The MC: The Mackinac Center Blog

'Free' Community College

Not a very sound idea

President Obama recently announced his goal to provide two years of “free” community college for American workers. This has been met with cheers from community college leaders, high school administrators, and plenty of Americans.

Such cheers, however, are not such a clear sign that President Obama would have us believe in the wisdom of providing free community college education. First, let’s not pretend that this is going to result in saving the country money on education — it merely changes who foots the bill. Instead of people attending community colleges paying for their own education, the American taxpayer will be tasked with doing this. Second, there is no reason to suspect that this policy will actually help anyone.

Using data from the Michigan Community College NETwork, we can clearly see that while tuition rates at community colleges have remained relatively steady, community college enrollment in Michigan has actually declined over the last three years. This suggests that fewer people are finding community college to be a worthwhile endeavor.

According to data from the Michigan Community College Association, the current community college completion/graduation/transfer rate is an abysmal 52 percent (up from 44 percent in 2008). This means almost half of all students who enroll in a community college program fail to complete, graduate or transfer to a four-year institution. Put another way, almost half of all people who enroll in community college pay tuition but fail to obtain any type of degree, effectively throwing their money away. President Obama’s proposed plan will do nothing to address this and instead will likely set more people up for failure.

The problem with community college, and college in general for that matter, is not the cost, as every year millions of people around the country choose to enroll in some type of post-secondary education program. The problem is that these institutions are failing to provide students with an adequate education in a dynamic and increasingly global economy. While some may point to a recent study by the Federal Reserve Bank of New York as evidence that college is still worthwhile, these statistics are based on averages which may hide underlying characteristics of great importance.

For example, after John Elway graduated from Stanford University in 1983 with a degree in economics, the average salary of students graduating from Stanford with an economics degree was several hundred thousand dollars per year, which was significantly higher than the average salary of economics majors from other institutions. Obviously, this statistical quirk was not because the Stanford economics program was somehow special; it was because they had John Elway, who was earning millions of dollars in the NFL. By the same token, college may be worth it on average, but the millions of unemployed and underemployed college graduates in society today certainly don’t feel that way and rightfully so. Instead of trying to lower the cost, we should instead find ways to increase the benefit of furthering one’s education beyond the high school level.

One way to do this would be to instead provide students who prefer it with a voucher or tax credit for job training rather than encouraging them to enroll in a system that fails to meet their needs. Under this system, the federal government would not be telling students to enroll in a broken system, but would instead free them to attend a program that they actually want to attend and where they are more likely to succeed.

Michigan Turns 178

A look back at the early days

Spalding Discusses School Choice

Joined on WKAR by Democratic lawmaker

Education Policy Director Audrey Spalding was a guest on “Current State” on WKAR-AM90.5 this morning, discussing school choice ahead of Tuesday’s celebration of National School Choice Week at the Michigan Capitol. The discussion included charter public school performance and why families utilize the Schools of Choice program. Also on the show was Rep. Sarah Roberts, D-St. Clair Shores, who introduced anti-school choice legislation last year.

Two Cheers for Legislators on Licensing

Good progress in 2013, more to be done

An important if usually under-the-radar public policy issue is occupational licensing – state rules that require residents to meet various criteria (and pay for them) before they may earn a living in a particular profession.

Rolling back licensure mandates requires taking on groups with a vested interest in preserving these restrictions on opportunity (and potential competitors). To its credit the previous Legislature did do some good if still-modest work in this area. In a bipartisan manner, legislators eliminated rules having to do with dieticians and nutritionists, interior designers, auctioneers, community planners, carnival workers, ocularists, school solicitors and immigration clerical assistants. It also tweaked some licensing requirements for barbers.

The Legislature also explored reforming licensure mandates on landscape architects, polygraph examiners, foresters (vetoed by Gov. Rick Snyder), residential lift installers and nurses, but these changes did not come to fruition. Many of these suggested reforms were based on a 2012 report from a state Office of Regulatory Reinvention.

For most jobs that require licenses, the mandates do not benefit the public in any measurable way. That is, there is no systematic evidence that licensure in most occupations adds to public health or safety, whether in the jobs mentioned above or in many other areas of employment, such as painting or construction.

Recognizing this, in 2013 a bill was introduced in the House to prohibit licensure mandates that cannot be shown to increase public health and safety. The Legislature should reconsider the issue this session as it would allow people to work legally, and let government get back to focusing on its core functions.

Labor Policy Expert Cited on Union Decline

Vernuccio in Detroit News, Free Press

Although union membership in Michigan fell 7.6 percent from 2013 to 2014, the full effect of the state’s right-to-work law has yet to be seen, according to Labor Policy Director F. Vincent Vernuccio.

“Right-to-work still has not kicked in for many Michigan workers,” he told The Detroit News. “As the contracts with the Big Three expire later this fall, tens of thousands of UAW autoworkers will be eligible for right-to-work. This includes many second-tier workers who are being paid far less than their co-workers because of UAW negotiated contracts. Past deals favoring older workers at the expense of new ones may come back to haunt to the UAW when younger workers are able to choose whether or not to support a union that short-changed them.”

Vernuccio also told the Detroit Free Press that there were other factors involved in the decline.

88 New Bills in Four Days — a Sampler

Ban local Uber bans, restrict religious freedom restrictions

In the four regular session days so far, members of the new 98th Legislature have introduced 88 bills. It will be several weeks before any substantive non-procedural votes are taken, so this report describes some new bills of interest.

House Bill 4032: Regulate Uber, Lyft, etc.; preempt local bans

Introduced by Rep. Tim Kelly (R), to establish a regulatory framework that would enable “transportation network companies” like Uber and Lyft to operate in this state, including a preemption on local government regulations or bans. This would include permit, insurance, driver background check and vehicle inspection and customer disclosure mandates, and prohibit street hailing and the use of cab stands by the vehicles. A version of this bill was advanced to the point of a House vote in December but the vote was then postponed. Referred to committee, no further action at this time.

House Bill 4041: Ban welfare and remove children from home for truancy

Introduced by Rep. Al Pscholka (R), to prohibit giving welfare benefits to a household with children who are truants or not being educated, and remove the children from the household. Referred to committee, no further action at this time.

House Bill 4042: Authorize tax on horse-drawn vehicles

Introduced by Rep. Joel Johnson (R), to empower counties to impose a registration fee (tax) of up to $50 on horse-drawn vehicles. A vote of the people would be required. Referred to committee, no further action at this time.

House Bill 4052: Ban local &ldqo;community benefit” mandate as condition of developing property

Introduced by Rep. Earl Poleski (R), to prohibit local governments from adopting a “community benefits” ordinance that imposes mandatory wage, benefit, or leave time requirements on developers or contractors as a condition of developing a piece of property. This would also prohibit locals from imposing a “prevailing wage” mandate requiring these employers to pay “union scale” wages, to the extent this is not already required by state or federal law. Referred to committee, no further action at this time.

House Bill 4053: Increase penalty for paying a person to run for office

Introduced by Rep. Earl Poleski (R), to authorize up to one year in prison and $500 fine for promising, providing, or accepting valuable consideration to run (or not run) for a political office. Referred to committee, no further action at this time.

House Bill 4057: Mandate “disparate impact” study for new industrial facilities

Introduced by Rep. Stephanie Chang (D), to require an applicant for an air quality emissions permit to submit a study of the “increased and cumulative risks” of discharges for a project in a “likely disparate impact” area, and require the Department of Environmental Quality to hold a hearing and consider this before issuing a permit. Referred to committee, no further action at this time.

Senate Bill 4: Enact a “religious freedom restoration act”

Introduced by Sen. Mike Shirkey (R), to establish that the state or a local government “shall not substantially burden a person’s exercise of religion, even if the burden results from a rule of general applicability,” unless this is done “in furtherance of a compelling governmental interest” and uses “the least restrictive means” to further that interest. Referred to committee, no further action at this time.

Senate Bill 5: Increase Earned Income Tax Credit

Introduced by Sen. David Knezek (D), to increase the state earned income tax credit from an amount equal to 6 percent of the federal EITC, to 20 percent. This is a “refundable” credit for low income workers (meaning that a check is sent to the taxpayer for the balance of the credit exceeding taxes owed). Note: A bill requiring this was enacted in December but is contingent on voters approving a sales tax increase in a May 5 election. Referred to committee, no further action at this time.

Senate Bill 15: Assert immunity of “Michigan-made” firearms from federal gun bans

Introduced by Sen. Phil Pavlov (R), to establish that firearms which are completely made in Michigan may be possessed and sold in this state, notwithstanding any potential federal gun bans claiming authority based on the U.S. constitution’s interstate commerce clause. Referred to committee, no further action at this time.

Senate Bill 20: Require that criminal offenders know act was unlawful for conviction

Introduced by Sen. Mike Shirkey (R), to establish that in any new law creating a criminal offense, if the law does not indicate whether a “culpable mental state” (“mens rea”) is required to establish guilt, the presumption will be that this is required, meaning that prosecutors must show that the defendant violated the law “purposely, knowingly or recklessly.” Under current law, many complex “administrative” offenses authorize criminal penalties for actions that a regular person would not know are illegal. 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.

Wind Energy Allegations Deserve Hearings

Claims about efficiency, health hazards should be explored

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

State lawmakers ought to investigate two unanswered allegations against wind energy in Michigan. The first persistent allegation is that, when it comes to efficiency and the environment, wind energy is a fraud. The second persistent allegation is that it often constitutes a health hazard.

Michigan’s 2008-passed energy law, which created what amounts to a mandate that 10 percent of the state’s electricity be generated by in-state wind energy by 2015, is scheduled to be reviewed by the Legislature this year. That review will be a travesty and sham if it fails to include a serious effort to delve into these allegations.

Any such "serious effort” should feature hearings that center on the allegations, not hearings about broader issues to which the allegations are treated as tangential information. In fact, the two allegations deserve to be handled separately. The question of whether wind energy in Michigan is really efficient and good for the environment could be taken up by an energy committee in either the House or Senate. The allegation that wind turbines often constitute a health hazard might be well-suited for either a local government committee or a health policy committee. Deciding which committees should look into the allegations is a minor consideration, as long the legitimate debate over these allegations doesn’t get glossed over or buried.

The allegation that wind energy is neither efficient nor particularly good for the environment is based on the fact that the wind only blows intermittently. The claim here is that, in Michigan, which the Federal Energy Regulatory Commission long ago excluded from its list of “good” wind energy states, wind energy is mostly fossil fuels — primarily natural gas — in disguise. According to wind energy critics, natural gas is needed to supplement the on-again off-again variability of wind to a degree that the wind portion of the equation is an impediment. In other words, simply turning on the natural gas generators and disconnecting from the wind turbines would be both more efficient and result in fewer emissions.

Hampered, it appears, by a belief in wind energy — or concerns about advertising dollars — most of the so-called mainstream news media refuses to listen to any discouraging words uttered about it, let alone report on the claims of wind energy critics.

The complaint here is not that the so-called mainstream news media won’t accept the allegation as factual, but that it is so closed minded that it doesn’t bother to find out what the allegation is. If it did so, suspicions that wind energy critics are just shilling for the fossil fuel industry would be dispelled, considering that the allegation is that wind energy is really just fossil fuels anyway. By not even acknowledging this part of the debate over wind energy, the national and statewide news media is, in a very real sense, censoring information from both itself and the public.

The allegation that wind energy in Michigan might constitute a health hazard is based on claims that inaudible, low frequency “noise” emitted by wind turbines, when erected in too close proximity to homes, makes from 10 to 15 percent of people sick. If proven, this could be a death knell for wind energy in Michigan because, due to population density, there is no practical way to build so-called wind plants (some call them wind farms) far enough away from places where people live.

Mason County took Consumers Energy to court over what is essentially the health issue concerning Lake Winds wind plant near Ludington. The county won at the circuit court level and that case is now before the Michigan Court of Appeals. The fact that most of the news media across this state has failed to cover that case is nothing short of amazing.

Something else the regular news media missed was a portion of the renewable energy study, that Gov. Rick Snyder ordered to be done, which found that the health impacts of wind turbines are real and that setback distances from homes should be increased. Meanwhile, virtually all “regular” news media articles on the study’s findings merely reflected what the wind industry wanted the public to think the study said.

Across Lake Michigan, Brown County in Wisconsin (where Green Bay is located) declared wind turbines to be health hazards. In Ohio, the state rid itself of the “in-state” aspect of its wind energy mandate and lengthened its wind turbine setback distance. The national and statewide news media has failed to report stories like these. Only certain radio stations, local TV stations and local newspapers have covered criticisms of wind energy, usually when reporting on local zoning board and county commission hearings.

As written in previous columns, it is likely that Michigan’s big utilities, Consumers Energy and DTE, will call the shots this year when it comes to any actual changes to Michigan’s energy laws. Anyone who thinks otherwise is probably being naïve.

Nonetheless, the Legislature —which unlike the news media is elected by the voters — should give the allegations about wind energy fair hearings. These hearings would almost surely be “he said, she said” in nature and wouldn’t settle the issues involved, but would at least show that lawmakers respect both sides of the issue and possibly alert the people of Michigan that the value of wind energy is debatable.

State Out Nearly $300M from Cigarette Smuggling

Yet another unintended consequence of high excise taxes

2013 Revenue Impact

In studies, essays and blog posts since 2008, we have noted the raft of unintended consequences associated with Michigan’s illicit trade in cigarettes. Often we zero in on smuggling itself. A quarter of all the cigarettes consumed in Michigan in 2013 were contraband.

What all too often gets left behind in the debate over cigarette trafficking is the amount of revenue lost by the state to activities that are effectively inspired by high taxes in the first place. We estimate that the Great Lakes State lost $298 million from the untaxed cigarette trade in 2013. The one sliver of good news is that the figure is down precipitously from 2012, when it was $350 million.

The graphic on the right indicates each state’s respective smuggling rate, its rank among the 47 states in our study, the estimated number of packs smuggled in, and the effect of smuggling on revenue,  to name a few columns. If the revenue number for a state is in parentheses, it means the state had a net loss of revenue from smuggling.

Some states, like Alabama, are net exporters of cigarettes. That is, for every 100 cigarettes consumed in Alabama, an additional 7.1 are smuggled out, to the benefit of its treasury. Conversely, 8.5 percent of all the cigarettes consumed in Arkansas are smuggled in; smuggling there represents a loss to its treasury of nearly $18.1 million.

The big tradeoff here for states is that, even with smuggling, revenue typically goes up after an excise tax increase, so despite these losses the treasury rakes in far more than it did before the last increase in the excise tax.

Still, to thwart smuggling and its myriad of unintended consequences, lawmakers should give serious thought to rolling back the excise tax burden in Michigan. They would need to offset these cuts with spending cuts elsewhere, but there remains plenty to cut in Michigan’s bloated, $52.3 billion state budget.

Why Not Double the Prevailing Wage?

Arbitrary rate does harm taxpayers, school districts

Michigan’s prevailing wage law sets an arbitrary mandate for what public entities (like schools) have to pay for construction projects.

Top Republicans in Lansing rightly want to eliminate these mandates, as the Mackinac Center has recommended for years. This is estimated to save taxpayers more than $200 million per year.

Democrats disagree with the proposed changes.

"It's extremely disappointing that the first priority of Republicans is to lower wages and have people work for less," said House Minority Leader Tim Greimel, D-Auburn Hills. "It's just another example of Republicans' relentless push for cheap labor."

But if government can set an arbitrary rate that raises wages with no harm to taxpayers or public schools that have to pay for them, why doesn’t the state double the prevailing wage rate?

The reason is that there are real costs to Michigan’s prevailing wage policy. Because of it, taxpayers get fewer government services than they would otherwise. Eliminating this extra cost would mean taxpayers could get that new school and afford new laptops for students. Or taxpayers could finance a new city hall and fill hundreds of potholes.

Michigan residents don’t set arbitrary rates on what they are going to pay for projects they have done on their own homes. Schools and local governments shouldn’t be forced to either.

Open Letter to the Liquor Control Commission

Abandon rules allowing industry price collusion

Dear Commissioners:

By now you may know that the Mackinac Center for Public Policy has filed a lawsuit against the Michigan Liquor Control Commission over illegal costs associated with a Freedom of Information Act request I submitted. The suit arose out of my investigations into your so-called “post and hold ” rules for distributors and wholesalers of alcoholic beverages. Previous empirical research has shown these rules may artificially raise prices paid by consumers between 6.4 to 30 percent, depending on the product.

You will recall that in testimony before the commission last June I recommended these rules be repealed because they hurt consumers and only benefit a handful of beer and wine wholesalers. This amounts to government-enabled industry price collusion.

It is distressing that the Commission has chosen to continue enforcing these anti-consumer rules. The reasons given in your explanation for not repealing the rule strongly suggest that the Commission is excessively interested in what benefits members of this industry rather than the public.

For example, the minutes of your Sept. 9, 2014 meeting state:

“The only voice of opposition to these rules at this time is the Mackinac Center for Public Policy. The Commission has not heard from retailers that these rules are detrimentally impacting their business.”

What difference does it make that a free-market think tank is the only opposition? How many retail beer-and-wine store owners, much less consumers, know or even imagine that a state agency enforces a form of anticompetitive price collusion? As you know, the rule (which was never enacted by the Legislature) does so by mandating that distributors and wholesalers “post” their prices for anyone to see, including competitors, and then prohibits them from changing these prices for up to 180 days.

Also, your focus on a particular business interest in that paragraph suggests that a point of clarification is necessary: The Mackinac Center’s concern is not about retailers and their businesses, but rather consumers and their wallets. Nothing we have written on this issue references “retailers.”

You also wrote the following:

“Both the Michigan Beer and Wine Wholesalers and the Michigan Licensed Beverage Association are in opposition to the rescission of these rules.”

This is unsurprising. Monopolists and price-fixing cartels are always opposed to repeal of their cozy arrangements.

This also raises the question, why is hearing from a disinterested “voice of opposition” cited as grounds for refusing to repeal an anti-consumer practice, while support from the special interest that profits from it is held up as justification? Of course those industry trade associations are “in opposition to the rescission of these rules” — they’re the primary beneficiaries! It’s consumers who suffer.

Continuing, the minutes from your Sept. 9, 2014, meeting includes the following:

“(T)he Chairman advised that the Commission is conducting a comprehensive review of all the administrative rules and will be reviewing both the beer and wine rule sets to incorporate the recent statutory changes.”

Unfortunately, the commission’s pro-industry history suggests nothing is likely to change. For example, Gov. Rick Snyder appointed a special advisory committee to review onerous alcohol rules and regulations, and yet “post and hold” was never addressed. Just in case it might have slipped the committee members’ minds, we sent them a letter on Oct. 24, 2011, that included the following bullet point:

  • Eliminate the “post and hold” rule from the Administrative Code.
    This is a measure that protects beer and wine manufacturers and wholesalers. The rule is tantamount to state-mandated price collusion… (more)

Nevertheless, apparently reviewing these rules wasn’t deemed convenient at this time. Still, you may want to reconsider, given that federal courts have held that similar schemes in other states violate the Sherman Antitrust Act. [See cases from Oregon (Miller v Hedlund, 813 F.2d 1344 (CA9 1987)), Maryland (TFWS v Schaefer, 242 F3d 198 (CA4 2001)), and Washington (Costco v Maleng, 522 F3d 874 (CA9 2008)].  

Finally, I understand that communications with persons outside the liquor industry may not be the Commission’s strong suit. This may explain why you are being sued under a law that requires government agencies to make public records (including electronic ones) available to — well, the public.

The Freedom of Information Act lawsuit was filed after I was informed that the Commission would charge $1,550 to “copy” 6,000 pages of records requested under the state open records law.

I know Commission traditions date back to the post-Prohibition era of the 1930s, but no page “copies” were ever requested. Instead, the request was for someone to stick a thumb drive in a computer and copy a spreadsheet from your database.

Thank you for your time and attention in this matter.

Sincerely,

 

Michael LaFaive

Director

Morey Fiscal Policy Initiative