Mozena debates merits of plan on Michigan Matters
A ballot measure to increase Wayne County property taxes to fund regional transit is stuck in past, focusing on transportation technology of the 1800s.
During a debate on Sunday’s episode of Michigan Matters hosted by CBS’ Carol Cain, Mackinac Center for Public Policy’s Vice President of Marketing and Communications John Mozena raised questions about the 20-year RTA transit tax plan that would rely on buses and trains.
We need to stop and think about what a 20-year plan means. … At a time of the most amazing change technologically in how people transport themselves around probably since the time Henry Ford was driving around in his quadricycle, we’re locking ourselves into technology from the 1900s in busses and technology from the 1800s in trains rather than allowing the innovation that’s out there in transportation to flourish. Twenty years from now, we’re going to wonder why we ripped up a lane of road to put in a bus lane in rather than self-driving-car guiderails.
Mozena went on to say that the plan ignores real transportation issues for Detroiters, who face the highest average auto insurance rates in the country, and ignores the opportunity to create jobs near where people live.
This is a terribly pessimistic plan because it assumes that in 20 years, low-income Detroiters are still going to need to get on the bus in the morning, leave Detroit to go to the job, and then come home at night.
Watch the full episode of Michigan Matters here.
Learn more about the proposed tax increase and RTA plan here.
Ban gas chamber for pets; subsidies for hospitals and Flint businesses; authorize new school taxes; regulate drones; more
The House held a pro-forma session with no votes this week, but the Senate passed a number of bills in its final session before the Nov. 8 election.
Senate Bill 979, Authorize .5 mill Flint property tax for spending and subsidies: Passed 36 to 0 in the Senate
To authorize creation of a new Flint authority with the power to impose a 15 year 0.5 mill local property tax, and use the money for unspecified government spending and subsidies to business owners.
House Bill 4388, Authorize 3-mill "sinking fund" property tax for school security and computers: Passed 36 to 0 in the Senate
To allow school districts to impose a 3 mill property tax for 10 years for a “sinking fund” that can be used to buy computer equipment, software and security equipment. Under current law schools can levy up to 5 mills for 20 years for a much narrower range of uses.
Senate Bill 25, Give TEDF subsidies to hospitals: Passed 35 to 2 in the Senate on October 20, 2016
To allow Transportation Economic Development Fund subsidies and spending for hospitals. TEDF money is a type of subsidy in which the state pays for access improvements related to a particular developer’s plant or project.
Senate Bill 732, Exempt Masons lodges from property tax: Passed 31 to 6 in the Senate
To exempt property owned by Masons' lodges from property tax, under a presumption that "Masonic activities" are by definition charitable purposes eligible for a tax break.
Senate Bill 1073, Authorize electronic hunting and fishing licenses: Passed 37 to 0 in the Senate
To authorize the development and use of an electronic hunting license that individuals could display on a smartphone or other electronic device, to be ready by March 1, 2018. Senate Bill 1075 also passed, to authorize the same for fishing licenses.
Senate Bill 97, Require agencies disclose federal aid requests to legislature: Passed 36 to 0 in the Senate
To require state agencies that apply for any form of federal or other financial assistance to notify legislative leaders, relevant committees and the legislature’s fiscal agencies within 10 days, with the notice including any conditions or stipulations associated with receiving the assistance.
Senate Bill 1076, Mandate 5 feet of clearance to pass bicycle: Passed 34 to 2 in the Senate
To prohibit passing a bicycle while driving a motor vehicle unless there is at least five feet of clearance between the vehicle and the bike. This would be permitted in no-passing zones too, if there is room to pass with the required clearance.
Senate Bill 992, Regulate aerial drones: Passed 37 to 0 in the Senate
To authorize the use of aerial drones for commercial purposes in Michigan, if the operator is authorized or licensed by the Federal Aviation Administration. Recreational use would also be permitted subject to federal rules. The bill would preempt local government restrictions on drone ownership or operation, but allow local regulations on use within their jurisdiction. It would also prohibit improper use of drones, including privacy violations, and authorize misdemeanor penalties. Finally, the bill creates a state commission to develop more detailed rules.
Senate Bill 403, Ban gas chamber for dog and cat euthanasia: Passed 37 to 0 in the Senate
To require an animal control or protection shelter to use only injections of a commercially prepared solution for euthanizing a dog or cat. The use of gas chambers would be banned, although reportedly they are already no longer used.
SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.
Lawmakers face a number of corporate welfare proposals
During Michigan’s economic “Lost Decade” of the 2000s, state government seemed to have just one response for crushing declines in income and employment that cost about 800,000 residents their jobs between 2000 and 2010: more corporate welfare.
If there was any evidence this approach works to turn around an ailing economy — there is not — it still could not have overcome the massive Michigan business and income tax increases imposed in 2007, and smaller exactions, such as a 2004 property tax hike.
Starting in 2011 a new governor steered a different course. Gov. Rick Snyder scaled back the pace of corporate giveaways, eventually ended a disastrous $500 million film subsidy adventure and replaced a destructive gross-receipts-type business tax with a simpler and less onerous corporate income tax.
It appears to have been an improvement as Michigan incomes and employment levels have grown much faster than the national average since the last recession.
But corporate welfare is always an attraction for politicians. Today, in the absence of any overarching growth or reform agenda, lawmakers on both sides of the aisle are falling back into past bad habits. Indeed, the upcoming lame duck legislative session could see a corporate welfare blowout.
To protect his legacy of growth and reform, Gov. Snyder should be prepared to wield a sharp veto pen. He has raised some concerns about a recent proposal that would help real estate developers finance large projects using taxpayer dollars, but so far has not taken a public position on the proposal.
Fiscal analysts don’t know yet how big a hit state revenues would take from this proposal, but the measure promises a huge wealth transfer from taxpayers to downtown Detroit real estate developers, such as Dan Gilbert. But that’s not the only scheme percolating under the Michigan capitol dome.
Rep. Holly Hughes (R-Muskegon) is the lead sponsor for a cronyist port authority bill being pitched with the usual “economic development” rationalizations. The measure passed the House in a bipartisan vote on September 22. It could deliver port revenue to politically well-connected developers while leaving taxpayers holding the bag if things go badly.
The owners of two privately owned port facilities in Muskegon are not amused at prospect of competition from their own local government. One of them said in press reports that he and the other operator can easily handle any new demand for shipping cargo into Muskegon and adding another player would be counterproductive, and unfair too.
The bill also holds out the promise of benefiting another well-connected special interest, Consumers Energy. The utility owns a closed Muskegon plant with property it would like to sell. Hughes’s bill would potentially raise the price of that property artificially. Consumers had testified in support of it, but then shifted to a “neutral” position on October 17.
Hughes has struggled to justify how this legislation is a net plus for her region or the state. When pressed in a WJR radio interview, she told host Frank Beckman to call someone else for details.
Lansing’s corporate welfare backsliding may be gaining momentum. The recent push began with a 2012 vote to deliver taxpayer dollars to Detroit Red Wings owner Mike Ilitch for a new stadium project. Last year lawmakers wrote a special law giving tax breaks to a Nevada company that wanted to use the moribund Steelcase “Pyramid” building near Grand Rapids for a data center.
Today, in addition to Hughes legislation and the Gilbert proposal, there’s also a “public-private partnership” bill introduced by Sen. Mike Kowall. Like the port proposal this also could become a vehicle for delivering profits for well-connected developers with potentially big losses for taxpayers.
In another disturbing echo of Michigan’s last “lost decade,” the renewed corporate welfare push comes after a series of tax hikes imposed on regular citizens, including vehicle registration and gas tax increases.
If the current year in politics has demonstrated anything, it’s that the public is sick to death of political elites putting their own careers and special interest politics above the interests of the state and nation. If Michigan lawmakers want to bring that revolt to galloping boil in this state, they are on course to do so. Let’s hope they instead step back from this ledge.
Ridesharing companies, taxis and limos would compete on level playing field under bills
A package of bills that would establish statewide, uniform regulations and an open market for transportation companies has been introduced in the Michigan Legislature. Importantly, it would also restrict local governments’ ability to manipulate this market.
More than a year ago, the Michigan House passed a bill package related to ridesharing companies like Uber and Lyft. These companies are operating in some areas in Michigan, but they have been restricted by municipal regulators. The bills would explicitly make it legal for them to operate anywhere in the state, meaning that no matter where you live, you could start earning extra income by driving for Uber or Lyft.
The Michigan Senate is now considering similar bills, but these would also eliminate the government’s current restrictive rules on limousine and taxi companies and regulate all car-for-hire companies on a level playing field. In other words, taxicab and limousine companies would operate under the same regulations as these new ridesharing companies.
The bill package would do the following:
- Require transportation companies to pay an annual fee and register with the state;
- Prohibit local governments from tacking on extra taxes and fees or requiring additional licenses;
- Mandate that companies only hire drivers with a clean driving record and no history of criminal behavior;
- Require companies to insure the vehicles and drivers to a specified level;
- Require all vehicles used by these companies to be inspected annually by a certified mechanic and display a company emblem at all times; and
- Allow airports to create additional “reasonable” regulations, but only if they apply equally to taxis, limousines and ridesharing companies.
Cities like Ann Arbor have cracked down on Uber and Lyft, and local regulations on taxis are often unbearable. The city of Kalamazoo, for example, has 75,000 people, but only a single cab company is registered with the city, despite a much larger demand for service.
The bills have only just been introduced, but they stand a good chance of getting attention, since the state House has already signaled its desire to address this issue — and did so with wide bipartisan support. These are strong bills that establish fair and safe regulations for everyone to compete on a level playing field and prevent local governments from banning popular services. You can read more about the issue and hear the stories of drivers and riders at www.mackinac.org/ridesharing.
Local media covers Detroit Children's Business Fair
Young entrepreneurs tried their hands at business this weekend at the inaugural Detroit Children’s Business Fair.
The event, co-hosted by the Mackinac Center for Public Policy and Junior Achievement of Southeastern Michigan, challenged children ages 6 through 14 to create a business and set up shop at the marketplace that took place Saturday in downtown Detroit. Approximately 30 children from 11 businesses sold products and services ranging from marshmallow guns, to coffee, to stress balls.
“We make the coffee and we sell it to people because we want people to stay awake and have energy in the morning,” said Juan Basurto told Rod Meloni, of Local 4 WDIV Detroit. His company, J.E.M. Coffee, sold Peruvian coffee and chocolate. “We want to raise money for our school so we can fix stuff that’s broken, like our playground. … I’m pretty excited for the new customers that are coming in.”
Mackinac Center Media Relations Manager Chantal Lovell told WDET in Detroit that the Center chose to co-host Detroit's first Acton Children’s Business Fair because it believes that more and better businesses mean more and better jobs, which leads to a better life for American families.
“We’re hoping this shows kids the opportunity there is in business and the rewards that and sense of satisfaction that can be had from a day of hard work and creativity.”
Learn more about Acton Children’s Business Fair here.
Skorup pens op-ed in The Detroit News
Detroit’s comeback has been promised for decades, but recovery has yet to fully materialize.
Mackinac Center Policy Analyst Jarrett Skorup tackled the topic in an op-ed for The Detroit News, in which he highlighted some of the development projects that were each billed as the thing that would bring Detroit back. Be it the 1977 opening of the Renaissance Center, the 1985 People Mover, or the 2013 arena deal for the Detroit Red Wings, none of the developments have fully delivered on the promised hype.
Skorup explains that Detroit’s heavy regulatory climate and high taxes are getting in the way of its own recovery.
Most notably, the government charges too much to live there. Detroit has the highest income tax in Michigan and one of the highest property taxes for homes and businesses in the nation. Wayne County is by far the highest-taxed, tacking on extras to fund the zoo, the Detroit Institute of Arts, the community college, the jail, an intermediate school district, and other local public authorities.
This is combined with a business and regulatory environment that is the worst in Michigan (and perhaps the nation).
Bankruptcy restructured the city’s finances, now it’s time to reform the rest of Detroit’s government to allow its businesses to flourish.
Read the full op-ed in The Detroit News.
State media covers update of Mackinac Center database
Parents, lawmakers, media and education officials may now easily find the latest compensation information for the leader of Michigan school districts, thanks to an updated database maintained by the Mackinac Center for Public Policy.
In September, the Center announced it had updated its superintendent compensation database, which also includes the contracts under which superintendents work. Ben DeGrow, director of education policy for the Center, said information empowers parents and decision makers to make the best choices possible.
The database includes information provided by districts that responded to the Center’s Freedom of Information Act requests. Approximately 90 percent of districts responded to the requests and the database includes over 500 contracts. Of the information available, 32 superintendents have total estimated compensation packages worth $250,000 or more; 109 receive $200,000 or more each year.
WOOD TV 8 covered the increase in compensation in recent years, particularly among superintendents in West Michigan. One of those is Grand Rapids Public Schools Superintendent Teresa Weatherall Neall, who is the second-highest compensated superintendent in Michigan. She receives an estimated total compensation of $319,707 a year.
Mlive also wrote about the release and found the average compensation package for Michigan superintendents to be $171,311.
The database was originally launched in 2012.
Access the database here.
Watch Wood TV 8’s coverage here.
Read Mlive’s report here.
Michigan increased pension funding and it’s still not enough
Michigan lawmakers are proud of their fiscal prudence for putting an extra $1 billion into the school employee pension fund. But the extra state payments have been insufficient to pay even the interest on the debt, let alone catch up on the $26.7 billion of unfunded liabilities in the system.
The state determines the amount of money the pension system needs each year based on an actuarial assessment that looks at how much is being earned in benefits by employees and how much the state still owes in pension debt. This is different from Social Security and Medicare, where the government sets a contribution rate and leaves it unchanged.
The amount the state is supposed to pay for the school pension system has increased with the system’s growing unfunded liabilities. The recommended inputs increased from $1 billion in 2009 to $2.2 billion in 2015, as unfunded liabilities increased from $12.0 billion to $26.7 billion. (This is in addition to other contributions made to provide subsidized medical insurance to school retirees.)
The recommended amounts are assessed onto school districts as a percentage of payroll. Since 2012, the state gives districts extra money to help them pay these growing costs.
But this extra money only pays the assumed annual costs of running the pension system — it does nothing to improve the overall financial condition of it. If not for this extra money, school districts would be paying an even higher amount of their payroll for pensions. More money dedicated towards pension costs means less money for other school programs and vice versa.
And both the state payments and school district contributions are not enough to catch up on the debt. Unfunded liabilities increase at the state’s assumed rate of return, which is one of the dynamics of underfunded pensions. That means that the $26.7 billion in liabilities needs $2.1 billion a year just to keep from growing larger.
The extra money plugged into the school pension system has a number of effects on state and school finances. But it will not decrease the unfunded liabilities that someone is going to have to pay eventually.
To learn more about how to fix Michigan’s pension problem, visit: www.mackinac.org/pension
FOIA is a legitimate accountability tool
The clerk of Lincoln Township, Michigan — a small township near the tip of the Thumb — publicly criticized a citizen for filing a Freedom of Information Act request. The Huron Daily Tribune reports:
Clerk Irvin Kanaski also called upon township residents at Monday night’s meeting to chide Arlene Schipinski for seeking the information surrounding a $1,100 private donation to the township’s legal fund.
Kanaski said Schipinski’s requests cost the township $2,300 to $2,500 in legal fees, not counting the time he and Treasurer Patricia Weber put into handling the request.
“This cost is more than double that of the $1,100 that was anonymous, the legal expense donation made to the township,” he said.
Kanaski also told other citizens to call Schipinski and tell her to “please stop wasting our money with her frivolous freedom of information requests.”
Kanaski’s criticism of and behavior toward Schipinski is wrong for at least two reasons. First, it is inappropriate for a government official to use a public meeting to urge the harassment of a private citizen. No one should be bullied for seeking information from their government.
Second, state FOIA law allows public entities to charge citizens for the cost of gathering, printing and sending information sought in a FOIA request. The township did not have to waste time or money on this. It should have estimated the costs and notified Schipinski that she would be responsible for these fees if she wanted the request fulfilled.
FOIA is a key tool used by private citizens to hold governments accountable. The Mackinac Center has used it extensively to break dozens of stories, many of which helped lead to significant policy changes. Dozens of other organizations in Michigan do the same.
Charter school shedding 'priority' label
One mid-Michigan charter school striving not to be defined by its past has begun to see the payoff for changing its attitude and approach.
While the state of Michigan still officially recognizes the Saginaw Preparatory Academy as a low-achievement “Priority school,” more of its students are demonstrating the reading and writing skills they need to advance.
On a campus situated just within the city limits and across from wide-open farm fields, Saginaw Prep serves a mostly poor, African-American student body. Free transportation on traditional yellow buses is provided to keep the school within reach of kids, many of whom hail from the other side of town.
Saginaw Prep automatically landed on the state of Michigan’s Priority list in 2014 by finishing in the bottom 5 percent of the state’s Top-to-Bottom rankings, a system heavily weighted on raw state test scores. Though the Priority label reflects only one year’s results, it sticks with a school for four straight years.
As the Mackinac Center has noted, the Top-to-Bottom rankings — soon to be used for high-stakes closure decisions — tend to align much more heavily with student poverty than with school quality. That means the state rankings do a good job telling us how students scored compared to the state average, but a poor job showing how well or poorly schools and teachers are performing.
To better show that, our Context and Performance report cards adjust scores against the outcome expected based on the share of students who receive free lunch subsidies. On the 2015 report card, high-poverty Saginaw Prep earned a B, meaning its adjusted score rated higher than nearly 80 percent of the state’s public elementary and middle schools.
The School Reform Office in Lansing issued the label, but the impetus to follow through on improvement has emerged from within the school itself. Third-year school leader Molly Rundell and her team have charted an upward course that is paying dividends.
Saginaw Prep’s improvement plan incorporates a new reading curriculum and semimonthly after-school professional meetings, where teachers review student achievement data and share successful strategies.
Perhaps most important is the consistent commitment to instructional time. While Rundell notes that “we need every single minute” of the school day, she is especially protective of the early hours. Students in kindergarten through 5th grade spend 100 minutes every morning focused on intensive English language arts instruction. Nothing interrupts activity before 10:00 a.m., not even the occasional field trip.
The fruits of focused hard work are evident on the school’s most recent round of M-STEP English tests, where nearly every group demonstrated significant increases. Proficiency rates doubled in fourth and fifth grade, with eighth-graders making their own dramatic growth.
Personal connections also play a significant role in fueling improvement. Teachers and other staff members wear red and black to school Monday through Thursday each week, matching the color of student uniforms, in a show of unity.
The sense of community bridges an even greater generational span than the one that exists between students and teachers. For years, a partnership with the Saginaw County Commission on Aging has brought elderly community members, like 92-year-old “Grandma Dora,” to the school. They faithfully volunteer in the younger grades to reinforce classroom standards and to offer help or a hug.
This year, Saginaw Prep has expanded its commitment to mentorship within the school. For its quarterly elective period, one section of the school’s eighth-graders are dispatched to the younger classes to provide extra tutorial help. Principal Rundell says the program benefits the skills and character of both sets of students.
The school partners directly with the Leona Group, a management company that employs its staff, and is authorized by the hometown Saginaw Valley State University. But it’s the relationship school staff builds with parents that provides the most direct accountability and strongest foundation for academic progress.
While members of the school community may appreciate the recent positive changes at Saginaw Prep, school leadership exudes no sense of having arrived. “I just want to continue on this trajectory and keep aiming high,” Rundell said.