The MC: The Mackinac Center Blog

Michigan Bill Could Give Ride-Sharing an Uber Lift

Bill prohibits local governments from further regulation

State Rep. Tim Kelly, R-Saginaw, introduced legislation that would create state-based regulations for ride-sharing services such as Uber and Lyft. At first glance, the regulations appear reasonable and have the support of these so-called transportation network companies themselves, as reported by MIRS News (subscription required).

Uber and Lyft have faced challenges trying to break into new markets around the country, as each city has its own unique regulations for taxi services. City governments don’t quite know how to regulate these new ride-sharing services though, because they don’t fit neatly into pre-existing taxi laws. Naturally, taxi companies are lobbying local governments to ban or severely limit these services, as they (justifiably) view them as an existential threat to their business.

Statewide regulations of these services make some sense. After all, do residents of Lansing face significantly different risks from ride-sharing than residents in Grand Rapids? Or, put another way, if some ride-sharing regulations are good for Detroit, they should be just as good for Traverse City or Jackson. Further, reasonable statewide regulations are an improvement over the current hodgepodge of rules created by local city ordinances.

The proposed regulations require transportation network companies to hold a certain amount of insurance, get annual vehicle inspections and only use licensed drivers with good driving records, among other things. Uber and Lyft do almost all this on their own already.

In light of these regulations, it’s important to note that ride-sharing services provide a remarkable level of self-regulation — much more than most other services that the state does not regulate at all. For instance, Uber drivers are rated directly by their riders, and these ratings are available for all other riders to see. The best type of regulation comes not from bureaucrats in Lansing, but from the information generated by the users of these services themselves. Previously, this type of information was too costly to share easily with all potential users, but today, it’s readily available in your pocket.

The most important aspect to Rep. Kelly’s bill is that it prohibits local governments from further regulating transportation network companies. This will provide regulatory stability for Uber and Lyft in Michigan, and will make it likely that they could expand rapidly in this state. This should be welcomed, as these services provide new job opportunities to thousands of people and reduce the transportation costs of thousands more.

Winning by Default

Breaking down the GOP's 2014 election success

(Editor’s note: Jack Spencer is capitol affairs specialist for Michigan Capitol Confidential and a veteran Lansing-based journalist. His columns do not necessarily represent the views of the Mackinac Center for Public Policy or Michigan Capitol Confidential.)

The real story of the 2014 elections is that broad and shallow segments of the Democratic base saw nothing compelling to either vote for or against. As a result, they stepped aside and let the Republicans win. That is the big-picture reality; accept no substitutes.

Sure, the election produced plenty of interesting sidelights worth evaluating. But by comparison, these are just ants crawling across the carpet; the low voter turnout is the rhinoceros on the living room sofa.

Gov. Rick Snyder was reelected 51-47 percent and will have ample GOP majorities to work with in the state House and Senate. In the House the Republicans picked up four seats, increasing their majority from the current 59-51 to 63-47. Meanwhile, Senate Republicans increased their majority by one seat, from the current 26-12 to 27-11.

Forget all the stuff about Snyder winning because voters recognized he was turning the economy around. Forget the rhetorical ballyhoo about Michigan voters rewarding the Republican legislators for representing core conservative principles. If, as lawmakers, they had actually represented core conservative principles as much as they claimed as candidates, the past couple of years would have played out very differently than was the case.

While we’re at it, let’s also forget all the potential political mistakes Gov. Snyder and the Republicans made — especially over the past year or so. Let’s forget their messaging miscues.  Above all, forget the idea that Gov. Snyder failed to secure the GOP’s conservative base; it was predicable that most of that base would grumpily shrug, take a deep breath, and vote for him.

The unsecured base that dominated 2014 was comprised of potential Democratic voters who simply weren’t persuaded that they had much at stake in the election. That’s the downside of liberal populism. Empty promises about what government is capable of accomplishing can and do win elections, but after the luster wears off the promises backfire. Ultimately, when the promises go unfulfilled, prove to have been unfulfillable in the first place, or fall short of expectations when fulfilled, the excitement gives way to disillusionment and apathy.

Meanwhile, conservatives who fear and oppose the growth of government-sponsored activism keep right on ticking like a Swiss watch. It’s impossible to be disillusioned or disappointed over promises one never believed in. This year those on the right of the political divide turned out and voted against the direction things have been heading nationally. With the absence of President Barack Obama’s name on the ballot, Democratic candidates at the state level became the only targets available to vote against.

As occurred in states across the nation, Gov. Snyder and the other GOP candidates in Michigan caught a wave that carried them to victory. They were fortunate to be standing on the right sand bar, and as the wave rolled by it lifted them. Thousands of potential Democratic voters who opted to stay home rather than vote caused the displacement that created the wave.

All of this was foreseen long ago. At the beginning of the year, Democratic strategists in Michigan identified apathy among Democrat-leaning voters as their biggest problem. They set upon a plan to change that situation. Lon Johnson, the chair of the Michigan Democratic Party, pursued an aggressive grassroots effort to boost Democratic turnout.

It was a well-conceived plan, involving thoroughly researched techniques and painstakingly executed. Doubtless, untold hours were spent on it. In the end, however, all of this proved fruitless. Voting, it seems, is a self-motivated action and attempts to artificially induce that motivation apparently just don’t work.

The plan succeeded only in convincing many Democrat voters to vote early, by absentee ballot, rather than waiting for Election Day. In terms of actually increasing Democratic turnout, the plan was a colossal flop.

Then there was the Democrats’ bread and butter issue. From early 2011 through the 2014 election, they falsely argued that Gov. Snyder and the Republicans cut education spending to give corporations a tax break. This political ploy — which has been used in various forms more than a decade — has limited value. It rallies those closely connected to conventional education institutions and forces Republicans to spend a bit of time and money setting the record straight. Beyond that, its effect on election results is minimal. In the end, the ploy’s lack of impact almost always disappoints Michigan’s Democratic political brain trust. That proved to be the case again this year.

The 2014 election could well be remembered as a repudiation of President Obama’s policies. Though the Republicans are doing all of the cheering, it was primarily the Democrats — by declining to vote — that actually forged the instrument of that repudiation.

The Republicans should understand that the electorate’s rejection of the Democrats’ political posture and rhetoric in 2014 might prove to be as temporary as it was after the 2010 elections. Things are likely to be very different in 2016. If the candidate chosen for the top of the GOP’s national ticket is as uninspiring as was the case in 2008 and 2012, the tables could turn and turn quickly.

There are obvious limitations to relying on the hope that the warts and blemishes of one’s opponents will always be perceived as uglier than one’s own. 

Morris Hood Jr. Educator Development Program

Time for the Legislature to end it

Good intentions are no substitute for sound results, and nowhere is this more evident than in public policy. Correcting a possible policy mistake should therefore be a priority when lawmakers begin work on the next state budget. An initiative that funnels minority students into teacher preparation programs is a prime candidate

The “Morris Hood Jr. Educator Development Program” will cost taxpayers $148,600 this year, but after 17 years of trying it’s hard to find any sign of progress toward its goals. Named after a Detroit Democrat who spent 28 years in the state House, including many as chairman of the Higher Education Appropriations subcommittee, the program was created shortly before Rep. Hood’s death in 1998.

According to a state website, the program is designed to “increase the number of underrepresented students, especially males, who enroll in and complete K-12 teacher education programs at the baccalaureate level at state-approved teacher education institutions.” Specifically, the program “targets African American, Latino, and Native American Students …”

Data from the state’s Center for Educational Performance and Information at least suggests the program hasn’t worked. If the program really is designed to increase the percentage of minority teachers in Michigan, then it has been a failure. According to CEPI, the percentage of minority teachers in Michigan has actually dropped from 10.2 percent of all teachers in 2007 to 8.9 percent in 2013. During the same period, enrollment of minority students has increased from 28.9 percent all of all students 31.7 percent.

Minority Teachers

Minority Students

The Hood program is one component of a larger “King-Chavez-Parks” initiative that Rep. Hood reportedly played a key role in launching. Mackinac Center analysts in 1996 recommended eliminating this initiative, too, on the grounds that “state resources should not be distributed on the basis of race or ethnicity.”

If accountability means anything it means ineffective programs should be eliminated so the scarce resources they consume can be allocated to more compelling needs. For example, the $148,000-plus spent on the Hood program is enough to fill 7,400 potholes.

This program is an excellent candidate for repeal, if only lawmakers would try. 

Vernuccio Cited on Tennessee VW Labor Talks

Chattanooga Times Free Press, Bloomberg Businesweek

Labor Policy Director F. Vincent Vernuccio was cited in the Chattanooga Times Free Press and Bloomberg Businessweek about the ongoing labor talks at Volkswagen’s plant in Chattanooga, Tenn.

VW recently announced a policy that could recognize multiple unions in the plant, including the American Council of Employees and the UAW. Vernuccio cautioned that VW that it should not recognize either group as an exclusive representative of employees.

“I think VW wants a new type of union and a union of the future,” he said.

Vernuccio details such a process in his study, released earlier this week, “Unionization for the 21st Century: Solutions for the Ailing Labor Movement.”

Is VW the First Model for 21st Century Unionism?

New policy echoes Mackinac Center recommendations

On Tuesday, the human resources department at the Volkswagen plant in Chattanooga, Tenn., released a new policy allowing for voluntary recognition of multiple unions at their plant.

The company said it would recognize any union that can show it represents at least 15 percent of the employees in the plant. As detailed below, the company will bestow greater privileges upon organizations that prove they represent more workers. These include use of company facilities and meetings with VW’s human resources department and executive committee.

On Monday, USA Today reported that UAW hailed the policy “as a vehicle to soon gain representation of workers at its first foreign auto plant in the South.”

The UAW’s dual claims on what they would like to see in Chattanooga may be at odds. On one hand they claim that their work with VW, specifically the establishment of a “works council,” would be a “new model for collaboration,” and on the other hand their goal is to be the exclusive representative of all employees at the plant.

VW’s new policy is a good test case for the type of voluntary and collaborative unionism that the Mackinac Center espouses in our new study, “Unionization for the 21st Century: Solutions for the Ailing Labor Movement,” and one that seems to comport with the UAW’s public organizing strategy of the Tennessee plant (although not with their actual goal of becoming the only union at the plant to represent all employees, gaining “exclusive representation”).

So far the UAW has been unable to garner the needed support from a majority of the employees to be recognized as the exclusive representative. The UAW was defeated 712-626 in February when it tried to become the monopoly bargaining agent.

Soon after the union formed Local 42, which was not recognized by VW but would serve as a launching pad for future organizing attempts. The new policy would allow Local 42 to be recognized but not have the same powers as if the union had achieved a majority election through the National Labor Relation Act — something the UAW may again attempt despite the new policy.

The biggest winner of the policy could be a rival union known as the American Council of Employees, which is a local union that is an alternative to the UAW. According to its website, ACE is “not a national organization” but “an independent employee council created to ensure that all VW Chattanooga employees have a voice on the Volkswagen Global Works Council.”

The site, geared toward VW workers at the plant, further explains that ACE only wants to represent the interests of fellow employees and has no political agenda: “With ACE, we — the employees of VW Chattanooga — get to represent ourselves with a unified voice and a direct line of communication to corporate leadership.”

As the Detroit Free Press reported earlier today:  

Maury Nicely, a labor lawyer who works with anti-UAW workers, said Volkswagen's new policy could be viewed as a win for both the UAW and the American Council of Employees.

"As I understand it, the policy is going to offer the opportunity for any group that gets 15% of support to get a seat at the table with Volkswagen," Nicely said. "It actually is going to open the door to groups in addition to the UAW."

If the UAW is serious about embracing a new form of unionism, it will adopt VW’s new policy. If, however, they push to be the exclusive representative for all employees at the Chattooga plant, all of its past overtures will prove untrue and tragically VW’s innovative policy will be rendered moot.

Volkswagen’s new policy of voluntary representation is the type of new unionism needed for the 21st century. Allowing competition without compulsion in representation by multiple unions will be best for both the workers and the carmaker.

  

Here is the breakdown of the VW’s new policy:

 

Consistent with Volkswagen’s Open Door (HR-C08) and Solicitation (HR-C02) policies, individual (or groups of) employees are free to:

-       Discuss and/or promote their interests / group in non-work areas on non-work time

-       Wear promotional clothing (hat, t-shirt) in non-work areas on non-work time

-       Display/use promotional items (water bottles, cups) that comply with material specifications (i.e. no silicone)

-       Raise questions, ideas, or concerns directly to Volkswagen management at any time

Level 1 membership – with greater than 15% support

In addition to the normal rights and opportunities discussed above, employees are free      to:

-       Reserve and utilize space in the Conference Center for internal employee meetings on non-work time once per month

-       Post announcements and information in company-designated locations

Organization representatives (employees only) may:

-       Meet monthly with Volkswagen Human Resources to present topics that are of general interest to their membership

 

 

Level 2 membership – with greater than 30% support

In addition to the Level 1 opportunities noted above, employees may:

-       Reserve and utilize space in the Conference Center for meetings on non-work time once per week

-       Invite external representatives of their organization for Conference Center meetings once per month

-       Post materials on a dedicated/branded posting board

-       Meet quarterly with a member of the Volkswagen Chattanooga Executive Committee

 

Level 3 membership – with greater than 45% support

In addition to the Level 2 opportunities noted above, organization representatives (internal or external) may:

-       Reserve and utilize on-site locations for meetings on non-work time (with staff and/or employees) as reasonably needed

-       Meet bi-weekly with Volkswagen Human Resources and monthly with the Volkswagen Chattanooga Executive Committee 

Sound Road Funding

Michigan House headed in right direction

Photo via Danielle Scott at Flickr.

(Author’s Note: In last week’s Detroit News editorial, “Second term agenda focused on right priorities,” Gov. Snyder noted that a road funding package “was pretty much done.” We hope some of the sound ideas below are contained therein.)

Last May, the Michigan House of Representatives passed a legislative package that would permanently increase annual road funding by around $462 million without a significant tax increase. Some of the measures could theoretically lead to modest restraints on other state spending. The Senate should adopt this or a similar package to move the ball forward on road funding.

Several components passed by the House are worthy of applause, such as dedicating $130 million in sales tax levies currently imposed on fuel purchases to roads. This revenue currently goes to other state spending, but most drivers would probably agree that taxes levied on fuel should be used to maintain roads.

A key bill in the package would redirect one-sixth of the 6 percent use tax levied on gas to roads. This would make around $239 million available for road repairs and construction with no tax increase.

Another bill would require more competitive bidding on road projects, while others would impose performance standards on contractors and require warranties on pavement projects costing more than $1 million. (A 2002 essay by registered professional engineer and current Mackinac Center President Joseph G. Lehman explained why road warranties are “an idea whose time has come.”)

Potential savings from those reforms may be sufficient to roll-back some modest tax hikes that are also included in the package, including $35 million worth of higher vehicle registration fees, and between $8.6 million and $11 million in added fees and fines on oversized and overweight vehicles.

That last item engages a longstanding debate regarding the impact of very heavy trucks on Michigan’s roads. Evidence suggests that heavy trucks may do less damage than people realize because the weight is spread out over more axles and thus, current limits are sufficient.

To the extent some of these levies represent legitimate user fees or reimbursements, they are unobjectionable and may simply be covering costs for services rendered (or road damage inflicted).

If the increase in the revenue from these fee hikes seem all too large, consider that lawmakers have called for between $1.2 billion and $1.5 billion in net new taxes and fees in the past couple of years alone. The Mackinac Center has long said the state should make good roads a higher priority and we believe these ideas provide a path forward. The Legislature has demonstrated a willingness to tackle tough fiscal issues (Michigan Business Tax, Personal Property Tax) in ways that improve the system without unduly burdening taxpayers on net balance.

Now that the election has passed, attention is being drawn again to Michigan roads. The House package passed last May represents a good starting point for translating those demands into action, and in a manner that does not jeopardize the state’s economic recovery. Reprioritizing current state spending to free up more resources for roads could readily complete this project.

For an exhaustive treatment of Michigan’s transportation system and related funding, see the 2007 Mackinac Center study, “Road Funding: Time for a Change.” For a list of 35 major budget reform ideas see the essay “$2.1 in Michigan Budget Reforms.” 

Detroit bankruptcy Judge Steven Rhodes called on the state to address the underfunding of local government pension benefits in his oral opinion. He stated that the state has a “constitutional, legal and moral obligation to assure that the municipalities in this state adequately fund their pension obligation.”

A government’s own employees should not be its largest creditors, nor should retirement benefits they have earned be placed at risk, as happened in Detroit.

There are a number of current bills that would help local governments avoid underfunding, and the Legislature should consider passing them.

When an employee earns pension benefits, the government creates a long-term liability. If the employer puts aside enough money to cover that liability, pension benefits will not be a problem. But if governments underestimate the costs, then there is a problem. This effect is more pronounced if the community has become less prosperous since the employee earned his or her pension.

Unfortunately, most Michigan cities find themselves in this situation. There are $3.1 billion in underfunded pension benefits in Michigan’s largest cities. The worst offenders have less than 50 cents saved for every dollar of pension benefits earned.

The easiest way for governments to ensure they can pay employees what was promised is to get out of the defined benefit pension business by closing the systems to newly hired employees. They can instead provide defined-contribution plans that offer generous retirement savings without generating long-term liabilities on taxpayers.

This can also help governments to catch up on the underfunding of promises made to employees in the closed system, while offering benefits to new employees that will be there when they retire.

Local governments, however, have been hindered in offering these plans because retirement benefits are a mandatory subject of collective bargaining when employees are unionized. Unions have been ideologically inclined toward defined-benefit pension systems. For example, Detroit unions fought to keep a defined benefit system around for new employees even as benefits were being cut for current retirees.

Judge Rhodes also made an appeal to unions to be pension system hawks, ensuring that these plans do not get underfunded. This would certainly help, but too often unions have argued for pension sweeteners and early retirement incentives that blow further holes in pension finances.

Legislation currently pending in the House Local Government committee would allow local governments to close their pension systems without having to negotiate this benefit with their unions. Under House Bill 4804, locals could simply choose to close these pension systems on their own.

Detroit’s bankruptcy judge does not want to see other governments go through what that city faced. He implored stakeholders to ensure that governments set aside the necessary money to pay for pension benefits. As legislators consider laws in this lame duck and beyond, they should be responsive to Judge Rhodes’ plea.

Lehman Discusses Legislative Priorities

Cut corporate welfare, fix roads

Mackinac Center President Joseph G. Lehman was a guest this morning on “The Tony Conley Show” on WILS-AM1320 in Lansing, discussing his recent commentary titled “What Should the Next Legislature Do?

Lehman noted that Fiscal Policy Director Michael LaFaive recent put together $2.1 billion worth of budget reforms, which he submitted to legislators.

“I would encourage everybody in the Legislature to look at that list and see if there’s anything on the list that is less important than roads,” Lehman said. “There’s a lot of corporate welfare on that list that can be cut.”

Lehman also touched on government transparency and bringing government employee benefits in line with what is offered in the private sector, which could save taxpayers $5.8 billion annually.

Reitz Cited on Criminal Sentencing Reform

Legislative overhaul could save taxpayers money

Mackinac Center Executive Vice President Michael J. Reitz told MLive that a legislative package on criminal sentencing reform is a good stop forward, including a proposal that would create a Justice Policy Commission to review sentencing guidelines.

“It is a valuable component of the proposals,” Reitz said. “These issues tend to fade to the background if there isn’t someone, or a group or entity, that’s continually looking at it.”

The recommendation came out of the Michigan Law Revision Commission’s meeting earlier this week, which Reitz attended. The MLRC also discussed modernizing the state’s Open Meetings Act.

Reitz recently co-authored a study with the Manhattan Institute on Michigan’s criminal code.

November 7, 2014, MichiganVotes Weekly Vote Report

New legislative leaders; facilitating medical innovation

The House and Senate met one day this week, primarily so that returning members and newly elected freshmen could select legislative leaders for the 2015-2016 session.

House Republicans chose Rep. Kevin Cotter to be the next Speaker of the House, and Senate Republicans chose Sen. Arlan Meekhof as the next Senate Majority Leader. These selections will be confirmed in official votes when the 98th Michigan Legislature convenes on Jan. 7.

House Democrats chose Rep. Tim Greimel to be their next minority leader, and Senate Democrats selected Sen. Jim Ananich for that role.

Senate Bill 1033, Don't subject “direct primary care” and “concierge medicine” to extensive insurance regulation: Passed 26 to 11 in the Senate

To establish that fixed-fee medical retainer agreements between a physician and a potential patient covering routine health care services are not considered “insurance” subject to the extensive regulatory regime imposed on conventional health insurance policies. This could presumably apply to “direct primary care” agreements, “concierge medicine” and similar innovations.

Who Voted “Yes” and Who Voted “No”

Senate Bill 637, Establish drunk driver vehicle interlock device regulatory regime: Passed 37 to 0 in the Senate

To establish regulations, procedures and fees for drunk driver vehicle interlock device installers, and give the Secretary of State the authority to oversee these programs. Current law regulates manufacturers and vendors of these devices but not installation.

Who Voted “Yes” and Who Voted “No”

Senate Bill 1055, Repeal mandate that state printing be done in Michigan print shops: Passed 24 to 13 in the Senate

To repeal a requirement that all state-funded printing must be done by Michigan print shops. to repeal a requirement that all state-funded printing must be done by Michigan print shops. The bill appears to leave in effect a “prevailing wage” mandate on state-funded printing, which prohibits granting the lowest bid to a shop unless its employees are paid the equivalent of local union wages.

Who Voted “Yes” and Who Voted “No”

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.