This Just In … Longwoods Out

Secretive MEDC consultant replaced

After serving many years as a consultant for the state, Longwoods International has been dropped in favor of another contractor. Longwoods provided return-on-investment estimations for the Pure Michigan advertising program. An Indiana-based company will now provide the same services under a new contract with the state.

I have been a frequent critic of Longwoods. The company claimed in previous reports that the state’s tourism advertising campaign provided huge financial returns. In its last report, Longwoods said $8-plus was returned in tax dollars for every dollar spent on Pure Michigan. But Longwoods refused to tell anyone how it obtained that number, claiming it was proprietary information.

This secrecy is unacceptable. It is like your kids telling you that they aced algebra, but refusing to show you their report card. The MEDC, the state agency responsible for Pure Michigan, remained with Longwoods, despite the secrecy. To determine whether the Pure Michigan program really delivered a positive impact on Michigan’s economy, I performed my own study, with the help of Michael Hicks, an economist at Ball State University.

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We collected 39 years of data on government spending to promote tourism. The data came from 48 states and — after doing a thorough review of the academic literature on the subject — we created a statistical model to measure the impact of such spending. We found some, but on balance it was negative. We found that for every dollar spent on tourism promotion, there was an additional 2 cents worth of business in the average state’s accommodations industry. In other words, in just this sector, the Pure Michigan program had a return of minus 98 percent. Other sectors of the tourism economy fared no better.

Unlike the MEDC’s contractor we used publicly available data sources. The methodology is explained in such detail that a reasonably talented economist could replicate our work.

With a new contractor arriving on the scene, this is a great opportunity for the MEDC to demonstrate the confidence it has in its program. It should mandate 100 percent transparency in the methods and data sources used by its new contractor.


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Consumers Don’t Need a Law to Limit Competition

Get rid of the ‘half mile’ rule for selling alcohol

If the government passed a law saying no gas station, grocery store or lemonade stand could open too close to one already operating, most people would see this as a needless limit to healthy competition in the marketplace. It’s consumers, not Lansing politicians, who should determine where retailers set up shop.

But the state does have a similar regulation — it prevents liquor stores from operating within half a mile of another store that sells alcohol. This is a silly rule that simply protects some businesses at the direct expense of their competitors and customers. And there’s no evidence this saves lives or even leads to less alcohol consumption.

The good news is that the Liquor Control Commission is repealing this rule on the grounds that it is anticompetitive and a burden to administer. The bad news is that, on behalf of established alcohol retailers, identical bills in the House (HB 4504) and Senate (SB 501) would write this protectionist language into state law.

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Supporters of these bills have two major arguments: 1) Retailers already have enough competition and would be harmed by the change; and 2) It would do harm to public safety. Both arguments lack substance.

First, no commercial enterprise — not even liquor stores — should be arbitrarily protected from market competition. Indeed, competitive marketplaces are so enshrined in American law and culture that defenses of these geographic monopolies come across as just plain bizarre.

The federal government runs an entire antitrust division charged with facilitating and protecting competitive markets. The U.S. Constitution prohibits states from erecting anticompetitive barriers. Would any Lansing politician dare suggest prohibiting pizza parlors or pie makers from locating within a half-mile of a competitor? Of course not.

But because this half-mile rule was established long ago and involves a regulated substance, the narrow special interests that want to limit competition have more influence in Lansing than your average local pizza shop. Hence the legislation to reverse this rule change. Protectionism tends to create a sense of entitlement and reducing or removing it leads to intense opposition from the special interest groups that benefit.

The safety argument lacks evidence. These bills would not lead to more alcohol sold in the state — the number of liquor licenses is set by a different state law and the number would not be increased. In fact, there is some evidence that public safety might be improved by raising the number of locations at which alcohol is available.

In her 2010 Ph.D. dissertation for the University of Michigan, titled “Urban-Rural Influences on Driving Behaviors and Driving Outcomes Among Michigan Young Adults,” Tenaya Marie Sunbury examined alcohol retail density in Michigan and its impact on alcohol consumers. She found that “[f]or both men and women, higher density of alcohol establishments was related to lower alcohol consumption, binge drinking and [drunk driving].”

A 2003 paper published by Patrick McCarthy looked at alcohol store density in the 1980s in 111 California cities and auto accident rates. He found that an increase in establishments selling general spirits was linked to decreases in the number of car crashes.

Both research papers suggest that actually increasing the number of licenses and removing geographic limitations on the location of alcohol establishments may help public safety to some degree. Current liquor licensees aren’t even facing the threat of more licensees, just the ability of some to locate within one-half mile.

This fits other research that shows state liquor controls does not affect alcohol-related deaths. Pennsylvania, for example, has a tightly regulated alcohol market, where consumers can only purchase liquor from state-run stores. But the Keystone State’s alcohol-related social issues are similar to those facing everything other state.

The state should not be in the business of unfairly regulating legal enterprises. House Bill 4504 and Senate Bill 511 would codify an unnecessary rule, to the detriment of consumers and perhaps public safety as well.

~~~~~

Jarrett Skorup testifying on this issue before the House Regulatory Reform Committee: 


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September 29, 2017 MichiganVotes weekly roll call report

House Bill 4616, Make local governments liable for gun ban preemption violations: Passed 69 to 39 in the House

To authorize private lawsuits against a local government that violates a state preemption on local firearms ownership or use restrictions. The bill would allow plaintiffs to collect actual damages and costs if they prevail.

Who Voted "Yes" and Who Voted "No"

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House Bill 4781, Regulate electric bicycle use of improved or forest trails: Passed 107 to 0 in the House

To regulate electric bicycles on paved, gravel or converted rail trails. Low-power, “Class 1” electric bikes would be allowed unless specifically prohibited from a trail by state or local officials. Faster and more powerful Class 2 and 3 e-bikes would be banned from trails unless specifically allowed. All electric bikes would be prohibited from non-motorized forest trails unless specifically allowed on one.

Who Voted "Yes" and Who Voted "No"


House Bill 4782, Permit and regulate electric bicycles on roads: Passed 107 to 0 in the House

To regulate and define classes of electric bicycle for use on streets and highways. “Class 1” are the lowest power bikes, and Classes 2 and 3 have more power and can go faster. The bill would ban individuals less than age 14 from using a Class 3 bike, and allow electric bicycles to be used on streets, bike-lanes and highways (not freeways) subject to the same rules and restrictions as regular bikes. Minors would have to wear a helmet.

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 www.MichiganVotes.org.


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Short-Term Rentals Are Good for Michigan

State should stop municipalities from cracking down on homesharing

Michigan residents have been making great use of sites like AirBnB and Homeaway to make extra money renting out their vacation homes or to find unique, affordable and convenient places to stay on vacation. But not all municipalities see this as a good thing.

Several cities across the state, including Holland and Traverse City, have banned or severely limited the property rights of homeowners who made their homes available on short-term rental sites. In an op-ed for the Holland Sentinel, Policy Analyst Jarrett Skorup, along with coauthors Kelli Fickel and Elaine Page, two residents of Holland who used to enjoy renting their homes to visitors, condemned this policy.

In Traverse City, it is illegal to rent out your home or vacation property in residential areas, and property owners routinely get fined for renting out rooms using websites like Airbnb. In Grand Haven, the city council voted through new regulations that would greatly restrict short-term rentals and ban it in some places. Other municipalities in Michigan are following suit.

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This is outrageous and a violation of private property rights. Vacation rentals have numerous benefits. Owners can earn a little money, renters can find an affordable place to stay, and neighborhoods can see property values increase with well-maintained and desirable properties.

We have seen it firsthand: Rental owners take pride in the upkeep of their homes. Visitors are able to see and appreciate our city and state. And more homes for rent means lower prices for everyone.

Two bills currently under consideration in the state Legislature would stop this local violation of property rights. For more on this issue, visit http://www.mackinac.org/23638.


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More State Oversight Needed for Government Assistance Programs

Michigan should adopt best practices for welfare, WIC programs

Michigan administers a variety of programs paid for by state and federal funds.

For decades, government spending on programs aiming to help the poor has exploded. Yet the poverty rate has been fairly consistent. As economist Thomas Sowell has noted, poverty was in a deep decline up until the federal War on Poverty began in the 1960s. After that, it stagnated.

It’s a tricky balance, determining how much government can help without discouraging people from working or investing in ways to improve their own lives. That’s why it’s important for Michigan to analyze the federal programs the state administers.

It has happened before. A good example came in 2011, when the Michigan Legislature assessed and then pulled back on the level of unemployment benefits it offered. Over the next five years, the number of people collecting unemployment declined by 80 percent to a 30-year low, while jobs and incomes increased.

In the mid-1990s, the Republican-led Congress gave states block grants and more flexibility in the way they spend federal money on welfare. But it also called for work requirements on individuals receiving benefits. Welfare reform ultimately saved billions and brought many people onto the work rolls. President Barack Obama, a Democrat, touted the reform and even said it was a major issue he had changed his mind on.

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It’s time for Michigan to take another look at this and other federal programs administered by the state. By 2013, welfare benefits had increased in value significantly since the 1990s reform and were worth nearly 80 percent of the state’s median salary. The state’s women, infant and children program, or WIC, pays out to people up to 185 percent of the poverty line – or at least it’s supposed to.

A few years ago, under the Obama administration, the federal Government Accountability Office released a performance audit of WIC programs in eight states, with Michigan being one. It found that some people who were ineligible for benefits were still receiving them, redirecting funds from people who needed them most. As a result of the audit, the U.S. Department of Agriculture released a memo of best practices for determining eligibility. It also encouraged states to define “current income” and required them to justify the definition they use. Michigan’s guidelines don’t appear to have fully adopted this recommendation. The state requires documentation for some people needing assistance, but it also allows for “self declaration of income” for some citizens.

As the federal government keeps expanding its welfare programs, state lawmakers and agencies should use their own power to reign them in and ensure they are being used efficiently and properly. That’s the best way to make sure the right people receive funds and those that truly need temporary help get back on their feet quickly.


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It’s Time to Allow Direct Vehicle Sales

You can’t buy a Tesla or a Fido in Michigan

If you’d like to drive a Tesla, you’ll need to go to Ohio to buy it. Michigan doesn’t allow car or motorcycle manufacturers to sell directly to consumers.

Tesla is part of a new wave of vehicle manufacturers rejecting the dealership model, allowing consumers to buy directly from the company that manufactures the product. Another such company is Kalamazoo’s Fido Motor Company, which makes a 45-mile-per-hour electric scooter that it can’t sell to consumers in its home state.

The topic recently came up on WMUK 102.1:

Jarrett Skorup is with the free market think tank the Mackinac Center for Public Policy. He says this ban doesn’t make any sense. Skorup says there’s no evidence that buying a car or motorcycle through a dealer is cheaper and Michigan doesn’t ban direct sales on any other products.

“If I want to go and get an iPhone I can directly order it off a website. I could go in and get it from a store or I could go directly to an Apple store and get it. So I have lots of options and we just think the market does the best job of sorting out how people want to pay for things,” says Skorup.

Studies show that buying from dealers doesn’t improve consumer safety or satisfaction. Michigan should stop limiting consumer choice and allow customers to buy where and how they’d like.

More information on direct auto sales is available at http://www.mackinac.org/EVT-INI20151202.


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How Juvenile Justice Works in Michigan

A brief overview of legal proceedings involving youth

Michigan is one of only five states that automatically prosecute all 17-year-olds as adults. Legislation currently pending before the Michigan House of Representatives would raise the age of legal adulthood within the court system so that 17-year-olds are treated as minors. It is important to have a complete grasp of the distinctions between the adult and juvenile court systems when assessing this important legislation.

The Michigan court system views minors age 16 and younger as juveniles and treats them differently than adults when they are involved in criminal proceedings. There is a family division within each state circuit court that is responsible for handling juvenile cases. Family court judges have more options to resolve a juvenile offense than do judges in a criminal case against an adult.

For example, a juvenile offender may be diverted from legal proceedings entirely. If his offense was relatively minor and he seems unlikely to re-offend, he may be required to pay a fine and be counseled and supervised for 30 to 90 days in lieu of prosecution. In that case, the court records are destroyed when the juvenile reaches age 17. If he doesn’t comply with the diversion program requirements, however, his case may return to the court for prosecution.

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Juvenile cases that are not diverted are placed on either a consent calendar or formal calendar. The consent calendar is an informal court monitoring program that is used in cases where the judge, prosecutor, juvenile and his parents agree that it is in the juvenile’s best interest to be kept out of the formal justice system. The court develops a case plan to resolve the matter that initiated the legal proceedings, which includes components such as treatment and restitution to victims. If the juvenile successfully completes the case plan, the court will close the case and destroy the case records.

The formal calendar more closely resembles the process of prosecuting an adult offender. Juveniles may admit to or deny charges against them and have rights to a speedy trial, legal representation and a jury. Still, youth are not convicted the way adults are. Instead, the judge will make a “finding of responsibility,” in lieu of a finding of guilt, and a “disposition” in lieu of a sentence. The disposition may require the youth to be on probation, be subject to electric monitoring, participate in treatment or counseling, do community service, live at a juvenile facility in or out of state or be waived into the adult court system for additional proceedings.

Children who enter the justice system have a unique opportunity to receive individualized attention that may mean a difference between a successful, productive life and one marked by crime and the consequences of a criminal record. Lawmakers should give juvenile justice the careful consideration this topic deserves.


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Arbitrary Licensing Requirements Should be Scrapped

Unemployment is a leading indicator for recidivism

The ability to earn an honest living is a solution to many of the problems individuals face, and this is even more true for people with a record of criminal activity.

When someone is released from prison, finding work is one of the best ways to keep them out of the corrections system for good. But in Michigan, this is often easier said than done.

Prospective employees require a state-mandated license to work for approximately 20 percent of the jobs in Michigan. For a majority of those jobs, which include skilled trades like roofing and painting, obtaining a license means proving you are of “good moral character.” In other words, if you have a criminal record, you are ineligible for a license.

In some professions this makes sense, but in most it would be better for licensing boards to use common sense when examining an applicant’s moral character. A conviction like reckless driving will not impact the ability of a barber to cut hair, but he could still lose his chance at a career as a result of it.

Mackinac Center Policy Analyst Jarrett Skorup and Research Intern Jacob Weaver recently published an op-ed in the Detroit Free Press discussing the reasons why the state should reform moral character clauses:

The laws preventing people with a criminal record harm, rather than protect, the public by cornering people into partaking in illegal activity. A 2011 study from the National Employment Law Project found that the higher the chance of released convicts’ landing jobs, the lower the recidivism rate. And a 2016 study out of Arizona State University estimates that higher licensing burdens led to a fourfold increase in convicts offending again and being sent back to prison. …

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This has a huge effect on the more than 4 million individuals who have some type of record in the state’s criminal history file, the 50,000 Michigan residents who are convicted of a felony each year, and the approximately 10,000 prisoners released from Michigan prisons annually.

And taxpayers are affected, too. The state spends $150 million on its licensing department and nearly $2 billion on corrections each year. If the state could reduce its recidivism rate, that’s less it needs to spend locking people up and more that could be spent on things that benefit taxpayers, like maintaining and improving infrastructure or even a broad-based reduction in tax rates.

For more on licensing reform, read the Mackinac Center’s recent study “This Isn’t Working: How Michigan’s Licensing Laws Hurt Workers and Consumers.” For more on criminal justice reform, visit http://www.mackinac.org/criminal-justice.


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West Virginia Supreme Court Upholds RTW Law

Mackinac Center scholars support the ruling

Image via Wikipedia.

The Mackinac Center is a national leader in examining and litigating legal issues surrounding right-to-work laws. Having championed the policy for three decades and helped usher in this monumental reform in Michigan, the Center is ready and able to take on any legal challenges to right-to-work.

One recent challenge was a showdown in West Virginia, where lawmakers passed a right-to-work law in 2016. But unions there had won an injunction in a county circuit court, halting the implementation of the law. Fortunately, just last week, the West Virginia Supreme Court overturned this injunction, ruling that the law should be implemented and also stated that there is little chance right-to-work proves unconstitutional.

As part of an effort to support the West Virginia right-to-work law, the Mackinac Center’s Senior Attorney Derk Wilcox submitted an amicus brief on behalf of the attorney general of West Virginia, who was defending the law before the state’s Supreme Court in this case.

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Wilcox argued that the unions’ case against right-to-work is faulty, especially considering that right-to-work has been upheld numerous times since its adoption by some states as long as 70 years ago. Further, Wilcox turned the unions’ argument on its head and pointed out that if right-to-work is deemed a “taking,” as the unions tried to argue, then the entire federal labor law mandating collective bargaining needed to be viewed as a “taking” as well. But in this case, the unions would be the ones doing the taking and, as a result, they probably wouldn’t favor such a definition or its implications.

But that’s not all Center scholars did to educate West Virginians about the positives of a right-to-work law. Senior Fellow Vinnie Vernuccio also testified before the West Virginia House of Delegates when lawmakers were originally considering the bill. Vernuccio also published op-eds in local newspapers and his work in the Mountain State was featured in a piece by the Wall Street Journal.

As recent events in West Virginia demonstrate, the Mackinac Center is fighting to defend the rights of workers across the entire country and upholding right-to-work laws is a critical part of that effort.


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‘Raise the Age’ Proposals Pending in Lansing

New legislation would stop automatically treating 17-year-olds as adults

Michigan is one of five states that treat 17-year-olds as adults in its criminal justice system. Legislative proposals pending in Lansing would change that. The bills would redefine “adult” to refer to people 18 years of age and older, bringing Michigan’s policies in line with most other states and federal laws that fix the age of legal adulthood at 18.

The Michigan House of Representatives has introduced 16 bills addressing juvenile offenders and youth in prison. It is well-documented that age-appropriate corrections policies are more effective at rehabilitating young adults. These bills aim to reduce misconduct among young offenders by giving 17-year-olds access to the more individualized penalties and by keeping them out of adult jails and prisons. Here are a few of the most notable proposals:

  • Michigan automatically prosecutes as adults all criminal defendants who were 17 or older at the time they committed a crime. HB 4607 would change this law so that 17-year-old criminal defendants would have their cases handled in the family division of circuit court instead, and eligibility for prosecution as an adult would begin at 18. Prosecutors would still be allowed to automatically prosecute 17-year-olds as adults for serious crimes.
  • A related bill, HB 4662, would raise the age of eligibility for diversion to include 17-year-olds. Diversion is a process that allows a law enforcement agency to keep minors out of court when they are apprehended for less serious offenses. Diverting a minor may mean simply returning him to his parents’ custody or having his family commit to working with a local agency to resolve the problem.
  • 17-year-olds are currently jailed and imprisoned with adults. HB 4744 would forbid detaining minors 17 years of age and younger in the same facility as adults. This measure would require counties to pay for appropriate placement (i.e. foster homes, child care or licensed juvenile facilities) for 17-year-olds, as they do for all other minors, if parental custody is not an option.
  • There are currently 18 crimes for which a minor will be automatically prosecuted as an adult. HB 4753 would alter that list. It would reclassify three offenses as crimes for which prosecutors are allowed, but not required, to treat minors as adults. These include escape or attempted escape from a high-security juvenile facility, bank or safe robbery, and the possession or delivery of more than 1,000 grams of illegal drugs.

These four bills have been referred to the Committee on Law and Justice, but have seen no action. Lawmakers would do well to carefully consider the potential benefits of raising the age of criminal responsibility to the age of 18. They can look to the experiences of other states that raised the age, such as North Carolina, which found the benefits outweighed the costs in the long-term. Specifically, the Vera Institute projected that a $70 million annual investment in juvenile justice would result in $123 million in reoccurring benefits to young offenders, victims and taxpayers, while reducing juvenile recidivism by 10 percent. Young offenders in the criminal justice system are at a crossroads; policies that might improve their odds of a successful, productive life merit special attention from lawmakers.

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Related Articles:

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