Regulatory Swamp-Draining Gets Boost In Washington

Trump’s Regulatory Affairs Director appears serious, and she has a record

President Donald Trump has nominated George Mason University law professor Neomi Rao to head the White House Office of Information and Regulatory Affairs within the Office of Management and Budget. This is a radical departure for the office, because for years Rao’s scholarship has challenged the legitimacy of the regulatory state and how it takes decision making away from Congress.

The pervasiveness of what is called “the administrative state” is a relatively new development in this country. The term refers to an entire bureaucratic apparatus that operates separately from elected officials, and over which the courts exercise very little oversight.

Rao’s appointment suggests that Trump intends a serious effort to break through the long-standing regulatory morass. She is the founding director of George Mason University’s Center for the Study of the Administrative State, and represents a huge departure from previous Regulatory Affairs directors.

For example, President George W. Bush appointed a Harvard scholar named John Graham. Graham's specialty was applying cost-benefit analysis to somewhat constrain regulations. While that approach is useful, he never challenged the basic legitimacy or pervasiveness of the regulatory state.

The same stance was adopted by President Barack Obama’s appointee, Cass Sunstein, a legal polymath who had offered some reasonable critiques of the existing regulatory state. But Sunstein was nevertheless a full-fledged booster of what he calls “nudging” people and firms into regulatory-directed outcomes.

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Rao starts from a very different position, and changes in another branch of government could deepen the challenge to “deep state.” Newly seated Supreme Court Justice Neil Gorsuch is said to be “Scalia without the deference to administrative agencies.” Justice Clarence Thomas has been a long-time critic of the administrative state, and has been joined by Justice Samuel Alito. Observers expect Trump to be able to appoint at least one or two more justices in this mold in his first term, and possibly more in a second term.

Nobel-prize winning economist Edmund Phelps has written extensively about the negative effects of overly developed regulatory power. Since the 1970s, when the alphabet soup of federal agencies sprang up and accumulated power, the general dynamism and innovation of the economy has slowed considerably. Phelps calls the entire apparatus of regulation, corporate protection and insider favoritism “corporatism’s managerial state.” He wrote:

“The new corporatism chokes off the dynamism that makes for engaging work, faster economic growth, and greater opportunity and inclusion. [It] does that by maintaining lethargic, wasteful, unproductive and well-connected firms at the expense of dynamic newcomers and outsiders and by pursuing goals such as consumption, social insurance, and rescue of companies and industries nourishing lives of engagement, creating, and exploring. Today, airlines, auto manufacturers, agricultural companies, media, investment banks, and much more have at some point been deemed too important to weather the free market on their own, receiving a helping hand in the name of the ‘public good.’” (Ammous and Phelps (2012), quoted in Phelps’ “Mass Flourishing,” 2013 Princeton University Press.)

So it matters that for the first time since the 1970s, the prospect exists for serious change in the regulatory state — starting with the and the unelected administrators who control it.


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Criminal Justice Reforms Signed Into Law, More Left to Do

Enacting some long-overdue reforms should pave the way to pass several others this year

A set of 18 bills recently signed into law will improve public safety and put Michigan on the track to administer criminal justice more efficiently, but there is still more work to do. The bills, championed by Sen. John Proos, R-St. Joseph and signed by Gov. Rick Snyder on March 30, are part of 21 proposals lawmakers have been discussing since last May.

The wide-ranging bills aim to collect more data about Michigan’s corrections system, reduce an offender’s likelihood of re-offending after leaving prison and cap the jail time that probationers can serve for violating the terms of their release. They also establish a parole system built on accountability and consistency and create special housing and programs for younger prison inmates, among other things.

Of the 20 reform proposals that made it to his desk, Snyder vetoed two. One would have created a program for collecting and managing data about the criminal justice system, a program that Michigan needs. Proos said that he had a commitment from the governor’s office to continue working on the issue. The other vetoed bill would have required the Michigan Department of Corrections to implement a program that might have landed state prisoners in county jails. Snyder noted that he vetoed that bill because jails do not generally have the same tools that the department uses to help ex-offenders successfully re-enter into society.

The reform bills enjoyed wide bipartisan support in both legislative houses. Only one, a misguided proposal to give taxpayer-funded grants to encourage employers to hire ex-offenders, did not pass. The idea may come up again, according to sources in the House, but legislators should let it die. Government should not be a third party to an employer-employee relationship, dangling a benefit to induce the employer to make certain hiring decisions. This skews the labor market and is unfair to people who have not broken the law.

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The Legislature should not stop with the 18 bills that are now law, however. Instead, lawmakers should use the new consensus about the need for reform to work on other changes.

Michigan needs to create a sophisticated data collection program that gives reformers a complete picture of the jail and prison system in Michigan. That kind of program can follow people from the time they get ready for trial to when they go back into society, and it can show where government needs to make changes.

Lawmakers should also reform policies that disproportionately harm low-income people. Michigan imposes more categories of fines and fees on criminal and juvenile defendants than other states, and it is more likely to suspend someone’s driver’s license for an offense that has nothing to do with traffic law. These penalties can present insurmountable challenges to people who are on a fixed income or working an entry-level job, and they may even prompt offenders to engage in more wrongdoing in order to make ends meet.

Our state also imprisons poor defendants who can’t make bail and are detained pending trial, which produces worse outcomes for their individual cases while disrupting employment and housing markets as workers and tenants are pulled out of the community. Lawmakers should address the shortcomings of this system as well, which basically ensures that defendants who lack means will remain behind bars.

Finally, although the state has made strides on civil asset forfeiture, it still has not reformed the law so that police are required to secure a criminal conviction before seizing a person’s private property and selling it for profit. This practice, along with requiring bail, devastates poor communities while doing little to advance public safety.

The Legislature and governor should respond to the overwhelming support for smart justice and commonsense reforms to Michigan’s system to make other improvements. They should use the energy created by passing these new laws to make sure the state has a smart, fair, efficient system of fighting crime and helping people who commit crime get on the right path.


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Don’t Bring Back Granholm’s Tax Credit Legacy

Legislators are considering it

Photo by US Embassy Sweden

Michigan legislators are considering creating new targeted tax credit programs, a key part of former Gov. Jennifer Granholm's economic strategy. For much of Michigan's “lost decade,” her plan for economic growth was centered on giving tax credits and other favors to politically preferred businesses and industries – combined with higher taxes for everyone else. There’s no evidence that any of this worked to grow the economy, and Michigan’s Legislature should learn from that lesson.

During Granholm’s tenure, the Democratic-led House and Republican-led Senate passed multiple bills that gave large tax breaks and subsidies to specific industries, primarily auto companies, battery firms, film studios, and companies involved in so-called green energy. In the meantime, taxes were raised on individuals and other businesses.

Most of those favors were funneled through the Michigan Economic Growth Authority. From 2003 to 2010, the amount of money promised under MEGA skyrocketed. Most of it was in the form of refundable tax credits, essentially direct subsidies. In 2009 alone, more than $1.2 billion was pledged to companies selected by state politicians and bureaucrats.

The empirical work done on this program largely agrees on this point: There is little evidence that these targeted tax breaks and corporate subsidies did any good for Michigan’s economy. Studies done by the Mackinac Center for Public Policy, the Anderson Economic Group and the W.E. Upjohn Institute for Employment Research all found the program to be economically destructive, or, at best, ineffective.

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Another analysis of the program found that fewer than 20 percent of the jobs promised by participating projects ever materialized. It also revealed that only 2.3 percent of businesses achieved the investment and job creation targets that won them these special favors in the first place. But the tax credits are good for up to 20 years, which means Michigan taxpayers will still be on the hook for these failed programs for several more years. The program cost the state budget about $1 billion last year.

Under the direction of Gov. Rick Snyder, the state stopped handing out tax credits and subsidies through MEGA after Republicans took over the Legislature. For the past five years, no new select tax credits have been handed out to corporations. But some legislators are pushing to give Granholm’s economic strategy another go.

In fact, the state Senate has passed a bill package of new targeted tax credits for select businesses. Senate Bills 111-115 would give certain developers the ability to divert tax payments from workers and homeowners to their own pockets. The Senate also passed another package of bills that would give 10-year tax abatements to 15 large companies per year if they expand or relocate in Michigan. Smaller companies and other taxpayers would still pay full freight.

Proponents say these proposals are not like past tax credit programs and promise that this time things will be different. But there’s no escaping the fact that these schemes rely on the belief that politicians can make wise “investments” with taxpayers’ money. Empirical research and historical evidence strongly suggest that politicians (no matter their party affiliation) are not good central planners. It’s easy enough for private investors to make poor decisions with their own money — how much easier it must be for politicians to do the same with other people’s money. Recent grassroots coalitions understand this: Both the Tea Party and the Occupy movement sprung up in large part to fight select favors for the politically well-connected.

So far, the Republicans in the state House have resisted the allure of these tax incentives. But the big businesses that stand to gain from these select favors are, to no one’s surprise, pushing for the bills, and Capitol-watchers think they stand a good chance of success. Legislators should resist these special corporate subsidies and instead work on what empirical evidence suggests really does work: lower taxes for everyone.


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The Failing Business of Business Favors

What would you say you do around here?

The state government spends a lot of money trying to create jobs in Michigan. There are dozens of programs in place with over $100 million in annual appropriations, and billions of tax dollars have been pledged to the purpose. Despite all of this spending, though, the programs don’t work and are rarely held accountable when they fail.

These business subsidies are not designed to improve the economy as a whole, but rather to chase a handful of business projects that are looking for state favors. If the project meets the state’s criteria, it gets the favor, often subject to negotiation with state administrators. Supporters argue that the favors are necessary because these kinds of projects shop around other states for further support.

The supporters want these projects to be important, and say that they would not happen without their work. Both the presumption of their importance and the presumption that incentives are required are doubtful.

The importance of these projects can be evaluated by looking at the recent job creation picture. There are 207,000 private sector jobs created in Michigan every three months and 192,000 jobs lost. Only a handful of those new jobs can be in firms that get state deals. Forget for a moment that the state has a poor record of turning job announcements into real jobs, the scope of state deals is simply not large enough to influence these figures.

The claim that these projects will not happen without state assistance also has problems, the obvious one being that it’s a claim that is impossible to prove. It would be interesting if the state rejected a handful of deals to see what happens, but that is not likely to occur. We’re left with the rare instances where evidence does appear, something we explored in our 2005 study, showing a number of projects that did happen or likely were going to happen without state money.

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But there are also some academic papers on the issue. At a Michigan House tax policy committee, economist Tim Bartik of the Upjohn Institute pointed out that 94 percent of the business projects he studied would happen without special deals. His work doesn’t apply to all incentives everywhere, but it ought to raise concerns about what actually will happen without special business deals.

Are the projects that benefit from state deals important? If these are your projects, then, yes, they are important to you. But what is good for you isn’t necessarily good for the state. And there ought to be a strong burden of proof necessary to claim that they are.

State-favored deals don’t meet that burden. Even so, some business interests and their allies are pitching two new programs to lawmakers in hopes of getting more and different favors. Proponents argue that we need these to compete with other states and that the numbers for these projects don’t work without state money.

Michigan already has a number of incentive programs, and Bartik’s report puts Michigan slightly above the national average when it comes to doling out favors. The Citizens Research Council has a 160-page report on all of Michigan’s programs. Apparently, they are failing in their promise to develop the economy, since lawmakers say that they need new ones to compete with other states.

The issue is that these projects do not develop the economy: They develop examples. Economic development is about data; the state’s job creation activities are about anecdotes. And unfortunately, the anecdotes are not symbols of real growth. The state was developing heaps of examples from 2000 to 2009, but was also shedding more jobs and production than any other state.

Perhaps that explains why the state does not require that economic development programs actually develop the economy. They can concentrate benefits to particular firms, but lawmakers do not require them to demonstrate their effectiveness. Administrators even get away with sketchy reporting on their activities.

There is a large amount of pressure being applied on lawmakers to pass these new favors, even though the evidence they will help the state is flimsy. But the political pressure is about granting favors, not about using real ways to improve the state economy.


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School Inc. Could Open Michigan Viewers’ Eyes

New documentary closely follows major Arizona choice law

As the ink finishes drying on the nation’s widest-reaching educational choice law, Americans can tune in to see what’s behind such programs and why they work.

On April 6, Arizona Gov. Doug Ducey signed into law an expansion of the state’s Empowerment Scholarship Account program. At the end of four years, parents of every public school student statewide will be able to use state funds to customize his or her education, subject to enrollment caps. This level of choice nearly had been achieved in neighboring Nevada, but a 2016 state Supreme Court ruling left the program in limbo, frustrating families seeking educational alternatives.

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Developments in Arizona have school choice supporters smiling today, a fitting launch to the three-hour documentary “School Inc. – A Personal Journey with Andrew Coulson.” The first part of the televised series is scheduled to debut this coming week in cities across the United States. Viewers in the Detroit area can find the episode on WTVS-TV, this coming Monday, April 10, at 7 p.m. The first episode re-airs Tuesday at 8 a.m. and 2 p.m. Parts 2 and 3 will appear at the same times in the weeks that follow.

In the newly released Free to Choose Media documentary, the one-time Mackinac Center senior fellow in education policy brings the audience along on his far-ranging travels to help answer the question: “If you build a better way to teach a subject, why doesn’t the world beat a path to your door, like they do in other industries?”

School Inc. is the culmination of the late Andrew Coulson’s dream of reaching a broad audience with the powerful case for transforming learning through choice and innovation. The dream finally comes to life before Andrew, who lost his battle with brain cancer in February 2016, was able to see it reach the airwaves. Tom Shull, another former Mackinac Center staffer, aptly eulogized his one-time colleague as “a generous and talented human being who worked for freedom of choice for all children in education.”

Now that work has reached the biggest stage yet. As groundbreaking as Andrew’s book “Market Education: An Unknown History” was, the documentary makes the message and insights more accessible. Nor have most people heard of James Tooley’s “The Beautiful Tree,” which to this day remains the most compelling book on education I’ve ever read. But the School Inc. journey includes a visit to the slums of India, where the low-tuition private schools featured in Tooley’s book have yielded amazing results.

The timing of the documentary’s release proves impeccable, almost as if it had been intended for this moment so it might reach an American audience highly attuned to the debate over educational choice. The election of Donald Trump has generated much discussion about the possibility of federal tax credit scholarship legislation.

And Michigan’s Betsy DeVos has a megaphone as the new secretary of education to promote the value of favoring families over education employees and bureaucracies by giving them the power to choose. The way she quickly touted the new Arizona legislation as “a big win for students and parents” represents a breath of fresh air from the federal bureaucracy, and further helps to raise awareness of choice programs.

As Arizona opens up a host of learning options and opportunities to its families, maybe School Inc. will open many Michigan viewers’ eyes to the possibilities that lie ahead.


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These Seven Proposals Would Change Michigan’s Constitution

April 7, 2017 MichiganVotes weekly roll call report

The House and Senate are on a two week spring break, so rather than votes this report contains some recently proposed constitutional amendments of interest. To become law these require a two-thirds vote in the House and Senate and approval by voters.

House Joint Resolution A: Establish part time legislature

Introduced by Rep. Michael Webber (R), to place before voters in the next general election a constitutional amendment that would limit annual legislative sessions to 90 consecutive days. Since 2001 more than 20 part time legislature proposals have been introduced, many attached to measures that would extend or repeal term limits. This one does not propose any term limit changes, but also contains no pay cut provision or exceptions allowing special emergency sessions. Referred to committee, no further action at this time.

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House Joint Resolution B: Establish independent political redistricting commission

Introduced by Rep. Jon Hoadley (D), to place before voters in the next general election a constitutional amendment to create a 14 member citizens redistricting commission to redraw congressional and legislative boundaries after decennial census counts, with members selected in a process overseen by the legislature’s Auditor General office. Referred to committee, no further action at this time.


House Joint Resolution C: Protect "electronic data and communications" from unreasonable search and seizure

Introduced by Rep. Jim Runestad (R), to place before voters in the next general election a constitutional amendment to add “electronic data and communications” to the Article I provision that recognizes the right of the people to be secure from unreasonable government searches and seizures of their “person, houses, papers, and possessions.”


House Joint Resolution H: Assert right to equitable public education opportunities in constitution

Introduced by Rep. Darrin Camilleri (D), to place before voters in the next general election a constitutional amendment to assert that the premise of the state public education system is premised on “a recognition of full and equitable opportunities for education and access to literacy as fundamental human rights.” Referred to committee, no further action at this time.


Senate Joint Resolution D: Ban charter schools hiring for-profit management company

Introduced by Sen. Rebekah Warren (D), to place before voters in the next general election a constitutional amendment to ban charter public schools from hiring a for profit education management company to “provide comprehensive educational, administrative, management, or instructional services or staff for the public school.” Referred to committee, no further action at this time.


Senate Joint Resolution I and House Joint Resolution K: Repeal constitutional prohibition on graduated state income tax

Introduced by Sen. Rebekah Warren (D) and Rep. Tom Cochran (D), respectively, to place before voters in the next general election a constitutional amendment to repeal an existing prohibition on imposing a graduated income tax (as opposed to Michigan's current flat tax). Referred to committee, no further action at this time.


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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Up in the Dumps

Michigan landfill business is booming

Here’s a sign of economic growth that most people overlook: The landfill business in Michigan is booming. The amount of waste sent to landfills continues to grow from a low point in 2012. Though recycling policies may have an effect, industry insiders say the increase in waste disposal signals an improving economy.

Michigan’s Department of Environmental Quality reports a 3.1 percent increase in solid-waste disposals in the state’s landfills in 2016 over 2015, while trash imported from Canada and other states increased 7.5 percent. Waste disposal from Michigan businesses and households increased 1.8 percent from the previous year, according to the department’s “Report of Solid Waste Landfilled in Michigan for Fiscal Year 2016.”

Michigan Waste & Recycling Association President Kevin Kendall said the increases indicate a marked improvement in economic activity throughout the Midwest and neighboring Canadian regions. “It’s a good problem to have,” he said. “A rebounding economy means there’ll be more waste volume.”

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Waste volume as an indicator of economic strength is bolstered by DEQ data reporting significant decreases in solid waste disposal between 2007 and 2016. While nearly 57.4-million cubic yards were disposed of from all sources in Michigan landfills in 2007, that number decreased steadily to a low of 43.9-million cubic yards in 2012. Solid-waste disposals in 2016 were up significantly at 49.1-million cubic yards.

“The uptick in municipal and commercial solid waste in Michigan the past several years is a sign of increased economic activity,” said Tom Horton, a spokesperson for Waste Management Inc. The Houston, Texas-based firm operates nearly half of Michigan’s 47 municipal and commercial waste landfill facilities. “Much of the increase in imported waste is attributable to construction and demolition.”

But the conclusion may understate the economic upswing, said Te-Yang Soong, vice president and principal engineer with CTI & Associates, Inc., an environmental, remediation and construction contractor headquartered in Novi. “That assessment may hold some element of truth since conventional wisdom suggests that landfills are the last to see the economic impact of a downturn, but the first to be positively impacted by an economic upswing,” he said.

“Undoubtedly, the availability of viable recycling options also has an impact on landfilling,” Soong continued. “It is unclear whether improvements in data collection may have also contributed to a perceived increase in waste volume. As most large manufacturing facilities and federal installations have adopted ‘Zero Waste’ and ‘Landfill Free’ practices, it is unlikely that significant and sustained increases in landfilled waste will be the norm.”

Capacity Shifts According to Need

At their current capacity, Michigan landfills can, on average, receive waste for another 27 years, up from 17 years projected in 2007. Horton explained that the state is only able to report what is currently reported and under a permit. He noted that landfill operators only request DEQ permits based on immediately projected needs rather than long-term forecasts. “Just like home builders only seek permits for the house they plan to construct in the coming year, landfill operators also make plans based specifically on what they need for the immediate future, making adjustments according to need,” said Horton.

Trash Imports and Diminishing Returns

Michigan trades its trash with other states and Canada. Although the DEQ reports 23.6 percent of all waste disposed in Michigan is from Canada and other states, Horton said Michigan exports municipal and commercial waste to other states and sends hazardous waste to Canada. For example, the Ohio EPA reports Michigan exported nearly 15 tons of solid waste to Ohio in 2015. Ohio, in turn, exported nearly 437,000 tons of solid waste to Michigan.

Interstate trade in trash varies year to year according to contracts, fuel prices and tipping fees (the cost to unload trash at a landfill). For example, Wisconsin imported 10,000 tons of Michigan waste in 2014, which was down from 50,504 tons in 2009. By comparison, the Badger State imported 1.4 million tons of waste from Illinois in 2005 and only 76,000 tons in 2014.

“Increased regulation and competition for volume also play a role in landfill viability,” said Soong, explaining that operating costs have risen due to increased regulations and regulatory fees. “At the same time,” he noted, “competition for volume has resulted in stagnated disposal rates and a decreasing return on investment for operators.”


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Republicans, Pursue Your Agenda with Gusto

Out, Out, Brief Candle!

Could Mr. Trump’s “Energy Independence” executive order mean the end of life on Earth?

At approximately 2 p.m. Eastern Daylight Time on March 28, 2017, the earth lost its ability to sustain life.

Or so one might believe after reading the overwrought reactions to President Donald Trump’s “Energy Independence” executive order. Of course, anyone who had taken the time to read its text would likely have a more measured response.

Heavily exaggerated reactions to any challenge to former President Barack Obama’s Clean Power Plan bring to mind Shakespeare’s thoughts from the play Macbeth on the futility of a life and its actions, wrongly directed. When Macbeth sees that his carefully laid plans to gain power were crumbling, he gave in to an overwhelming sense of morbid terror and abject pessimism.

Life’s but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more. It is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.

That same blossoming fear and pessimism is clearly visible in the reactions of those who labored to shutter most of America’s energy capacity over the past eight years. In this hyperpartisan and hyperbolic era, responses to the new executive order were uniform in their use of inflammatory invective, reviling it as “an assault on climate action,” and “a know-nothing path to an endangered planet.” Others ominously questioned what the order would “mean for the world?”

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Foundational American concepts such as the separation of powers have been largely overlooked for the past eight years. The reason: The last administration produced a long list of executive actions to “empower the renewable energy sector and move forward a sensibility among people … that climate change is real.” But separation of powers is being hurried back into vogue in the effort to criticize this executive action as being “all about power.”

Green groups, like the Sierra Club, pounced on the executive order and then vaulted from it into a full-throated fundraising mode. In their funding requests, they demanded the president keep the Clean Power Plan in place or – quite brazenly – that he replace it with even more restrictive policies.

Former EPA Administrator Gina McCarthy joined the chorus, complaining, “This day is really embarrassing for the United States, not just dangerous for our kids and our future.” Former Democratic presidential candidate Hillary Clinton, raised the bar by stating that the new president was putting “American lives at risk,” by “willfully ignor(ing) the science.”

A frantic tweet by social and environmental activist Van Jones informed his followers, “@realDonaldTrump just signed a death warrant for Planet Earth.” And, not to be outdone, progressive filmmaker Michael Moore one-upped them all by tweeting his illogical prediction that, “Historians … will mark … March 28, 2017, as the day the extinction of human life on earth began, thanks 2 Donald Trump.”

Readers might disagree with the president’s policies. But if they read his executive order closely, they would have seen a refreshing willingness to balance environmental, economic and social challenges rather than focusing almost solely on the environment.

They would have seen a renewed focus on diversifying energy sources, much like the Democratic Party called for in its 2012 party platform. That document recommended an “all-of-the-above approach to developing America’s many energy resources, including wind, solar, biofuels, geothermal, hydropower, nuclear, oil clean coal, and natural gas.”

Although the new executive order calls for a diverse energy portfolio, it still mandates that “all agencies should take appropriate actions to promote clean air and clean water.” Even the seemingly obvious requirements that “environmental regulations comply with the law” and that they be developed through “transparent processes that employ the best available peer-reviewed science and economics” are included.

More importantly, those who took the time to read the order would have seen that it is only the very beginning of the long, drawn-out legislative and regulatory process of rolling back the Obama administration’s climate action plan.

I realize that they are worried. I understand that, just like Macbeth, they are lashing out with extravagant pronouncements that, if their attempts to control policy are not implemented, life signifies nothing. Various environmental and political groups have tried to portray the order as an immediate end to all environmental protection in the United States – or, more absurdly, as the end of all human life on earth. It is, instead, nothing more than a reasonable move toward renewing the production and use of essential energy resources.


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Michigan Government Salaries Database Shows Value of Transparency

Public records now at public’s fingertips

Visit the database at mackinac.org/salaries

The value of government transparency and the need for more of it has been on full display since the Mackinac Center and two other watchdog groups released the Michigan Government Salaries Database in late March.

The new database — which is easily searchable and made available as a public service by the Mackinac Center for Public Policy, Michigan Coalition for Open Government and Michigan Press Association — contains salary information of nearly 300,000 public employees.

“As part of our government transparency project, the Mackinac Center often obtains data on the compensation of government employees in Michigan,” Michael Reitz, Mackinac Center executive vice president, was quoted by My Bay City as saying. “We use these public records to fact-check claims about salaries, verify data from other open records requests and hold governments accountable for their spending. We and our partners now offer this database as a service to taxpayers and other watchdogs.”

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While not the first online database of public employee salaries in Michigan, the new database is the most extensive one and makes it easy for people to access public records.

“This database can provide information on whether there are disparities based on gender, race, ethnicity, etc.,” Jane Briggs-Bunting, founding president of the Coalition for Open Government, was quoted in the Lansing State Journal as saying.

Lansing State Journal columnist Judy Putnam said publishing public employee salaries — something the LSJ once did — may upset some people, but transparency is justified.

“The bottom line is that public salaries should be available in a transparent way. Why? Because the employer of public workers is us, the citizens,” Putnam wrote.

She listed some of the common arguments against a database and explained why, despite them, the salaries should remain public.

  • It just gives the nosey parkers fodder. True, but public information doesn’t require a noble motivation to access it.
  • It’s already public. Yes, you can use the Freedom of Information Act to obtain the information if you know how. It’s not a transparent way to run government.
  • Making employees names available puts them at risk. The database doesn’t offer any personal information beyond salary and position. It’s a throw-everything-at-the-wall argument.
  • A range of salaries is available. True again. The Michigan Civil Service Commission posts them. It’s a fair point, but is that enough?

The Leelanau Enterprise interviewed a county administrator who said he doesn’t mind efforts to publish such information.

The new database is not considered a threat by county administrator Chet Janik, who served previously in education positions that would have put him on the list.

“I don’t have an issue,” Janik said. “When I worked at NMC (Northwestern Michigan College), Buckley and Charlevoix Schools, my salary was public. “The positions are supported by tax dollars. So, I have no problem with the access,” he said.

“I like to get it from a source like the Mackinac Center that has a reputation for credibility, rather than from another organization without credibility. It’s more reliable,” local government watchdog Steve Mikowski told The Leelanau Enterprise.

Through the database, citizen watchdogs identified errors in the posted salaries of some Department of Corrections employees. In some cases, employees were listed as receiving hundreds of thousands of dollars more than they do in reality. The error was made by the state’s Office of Retirement Services, which is responsible for managing the pensions of Michigan’s public employees.

“One must now question if this FOIA response is the only thing ORS is doing in error,” Reitz said. “Has the office based retirement calculations on these erroneous and inflated salaries? How long has ORS had bad salary data? Why didn’t anyone within the office question why a Department of Corrections employee was supposedly paid $400,000? Legislators should conduct a thorough review of this office and its record keeping procedures and demand answers.”

Investigative reporter David Bailey, of WZZM 13 in Grand Rapids, asked the state if the inflated numbers were used to calculate pensions. The ORS said they were not, adding, “Thorough reviews of record keeping is already part of the ongoing auditing process that occurs, through both internal and external audits.”

Bailey noted a new report by the Michigan Office of the Auditor General that found ORS understated pension liabilities by $143 million in 2014-15 because it lacks a control process to ensure correct data.

The state provided the Mackinac Center new salary numbers for the 4,500 employees in question, but that new data set was also flawed. A third set of salaries, which is apparently correct, has been posted to the database.

As the Center obtains additional records through the Freedom of Information Act process, more government employees will be added to the database.

“Our database made it more easily available, while uncovering potentially serious administrative issues in an important government office,” Mackinac Center President Joseph Lehman explained. “One of the Mackinac Center’s signature contributions to policy discourse in its 30-year history has been making public data more accessible to everyone, not just politicians and bureaucrats. We will continue to fight for an open, transparent government.”

Read more:

Access the Michigan Government Salaries Database
My Bay City: Salaries Unveiled
LSJ: Database Reveals State Employees’ Salaries
LSJ: Public Pay Database is Painful but Justified
Leelanau Enterprise: Website Offers Government Salaries
Michigan Government Salaries Database Corrected after State Admits Fault
WZZM 13: State Leaders Deny Deeper Problem Regarding State Salary Mistakes
Why Mackinac Published Names and Wages of Government Workers in a Searchable Database
WZZM: State of Michigan Provides Wrong Salary Data for Thousands of Workers
Michael Cohen of Capital City Recap Interviews Jarrett Skorup on Database Release


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State Should Review Supreme Court Pay

Salaries have been frozen for 15 years

Photo by Phillip Hofmeister

Michigan Supreme Court Justice Robert Young Jr. just announced his retirement. Young served on Michigan’s highest court for 18 years, and you’re sure to hear lots of positive commentary about his service — and rightfully so. But there’s an interesting fact you probably didn’t know about him or his long-serving colleague Chief Justice Stephen Markman: They’ve likely received fewer pay increases during their careers on the court than any other public servants over the same period.

In the first couple of years of Young’s tenure on the Supreme Court, the State Officers Compensation Commission — the public body that recommends salary rates for certain public officials — awarded pay increases of 14 percent (2001) and 2.9 percent (2002). That pushed the justice’s salaries to $164,610, and that’s where they’ve stayed ever since.

Why the stagnant wages? It’s hard to pinpoint a single cause, but a contributing factor no doubt was a 2002 constitutional amendment that changed the process for increasing justices’ pay. After voters approved this amendment, the Legislature now had to approve the salary recommendations made by compensation commission before they would go into effect. And for a variety of reasons — Michigan’s economic doldrums of the 2000s, subsequent budget battles, government shutdowns, etc. — the Legislature has not approved any pay increases for justices for the last 15 years. This despite the commission’s repeated calls for raising these salaries.

The Legislature should reconsider this. Over the course of this long salary freeze, Michigan has changed its national rank for supreme court justice pay from 2nd highest in 2002 to 31st in 2017, according to the National Center for State Courts. Now, to be clear, the purpose of compensating justices is not to “win” a national rankings contest. But these rankings are nevertheless helpful, because Michigan does need to keep these salaries at a competitive rate if it wishes to attract and retain high-quality, professional judges that will serve the people well.

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And the current salaries offered Michigan Supreme Court justices are on the verge of becoming uncompetitive. For instance, an aspiring state justice might also be thinking of pursuing a job in the federal courts. There, district judges make $205,100 and circuit judges make $217,600, 25 percent and 32 percent more, respectively, than Michigan Supreme Court justices make.

Even judges in lower courts in Michigan might soon start making as much or more than members of the state’s highest court. Historically, these judges’ pay was tied to Supreme Court salaries: Court of Appeals judges made 92 percent of Supreme Court salaries; circuit and probate judges made 85 percent; and district judges made 84 percent. But a new law created last year did away with this arrangement. Changes to lower court judges’ salaries will be based on what the Civil Service Commission approves for nonunionized state employees. With a growing economy contributing to increased government revenue, it’s likely that the commission will approve raises for state employees over the next couple of years. If that happens and no change is made to Supreme Court pay, Court of Appeal judges may be making more than justices on the Supreme Court.

With taxpayers’ interest in mind, my Mackinac Center colleagues and I are often critical of the type and amount of compensation government officials award their employees. We have argued that the way school districts pay teachers is outdated and harmful. We’ve said that the state could save more than $5 billion by right-sizing government employee benefits and that it should get out of the business of offering defined-benefit pensions. Finally, we just released a database of all of the salaries of public employees, so Michigan taxpayers can play watchdog to government employers.

But none of this means that salaries for public officials can never be increased. Governments need to offer competitive salaries to attract competent employees. In the case of the Supreme Court, the state may start to risk losing high-quality candidates because too many of them have more lucrative options elsewhere. The Legislature should consider this before continuing the 15-year-long salary freeze on Supreme Court justices.


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