The MC: The Mackinac Center Blog

September 19, 2016 MichiganVotes Weekly Roll Call Report

Blasts-from-the-past on road funding, same-sex adoptions, civil asset forfeiture and more

While legislative committees were active this week, no votes were taken in House or Senate. The Roll Call Report therefore continues its review of key votes from the 2015-2016 session.

House Bill 4522, Expand legislative subpoena power: Passed 69 to 39 in the House on June 2, 2015

To give certain committees of the legislature the explicit authority to subpoena and investigate records of local governments, authorities, school districts and community colleges. At least one member of the minority party would have to agree. Under current law committees can subpoena state agency personnel and private citizens. The Senate has not voted on this bill.

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Who Voted “Yes” and Who Voted “No”


House Bill 4505, Increase civil asset forfeiture burden of proof: Passed 103 to 6 in the House on June 4, 2015

To require a more rigorous “clear and convincing” burden of proof standard in the law that gives police agencies the power to seize and sell a person’s property if it may be connected with an illegal drug crime, even if the person is not charged or convicted. Under current law property may be taken under the least rigorous "preponderance of the evidence" standard.

Who Voted “Yes” and Who Voted “No”


House Bill 4505, Increase civil asset forfeiture burden of proof: Passed 38 to 0 in the Senate on October 7, 2015

The Senate vote on the bill described above.

Who Voted “Yes” and Who Voted “No”


House Bill 4605, Road funding votes, earmark some income tax for roads: Passed 62 to 47 in the House on June 10, 2015

To earmark a portion of state income tax revenue to road funding, starting with $192 million in 2016 and increasing to $717 million in 2019.
Following the overwhelming defeat of a May, 2015 ballot initiative requesting $2 billion in tax increases for roads and more, the House and Senate traded competing alternative proposals, of which this was one of the first. The Senate did not vote on this bill, but similar provisions were eventually included in a successful road funding package.

Who Voted “Yes” and Who Voted “No”


House Bill 4609, Road funding votes, EITC repeal: Passed 57 to 52 in the House on June 10, 2015

To eliminate the state earned income tax credit, which grants recipients an amount equal to 6 percent of the federal EITC. The EITC is a "refundable" tax credit that sends checks to low income workers totaling around $115 million annually, which would be reallocated to road funding (see previous bill). The Senate did not vote on this bill, and the repeal was not included in the final road funding package.

Who Voted “Yes” and Who Voted “No”


House Bill 4607, Road funding votes, shift corporate subsidies to roads: Passed 60 to 49 in the House on June 10, 2015

To no longer spend $75 million annually on various direct and indirect subsidies granted to corporations and developers under the “21st Century Jobs Fund” rubric, and instead use this money on road repairs. House Bill 4608 defunds other subsidies, but both bills require spending to continue for government tourism industry promotion ("Pure Michigan" ads). Neither bill was voted on in the Senate, and the proposals were not part of the final road package.

Who Voted “Yes” and Who Voted “No”


House Bill 4189, Let adoption agencies refuse adoptions that violate moral convictions: Passed 65 to 44 in the House on March 18, 2015

To establish that a private adoption or foster care agency is not required to assist or participate in an adoption or placement that violates its written religious or moral convictions, including adoptions of a child by a same-sex couple. State agencies would be prohibited from discriminating or taking an “adverse action” against an agency for this reason.

Who Voted “Yes” and Who Voted “No”


House Bill 4189, Let adoption agencies refuse adoptions that violate moral convictions: Passed 26 to 12 in the Senate on June 10, 2015

The Senate vote on the bill described above.

Who Voted “Yes” and Who Voted “No”


House Bill 4052, Preempt local employer wage, benefit or labor law mandates: Passed 57 to 52 in the House on May 20, 2015

To preempt local governments, public schools, state colleges and universities, and other governmental authorities from imposing mandatory wage, benefit, leave time and other requirements on employers that exceed those required by state or federal law.

Who Voted “Yes” and Who Voted “No”


House Bill 4052, Preempt local employer wage, benefit or labor law mandates: Passed 23 to 15 in the Senate on June 17, 2015

The Senate vote on the bill described above.

Who Voted “Yes” and Who Voted “No”


Senate Bill 211, Authorize uncensored public school American heritage instruction: Passed 30 to 8 in the Senate on June 11, 2015

To require public school boards to “permit” instruction and reading of “America's founding documents” including those related to the country’s “representative form of limited government, the Bill of Rights, our free-market economic system, and patriotism.” School districts would be prohibited from censoring or restraining reading that includes “religious references in original source documents, writings, speeches, proclamations, or records.” This bill has not been taken up by the House.

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.

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Michigan Must Stop Keeping Peoples’ Property Without Conviction

Skorup discusses civil forfeiture on Michigan Radio

Michigan lawmakers took some important steps last year to reform Michigan’s civil forfeiture laws, but there’s still plenty of work to be done.

Mackinac Center Policy Analyst Jarrett Skorup spoke with Lester Graham on Michigan Radio’s Stateside program about the practice of civil asset forfeiture. Under this practice, law enforcement may seize private citizens’ property, regardless of whether or not that person has been convicted of or even charged with a crime.

The problem in Michigan and around the country is this isn’t just done in the criminal realm, it’s done in the civil realm, which is why it’s called civil forfeiture. … When assets are seized and go through the civil system, it can happen before anybody is charged with or in many cases even accused of a crime. So the government is able to take people’s property even though they might actually not have done anything wrong.

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While Michigan has recently added transparency and reporting requirements to the process, Skorup said civil asset forfeiture should be done away with altogether.

If the police want to take ownership of somebody’s property, they should have to prove and convict them of a crime. Michigan has the worst of a couple different worlds here because the money goes back to the department that initially seized people’s assets, so you have this incentive process set up and it’s been admitted by law enforcement. This is used to pad their budgets and that’s not how a criminal justice system should work.

Skorup said property should only be seized if a person is convicted of a crime and a judge and jury determine that property was connected to that crime.

Listen to the full interview at Michigan Radio here.

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An Opening for Michigan Licensing Reform

When the state asks for higher fees, repeal the mandates

A recent MIRS report, “State Collects 32% More In Fees Than It Cost to Regulate,” notes that the state brings in $147 million in revenue for licenses and permits. But the total cost to regulate Michigan’s variety of industries was much probably much higher.

The Michigan Department of Licensing and Regulatory Affairs, or LARA, is in charge of overseeing the occupations state law requires to be licensed. In theory, the fees collected for an occupation should pay the cost of regulating that occupation but that rarely works out in practice.

According to MIRS, the state gained $25.5 million in revenue from fees from stockbroker and investment firms, but spent only $4.5 million regulating them. It brought in $46,880 from carnivals and amusement rides, but spent $390,401 overseeing them. Ski areas paid $15,676 in fees while costing the state $339,552 to regulate. Many professions subsidize other occupations or within their own departments.

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Last year, Michigan’s licensing apparatus collected a total of $54.3 million in fees while spending only $37 million. So, on the whole, the nearly 200 occupations licensed by the state are paying more than in fees than what it costs the state to regulate these industries. This gives credence to the notion that part of the state’s interest in regulating occupations is simply to generate revenue.

For regulating occupations that are not paying for themselves, the head of LARA blamed fee structures that are decades old and set in statute, and there is a point to that. The department plans to go to the Legislature and ask for some of these fees to be raised.

But before policy makers agree to increase fees, they should consider other options. First, the state should try to limit how much some occupation’s licensing fees subsidize the cost of regulating other occupations. The state collects a lot of revenue in fees from building contractors and nurses — but these professionals should not be paying the cost to oversee landscape architects and barbers.

More importantly, legislators should eliminate licensing requirements for occupations that do not have a clear connection to public safety concerns. This will eliminate costs for LARA and, according to empirical evidence, likely give the economy a boost by reducing the costs of individuals entering the labor market.

Unless requiring an occupational license can be proven to benefit public health and safety, the state should not bother with creating a regulatory scheme for an occupation. Too many of Michigan’s licenses do not meet this standard.

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Markets, Not Politicians, Slow State Oil and Gas Production

From 'obscene profits' to 'obscene losses'

The Detroit News recently reported that low oil prices have resulted in a decreased number of new oil and natural gas wells around Michigan. As a result of the slowing markets and dropping prices, the industry is seeing losses mount and is laying off hundreds of thousands of employees across the country. The article notes that Michigan is setting record lows in the number of drilling permits, with accompanying job losses. In fact, Energy Information Administration (EIA) numbers indicate that oil production in the state actually reached a 25-year low in 2015.

This revelation isn’t terribly surprising, as the hardships being faced by the oil and gas industry are well known. But one section from the article did stand out.

Mega oil companies such as Exxon Mobil Corp. and BP PLC are saddled with massive debt and generating ‘obscene losses’ that are ‘unlike anything we’ve ever seen before in history.’ …

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Forty publicly traded U.S. oil producers last year lost a combined $67 billion, according to an EIA report released in April. Exxon Mobil, BP, Royal Dutch Shell PLC and Chevron Corp. hold a combined net debt of $184 billion — more than double than in 2014, The Wall Street Journal reported this week.

The term “obscene” in relation to energy companies is interesting. Flash back a decade or so ago and it was applied in a much different context.

In April 2006 — when the crude oil price was at approximately $67 per barrel — a CNN news item quoted bipartisan views on how to address oil prices and industry profits.

Amid rising gas and oil prices, a leading Republican said on Sunday that the U.S. government should consider imposing a windfall tax on oil company profits.

‘I think it's something worth considering among a number of options,’ Pennsylvania Sen. Arlen Specter, chairman of the Judiciary Committee, told CNN's ‘Late Edition.’...

Sen. Carl Levin, a Michigan Democrat, told CNN's ‘Late Edition’ on Sunday, ‘We need a windfall profits tax, because these profits have been absolutely obscene.’

When oil companies are making “obscene profits,” elected officials on both sides of the aisle trip over themselves to impose a “windfall profits” tax. Of course, Sen. Specter has passed away and Sen. Levin has retired, but many people currently in office had made the same call for windfall taxes.

Now that oil prices are near an all-time low, these calls have died down. But it is markets, not environmentalists or politicians, which have driven down prices for consumers and led to these “obscene losses” that are “unlike anything we’ve ever seen before in history.”

Don’t hold your breath waiting for politicians to stick with their “windfall” logic by demanding aid to help address the financial pressures the industry is facing. That logic only holds when it can help expand government spending. Of course they shouldn’t demand aid, just as they shouldn’t demand additional taxes. Government officials should allow competitive markets to work and, thereby, produce greater prosperity for everyone.

It is more realistic to expect that when the energy market turns around, elected officials will go back to their demagoguery. But people should keep politicians’ track record in mind the next time they engage in a craven grab for headlines, more money and more political power.

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It’s not news that government employee pension systems across the nation have promised retirees billions in pensions and not saved enough to make good on those promises. But a related problem could pose an even greater risk to taxpayers: lifetime health insurance benefits provided through these systems.

Michigan may be showing governments across the country the way to resolve the fiscal challenge, however. Without much fanfare, the state and many local governments have stopped offering new employees open-ended post-retirement health insurance benefits. In doing so, they have contained their exposure to ever-increasing premiums that could one day threaten their solvency.

Governments have tended not to set aside money to pay for those benefits as employees work, but rather pay the insurance premiums as they come due. This means today’s taxpayers are paying payroll expenses incurred by government employees years or even decades in the past.

This is both unfair and imprudent. If such coverage is offered at all, a better course would be to place money in a health insurance trust fund as the benefits are earned, just as pension contributions are deposited annually into pension funds.

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Such prefunding is what governments are supposed to do with pensions. Most have fallen short, though. The latest Pew report tallies nearly $3.7 trillion in pension liabilities that governments acknowledge; stricter pension assumptions can inflate this figure. Governments have saved $2.8 trillion to pay for pensions, leaving $934 billion in unfunded liabilities.

The retiree health insurance is a smaller, $627 billion gap, but fewer dollars have been set aside to pay these future benefits. The size of this gap is even more uncertain than that for pensions, given the employers’ exposure to rising health care costs and premiums.

This is a problem that the private sector has already resolved. A 2011 Mackinac Center study found that only three of 24 major private sector employers in Michigan provided any retirement health insurance benefits.

Michigan governments have started to change. The school system (with 425,000 total employees and retirees) and the state employee system (with 76,000 members) no longer offer to pick up post-retirement health insurance costs for their new employees. Instead, new employees are offered supplemental contributions to their retirement savings plans, which are intended to pay for any insurance coverage they choose upon retirement.

By closing these two systems to new hires, and trimming the benefit for current retirees, Gov. Rick Snyder and members of the 2011-12 Legislature deserve credit for refusing to kick this can down the road one more time. Instead, the state is now on course toward gradually eliminating the problem.

Local governments in Michigan have undertaken similar reforms. Only six of the state’s 30 largest cities and townships still offer new employees open-ended retiree health benefits. Even among the holdouts, some have made changes: Dearborn Heights no longer offers the benefit to entry level police; and Taylor also closed them to new officers in 2011.

Many counties have also stopped offering retiree health insurance benefits to new hires, including one perennial fiscal basket case, Wayne County.

None of this means the problem is solved, however, only that its growth has been contained. The state’s largest 30 municipalities have made $4.7 billion worth of promises for retiree health insurance coverage, and they have only saved $1.0 billion to cover it. Managing the $3.7 billion remainder will be a huge challenge.

There is a state constitutional guarantee for pension benefits that have been earned. State and local governments can, however, trim post-employment health benefits — not just for future retirees but for current ones as well.

Many Michigan governments have taken the less drastic but still extraordinary step of simply no longer offering this benefit to new employees. Their prudence will pay big dividends to both taxpayers and government employees in the future.

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A state economy isn't made up of the biggest companies

According to MIRS News, Sen. Mike Kowall, R-White Lake, is pushing for driverless vehicle legislation, hoping to land a research center in Willow Run. The intent of the legislation, MIRS said, “is to propel Michigan to the head of the line in the highly competitive autonomous sweepstakes, which involves such states as California, Nevada, Texas and Florida.”

According to the news site, Kowall issued a warning: “If we do nothing, that would be irresponsible. We'd lose jobs. We'd lose people moving away wholesale and the universities promoting these studies, everybody would move out of state.”

There are often “competitions” between states for projects. Lawmakers tend to send heaps of taxpayer dollars to companies that try to play one state or locality off the other as they consider where to place new projects.

It’s a good thing that the state economy relies upon decentralized decision-making to create jobs instead of political deals. The deals are not the fountain of all economic activity, as portrayed by policymakers.

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That is because a state economy is not the compilation of the biggest companies and favored industries, but rather the result of decisions made by thousands of business owners and managers. There are thousands of jobs created and lost every month. At best, politicians make deals for dozens, and these rarely come to fruition. And there is an economic cost to the taxpayer dollars used to lure companies not accounted for in the job announcements.

Some of Kowall’s proposals may prove to be valuable. Creating a legislative environment that allows self-driving vehicles is an important thing to do, considering that many of our laws on road and vehicle usage assume that there is a person driving.

But the competition for flashy projects results in taxpayer losses.

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What You Owe for Pensions

Michigan governments hold $3,800 per person in pension debt

Like state and local governments across the nation, Michigan has a variety of public entities that offer pensions to former and current employees. And like nearly all other governments, Michigan’s units have huge unfunded liabilities.

Unfunded liabilities exist because politicians have not saved enough money to pay for the pensions promised to employees and retirees.

Michigan’s public school employee system has an unfunded liability of $26.7 billion. Local governments, cities and counties, are behind more than $5.4 billion. The state employee system has an unfunded liability of $5.8 billion. So the most prominent public entities are behind a total of $37.9 billion, or $3,800 for every person in the state.

The state employee system was closed in 1997, meaning new employees were shifted to a defined contribution, 401(k)-type plan. These retirement plans pay for benefits as they are earned and cannot rack up unfunded liabilities. The unfunded liability of the state employee system, unlike that of other open pension systems, is trending down and will eventually be paid off.

Our study of Michigan’s pension systems, at all layers of government, show a hard truth: Pension systems don’t get funded – they get underfunded. Politicians simply cannot be trusted to put aside enough money for benefits later since they’d rather spend the money now.

It’s time to put the money back in our hands, and shift new employees off the pension system.

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September 9, 2016 MichiganVotes Weekly Roll Call Report

Medical marijuana crack-down, driverless trucks, dogs in outdoor cafés

House Bill 4209, Impose licensure, regulation on medical marijuana industry: Passed 25 to 12 in the Senate

To impose a 3 percent tax on retail medical marijuana sales, along with a licensure mandate and comprehensive regulatory regime for medical marijuana growers, transporters, dispensaries and more, with civil and criminal penalties for violations. This would be modeled on the state's "three tier" alcohol sales regime, which has been criticized for empowering anti-competitive regional distribution monopolies.

Who Voted “Yes” and Who Voted “No”

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House Bill 4210, Authorize medical marijuana in edible form: 28 to 9 in the Senate

To authorize the use of edible marijuana infused products under the state’s medical marijuana law, and establish regulations for these substances.

Who Voted “Yes” and Who Voted “No”


House Bill 4827, Create "seed to sale" medical marijuana database: Passed 27 to 10 in the Senate

To require the state to develop a comprehensive “seed-to-sale” tracking system for commercial marijuana, with information on each step including recording final sales to individual customers. This would all be contained in a computer database and would not be a public record, but could be used for enforcing the medical marijuana law, including tracking how much individual card holders purchase and from whom.

Who Voted “Yes” and Who Voted “No”


Senate Bill 1014, Remove procedural restraints on regulating medical marijuana facilities: Passed 26 to 11 in the Senate

To exempt rules imposed on medical marijuana facilities from the requirements of the state administrative procedures act, which requires agencies to follow a specific process to ensure rules are reasonable, do not exceed the agency’s legal authority and are actually needed.

Who Voted “Yes” and Who Voted “No”


House Bill 5275, Require DNR create forest trail map: Passed 28 to 9 in the Senate

To require the Department of Natural Resources to create a comprehensive inventory of (unpaved) state forest roads that identifies their condition and development level, and shows the types of motorized and non-motorized uses currently restricted on each segment, including seasonal restrictions. Also, to allow the wider used of pack-saddle horses for purposes of hauling out game during hunting season.

Who Voted “Yes” and Who Voted “No”


Senate Bill 962, Revise details of legislature’s regulation oversight: Passed 26 to 11 in the Senate

To expand the authority of the legislature’s Joint Committee on Administrative Rules (JCAR) so it can delay a department rule for up to one year while the legislature tries to pass a bill to change the law that permits the rule.

Who Voted “Yes” and Who Voted “No”


Senate Bill 1019, Expand scope of practice for nurse anesthetists: Passed 22 to 15 in the Senate

To reduce the limitations on nurse anesthetist’s scope of practice, allowing them to provide anesthesia and analgesia services as the sole and independent anesthesia provider under certain conditions, and more.

Who Voted “Yes” and Who Voted “No”


Senate Bill 727, Allow dogs in outdoor cafés: Passed 32 to 4 in the Senate

To allow a restaurant to permit customers’ dogs in outside dining areas. Under current law only seeing-eye and other service dogs are allowed. Local governments could still choose to ban dogs.

Who Voted “Yes” and Who Voted “No”


Senate Bill 995, Authorize driverless vehicles on Michigan roads: Passed 36 to 0 in the Senate

To expand a law that permits operating automated driverless vehicles on Michigan roads, subject to detailed restrictions and conditions. The bill is part of a package comprised of Senate Bills 995 to 998 that would potentially repeal the requirement that a human operator be present to monitor performance and intervene if necessary, permit “platoons” of driverless trucks traveling together on highways, and create regulations for these and related autonomous vehicle activities. Local governments would be preempted from imposing more restrictive regulations.

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.

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The Legislature is considering a bill that would prohibit local governments from banning people from owning pit bulls. Senate Bill 239, sponsored by Sen. Dave Robertson, R-Grand Blanc Township, has passed the Senate and is being considered in the House.

According to the Detroit Free Press, 26 towns have enacted ordinances that restrict pit bulls and 14 outright ban them and other dog breeds.

It’s true that pit bulls harm more people than any other type of dog. According to one report, they have killed a total of 233 people since 1982. That makes them about 40 percent more likely to kill than Rottweilers — though, when the number of deaths is adjusted to reflect the number of each breed, huskies are actually far more dangerous. Other studies have a slightly higher estimate, with approximately 19 people per year dying because of dogs. 

But the question is whether pit bulls are dangerous enough that governments should ban them. While the breed often makes the news, the number of injuries and deaths they cause is still very small.

Evidence suggests that pit bulls are not more inherently dangerous than some other types of dogs. The American Society for the Prevention of Cruelty to Animals (ASPCA) and the federal Centers for Disease Control are both opposed to breed-specific legislation because studies show them to be ineffective and harmful. Other research suggests that while pit bulls are aggressive, other breeds are even more hostile. In other words, pit bulls are only more dangerous because they are bred that way by their owners, meaning local bans just encourage people to train other types of dogs to be violent.

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Many cities have ordinances that restrict residents from having any dog that is dangerous or out of their control. This policy is much better than a specific ban on pit bulls or other breeds.

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New Study Calls for More Spending to Provide Nothing

Higher education costs are increasing, but why?

A study from the Michigan League for Public Policy says that Michigan should spend more taxpayer dollars on state universities. This would do little to lower tuition, though, until the schools stop their spending spree.

For universities, tuition and taxpayer support are revenues that pay for their expenses. The League states that cuts in taxpayer funding of universities are the culprit for tuition increases. The biggest driver for tuition increases, however, is not stagnant taxpayer support but university expenses.

Say that legislators wanted to use taxpayer money to keep tuition at what it was a decade ago. In that case, the state would need to spend another $1.5 billion, doubling what taxpayers currently spend.

Prospective students have largely ignored university sticker prices when making their selections. Easy credit (often subsidized) means that unaffordability does not limit their decisions. So universities tend to compete on things other than price. College support staff, in particular, is an ever-increasing expense.

The League makes no attempt to analyze the reasons for the increased expenses that are driving tuition up.

One day, students will be more cost conscious about the bill for higher education. That, rather than doubling taxpayer support, will provide a stronger incentive for universities to keep tuition low.

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