax, describing it as a "grand bargain" wherein both taxpayers and spending interests give a little and get a little. Unfortunately, the "grand bargain" is a lopsided compromise that will further burden taxpayers.

Since 2002, Michigan residents have seen four different tax increases: Hikes in income and business tax rates in 2007, and cigarette tax hikes in 2002 and 2004. These are in addition to other revenue enhancements, such as adding "driver responsibility fees" to traffic tickets and selling off future tobacco settlement revenues. Legislators have also reneged on promised phase-downs and phase-outs of income and business taxes. In return, the state received balanced budgets and not a whole lot else.

To the taxpayers, the only issue is the amount they are required to contribute. The state’s current policies make them pay more each year. The cost of government employees, however, keeps increasing. In fiscal 2002, state government spent $3.9 billion in wages and benefits for 60,000 employees. In fiscal 2008, the last year for which data is available, that cost had grown to $4.7 billion despite employing 9,300 fewer full-time equivalent employees.

On average, Michigan spends $93,039 per FTE state employee, up from $65,176 in 2002. State fiscal strains resulted in cuts to other areas of the budget, including university appropriations and local government revenue sharing, even as taxes were raised. But the level of pay and benefits of Michigan's government work force has only increased.

Few state employees receive a $93,039 salary, though. Insurance benefits and retirement costs require 30.5 cents of every dollar in state compensation, and they have grown substantially. Since fiscal 2002, the state's payments for retirement have nearly doubled (state retirement includes generous health benefits), while payments for health insurance have increased by 48 percent. Protecting the wages and benefits received by the state government work force has clearly been a priority for policymakers.

Public school budgets have been even more sheltered than have the state's employees from Michigan's decade-long economic downturn. From 2002 to 2008, cumulative revenues to school districts increased by 2.3 percent, adjusting for inflation. That may not sound like much, but at the same time, total private-sector earnings in Michigan — every private-sector paycheck, employer-paid benefit and dollar earned by a private business — fell 11.5 percent, adjusted for inflation. Public school enrollment over this time fell 3.4 percent. School spending has been detached from declines in both the student population and the economy.

If state and local governments (including school districts) were to bring the fringe benefits received by public-sector employees in line with those of the private sector, our calculations show the savings would equal $5.7 billion annually. This is more than enough to repeal all of the recent state tax hikes, eliminate the Michigan Business Tax and substantially lower any other state tax.

The differences between the compensation for Michigan's government employee and its private-sector taxpayers are unsustainable. Reform is critical. Policymakers are beginning to address the problem, but the current proposals fix only a fraction of the problem.

The savings from the proposals to require employee contributions to state pension systems are difficult to project. At best, the bills would save $400 million annually, which is substantial, but a far cry from the $5.7 billion gap now in place. At worst, the bills may actually cost taxpayers more through provisions that multiply pension benefits and mandate other retiree benefits.

There is constant talk in Lansing about the structure of public-employee benefits: what insurance coverage to offer, whether to pool benefits among various levels of government and whether government workers should be in a "defined-contribution" or a "defined-benefit" retirement system. But to the taxpayers, the only issue is the amount they are required to contribute. The state's current policies make them pay more each year.

Lately, those costs of compensation have increased without any votes from Lansing and with no public discussion. Public-employee expenses are treated as just another cost that taxpayers must bear. But taxpayers have given up much over the past eight years to shore up a broken system. Any public policy "bargain" appealing to "fairness" needs to address the unsustainable growth of public compensation. Addressing these costs would make a service tax unnecessary.

James M. Hohman is a fiscal policy 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. www.mackinac.org

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JULY 2010

MICHIGAN DEPT. OF ED. MISCALCULATES AVERAGE TEACHER SALARY
Department corrects its error; revised figures available
By Michael Van Beek, June 2, 2010

The Michigan Department of Education improperly calculated the average public school teacher salary in the state for the last six years, reporting figures significantly lower than what is correct. Corrected figures for the past two years were recently released.

The teacher salary averages are published in MDE's "Bulletin 1014" report, which divides the total amount paid in salary to all teachers in the state by the number of teachers. The department, however, had included some charter school teachers in the second figure without adding their pay to the total salary amount. The math error produced a deflated average teacher salary from 2004 to 2009.

In 2004 the difference between the average salary reported by the MDE ($52,161) and the correct figure ($54,088) was $1,927, or 3.7 percent. The most recent 2009 report understates the correct salary amount by $3,551, or 6.1 percent.

Charter school teachers generally earn salaries that are considerably lower than those in conventional schools. When they are not included in the calculations the average salary for teachers in conventional districts is $62,556.

The MDE has issued a revised version of the 2009 report that correctly states that the average teacher salary for all teachers that year (conventional and charter) was $62,272, or $3,551 more than the $58,721 originally reported. The 2008 report has also been corrected.

The figures are important because they may be used to inform important policy decisions. For example, the Legislature recently debated a modest school employee pension reform proposed by Gov. Jennifer Granholm, and pensions are based on a teacher's final salary.

Michigan teachers command the highest salaries in the nation when taking into account state per capita personal income.

Reprinted by permission from Michigan Capitol Confidential, a publication of the Mackinac Center, www.mackinac.org.

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APRIL 2010

MICHIGAN'S COSTLY TAB FOR 'CAP-AND-TRADE'

By Tom Gantert, March 18, 2010

Rep. Henry Waxman, D-Calif.Cap-and-trade legislation will hit Michigan hard by 2030 if passed, costing the state as many as 91,000 jobs while raising residential energy costs as much as 60 percent and cutting a family's disposable income by as much as $1,400 a year, according to a new study.

The study was done by the American Council for Capital Formation, a Washington-based public policy research think tank. It analyzed the impact of the Waxman-Markey HR 2545 bill. That bill contains the "cap-and-trade" language. Cap-and-trade puts a cap on emissions — and energy consumption. Sources either lower their emissions, with the ability to trade any excess allowance not used, or they can exceed the cap and purchase more credits to cover that over usage.

"It's really all pain and no gain as far as our study shows," said Margo Thorning, one of the study's two authors and the senior vice president and chief economist of the ACCF.

The ACCF did a baseline study on Michigan without a cap-and-trade bill, and then compared that to what would happen if the climate legislation were passed.

The study's findings:

Michigan will have between 66,600 and 90,800 fewer jobs by 2030 if cap-and-trade legislation is passed. The job losses will be from lower industrial output due to higher energy prices, the high cost of complying with required emission cuts and greater competition from overseas manufacturers with lower energy costs.

Michigan's energy costs will go up by 2030. Gasoline prices will increase by 20 to 26 percent, electricity prices will increase up to 60 percent and natural gas prices will increase up to 79 percent.

Disposable income for families will be reduced between $883 and $1,435 per year by 2030.

Thorning is coming to Lansing on April 29 to give a more in-depth presentation on the study.

According to the study, cap-and-trade will slow Michigan's economic growth because the state's energy users will have to subsidize more expensive energy sources such as wind and solar power to quickly meet federal mandates.

Thorning said the negative impact economically will not result in any clear environmental benefit because larger developing countries aren't on the same cap-and-trade energy diet.

"The environment doesn't benefit unless China and India take on targets, and they haven't taken on targets," Thorning said. "Our small change will be swamped by the emerging countries who are growing and dependent upon fossil fuels."

The study is available at http://www.accf.org/media/docs/nam/2009/Michigan.pdf

Permission to reprint in whole or in part is hereby granted, provided that the Mackinac Center and the author are properly cited. http://www.mackinac.org/

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OCTOBER 2009

MACKINAC CENTER PUBLIC-INTEREST LAW FIRM FILES SUIT
Sept. 16, 2009
Contact: Patrick Wright Director, Mackinac Center Legal Foundation, or
Michael Jahr, Director of Communications 989-631-0900

LANSING — The Mackinac Center Legal Foundation, a newly created public-interest law firm, today filed suit against the Michigan Department of Human Services in a case where a “shell corporation” was established to shanghai more than 40,000 home-based day care business owners into a government employees union. On behalf of two owners, Sherry Loar and Dawn Ives, the MCLF filed an action at the Michigan Court of Appeals seeking to stop the DHS from improperly siphoning “union dues” out of state subsidy checks meant to provide assistance to low-income parents.

“The DHS, UAW and AFSCME have devised a scheme to siphon $3.7 million into union bank accounts,” said Wright. “They’ve done this by concocting a new government entity that they allege transforms 40,000 home-based private contractors into government employees and union members. If Sherry and Dawn are government employees simply because a few of their customers receive government aid, then doctors, landlords and independent grocers can’t be far behind.”

To achieve this massive increase in government employees, the DHS and unions appear to have created a shell corporation using an interlocal agreement between the agency and Mott Community College, a move that Wright criticized as extraconstitutional.

“If the state is determined to place these day care providers in a union, it needs an act of the Legislature,” said Wright. “Two government agencies cannot conjure up the power to change the law simply because they are working together.”

Both plaintiffs enjoy running their own businesses, and both provide an important service to parents and children in their community. They do not work for the state of Michigan, and aside from the parents who hire them, they do not work for an employer. Although they describe themselves as long-time union supporters, Loar and Ives were shocked last year when they received notification in the mail that they were considered dues-paying members of the Child Care Providers Together Michigan union.

“I’m not opposed to unions; everything has a place,” said Loar. “But when we enter my door, this is my home.”

A video that tells Loar and Ives’ story, as well as the complaint, legal brief, a backgrounder and other information related to the case, can be found at www.mackinac.org/9051.

The Mackinac Center Legal Foundation is a public-interest law firm that advances individual freedom and the rule of law in Michigan. Wright, who will continue as the Center’s senior legal analyst, explained that the Legal Foundation “will build upon the Center’s prior work of filing amicus briefs in strategic cases that allow the Mackinac Center to directly fight improper and illegal government activity.”

Reprinted by permission from the Mackinac Center.

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OCTOBER 2009

RELIANCE ON RENEWABLE MANDATES WILL COST, NOT CREATE JOBS
Russ Harding, Mackinac Center Senior Environmental Policy Analyst, August 31, 2009

MIDLAND - The adoption of "green energy" policy recommendations made in a recent report by the National Resources Defense Council would push Michigan's economy into a freefall, according to Mackinac Center for Public Policy energy analysts Russ Harding and Tom Tanton. The report, "Energy Future: A Green Energy Alternative for Michigan," claims that the state's future energy needs can simply and quickly be met through renewable sources that could save $3 billion in electricity costs over 20 years.

"The NRDC report has the luxury of avoiding the empirical evidence that renewable mandates and rejection of clean-coal energy strategies kill industry, cost jobs and wreak economic havoc," said Harding, referring to a March 2009 study released by Spain's Universidad Rey Juan Carlos. "The Energy Future report describes one side of a two-sided equation. We are promised green jobs if we rely solely on alternative energy to power our homes and factories. What we are not told is that for every green job created, we could lose at least two or three other jobs because of higher energy costs."

The URJC study reported that Spain's $36 billion renewable energy portfolio created only $10 billion of energy, effectively raising the country's comprehensive energy prices by 31 percent. Citing additional energy costs as high as 55 percent, several of Spain's largest industries subsequently moved operations to other countries.

While agreeing with the NRDC assessment that the Michigan Public Service Commission's predictions of increased power demand in Michigan are overstated, Harding and Tanton disagree with the conclusion that new baseload coal or nuclear power plants are not needed.

"Most of Michigan's large power plants are aging and need to be replaced with new, environmentally clean technology," said Harding. "Trying to keep the older plants running and supplementing them with wind and solar will lead to more pollution, not less."

The Mackinac Center recently contracted with Tanton, president of T2 and Associates and a senior fellow in energy studies at Pacific Research Institute, to research and write an analysis on energy policy for Michigan that will be published in early 2010.

"It's almost funny that NRDC would tout the world's oldest and most-expensive technologies like wind, sun and firewood as solutions to Michigan's 21st century future," said Tanton. "Mankind has advanced over the centuries by moving away from old, tired and diffuse energy forms. States like California that have already tried the NRDC approach continue to have the nation's highest utility rates and the lowest power quality, along with associated disastrous state budgets and economies.

"The NRDC approach has to rely on heavy subsidies and government mandates because the technologies have been left in the dust, not because they are 'infant' industries," Tanton continued. "If NRDC was as concerned about the human resources in Michigan as they are the natural resources, they would focus on technologies like nuclear, clean coal and Michigan's own vast reserves of natural gas, which can pave the way for an economic resurgence in Michigan."

Reprinted by permission from the Mackinac Center, www.mackinac.org, 989-631-0900

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MAY 2009

ATTEMPTS AT GOVERNMENT EFFICIENCY ARE MISGUIDED
By Russ Harding, Apr. 6, 2009

In response to Michigan's depressed economy and sinking state revenues, Gov. Jennifer Granholm announced in the State of the State address her intent to reduce the number of state agencies from 18 to eight. While the governor's goal to make government more efficient through department consolidation is laudable, it is likely to achieve little in savings and may make it more difficult for residents and businesses to benefit from timely decisions. Government reorganization seldom addresses the real issues of what functions government should perform. Rearranging the deck chairs of government functions is not the same as reducing or eliminating programs that are not essential to the safety and welfare of Michigan taxpayers.

I spent much of my career trying to make government more efficient as a manager of state natural resource and environmental programs for 35 years in four different states, culminating as director of the Michigan Department of Environmental Quality from its beginning in 1995 through 2002. I have come to the conclusion that while well-intentioned, most of my efforts to bring efficiencies to state government programs were wasted. My basic premise was wrong. While government certainly could be more efficient, what it needs most is downsizing. Eliminating unnecessary government programs is much harder work than shuffling programs between state departments. Perhaps that is why the governor and the Legislature continue to offer stopgap measures such as reorganization rather than real structural reform of state government.

Expanded and new government programs quickly acquire a political constituency that lobbies for their continued existence and often argues that programs need to be larger. These political constituencies vary from businesses that want incentives or subsidies to groups that want the government to support their particular agenda. Once government programs are in place it's very difficult to get rid of them when they underperform or fail completely to realize their intended goals. That is why as director of a state agency I was often reluctant to accept new federal money that invariably had strings attached to it. The Washington Post reports that a number of banks have refused to accept or are considering giving back federal bailout funds for that very reason.

If the governor wishes to effect meaningful government streamlining and savings, she need look no further than her own stated goal to return the state's wetlands program to the federal government, which is closer to actual government reform than is her plan to reorganize state departments. Wetland permitting is not a function that the state needs to perform. The federal government does wetland permitting in 48 other states and is capable of performing that function in Michigan. Gov. Granholm should stay the course she announced on the wetlands return as she will surely face opposition from special interest groups more interested in their particular cause than the overall good of the state.

Most taxpayers do not care how state government is organized, but they do care about what functions it performs. It is particularly critical that state government lives within its means at all times, but especially during an era of double-digit unemployment (Michigan is now at 12 percent, worst in the nation). It is impossible for Michigan to get its spending in line with projected state revenues without eliminating functions and programs.

While consolidating state departments is not a bad idea, the monetary savings will simply not be enough to balance the books. Relying on one-time federal stimulus dollars that raise expectations will only make the long-term problem worse when those funds disappear.

Gov. Granholm should follow the lead of other state governors who have wisely decided not to accept some federal stimulus funds. The time for substantial state restructuring is now. Lawmakers should review every state program to determine if it is essential to the safety and health of Michigan residents, and eliminate those programs that fail to meet these criteria. The alternative to reduced state spending is additional tax increases, which will only depress the state's economy more. What our byzantine and gargantuan state government needs is a demolition crew, not another interior decorator.

Russ Harding is director of the Property Rights Network 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.

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SEPTEMBER 2008

THE TRUTH BEHIND THE 'GOVERNMENT REFORM PROPOSAL'

Document on UAW Web Site Outlined Strategy for 'Changing the Rules of Politics in Michigan to Help Democrats'

The Mackinac Center for Public Policy has obtained a document outlining details of what would become the "Reform Michigan Government Now" ballot initiative. The document, in the form of a Microsoft PowerPoint presentation, bears the blunt title: "GOVERNMENT REFORM PROPOSAL: Changing the rules of politics in Michigan to help Democrats."

According to the UAW Region 1-C Web site where the document was originally found,[*] this presentation was given to local union officials at a leadership conference in late May or early June. UAW officials have not returned our calls, and both the presentation and a brief article that referred to the presentation have since been removed.

While it’s not clear who delivered the 34-slide presentation, it begins by painting a grim picture for the Democratic Party in Michigan. "Democrats have been reduced to a de-facto permanent legislative minority in Lansing, especially since 1990," the presentation begins. The document indicates that obtaining favorable Democratic districts would require Democratic control of Michigan's House, Senate, governor and Supreme Court. The "problem" is that the Democrats would be unlikely to control future redistricting, and without favorable redistricting another "Engler era" is "quite possible."

After asserting that Democrats are unlikely to achieve control of redistricting through conventional means, i.e. the democratic election of candidates, the presentation outlines a series of changes to remove "structural obstacles to Democratic control of state government." Among the goals are the establishment of a bipartisan commission to redraw legislative boundaries and the removal of two Supreme Court justices and seven Court of Appeals judges with the intent of establishing a partisan advantage.

To make these changes more palatable to the electorate, the presentation calls for them to be combined with other alterations to state government, including a reduction in lawmakers’ salaries, a decrease in legislative seats and reducing the number of executive branch departments, state boards and commissions. The amendments suggested in the PowerPoint presentation match up precisely with the terms of the "Reform Michigan Government Now" submitted for the November ballot and now under review by the State Board of Canvassers.

The document also includes polling data and a $4.9 million budget for passing the initiative, which is described as "less than half the cost of trying to beat an incumbent GOP Supreme Court Justice." The presentation concludes with the prediction that "[i]f the proposal passes, it will reduce the cost and increase the prospects of winning the State Legislature every cycle."

To the extent that this document is what it appears to be, it leaves little doubt that the Reform Michigan Government Now ballot initiative is a partisan power play. The most important features of the scheme are the redistricting commission and the removal of two Republicans from the Michigan Supreme Court. Nearly everything else in the proposal seems to be calculated to make the entire package more attractive to voters.

The Mackinac Center is a nonpartisan policy research organization committed to informing Michigan residents about the content and likely consequences of legislation and ballot proposals. While we have no objections to partisan politics as such, it is essential to call attention to partisan ploys that are presented as neutral good-government reforms.

The PowerPoint file also gives a troubling glimpse into the thinking of UAW officials. Rather than working to guide their members through a difficult economy, they appear to be pursuing a crassly partisan and breathtakingly cynical political maneuver. At a time when the auto industry in Michigan is undergoing difficult changes, the UAW would be well-advised to focus on its members and leave politics to the politicians.
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[*] The PowerPoint presentation was originally discovered by Mackinac Center Labor Research Intern Jim Vote. That story is told in more detail in "An Intern's Service to Michigan."

Paul Kersey is director of labor policy for 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.

Note:  The Court of Appeals has taken the proposal off the ballot, but the sponsors of the proposal intend to appeal to the Supreme Court.

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MAY 2006

MICHIGAN IS A HIGH TAX STATE

States Ranked by Total Taxes and Per Capita Amount: 2005
Amounts in thousands.				Per capita amounts in dollars
Total tax			Total tax per capita
Rank	State	Amount	Rank	State	Amount
	United States…..	648,606,245		United States…..	2,192.27
1	California…..	98,434,685	1	Vermont…..	3,600.16
2	New York…..	50,190,396	2	Hawaii…..	3,477.93
3	Florida…..	33,894,971	3	Wyoming…..	3,417.77
4	Texas…..	32,784,942	4	Connecticut…..	3,300.49
5	Pennsylvania…..	27,262,969	5	Delaware…..	3,228.79
6	Illinois…..	26,411,689	6	Minnesota…..	3,093.93
7	Michigan…..	24,340,487	7	Massachusetts…..	2,815.23
8	Ohio…..	24,006,560	8	Alaska…..	2,786.90
9	New Jersey…..	22,933,999	9	California…..	2,724.31
10	North Carolina…..	18,639,618	10	New Jersey…..	2,630.65
11	Massachusetts…..	18,014,681	11	New York…..	2,606.62
12	Virginia…..	15,918,847	12	Rhode Island…..	2,443.07
13	Minnesota…..	15,881,131	13	Wisconsin…..	2,429.96
14	Georgia…..	15,675,655	14	Maryland…..	2,410.23
15	Washington…..	14,839,634	15	Michigan…..	2,404.95
16	Maryland…..	13,497,281	16	West Virginia…..	2,367.17
17	Wisconsin…..	13,452,250	17	Washington…..	2,359.99
18	Indiana…..	12,853,976	18	Arkansas…..	2,357.84
19	Connecticut…..	11,584,728	19	Maine…..	2,323.12
20	Arizona…..	11,008,428	20	New Mexico…..	2,319.23
21	Tennessee…..	10,007,292	21	North Dakota…..	2,202.97
22	Missouri…..	9,543,814	22	Pennsylvania…..	2,193.32
23	Kentucky…..	9,090,882	23	Kentucky…..	2,178.50
24	Louisiana…..	8,638,674	24	Nebraska…..	2,158.36
25	Alabama…..	7,799,948	25	North Carolina…..	2,146.68
26	Colorado…..	7,648,456	26	Virginia…..	2,103.72
27	South Carolina…..	7,318,388	27	Ohio…..	2,094.08
28	Oklahoma…..	6,859,030	28	Nevada…..	2,074.72
29	Arkansas…..	6,552,449	29	Illinois…..	2,069.40
30	Oregon…..	6,522,665	30	Idaho…..	2,053.51
31	Iowa…..	5,750,629	31	Indiana…..	2,049.42
32	Kansas…..	5,598,700	32	Kansas…..	2,039.60
33	Mississippi…..	5,432,152	33	Iowa…..	1,938.85
34	Nevada…..	5,010,443	34	Oklahoma…..	1,933.21
35	Utah…..	4,686,381	35	Montana…..	1,910.14
36	New Mexico…..	4,471,477	36	Louisiana…..	1,909.52
37	Hawaii…..	4,434,356	37	Florida…..	1,905.28
38	West Virginia…..	4,301,156	38	Utah…..	1,897.32
39	Nebraska…..	3,796,551	39	Mississippi…..	1,859.69
40	Maine…..	3,071,161	40	Arizona…..	1,853.58
41	Idaho…..	2,934,459	41	Oregon…..	1,791.45
42	Delaware…..	2,725,095	42	Georgia…..	1,727.73
43	Rhode Island…..	2,628,747	43	South Carolina…..	1,719.95
44	Vermont…..	2,242,902	44	Alabama…..	1,711.27
45	New Hampshire…..	2,022,146	45	Tennessee…..	1,678.23
46	Alaska…..	1,850,502	46	Missouri…..	1,645.49
47	Montana…..	1,787,889	47	Colorado…..	1,639.54
48	Wyoming…..	1,739,646	48	New Hampshire…..	1,543.62
49	North Dakota…..	1,403,293	49	Texas…..	1,434.16
50	South Dakota…..	1,110,035	50	South Dakota…..	1,430.46

Source: U.S. Census Bureau, Governments Division Created: March 29 2006 Last Revised: March 30 2006

Do we really need to make sure that we continue to be overtaxed?

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AUGUST 2005

HELP STOP UNJUST FORFEITURES

Leonard Schwartz, in the July edition of Michigan Libertarian, seeks the support of Michigan residents to support Senate Bills 138-143. 

Michigan law allows the police to confiscate a motor vehicle if they suspect that anyone used the vehicle for an illegal purpose. It doesn't matter whether the owner gave consent. It doesn't even matter whether someone stole the vehicle.

For example, if the police claim that they found any marijuana in your car, they can seize your car. How the marijuana got there doesn't matter. Maybe it fell out of the pocket of an auto mechanic, valet parking attendant, or auto thief. Or maybe the wind blew a miniscule amount of marijuana through an open window. The police can confiscate your car.

Although the government sometimes is required, and often is willing, to return the vehicle to an innocent owner, the owner must pay a large fee. In Wayne County the fee is $900.

Senate Bills 138-143 will help protect innocent owners from unjust forfeiture. These bills will require the government to return a motor vehicle, without any fee, if (A) the owner is not charged with a crime, civil infraction, or civil violation, or (B) the owner is charged with, but found not guilty of, a crime, civil infraction, or civil violation.

Please ask your state senator and state representative to support Senate Bills 138-143.

SpeakOutMichigan provides an easy way to send e-mail to them. It provides a prewritten letter, to which you can add personal comments. Type in your zip code and SpeakOutMichigan will identify your state legislators and send them the letter. It takes only a minute or two.

SpeakOutMichigan also provides an easy way to send e-mail to your friends, so that they can contact their state legislators. Again there is a prewritten letter.

Help protect yourself and other innocent owners from unjust forfeiture.

Support Senate Bills 138-143.

Reprinted by permission.  For more information see:  www.speakoutmichigan.org.

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MAY 2005

CATO RATES GRANHOLM

The Cato Institute has rated all of the nation's governors.  Here is what they had to say about Jennifer Granholm:

Jennifer Granholm, Democrat     Legislature: Republican
Took Office: January 2003
Grade: D

Jennifer Granholm, former state attorney general, campaigned as a moderate centrist Democrat. She has been advertised nationally as one of the rising stars in the Democratic Party. She began her term in office claiming she had no plans to raise taxes, saying: “I know people think because I’m a Democrat that means automatically that I’m interested in raising taxes. But that’s just not the case.”

She initially started to balance the budget by cutting spending and avoiding tax hikes. However, within two months of taking office, she began to flirt with tax increases. She settled on a 4-cent diesel fuel tax hike and increased corporate taxes by ending certain corporate income tax deductions. The legislature killed the first one but gave her the second.

By November 2003 she had proposed stopping a scheduled income tax cut.

In 2004 Granholm proposed $391 million tax plan, which raised the cigarette tax from $1.25 per pack to $2.00. She also called for replacing the expiring estate tax with a new inheritance tax. The legislature gave her only the cigarette tax increase.

Now Granholm has embarked on a quest to reform the state tax code. Given her recent history of lobbying for higher taxes, there’s a strong likelihood that the reform effort will cascade into a series of tax hikes. Granholm has been a great disappointment in her first two years.

Fiscal Performance Data

n/a         Average Annual Change in Real per Capita Direct General Spending through 2002

n/a         Average Annual Change in Direct General Spending per $1,000 Personal Income through    2002

-4.5%     Average Annual Recommended Change in Real per Capita General Fund Spending through 2005

-4.1%     Average Annual Change in General Fund Spending per $1,000 Personal Income, 2002–2005

n/a         Average Annual Change in Real per Capita Tax Revenue through 2002

n/a         Average Annual Change in Tax Revenue per $1,000 Personal Income through 2002

1.7%     Average Annual Recommended Change in General Fund Revenue per $1,000 Personal Income through 2005

-2.1%     Average Annual Change in Real per Capita General Fund Revenue, 2002–2005

2.0%     Average Annual Recommended Tax Changes as % of Prior Year’s Spending through 2005

0.00     Change in Top Personal Income Tax Rate, proposed and/or enacted (% points)

-0.6     Change in Top Corporate Income Tax Rate, proposed and/or enacted (% points)

5.9     2004 Combined Top Income Tax Rates, personal plus corporate

2.0     Change in Sales Tax Rate, proposed and/or enacted (% points)

4.0     Change in Gas Tax Rate, proposed and/or enacted (cents per gallon)

75.0     Change in Cigarette Tax Rate, proposed and/or enacted (cents per pack)

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SEPTEMBER 2004

CARL LEVIN'S NEPOTISM PRINCIPLE

Shannen W. Coffin, in the August 4, 2004 edition of National Review Online (NRO), noted that Sen. Carl Levin has brought to a grinding halt the judicial-confirmation process for the United States Court of Appeals for the Sixth Circuit, and Senate Democrats have closed rank around him.

The four vacancies on the Sixth Circuit (one-quarter of the bench) have all been designated as "judicial emergencies" by the Administrative Office of the United States Courts.  

President Bush responded to this crisis by nominating four highly qualified Michigan residents to serve on the Sixth Circuit, Henry Saad, Richard Griffin, David McKeague and Susan Neilson.  They have more than 45 years of judicial experience on state and federal benches. They have been approved by the American Bar Association and have been praised by the Michigan Chamber of Commerce, the UAW, past presidents of Trial Lawyers and Local Bar Associations and former President Ford.

After languishing for years, three of these four candidates were recently approved by the Senate Judiciary Committee.  Last week they finally got their vote on the floor of the Senate.  While all three were approved by a majority of the senate, their confirmations were stopped by filibuster.

The problem with these judges is simple.  They are not related to Carl Levin.

Levin complains that, when Bill Clinton was president, some of his nominees to the same court were not confirmed by Senate Republicans.  So he says, unless President Bush re-nominates two of those Clinton nominees to the Sixth Circuit, he will block the vote.  His ire is particularly intense in the case of Michigan Court of Appeals Judge Helene White -- whose nomination was returned without approval at the end of President Clinton's second term.  This is a normal result.  

However, none of the many other nominees who have not been confirmed at the end of presidential terms were Carl Levin's cousin-in-law.  Judge White happens to be married to Levin's cousin.

Senate Democrats have made a mockery of the judicial confirmation process, turning aside any candidate that they would not have chosen.  While Democrats argue that only nine of President Bush's appellate-court nominees have been filibustered, that is nine more that in all of the preceding presidencies combined.

President Bush should not cave in to Levin's demands.  At the beginning of his term President Bush did re-nominate several judges originally nominated by President Clinton, but not confirmed.  It was meant to be a gesture of goodwill.  What he got in return was not just several judges who disagreed with his philosophy of judging but a Senate that treated his nominees with greater hostility than any time in our nation's history.  He shouldn't make the same mistake twice, especially with a senator who puts nepotism before country.

Shannen W. Coffin, a Washington DC attorney, is a former deputy assistant attorney general for the civil division of the US Department of Justice.

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SEPTEMBER 2004

BIG WIN IN MICHIGAN FOR PRIVATE PROPERTY

The Michigan Supreme Court has overturned the case that has allowed cities and local governments to abuse the power of eminent domain for the last twenty years. 

In 1981 the Michigan Supreme Court ruled in favor of the City of Detroit in a lawsuit against the residents of a small community known as Poletown. In that case, the City evicted residents of the Poletown neighborhood and demolished 1,400 homes, 140 businesses, including several churches to make room for a General Motors assembly plant. As the Detroit police yanked the door from the Immaculate Conception Church and arrested the parishioners barricaded inside, Reverend Joseph Karasiesicz told reporters; "This is an evil law and we have to fight it…[T]his has national implications and national scope. It sets a bad precedent." 

The Court unanimously overturned that ruling in a case involving Wayne County's attempt to confiscate 1,300 privately held acres for a "business and technology" park that the County claimed would provide thousands of jobs and "tens of millions in tax revenue." In invalidating the 1981 law the Court said: "Poletown's economic benefit rationale would validate practically any exercise of the power of eminent domain on behalf of a private entity. If one's ownership of private property is forever subject to the government's determination that another private party would put one's land to better use, then the ownership of real property is perpetually threatened."

Reprinted by permission from Liberty Matters News Service, August 11, 2004.  www.libertymatters.org

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MARCH 2004

FROM THE IOSCO COUNTY SPORTMEN'S CLUB

 How about this!!!!!

 1/6/04 Michigan Gov. Granholm appoints Mary Brown to National Resources Commission (NRC).

On the 1/29/2004 show of Practical Sportsman, Fred Trost included a quote from an interview with Mary Brown. Ms. Brown, a retired Democrat State Representative, a preservationist who was voted Conservationist of the Year by the Sierra Club, is Jennie's recent appointment to the NRC. Below is a quote from her.

Brown said, "I’m not a hunter, but I’m not opposed to hunting. We have to manage (our resources) for hunting, but we have to manage them for other reasons, too.

There may be areas that need to be closed to hunting for a period of time because of habitat issues. For instance, what damage is being done to the habitat when you drag a deer out of the woods?"

You heard it right. A newly appointed outdoor politician said that areas might have to be closed to hunting in Michigan because of the habitat damage from dragging deer out of the woods?

Let's hope Jenny doesn't get a chance to appoint any more.

Link to State of Michigan web site announcing appointment: http://www.michigan.gov/gov/0,1607,7-168--83855--,00.html

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NOVEMBER 2003

JENNIFER WANTS TO "TWEAK"

FOR IMMEDIATE RELEASE: Friday, Oct. 10, 2003
Contact: Michael LaFaive, Director of Fiscal Policy, (989) 631-0900

2,948 Jobs Won't Be Created if State Income Tax Cut Delayed, Economic Model Shows

MIDLAND - A widely used economic modeling program shows that delaying the scheduled cut in Michigan's income tax, as reportedly contemplated by Gov. Granholm and state legislators, would thwart the creation of as many as 2,948 jobs in 2004, according to the Mackinac Center for Public Policy, which also uses the model.

The State Tax Analysis Modeling Program (STAMP), produced by the Beacon Hill Institute for Public Policy Research at Suffolk University in Boston, is used to analyze the impact of state tax policy on jobs in states as diverse as California, Ohio, and Virginia, and by the state government of Oklahoma. The Mackinac Center owns and operates a STAMP model tailored to the state of Michigan in order to study the economic impact of changes in Michigan's tax structure.  Michigan's income tax is scheduled to be cut from 4.0 percent to 3.9 percent, effective Jan. 1, 2004.

The STAMP model used by the Mackinac Center also calculates that the business services industries would be hit hardest by a delay in the scheduled income tax cut, with more than 600 jobs not created in that sector.  This forecast comes on the heels of state Senate Fiscal Agency testimony that 23.3 percent of all job losses in the United States since 2001 have come from one state - Michigan.  

"You don't treat a bleeding patient by opening another vein," said Michael LaFaive, director of fiscal policy for the Mackinac Center.  "The state of Michigan can't afford not to cut taxes.  We're bleeding jobs. The prescription is lower state spending and management techniques such as privatization," LaFaive said.  The Mackinac Center is a nonprofit, nonpartisan research and educational institute.

Last March, the Mackinac Center published a 157-page study, "Recommendations to Strengthen Civil Society and Balance Michigan's State Budget," offering more than $2 billion in General Fund savings.  "The first round of budget cuts this year were impressive, but more can certainly be done," said LaFaive.  The study is online at http://www.mackinac.org/5046.

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OCTOBER 2003

HOW MICHIGAN COMPARES

All the talk about California's tax burden leads one to wonder how Michigan compares with other states.  Fortunately, www.taxadmin.org has done a comparison of the 2002 data.  

Michigan was 10th in total taxes at $21,864,000,000.  The per capita tax burden was $2,176. It was 13th in the percentage of personal income at 7.3%.

For the curious, Hawaii was first in both categories at $2,748 per capita and 9.6% of personal income.  California was 8th in per capita at $2,214 and 18th in percentage of personal income at 6.9%.

South Dakota was lowest in per capita taxes at $1,283 and New Hampshire was lowest in percentage of personal income at 4.4%.

Michigan's tax collection by source (percentage of total) was: property 8.6%, sales 35.6%, selective sales 10.5%, individual income 28.0%, corporate income 9.4% and other 7.8%.

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SEPTEMBER 2003

A REPORT FROM THE MICHIGAN FOREST ASSOCIATION

The annual meeting of the Michigan Forest Association was held in Newberry and Naubinway on August 15 and 16, 2003.

Previously, a Department of Natural Resources representative had explained the problem which the State of Michigan had incurred last year in paying taxes on the land that the State owns.  The original idea of lowering the taxes on all State land to the "swamp rate" of approximately $2.00 an acre went nowhere in the legislature.  Now, the State is actually doing an inventory of the property it owns to determine if the State should divest itself of some of its holdings.

The forest policy which is on the books was originally drafted some 30 years ago.  The general feeling is that it should be reviewed to determine any necessary changes.  Rep. Tom Casperson, R-Escanaba, has introduced a package of bills which will deal with a number of issues.  Warren Suchovsky, Menominee County Republican Treasurer, is following the bill on behalf of the Timberman's Association and the Michigan Forest Association.  MFA and Tree Farmers expect to work closely with the Farm Bureau in reviewing this legislation.

One of the objects is to have forest land, which is in timber production, treated as an agricultural product.  Sen. Tony Stamas has introduced SB 166 which would classify timberland of more than 10 acres which is under active management as agricultural property for property tax purposes.  This has been a long-standing goal of MFA, Tree Farm and Farm Bureau.  A similar bill has been introduced in the House under HB 4143.  Rep. Lorence Wenke, R- Richland, the Chairman of the House Committee on Tax Policy has not yet brought the bill up for hearing or action.  If you think that action on this bill is important, you can contact him at lorencewenke@house.mi.gov or call toll-free (877) 686-1787.

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JULY 2003

ECO-TERRORISTS COME TO MICHIGAN

The Associated Press reported on June 4, 2003, that police are searching for members of the radical Earth Liberation Front (ELF) who have been destroying luxury homes under construction in Michigan.  The FBI considers ELF one of the nation's most prolific domestice eco-terrorist organizations, saying it has carried out hundreds of attacks since 1996.

In Washington Township, the nearly completed homes, with a combined value of about $700,000 were burned.  Graffiti reading "Elf" and "stop sprawl" was spraypainted on nearby construction equipment.

The spraypainting found in Washington Township, about 25 miles north of Detroit, was similar to that found in an area near Ann Arbor where two homes under construction were burned in March.  An April 1 notice on the ELF Web site indicated its activists were involved.

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JUNE 2003

STATE LAND AND PROPERTY TAXES

At the May 16, 2003 meeting of the Michigan Forest Association, a representative of the Michigan Department of Natural Resources (MDNR) reported that the agency ran into a real problem last year.

It seems that the MDNR is the only state agency which pays property taxes at the ad valorum rate applicable to the property.  It does not pay the homestead or a lower rate except as to those properties which are escheated to the state when no one will buy the property.  Many abandoned lots in Detroit fall into this category.  On those, the state pays taxes at the rate of $2.50 per acre.

Last year, the MDNR had a very difficult time paying its property taxes.  The only way it was done was to go through every division and scooping up every available dollar.  This was quite stressful.

Therefore, the MDNR has decided that it should push legislation which would lower the rate on all of the property it owns to the $2.50 rate.

At the same time, the MDNR continues to try to acquire MORE property.  When private parties attempt to purchase a piece of state-owned property every single division of the MDNR must approve the sale.  This almost never happens.  Therefore, the State of Michigan owns more and more property every year.

The general reaction of the Board of the Michigan Forest Association (of which your editor is a member) was very negative to the $2.50 proposition.  In counties, such as Iosco, where the State owns a great deal of property, the result would be to push more and more burden of running the county on the private property owners who will own less and less of the land.

At the May 8 meeting of the Iosco County Democrats, county Treasurer, Elite Shellanbarger, made a presentation to the Democrats.  The Republicans, who were meeting at the same time, were invited to attend.  Your editor did so.

Among the subjects discussed was the role of the Treasurer in the collection of property taxes.  If property taxes are not paid in two years, the property involved is subject to sale.  After a payment is in default, the Treasurer "buys" the debt.  He actually writes a check for the taxes due to all of the entities who are entitled to a share of the taxes.  He uses a revolving fund to make these payments.  If the taxes are paid late, the Treasurer collects a 4% handling fee plus 1% per month on the outstanding debt for a total of 16% per year.

If the taxes are not paid for two years, the property is put up for sale.  However, governments get the first crack at all of the properties.  This includes the State of Michigan.  And, in some cases, the State does buy the property for the taxes owed plus the fees due.

If all of the governmental entities decide to by-pass the property, then the property is placed for sale for the taxes and fees and sold at auction.  If the property is sold, the former owner is given a chance to redeem his property during a relatively limited redemption period.

If no one will pay the minimum bid of the taxes and fees, the property goes to another auction where it goes to the highest bidder, regardless of whether or not it covers the amount due.

All of the payments for the property go to the Treasurer who holds the tax deed until the taxes are paid, the property is redeemed or the property is sold.  This is how the revolving fund is reimbursed for the payments it made up front.

If no one will buy the property at any price, its escheats to the State of Michigan, is owned by the MDNR, and it is that property on which the State pays taxes at $2.5 per acre.

These are the properties which blight the inner cities.  They are not maintained, they bring no real income to the cities, they are of no value to the MDNR because they are scattered all over and not in any manageable blocks.

How about this for an idea?  Give the properties away to anyone who will take them and build a home or business on them.

Don't buy any more property in the State.  If the MDNR comes to the conclusion that there is a piece they must have, then they must sell another piece. 

That's what real people do.  Rather than continue to place more productive property under government control and then require more and more money from taxpayers to pay for the State's insatiable appetite, start prioritizing and properly managing the property the MDNR already owns.

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MARCH 2003

RWC LOSES PROGRAM CHAIR

Some people really know how to mess up a retirement.

Recently, Judge J. Richard Ernst retired as Circuit Judge of the 23rd Judicial Circuit.  Rather than sit around the fireplace and read, or fish, hunt, or engage in normal activities, he took another job.

Judge Ernst has accepted an appointment to assist Armenia in the development of their legal system.  His wife, Jan Ernst, has been the program director for the Sunrise Side Republican Women's Club for the last couple of years.  Because the Ernsts will live in Armenia for the duration of the appointment, Jan will not be able to arrange the speakers for lunch at G's in Oscoda.  

The Judge will precede Jan to Armenia, figure out where they will live, and Jan will follow in a month or two.

The program is sponsored by the American Bar Association and funded through USAID and Rural Bank.  It was originally called the Central Eastern Europe Law Initiative and has now been expanded to Asia, operating in the newly established republics which became independent with the demise of the Soviet Union.

Most of these countries are nominally using legal systems based upon Napoleonic Law.  Except for Russia, which just initiated a jury system last fall, legal decisions are made by judges, a panel of judges, or a panel including a judge.  In most of the countries, the major problem is a lack of confidence in the legal system because of the endemic corruption which occurred during the Soviet rule.  Until these countries develop confidence in their police, border guards and courts, they will have difficulties dealing with their other major problems, such as women's rights and human traffickng.

The Judge will receive housing and a modest stipend for the year he and Jan will live in Yerevan, the capitol of Armenia.  While he does not speak Armenian, he hopes to learn enough Russian while there to find his way around.  He will have an interpreter available for his work.

In case you're wondering, there is a nine-hour time difference.  When it is noon here, it is 9:00 p.m. in Armenia.

This promises to be an exciting adventure and may actually force Jan to learn how to use the world wide web.

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JANUARY 2003

MICHIGAN WHALE WATCHING

The Associated Press reported on November 16, 2002 about a 4th grade teacher, Deb Harris, in Muskegon, Michigan who was amazed by an article in "Michigan Studies Weekly" -- a newspaper distributed to 462 teachers statewide.

The article read: "Every spring, the freshwater whales and freshwater dolphins begin their 1,300-mile migration from Hudson Bay to the warmer water of Lake Michigan." 

Harris called the Utah-based Studies Weekly Inc., which put out the teaching aid, to advise that there are no whales in Lake Michigan, but she said an editor stood behind the story.

A retraction was later posted on the company's web site with the explanation that the false information came from a different internet site intended as a joke.

Let's hope that all of our teachers are as diligent in checking the veracity of the information they are asked to teach.

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NOVEMBER 2002

PUT YOUR MONEY WHERE YOUR MOUTH IS

Mary P. Smith, like many other customers of Northland Area Credit Union, received the monthly newsletter from that company.  For the last four months, the Credit Union has used the newsletter to tout Democratic officeholders who are candidates in this year's election.  As a member of NAFCU and a Republican activist, she was greatly disturbed by the blatant campaign activity.  

In writing to Terry Bigda, the president of NAFCU, she stated:

"You have used money earned in part by my deposits with the credit union to campaign for candidates whose political philosophies are diametrically opposed to mine.  The campaign flyer enclosed with my October statement seeking credit union members' votes for Granholm, Levin and Peters was the last straw.

Therefore, I am taking my money elsewhere and am encouraging fellow Republicans to do the same.  I will also discontinue my VISA account through NAFCU."

Mary is not the only one to close her account.  A number of other Republicans have done so as well.  If you are inclined to do likewise, it wouldn't hurt to let Mr. Bigda know why.  His address is 4346 F-41, P.O. Box 519, Oscoda, MI 48750.

In that same vein, NPI Wireless sent out a September flyer urging customers to recycle mobile phones which are no longer in use.  NPI will send from 25 cents to $20 to the Sierra Club for any phones they recycle.  The Sierra Club is one of the most anti-private property rights, socialistic, anti-Republican group out there.  Maureen and Lew Rudel have not renewed their contract with NPI because of this position.  Other cellular companies are available.  If you choose to stop doing business with NPI, be sure to let them know why.  Why not give your functioning phone to someone who does not have one.  Even if you have no provider, 911 is usable on any working cell phone.

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JULY 2002

NOT RAIN OR SLEET, BUREAUCRACY!

For those in Tawas or East Tawas, where local mail stayed in the post office, was cancelled and sorted and delivered -- usually the next day, things have changed.  Now, all mail is sent to Saginaw.  It seems that the post office gurus who can't figure out why they are losing money hand over fist and need the 37 cent stamp to stop the bleeding, decided they had a great big automated sorting machine which was underused in Saginaw.  Therefore, we will have all of our mail sent there to use the sorter.  The automated cancellation machines have been  removed from the local post office to make sure it happens.

This remarkable machine in Saginaw recently gave your editor an example of its efficiency.  A letter was sent by someone in Reno Township on May 13.  On May 13, it was cancelled in Saginaw.  On May 15, it was cancelled in N. Houston, Texas.  It finally arrived at the Tawas City post office box on May 22.  Even the pony express did a better job.

However, you loyal readers can by-pass the bureaucracy.  If you drop your local mail in the drop boxes outside the post office after 5:00 p.m., when poor unfortunate other letters are on the way to their odyssey, the local post office employees will lovingly retrieve them, hand cancel them and sort them for delivery the next day.  Don't tell anyone else the secret. . . 

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OCTOBER 2001

MICHIGAN'S DUMB LAWS

(From www.dumblaws.com)

We often like to take aim at the Federal laws and regulations that make no sense, but it's time to admit that Michigan isn't perfect either.  Under Michigan state statutes:

• A woman isn't allowed to cut her own hair without her husband's permission.

• There is a 10 cent bounty for each rat's head  brought into a town office.

• It is legal for a robber to file a law suit if he or she got hurt in your house.

• You may not swear in front of women and children in the state of Michigan.

Some of the cities have some doozies, too.

Clawson -- There is a law that makes it legal for a farmer to sleep with his pigs, cows, horses, goats and chickens.

Detroit -- Couples are banned from making love in an automobile unless the act takes place while the vehicle is parked on the couple's own property.  Willfully destroying your old radio is prohibited.  It is illegal for a man to scowl at his wife on Sunday.  Alligators may not be tied to fire hydrants.  It is illegal to let your pig run free unless it has a ring in its nose.  According to history and animal husbandry, it prevents them from rooting in the ground for their food.

Grand Haven -- No person shall throw an abandoned hoop skirt into any street or on any sidewalk, under penalty of a $5 fine for each offense.

Harper Woods -- It is illegal to paint sparrows to sell them as parakeets.

Kalamazoo -- It is against the law to serenade your girlfriend.

Rochester -- All bathing suits must have been inspected by the head of police.

Soo -- Smoking while in bed is illegal.

Wayland -- Anyone can keep their cow on Main Street at a cost of 3 cents a day.

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MAY 2001

WE DON'T GET NO RESPECT

Thanks to Tom Ferguson and Travel News, the magazine of Michigan's Sunrise Side Travel Association, we have a good idea of the problem with Northeast Michigan.

The state publication - Midwest Travel Ideas - published by Midwest Living Magazine not only takes away our beautiful Lake Huron and gives us the much colder Lake Superior, it shows Northeast Michigan as vacant space.  There are no cities shown at all, and the only road is US-23.

Maybe that's why so many visitors to the north pack groceries for their entire trip.  They think they have to shoot, catch or trap anything they might eat.  At least the Lt. Governor knows we're here.

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JULY 1998

ENGLER PRESENTS CRIME VICTIM WARNING SYSTEM

Governor Engler recently announced the creation of the Crime Victim Notification System, a state-of-the-art innovation designed to protect crime victims' rights. Developed and supported by the Department of Community Health in conjunction with Michigan's sheriffs and prosecuting attorneys, the system is essentially a state-wide computed and telephone network that will provide up-to-the-minute information to crime victims on the status of defendants.

Currently, victim notification is done by mailed notice. Under the new system, victims will be instantaniously notified on court schedules, sentencing, and appeals.

The system is presently being tested in Newaygo and Wayne counties. It should be implemented statewide during the 1998-99 fiscal year.

"When the Crime Victim Notification System is up and running, Michigan will be the largest state with a comprehensive victim rights system and one of the first in the nation with a statewide computed system to enhance victims' rights," announced Governor Engler.

Funding for the program will be completely covered by assessments paid by convicted criminal defendants.

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APRIL 1998

MICHIGAN CHANGES MINERAL RIGHTS LAW

Michigan residents will find it easier to obtain clear title to mineral interests under a law recently signed by Governor Engler.

The law changes the Marketable Record Title Act of 1945 by shortening the period required for filing claims of tile from 40 to 20 years for mineral interests other than sand, gravel, limestone, clay and marl. This makes the Marketable Title Act consistent with the Dormant Mineral Act of 1963, which already has a 20-year period for oil and gas minerals.

Owners of mineral rights have to record their interests to protect them from being reunited with the surface rights. If they do not show up in the chain of title for 20 years, they are forfeited to the surface owners.

There is a three year grace period from the date the legislation was signed for those people who fall between the 20 and 40 year time frame which will help preserve an interest, claim or other conveyance or title transaction that may exist on property which could be affected by the law.

The change is most significant in the U.P. where closing mines ofter ceded mineral rights to employees. If these rights are not recorded, it was virtually impossible to obtain clear title and purchase remaining mineral interests because of the difficulty of tracing the title holders.

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Revised: