The MC: The Mackinac Center Blog

Politicians Don’t Guide the Economy, You Do

Economic growth starts with the individual, not the state

MLive columnist Rick Haglund is skeptical about the state’s choices of favored industries, noting that much of the Michigan Business Development Program subsidies go to manufacturers. “[D]eluded by the recent resurgence of manufacturing jobs, state policymakers are doubling down on promoting Michigan as a state that makes things,” he writes.

However, everyone should be skeptical of the idea that the state can lead economic growth at all.

Michigan’s industrial mix is not the result of decisions made in Lansing. It is the result of millions of people using their skills and knowledge in the most effective way they know how to better serve each other and themselves.

This is not a new idea. In “The Use of Knowledge In Society,” Nobel laureate Friedrich Hayek explains that economic planning does not happen at the top, but rather by each person in the economy. A person’s own knowledge of time and place forms the economy more than a government’s industrial policies.

High school students in the marching band know that the movie theater openings offer flexible hours, and this changes the state’s industrial mix. (Try asking what instrument a youthful ticket taker plays. You may be surprised.)

A grocer’s knowledge of how many fresh cherries he or she can purchase that will sell before they spoil influences the state’s industrial mix.

Believing that there’s a market for a new makerspace, and investing in the equipment necessary to do it will change the state’s industrial mix.

Multiply these examples by several million and the net product is the state economy.

Public policy would have a hard time keeping up with the pace of change these decisions cause in the economy. Yet the state has programs that have spent billions attempting to lead the economy. Michigan’s private sector created 193,208 jobs in the first quarter of 2014 and lost 179,299 jobs. The state government’s flagship incentive program subsidized at-most 1,931 jobs over the same period and offered $24 million of taxpayer money for those jobs. Thus, the state’s attempts would influence less than one percent of the job creation and none of the losses, even if it all worked according to plan. (It rarely does.)

State government can do some things to change the makeup of the state but these are as likely to generate as many net losses as gains. Those wind farms in the Thumb were not built by investors and entrepreneurs believing that this was an efficient way to generate electricity, but rather by policymakers in Lansing to mandate renewable power. This is done at great expense, and every step of the process from engineering the wind turbines to building them to operating them is done with taxpayer support, whether locally, nationally or internationally.

Unfortunately, the number of jobs in wind electric power generation is not disclosable in the economic statistics yet, typically because there aren’t enough jobs or the jobs that exist are too concentrated in select companies. While wind’s job impact is unknown, its costs are as well. The state’s annual reports on the program lack a proper accounting of the costs.

The state’s film subsidies are an even more dramatic example of politicians’ impotence in guiding the economy. Despite $500 million in taxpayer expenditures, there are fewer film jobs now than when the program began in 2008.

The future looks different than what politicians can expect. The millions of participants in Michigan’s economy make their decisions in unpredictable ways.

For example, Michigan’s manufacturing growth is unexpected. Few people thought manufacturing jobs would disappear from the state after the recession, but the use of automation and a sluggish track record was believed to hinder the ability of manufacturing to increase employment. Yet the net number of manufacturing jobs in Michigan increased by 219,000 jobs since it bottomed out in 2009, roughly a 50 percent gain.

This is not to say that the trend will continue, just that the pace of the recovery is unexpected.

It is not clear that this recovery is caused by the state targeting manufacturers for favors. As the job churn numbers show, employment gains from the handful of firms granted special treatment are a drop in the Great Lakes.

The most constructive thing the state can do to encourage growth is to get out of the way and let residents create the future based on their own knowledge and skills. The policies that matter for growth and prosperity are things like lower tax burdens and fewer licensing barriers that allow people to use their knowledge to better their own lives and the lives of others.

Happy New Year!

The perfect time for tax cuts

With the new calendar year upon us it is time to remind lawmakers about sound public policies. One overlooked area the new Legislature needs to take up is large, across-the-board tax cuts. Center analysts have recommended a personal income tax cut from 4.25 percent to at least 3.75 percent.

There are four major reasons why a tax cut is necessary. First, the money legally confiscated from Michigan residents belongs to them, not Lansing politicians or their hangers-on. Second, the Legislature has owed us a tax cut since its members hiked personal income taxes by 11.5 percent in 2007. Third, other taxes and fees at federal and state levels have been biting taxpayers more in recent years. It’s time to reverse the damage. Lastly, taxes matter. Reducing them can encourage growth, which is no small matter for Michigan.

Too many (though not all) politicians seem to view taxpayers as cash machines from whom they can withdraw ever higher amounts of revenue via taxes and fees. Need $1 billion more for roads? “No problem,” responds Lansing. “Rather than reforming state spending to better live within our current means we will simply take more from the people who earned it.”

There are plenty of areas to cut in the state’s $52 billion-plus budget to offset revenue losses. I recently published a list of 35 ideas for $2.1 billion in spending reforms. Surely thoughtful legislators concerned with preservation of taxpayer resources could adopt or adapt at least one or two of them.

Even if lawmakers believe our money is their money, we are owed a large personal income tax cut. Recall that the state income tax rate was hiked from 3.9 percent to 4.35 percent in 2007. We were promised this was only temporary and would be rolled back starting in 2011. Ultimately that rollback was delayed and then scrapped altogether after a puny 0.1 percent cut to 4.25 percent. It is time for Lansing to keep its tax cut promise.

Don’t forget that fees have been piled high on Michigan residents, too. The Fiscal 2014 budget alone contained $82.6 million in new and higher fees on businesses and families. And these are just at the state level. Other tax and cost increases have been imposed from Washington.

Congress permitted President Bush’s tax cuts to expire and taxes and fees also went up under Obamacare, and that was in addition to the spiraling cost of existing health care plans.

I can’t be the only person tired of being nickeled-and-dimed and “dollared” to death by all levels of government.

Michigan was only one of two states in the union to experience negative economic growth from 2000 through 2009 as measured by real state Gross Domestic Product. We need a tax cut because tax policy matters to growth and the Great Lake State needs a lot more of it.

Last February the John Locke Foundation published its review of 528 academic papers and professional journals published between 1992 and 2013. Of the more than 100 that zeroed in on local or state tax burdens, 64 percent showed a negative link between burden and economic growth. In 67 percent of studies reviewed on narrower topics a negative link was found between higher personal income taxes and economic growth.

Some of the individual studies referenced in this review aren’t just interesting for the results but for the methodology. A 2004 paper in Public Finance Review looked at border counties in adjoining states. After examining 30 years of data the authors concluded — as explained by JLF — “states that raised their income tax rates more than their neighbors had significantly slower growth rates in per-capita income.”

The entire JLF review should be required reading for Michigan lawmakers, but it need not be the only one. The papers “What is the Evidence on Taxes and Growth,” published by the Washington D.C.-based Tax Foundation and “Tax Myths Debunked” by the American Legislative Exchange Council are both worth legislators’ time.

The bottom line is that the state’s bottom line carries more revenue than is needed. Paring back both state spending and state personal income taxes are ideas whose time has long since come.

R.I.P. Paul Gadola

Former Center board member passes away

The Hon. Paul Gadola, who served on the Mackinac Center’s Board of Directors from 1992 to 2008, passed away today at the age of 85.

“Judge Gadola was an early board member of the Center who lent us his good name, as well as his guidance and wisdom, beginning at a time when we had no reputation to lose,” said Mackinac Center President Joseph G. Lehman. “As he served for nearly two decades, the Mackinac Center became the nation’s largest and most effective state-based think tank. We will always be grateful to Paul and we extend our heartfelt sympathy to the Gadola family.”

Gadola was a trial lawyer in Flint for 25 years before being named a federal judge by President Ronald Reagan in 1988. A founding member of the Flint ACLU chapter, he received that group’s lifetime achievement award. He also served as a board member for the Urban League of Greater Flint and the Genesee County chapter of the NAACP.

House Joint Resolution UU, Increase sales tax: Passed 26 to 12 in the Senate

To place before voters in a May 5, 2015 election a constitutional amendment increasing the state sales tax from 6 percent to 7 percent. This is part of a package that represents a net tax increase of $1.945 billion, of which $1.2 billion would go to road repairs and the rest to other spending. The next several bills will not go into effect unless voters approve this measure on the May 5 election.

Who Voted “Yes” and Who Voted “No”

House Joint Resolution UU, Increase sales tax: Passed 94 to 16 in the House

The House vote on the measure described above.

Who Voted “Yes” and Who Voted “No”

House Bill 5477, Increase Gas and Diesel Tax: Passed 23 to 15 in the Senate

To replace the 19 cents per gallon gas tax and 15 cents diesel tax with a 14.9 percent wholesale fuel tax, which at current prices is 41.7 cents per gallon for gasoline and 46.4 cents for diesel. The increases would be mostly, but not completely, offset by exempting fuel sales from the state sales tax. However, this is contingent on voters approving the large net tax increase represented by a sales tax increase on a May 5 ballot.

Who Voted “Yes” and Who Voted “No”

House Bill 5477, Increase Gas and Diesel Tax: Passed 93 to 17 in the House

The House vote on the bill described above.

Who Voted “Yes” and Who Voted “No”

House Bill 4630, Increase vehicle registration taxes: Passed 23 to 15 in the Senate

To increase vehicle registration taxes on trucks, electric vehicles and cars more than three years old. This would cost vehicle owners around $95 million more each year, but will not go into effect unless voters approve a sales tax increase on a May 5 ballot.

Who Voted “Yes” and Who Voted “No”

House Bill 4630, Increase vehicle registration taxes: Passed 67 to 43 in the House

The House vote on the bill described above.

Who Voted “Yes” and Who Voted “No”

Senate Bill 847, Increase payments to low income wage earners: Passed 23 to 15 in the Senate

To increase the state Earned Income Tax Credit, which will distribute $260 million to low income wage earners. However, this is contingent on voters approving a sales tax increase tax on a May 5 ballot.

Who Voted “Yes” and Who Voted “No”

Senate Bill 847, Increase payments to low income wage earners: Passed 78 to 32 in the House

The House vote on the bill described above.

Who Voted “Yes” and Who Voted “No”

Senate Bill 423, Require public school spending “adequacy” study: Passed 20 to 18 in the Senate

To require the state budget agency to contract for a study to determine how much money per student is needed for a public school to educate students sufficiently well to meet state graduation requirements. Reportedly the bill was adopted to get Democratic votes on the sales tax increase described above, but it is not contingent on that measure’s approval by voters.

Who Voted “Yes” and Who Voted “No”

Senate Bill 423, Require public school spending “adequacy” study: Passed 72 to 38 in the House

The House vote on the bill described above.

Who Voted “Yes” and Who Voted “No”

Senate Bill 658, Impose “Amazon tax” on internet purchases: Passed 83 to 27 in the House

To require merchants outside the state who have an affiliation with a different business located in Michigan to collect sales tax on purchases by Michigan residents, in the manner pioneered by internet retailer Amazon.com. This bill does not require voter approval of a sales tax hike like other bills in the $1.945 billion road funding/tax hike deal, but House passage was part of those negotiations. The Senate adopted the measure on Dec. 11.

Who Voted “Yes” and Who Voted “No”


The remaining bills in this report are not related to the tax increase/road funding package described above.

House Bill 4186, Revise criminal record expungement rules: Passed 38 to 0 in the Senate

To allow a person convicted of only one felony offense and not more than two misdemeanors, to apply to have the felony “set aside,” or expunged from the person’s public record. A person convicted of not more than two misdemeanors could apply to have one or both set aside. This would not apply to convictions for criminal sexual conduct, domestic violence or crimes punishable by life imprisonment.

Who Voted “Yes” and Who Voted “No”

Senate Bill 78, Restrict setting aside state land for “biological diversity”: Passed 59 to 50 in the House

To prohibit the Department of Natural Resources from designating an area of land specifically for the purpose of achieving “biological diversity”; to no longer require the DNR to manage forests in a manner that promotes “restoration”; and to remove from statute a legislative ”finding“ that most losses of biological diversity result from human activity.

Who Voted “Yes” and Who Voted “No”

House Bill 4480, Require more detailed reports on corporate subsidy costs, outcomes: Passed 37 to 0 in the Senate

To require state economic development agencies to submit and post online more detailed reports on the costs and outcomes generated by their various loan, tax break and subsidy programs targeted at specific corporations, developers or industries.

Who Voted “Yes” and Who Voted “No”

Senate Bill 789, Revise concealed pistol license procedures: Passed 84 to 26 in the House

To eliminate county concealed weapon licensing boards, and transfer the responsibility for administering and issuing concealed pistol licenses to county clerks, with the State Police still performing the background checks required by the law.

Who Voted “Yes” and Who Voted “No”

Senate Bill 1033, Exempt “direct primary care” and “concierge medicine” to extensive insurance regulation: Passed 60 to 50 in the House

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 74, Mandate school “cyberbully” policies: Passed 65 to 45 in the House

To revise the 2011 law mandating that schools adopt anti-“bullying” policies, by requiring that their policies also address “cyberbullying.”

Who Voted “Yes” and Who Voted “No”

Senate Bill 269, Extend $75 million annual corporate subsidy earmark: Passed 82 to 26 in the House

To extend through 2019 an annual $75 million earmark to a “21st Century Jobs Fund” program created by the previous administration, which provides various subsidies to particular firms or industries chosen by a board of political appointees. Under current law, the earmark expires in 2015.

Who Voted “Yes” and Who Voted “No”

Senate Bill 211, Establish firefighters’ cancer presumption: Passed 109 to 1 in the House

To establish a presumption that, for purposes of granting workers compensation benefits, certain cancers contracted by non-volunteer firefighters arose out of their employment. The burden of proof would be on the employer to show the disease was due to smoking, nonwork-causes or specific incidents. Any benefits would be contingent on the legislature appropriating money for them.

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.

 

Department Reorganization is New Wine in Old Skin

Corporate welfare doesn’t work, reorganizing won't fix it

There is nothing new under the public policy sun. Gov. Rick Snyder announced last week a government reorganization that will marry Michigan’s existing “economic growth and job training efforts under one department.” They’ve been married before and didn’t work well then either. The fact is, corporate welfare doesn’t work and no amount of reorganizing will make it so.

Michigan had a similar system when economic development efforts and job training efforts were both run out of the Michigan Jobs Commission. Governor Engler split job and talent training up from economic development because he thought it would improve the state’s economic development efforts.

The Michigan Economic Development Corp. was to concentrate on economic development efforts while a separate Michigan Department of Career Development was to handle workforce development. In a 1999 Michigan Information & Research Service report the new MEDC President and CEO, Doug Rothwell was quoted as saying, “The state’s economy has grown to the point where the Michigan Jobs Commission model didn’t fit anymore.”

It’s difficult not be cynical about the moves governors make within the state’s corporate welfare complex because so much of it just ends up being new wine in an old skin.

According to Gov. Snyder, “One of my top priorities has been to make Michigan a national leader in talent development by focusing on workforce training for the jobs of today and tomorrow." He goes on to say, "That effort will require a comprehensive, unified approach to best help Michiganders while working to retain and attract businesses to create more and better jobs.”

Why is a comprehensive, unified approach today necessary when it must not have worked in the past?

At last week’s press conference on the subject capitol correspondent Tim Skubick asked, “So the old system was not working?” The Governor responded, “It was working. Again, you can see that by job creation; jobs being filled. Again we passed the 300,000 private sector job mark now. I’m very proud of that. This is a way to accelerate that. And again, focusing in on what you are going to see nationally as being something that’s only going to be a louder and louder issue, this issue about requisite skills to be successful in the careers that are going to be the careers of the future.”

You can watch it here. (Start at the seven-minute mark to hear Mr. Skubick lob his first question — on rearranging an organizational chart.)

It doesn’t matter how often state government moves its seating chart around. Taking money from many businesses and people and giving it to just a few isn’t a recipe for economic growth and empirical evidence is pretty clear on that.

It’s worth noting that every governor back to Kim Sigler in the 1940s has tried to put their own special stamp on some economic central planning bureau or department. Check out a brief history here.

Many of the job training goals laid out by government too can and perhaps should be reached privately. After all, if companies and people were allowed to keep more of what they earn they could tailor their own needs and desires and revenue to fit the demands of the marketplace.

A better direction is to eliminate all corporate welfare and job training subsidies and return money used to pay for both to its rightful owners. They know how best to reinvest those dollars — in job creating investments or in life enhancing skills development.

December 17, 2014, MichiganVotes Weekly Vote Report

Obamacare “navigators,” unionized college athletes and more

Note: House and Senate votes on a road funding/tax increase package taken after midnight on Dec. 19 came too late for inclusion in this report. A supplemental report on these and other late votes will be sent on Monday, Dec. 22.

Tax Hike/Road Funding Package

In the early hours of Friday, Dec. 19, the House and Senate passed several large tax increases and tax shifts intended to generate an additional $1.2 billion for roads, $300 million for schools, $130 million for municipal bus system subsidies and $95 million for local governments. The roll call vote details will be included in a supplemental report to follow. Key elements of the package include:

-- House Joint Resolution UU, a constitutional amendment increasing the state sales tax from 6 percent to 7 percent. This will appear on a May 12, 2015 ballot, and if it is not approved by voters then other road tax increases and shifts in the package will not go into effect.

-- House Bill 5477, which converts the state gas and diesel tax from a cents-per-gallon tax to one imposing a 14.9 percent levy on the wholesale price of fuel. Reportedly this is equivalent to a 42 cents per gallon tax at current fuel prices, compared to the current 19 cents per gallon gas tax and 15 cents per gallon diesel tax. Most of the increase would be offset by exempting fuel purchases from the state sales tax.

-- House Bills 4539 and 5492, which exempt fuel sales from state sales tax and use tax, respectively. Most sales tax revenue is automatically earmarked to schools and local government revenue sharing. The reduction of revenue would be offset by the measure increasing the sales tax to 7 percent.

-- Several other bills in the package or related to it. House Bill 4630 increases various vehicle registration taxes, which will extract an additional $95 million from car and truck owners each year. Senate Bills 658 and 659 impose sales and uses taxes on many catalog or internet purchases made from sellers outside the state, which is projected to collect an additional $50 million in from taxpayers.

Other action during this final week of the 2013-2014 Legislature included these House and Senate votes:

House Bill 6074, Exempt college athletes from unionization: Passed 25 to 11 in the Senate

To establish that college students who participate in intercollegiate athletics on behalf of a state university are not considered “public employees” subject to unionization under the law that mandates schools and local governments must engage in collective bargaining with government employee unions.

Who Voted “Yes” and Who Voted “No”

House Bill 4576, Regulate federal health care law “navigators”: Passed 32 to 6 in the Senate

To impose regulation and a “certification” requirement on the “navigators” authorized by the federal health care law (“Obamacare”) to assist persons applying for government-subsidized health insurance benefits through agency this law creates (the “exchange”). The bill authorizes background checks, testing and training requirements, and more.

Who Voted “Yes” and Who Voted “No”

House Bill 4480, Require more corporate & developer subsidy transparency: Passed 37 to 0 in the Senate

To require the Michigan Strategic Fund and the Michigan Economic Development Corporation to annually submit and post online more detailed reports on the costs and outcomes generated by their various “economic development” loan, tax break and subsidy programs targeted at specific corporations, developers or industries.

Who Voted “Yes” and Who Voted “No”

House Bill 4783, Expand a corporate/developer subsidy regime: Passed 31 to 6 in the Senate

To authorize creation of a seventh “Next Michigan Development Corporation,” which is a government agency that gives tax breaks and subsidies to particular corporations or developers selected by political appointees on the entity’s board for projects meeting extremely broad “multi-modal commerce” criteria (basically, any form of goods-related commerce). This would probably be in the Detroit area.

Who Voted “Yes” and Who Voted “No”

Senate Bill 910, Ban enforcement of new woodstove emissions limits: Passed 68 to 41 in the House

To prohibit Department of Environmental Quality from imposing new state regulations limiting emissions from woodstoves and heaters, or enforcing federal regulations that do this. The bill was introduced as news reports indicated that proposed federal Environmental Protection Agency rules would impose restrictive new limits on wood burning heaters.

Who Voted “Yes” and Who Voted “No”

Senate Bill 791, Revise, make permanent non-transportation 7/8th cent gas tax: Passed 108 to 0 in the House

To eliminate the 2016 sunset on a 7/8ths cent-per-gallon gas tax that was originally supposed to expire in 1998 and be used to clean up leaking underground fuel tanks, but which has been extended several times and was diverted to other government spending by a 2004 “fund raid.” However, the bill would earmark $20 million of the annual revenue of around $50 million from this tax to underground tank cleanups (as originally intended), and add some limits on using money from this tax to support unrelated activities.

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.

Top 25 of 2014

Our most popular offerings of the year

Asset forfeiture, illegal language in teacher contracts, union bullying and intimidation and Michigan Education Association finances were the most popular items on our website in 2014. Below are the top 25 articles you, the readers, clicked on during the past 12 months.

Please note that the list below is not scientific, but rather based on page views relative to posting dates.

  1. Man Who Speaks Out About Police Seizing His Property Without Charges Is Arrested Hours Later
  2. Wisconsin Wind Turbines Declared Health Hazard
  3. Non-Christians Given ‘Special Consideration’ in Union Teacher Contract
  4. All Four Teachers in New Schauer Ad Claiming School Cuts are in Districts Receiving More Money
  5. Which Michigan School Districts Pay the Most?
  6. Property Seized, Money Taken — But No Crime
  7. Disabled Family Sees 300 Percent Increase in Health Insurance Costs Under Obamacare
  8. Making Sense of the Complicated Ballot Language for Proposal 1
  9. SEIU Membership Drops 80 Percent After Dues Skim Ends
  10. Legislators Block Low-Cost Eye Exams in Michigan
  11. Brighton Teacher Who Served in Afghanistan Sues Union, School District over Right-to-Work Violation
  12. Union Says Photo IDs not Necessary to Vote — Unless You Vote to Leave Union
  13. Union, District Force Non-Union Teacher to Pay for Release Time
  14. MEA Sends Credit Agency After Teacher Who Stopped Paying Dues
  15. MEA Executives Take Big Pay Raises While Liabilities Continue to Grow
  16. Detroit Expected $55 Million in Property Tax Revenue; It Brought in $6.7 Million
  17. Hospital Union Resorts to Intimidation Tactics Against Workers Who Opt Out
  18. Little House on the Subsidized Prairie
  19. Early Returns on Michigan as a Right-to-Work State: Incomes Rising
  20. From Detroit to the Ivy League: One Student’s Journey
  21. Michigan Teachers Rank No. 2 for Salary
  22. Do As I Teach, Not As I Governed
  23. MEA Says 8,000 Haven’t Paid Dues; Some Teachers Say Union Intentionally Misled Members
  24. SEIU Allowed to Keep Millions in ‘Dues’ Money it Siphoned Away from Medicaid in Stealth Unionization, Court of Appeals Rules
  25. Minimum Wage Increase — A Serious Effort or Just Rhetoric?

No 'Replacement Revenue' for Taxpayers on Roads

New plan would give Michigan 2nd highest sales tax

Legislators are trying to make a deal for more road funding before they finish their term. Their latest proposal show less sympathy for taxpayers than for spending interests.

The new deal is reported to move the sales tax on gasoline to fund the roads instead of schools, local governments, and other general budget items. Few states levy sales taxes on gasoline. They would also ask voters to approve increasing the state sales tax from 6 percent to 7 percent. The changes reportedly will not go into effect if the proposal loses at the ballot box.

Thus, Lansing politicians are asking for a large tax hike. If approved, Michigan will be tied for the nation’s second highest state sales and use tax rates, second only to California’s 7.5 percent assessment.

This is much different from the plan introduced by House Speaker Jase Bolger, R-Marshall,which gradually allocates sales taxes on gasoline to the transportation budget. Because the state’s economy is recovering and tax revenue is increasing, Rep. Bolger's proposal would not require any budget cuts — just mitigated growth of future revenue.

This proposal to devote more funding for the roads without reaching deeper into taxpayer pockets was met with anguish from state spending interests, who claimed that it did not find replacement revenue for the money that would otherwise be spent on schools and local governments if sales taxes on gasoline were spent on roads.

Some believe these spending interests are entitled to grow by 32 percent over the course of Rep. Bolger's plan instead of 25 percent.

Yet that sympathy for those budget items does not extend to taxpayers. A proposed $1.3 billion increase in sales and use taxes does not identify replacement revenue for the taxpayers who will foot the bill for this spending.

Michigan is starting its fifth year of an economic expansion that has generated more revenue for the state government budget. Between revenue growth and the savings opportunities in the state budget, this deal unnecessarily protects spending interests at the expense of taxpayers.

(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.)

Taxpayers in Michigan and across the nation are generous. They don’t mind welfare dollars being spent on the needs of the less fortunate; however, if the money were to end up being used to buy beer, cigarettes or lottery tickets, they would be justifiably outraged.

With this year’s lame duck session drawing to a close, one striking feature stands out. While lawmakers wrestled over how best to get funding to fix up and keep up Michigan’s roads, legislation to perpetuate the state’s flop-filled film subsidy program shot through the Senate and House like a hot knife through butter.

Make no mistake about it, the state’s film subsidy program is nothing more than a government-sponsored luxury; a giveaway paid for with other people’s money and — as always — those other people are the taxpayers. Over the five years of its existence the program has cost nearly half a billion dollars and there are fewer film jobs in Michigan now than before it started.

Politicians in Lansing, who love to talk about the importance of priorities, apparently felt supremely confident that the regular news media would miss the farcical joke. It is no surprise that their confidence proved well-founded. A bill to continue film subsidies zips through the Legislature ahead of a debate involving a potential fuel tax hike; and yet the irony of it doing so attracts little news media attention — not even a few sarcastic jabs.

No mystery here

If a script were written based on why the Legislature voted to keep the film subsidy program alive, it wouldn’t qualify as a mystery.  It takes little imagination to understand the forces that were at work.

First, the Michigan Film Office was established under former Gov. Jennifer Granholm, and once established virtually all government agencies become virtually immortal. For government agencies, departments, commissions, etc., the goal is survival; their stated missions are a secondary concern. Whenever one of these entities is formed, what is really being created is a self-serving constituency within the halls of government dedicated to remaining in existence, getting as many dollars appropriated for its use as possible, and then — finally — taking on whatever the task is that was supposedly its primary function.

Second, it’s a sure bet that a publicity-minded industry like the “Hollywood movie-making crowd” would push all the right promotional buttons to sell the idea to lawmakers that keeping Michigan’s film subsidies intact was a politically smart thing to do. No doubt; the glamour of stars and celebrities was utilized, egos were stroked and well-timed and targeted letters and emails were sent to help secure the legislative victory.

Admittedly, another aspect of the situation that could have been a factor is that the film subsidy program might be superficially popular. Absent any publicly released polling on the topic, it is possible that when given a brief and general description of Michigan’s film subsidy program a significant percentage of voters might tend to say “that sounds OK to me.”

But the sort of polling that would be most useful would ask voters whether the $5 million, $10 million, $20 million, $50 million, or whatever the amount appropriated to the program ends up being, would be better spent for things like schools, law enforcement or roads. It seems probable that the film subsidy program would fare poorly in that kind of survey.

Don’t buy the excuses

A lot of lawmakers voted to keep the film subsidy program running through 2021; the bill passed 73 to 37 in the House and 33 to 4 in the Senate. If your local representative or senator tries to explain a “yes” vote on the bill (SB 1103) by claiming it didn’t appropriate any actual funding for the program, don’t buy it. Outside of a handful of legislators on next year’s appropriations committees, the only vote lawmakers are accountable for regarding film subsidies is the one that just took place.

Eventual funding for the film subsidies will be a line item in a bundled up appropriations spending bill. Those are the kind of bills lawmakers always explain their “yes” votes on by saying, “I didn’t agree with everything in the bill, but I couldn’t vote against the entire state’s general fund budget just because there are parts of it I didn’t like.”

Film subsidies are nothing more than a flashy brand of corporate welfare. Though dressed up to look like something else, they are on a par with allowing food stamps to be used for booze, cigarettes and lottery tickets.  At best, film subsidies are political feel-good food; a chocolate éclair dished up by government-centered chefs and served at the public’s expense in spite of the fact that as candidates a majority of legislators posture and pledge to limit the state to a lean fiscal diet.

One might have hoped the lawmakers would have at least shown enough sense of priority to tackle the main course (road funding) before indulging in their gratuitous dessert.

LaFaive: How to Cut $2.1 Billion in Spending

Guest on WILS in Lansing; ideas for road funding

Michael LaFaive, director of the Center’s Morey Fiscal Policy Initiative, was a guest on “The Tony Conley Show” on WILS-AM1320 in Lansing today, discussing his ideas to cut $2.1 billion from a state budget of more than $52 billion, allowing for tax cuts and providing money for road and infrastructure improvements.

The second part of LaFaive's interview with Conley can be heard here.