James M. Hohman, Assistant Director of Fiscal Policy [Mackinac Center]

Michigan State University President Lou Ann Simon has characterized proposed state aid cuts as "brutal," although she gamely acknowledges "We can make this work." … more

Posted on March 24, 2011 at 12:30pm

Detroit Free Press Editor Points out Film Incentive Flaws

As Detroit Free Press editor Stephen Henderson points out, the film incentive was meant to generate a film industry in Michigan that would exist without special favors. In light of this goal, the incentive has so far been only an expensive failure. … more

Posted on March 1, 2011 at 2:09pm

Governor Looks At Public Employee Compensation

In his executive budget, Gov. Rick Snyder recommends reforms to the compensation offered to employees by Michigan’s state and local governments. Considering that employment costs are a primary reason why government continues to grow, this is a commendable move. … more

Posted on February 18, 2011 at 9:05am

More Good News for Michigan’s Economy

The Bureau of Labor Statistics provided some encouraging news that indicated Michigan’s economy continues to recover. The state’s private sector added 221,292 jobs in the second quarter of 2010 and lost only 184,025. … more

Posted on February 4, 2011 at 3:11pm

Detroit Public Schools Contracts Out Custodial Services

Mlive.com reports that Detroit Public Schools signed contracts with private vendors to clean and maintain the district’s buildings. DPS will join 145 other school districts in Michigan that contract out for these services. … more

Posted on January 28, 2011 at 5:00pm

How Bad is Detroit’s Detroitification?

Mackinac Center analyst Jack McHugh has called the long process of hollowing out a private economy to prop up an unsustainable government, "Detroitification." Detroit's most recent comprehensive annual financial report shows just how much the title-city itself has been hollowed. … more

Posted on January 21, 2011 at 1:39pm

Michigan Posts Record Drop in Unemployment Rate for December

According to data released by the Michigan Office of Labor Market Information today, the state’s unemployment rate dropped by 0.7 percentage points from 12.4 percent in November 2010 to 11.7 percent in December 2010. This is a record for this data series that began in 1976. … more

Posted on January 19, 2011 at 4:25pm

Bonuses Included, Michigan Government Benefits Exceed Private Sector by $5.7 Billion

In an article in The Detroit News, Michigan Sen. Vincent Gregory, D-Southfield, states that government workers get generous health and pension benefits in lieu of bonuses, apparently implying that the two offset. Thankfully, there are data on the issue to check his theory. … more

Posted on January 3, 2011 at 11:50am

Gov. Granhom Claims Ignorance of MEGA Failures

If a person sits through Gov. Jennifer Granholm’s video portrait, they might think that the governor is interested and aware of her economic development programs. She spends nearly the entire production on her efforts to foster job creation. Unfortunately, a recent MIRS interview (subscription required) shows that she is blind to the failures of the programs she supports. … more

Posted on December 22, 2010 at 3:45pm

The Mackinac Center Is not 'Pro-Business'

The Mackinac Center is pro-free markets, not necessarily “pro-business.” The following excerpt from an article by Luigi Zingales does a good job of describing the difference (although the Center is not a lobbyist, either). Zingales is a professor at the University of Chicago Booth School of Business. … more

Posted on December 20, 2010 at 4:20pm

Michigan Falls to Bottom 10 in Key Economic Measure

The Bureau of Economic Analysis released a key measure of economic growth today that showed that Michigan has gone over a decade without increased production. New gross domestic product figures, a measure of the value of an area’s goods and services production, showed that Michigan’s economy produced 8 percent less in 2009 than it did in 2000 when adjusted for inflation. The nation rose 15 percent during this period. … more

Posted on November 18, 2010 at 10:45am

Wishful Reporting of Governor’s Investment Missions

In Gov. Jennifer Granholm's weekly radio address, she ballyhoos her investment missions abroad by claiming that they're responsible for creating or retaining 20,000 Michigan jobs. Unfortunately, she continues to mistake job announcements for job creation. … more

Posted on November 12, 2010 at 3:35pm

Michigan’s Economy: From Worst to Average

There's no question that Michigan's economy has performed poorly over the past decade. Essentially, the state lost one out of every five jobs since employment peaked in 2000. However, Michigan's economic trends have changed in recent months. It is no longer the worst performer in the country. In fact, since the end of the U.S. recession, Michigan's performance is average. … more

Posted on November 3, 2010 at 1:43pm

And They Think California Is a Lost Jobs Basketcase?

Some 867,500 jobs have disappeared from the Great Lakes State since our 2000 employment peak of 4,690,300 jobs. … more

Posted on October 27, 2010 at 2:23pm

Governor: Heads I Win, Tails You Lose on Job Projections

Gongwer News Service reports that Gov. Jennifer Granholm is unhappy that a new economic forecast estimates that Michigan will start adding jobs next year. But crediting those programs for improving the job estimates is an injudicious use of the forecasts since the economic estimates cited have been optimistic. … more

Posted on October 8, 2010 at 3:30pm

Broken Windows on Display in Michigan Senate Finance Committee

Mark Adler, a lobbyist for the Michigan Production Alliance, and Carrie Jones, the director of the Michigan Film Office, defended the state's film subsidy program in a Senate Finance Committee meeting today. To do so they employed a long-recognized economic fallacy, the "Broken Window" theory, which only considers economic activity that is "seen" while ignoring unseen economic costs. … more

Posted on September 22, 2010 at 3:00pm

State Budget Deal Kicks Can Down the Road to New Guys

The fiscal 2011 budget appears done. It contains no systemic reforms or program reductions. Meanwhile, with the end of federal stimulus subsidies, revenue projections for the following fiscal year fall off a cliff. … more

Posted on September 9, 2010 at 4:15pm

Phony 'Sandbox Party' Uses Taxpayer Dollars to Lobby for More Goverment Spending

A government entity that received $14.6 million of taxpayer money in the current state budget organized a publicity stunt to lobby for more government spending, called the "First Ever Sandbox Party Convention" in East Lansing. … more

Posted on August 27, 2010 at 4:42pm

July Was a Good Month for Michigan

Last week's state-by-state employment release from the Bureau of Labor Statistics showed that Michigan led the nation in job growth from June to July. The state gained an estimated 27,800 jobs in the month. … more

Posted on August 26, 2010 at 3:49pm

The Secret of Economic Growth in Michigan

In a recent radio interview with Morey Fiscal Policy Initiative Director Michael LaFaive, radio host Tony Conley stated that we should be looking at what Texas and North Carolina are doing to foster economic development. Any benchmarking attempt should first start with the right states, but North Carolina isn't one of them. … more

Posted on August 16, 2010 at 2:10pm

Public Sector Still Doing All Right

Special interest groups whose members' compensation comes from tax dollars are afraid that Michigan's economic crisis will impact their paychecks. They're right to be concerned since there is less private money left to pay generous public-sector salaries and benefits. … more

Posted on August 11, 2010 at 11:44am

New Report Misses the Mark on Higher Education

A new report by the Michigan League for Human Services bemoans the lack of tax money going to higher education. But the authors give a skewed view of appropriations, get some facts wrong, and completely miss the 800-pound gorilla of higher education: that increasing costs drive tuition increases. … more

Posted on August 10, 2010 at 3:40pm

Michigan Education Association May Help Fund Oklahoma Revenue Grab

Oklahoma's state affiliate of the National Education Association only has 23,451 members, but has nevertheless launched a revenue-grabbing initiative, SQ 744, that will be on the ballot in November. … more

Posted on July 30, 2010 at 4:05pm

Bill Reveals New Politically Correct Economic Development

A newly introduced bill in Michigan gives new meaning to the phrase "politically correct economic development." … more

Posted on July 22, 2010 at 4:05pm

Michigan Exports to China Grow

The Chinese market for Michigan goods continues to grow. So it's strange that politicians here continue to point fingers at Chinese trade for Michigan's economic decay. … more

Posted on July 13, 2010 at 3:47pm

Michigan Public Payrolls Protected in Recent Recession

Since the beginning of the national recession in December 2007, Michigan's private sector has lost 70 times more jobs than its government sector. … more

Posted on July 8, 2010 at 10:30am

Governor Surrenders on Service Tax

Michigan taxpayers can breathe a sigh of relief: The Detroit Free Press reports that Gov. Jennifer Granholm has abandoned hope that her service tax will become law. At a news conference on an unrelated issue, the Governor stated that she did not expect the Legislature to enact her plan. … more

Posted on July 8, 2010 at 8:06am

Census Bureau: Michigan Beats Most States in Tax Revenue Growth

The U.S. Census Bureau recently released state and local government quarterly tax information that shows Michigan's tax revenue continues to outperform the rest of the state economy. Policymakers should keep these figures in mind as Lansing cries poverty over this year's budget. … more

Posted on July 6, 2010 at 10:10am

Reality Check: Governor’s Budget 'Poor Mouthing'

Gov. Jennifer Granholm cried poverty yesterday, claiming that her administration already cut 11,000 state employees and that the state cannot make further cuts without lowering "critical services that struggling families count on to survive in this tough economy." However, thanks to higher compensation levels, taxpayers are paying more overall even with fewer workers on the job. … more

Posted on July 1, 2010 at 4:08pm

MEA Complains About More Money To Spend On Education?

The Michigan Education Association protested in Lansing yesterday to demand more taxpayer money to go to the public school system and to protest recent public school pension reforms. But the pension reforms will allow districts to have more resources to devote to improving education. … more

Posted on June 25, 2010 at 11:17am

Michigan Unemployment Rate Down to 13.6 Percent

New data was released yesterday from Michigan's Office of Labor Market Information that indicates Michigan's economy may be recovering. … more

Posted on June 17, 2010 at 7:30am

Service Tax Is Bad Policy

The service tax is bad policy for Michigan. Legislators should resist the temptation to pass this tax hike as the budget deadline approaches. … more

Posted on June 16, 2010 at 9:35am

Fact-Checking and Adding Context to the Governor’s Economic Diversity Speech

In a speech on diversifying the state economy at the Mackinac Policy Conference today, Gov. Jennifer Granholm stated that diversification efforts through the Michigan Economic Development Corp. have brought 919 "companies or expansions" to Michigan. She also stated that health care is the state's largest industry. One claim is without context and the other is incorrect. … more

Posted on June 4, 2010 at 4:22pm

States With More College Grads Don't Have Better Economies

Evidence suggests that a single-minded focus on increasing the proportion of a state's population with college degrees is a dead end for improving the state's economy. … more

Posted on June 3, 2010 at 4:03pm

'Out of Balance' and Bad at Math

A new paper from the National Institute on Retirement Security uses convoluted calculations to argue that public-sector employees receive wages that are 11 percent to 12 percent below private-sector averages. When calculated in a straightforward way, however, the alleged wage disparity disappears. … more

Posted on May 14, 2010 at 3:01pm

Michigan Tax Burden Grows Despite Claims to the Contrary

Per capita figures make Michigan seem worse off by comparison to other states since population is less responsive to economic changes than are tax revenues. Still, Michigan's per capita tax burden increased over the past decade. … more

Posted on May 3, 2010 at 11:30am

State Employee Pay Grows 25 Percent Above Inflation Since 1999

The average state employee compensation package costs approximately $93,039. Inflation-adjusted wages and benefits have increased 25 percent since fiscal 1999. The figures include the value of all benefits from state-paid retirement contributions to dry cleaning allowances. … more

Posted on April 21, 2010 at 3:20pm

Michigan Film Subsidies: Two Years, $117 Million and No Film Job Growth

It has been two years since Michigan's film subsidy program became law, which is sufficient for it to have gotten off the ground and had some measureable impact on the state's economy. According to the most recent Bureau of Labor Statistics, 18 months after its launch there were 9.8 percent fewer people employed by the film industry in Michigan than when the subsidy program began. … more

Posted on April 20, 2010 at 11:38am

Facts for Tax Day in Michigan

Today is April 15, the last day to file your 2009 tax return. Protests are happening around the state alleging rampant growth of government, overtaxation and overregulation.
Here are some facts about taxes in Michigan. … more

Posted on April 15, 2010 at 12:00am

Michigan Public Employees Compensation Growing Despite Concessions Claims

Spokespersons for Michigan government employee unions contend that they have given up hundreds of millions of dollars in wages and benefit concessions over the past few years. The claims are in dispute, and data from the U.S. Bureau of Economic Analysis offers some support for those challenging them. It shows that since 2000, government employee compensation in Michigan has increased 11.4 percent, while private sector employees are getting 5.1 percent less. … more

Posted on March 30, 2010 at 1:57pm

Michigan Employment and Personal Incomes Better, But…

Two releases from government statistical agencies this week show that the state's economy is still pretty bad, but that its long fall may have finally bottomed out. The state unemployment rate is 14.1 percent, down from its peak. Michigan's per capita personal income was down again, but Michigan was not the worst in the country. … more

Posted on March 25, 2010 at 3:58pm

New Census Data: Michigan Economy Suffering More Than State Budget

New Census Bureau data published today confirm a trend shown in previous releases: While the amount of tax revenue flowing into the Michigan treasury has fallen, the state's tax trends look brighter than the state's economy. … more

Posted on March 23, 2010 at 12:08pm

What Transparency Should Look Like at the MEDC (but Doesn't)

The award of a $9.1 million tax credit to a convicted embezzler has raised serious concerns about the lack of transparency at the Michigan Economic Development Corporation. The concerns could be alleviated by two transparency/due diligence reforms that would protect the state (and taxpayers) from fraud. However, the real issue is not whether the occasional criminal wins an "incentive" deal, but the lack of transparency that characterizes this entire operation. This is the measure by which the responses of politicians and economic development bureaucrats to this embarrassment should assessed. … more

Posted on March 19, 2010 at 11:52am

MEGA Jobs Announcements Symbolic Drop in the Bucket

The Michigan Economic Growth Authority yesterday approved its latest batch of tax credits to lure large business projects to Michigan.
Despite the press release, these big business projects are just not that consequential to Michigan's total economy. … more

Posted on March 17, 2010 at 3:48pm

Supposed Benefits of Pension Obligation Bonds Sink With Market

Michigan legislators who might consider borrowing billions to prop up government employee pension and post-retirement health care benefits should first look at recent developments in California. That state's massive state pension system, CalPERS, may lower its expectations for investment returns. According to the Wall Street Journal, it is considering a drop in its return expectations from 7.75 percent to as low as 5 or 6 percent. … more

Posted on March 9, 2010 at 2:00pm

Employment Creation in Michigan Illustrates the Ineffectiveness of the State's Incentives

The latest Business Employment Dynamics numbers from the Bureau of Labor Statistics show that from the third quarter of 2008 through the second quarter of 2009, 778,025 jobs were created in Michigan and 1,144,655 jobs disappeared. Among other things, the figures starkly illustrate just how ineffective the state's economic incentive programs are. … more

Posted on February 24, 2010 at 4:14pm

Service Tax: $1.3 Billion Tax Hike on Thousands of Services

The Michigan Senate Fiscal Agency has performed an initial review of Gov. Jennifer Granholm's executive budget recommendation, which reveals that the proposed service tax would actually raise taxes by $1.3 billion — much more than the $900 million originally reported. … more

Posted on February 22, 2010 at 3:30pm

Michigan: A National Leader in Tax Hikes

Gov. Jennifer Granholm argues (with some remorse) that during her seven-year tenure, Michigan has cut more from its budget than any other state. The claim is dubious, but another milestone about which she does not boast is verifiable: Since Gov. Granholm's first inauguration in January 2003, Michigan has led the nation in tax increases.
States rely on four major taxes to finance their general operations: income, sales, business and tobacco taxes. Gov. Granholm has signed into law increases in three of these: tobacco taxes in 2004 and business and income taxes in 2007. Only two other states, Maryland and New York, have increased all three of these taxes since 2002. … more

Posted on February 19, 2010 at 2:08pm

Gubernatorial Fact Check

In presenting her executive budget, Gov. Jennifer Granholm stated, "I have cut more state spending than any governor in Michigan history, having resolved more than $10 billion in deficits since 2003." It's unnecessary to state that one of those budgets was "resolved" with a $1.4 billion tax hike — not exactly cutting more than anyone — but even the $10 billion is an overstatement. … more

Posted on February 18, 2010 at 10:55am

Which Would You Choose: Growth or Economic Decline?

No, we wouldn't want to be like Mississippi. Flint wouldn't want to be like Dallas. Those places have like, economic growth and stuff. … more

Posted on February 16, 2010 at 12:20pm

Michigan’s Brains Remain Constant

The exodus of young and educated young people from Michigan is one of those “clear, simple and wrong” explanations often cited as a factor in Michigan’s poor economic performance. The reality is that young people are already highly mobile even in a good economy, and that even in Michigan’s ongoing bad times, we're actually doing pretty well in attracting college graduates to the state. … more

Posted on February 12, 2010 at 4:15pm

Governor’s Tax Hike Proposals Increase Already Juiced System

Michigan Governor Jennifer Granholm introduced a series of tax hikes today to raise more revenue to cover its overspending. But adding a tax hike would increase the revenue to a system that's already giving Lansing more revenue than typical among states. … more

Posted on February 11, 2010 at 12:37pm

Governor Wrong About Headlee Limits

Michigan Governor Jennifer Granholm presented her executive budget today. In it, she argues that Michigan needs to raise taxes in the over the next few years because its revenues are far below its constitutional revenue limit. She states, "The gap has grown as a result of the economic downturn and is anticipated to widen further as currently enacted tax changes take effect in the next several years." … more

Posted on February 11, 2010 at 12:07pm

Don’t Blame Mexico for Michigan’s Problems

In her State of the State address last week, Michigan Gov. Jennifer Granholm listed the reasons why she believes the state's economy has fallen. "We all know the reasons — trade policies that dismantled factories here and built them in Mexico, the auto industry in meltdown, the banking crisis, the mortgage crisis, and on top of all that, a severe national recession." While the latter reasons may have played their part, company and job relocation to Mexico has been the least of Michigan's problems. Furthermore, trade with Mexico has actually been a bright spot for the state. … more

Posted on February 10, 2010 at 9:24am

Michigan Unemployment: Topping the Charts for 46 Months

Michigan's unemployment rate of 14.6 percent was the highest in the country, according to today's release from the U.S. Bureau of Labor Statistics. The next closest state was Nevada, which increased to 13.0 percent. … more

Posted on January 22, 2010 at 4:14pm

Get the Data on Michigan Support Service Contracting

Part of the new Michigan Senate Republicans' spending reform proposal would mandate public school districts to seek competitive bids for food, custodial and transportation services. The Mackinac Center surveys each district annually to see whether they contract out for these services. You can view the 2009 survey results here. … more

Posted on January 21, 2010 at 3:35pm

Beware Michigan Tax “Restructuring”

Lansing policymakers are discussing plans to shift taxes around and are being supported by some faulty observations. Some of them made their way into an op-ed by Susan Demas in The Detroit News. She noted, "Michiganders have gone from paying 9.5 percent of their incomes in taxes in 1999 to 7 percent today."
Actually, Michiganders pay much more in taxes. These are simply figures from the state's Headlee amendment revenue limit calculations, which do not count local or federal figures, nor all of the state's non-federal revenues. Adding local tax burdens increases the figure to 10.7 percent. Overall, Michigan citizens face a much broader burden of government. The federal government takes in 21.6 percent of the entire country's personal income and Michigan pays its share, leaving Michigan citizens tax burdens around 30 percent instead of 7.
Besides, the state tax system is very good at capturing revenues from growing economies. That's largely the reason why state government coffers were closer to the Headlee cap in the high-growth 90s. But Michigan has not grown in a long time. … more

Posted on January 19, 2010 at 1:00pm

Assistant Director of Fiscal Policy

Tools

From James M. Hohman