March 24, 2017, MichiganVotes weekly roll call report
Senate Bill 223, Create process for disclosing police firing to other agencies: Passed 37 to 0 in the Senate
To establish a process and liability exemption for a police agency disclosing information to another agency about a former officer who may have been fired. A separating officer could review the official record and make his written explanation a permanent part of it. Police job applicants would have to give prospective employers a waiver allowing them to get the separation records, and the former employer would be immune from liability for revealing this.
Senate Bill 202, Exempt no-cash social media games from gambling ban: Passed 35 to 3 in the Senate
To establish that the state’s laws against gambling do not apply to a “social media internet game” that rewards players with either a free play or an extended period of playing time as a result of chance or uncertain event. The bill excludes “fantasy sports” games from its provisions.
Senate Bill 219, Revise concealed pistol permit details: Passed 27 to 10 in the Senate
To revise many details and procedures in the state’s concealed pistol license law. Among other changes, if a license is denied based on one of the disqualifications specified in the law, the disqualification must appear in the State Police background check all applicants must undergo. The bill also repeals a state permit requirement to own an armored vehicle (one with guns would be subject to many other restrictions though).
House Bill 4167, Increase maximum length limit for agriculture equipment truck: Passed 97 to 11 in the House
To increase the maximum vehicle-and-trailer combination length transporting agricultural drainage tubing to 75 feet.
House Bill 4219, Revise human trafficking deferral detail: Passed 108 to 0 in the House
To give state and local government agencies the power to enter joint operating arrangements with a particular developer to build a hospital or transportation facilities. The private operator would benefit from tax exemptions and its governmental partner's power to impose property taxes, borrow, take private property using eminent domain and more. The government agency involved could choose the private sector actor without necessarily having to accept the lowest bid. The projects could be proposals from a private developer.
SOURCE: MichiganVotes.org, a free, nonpartisan website created by the Mackinac Center for Public Policy, providing concise, nonpartisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.
New York's cigarette taxes have sparked a huge black market and should be rolled back
Editor's Note: This article originally appeared in Crain's New York on March 24, 2017.
New York has ostensibly made the health of its people and its treasuries a priority by maintaining high cigarette taxes, but these taxes come with a cost.
The state’s high cigarette taxes have led to rampant tax evasion and avoidance and other ugly, unintended consequences.
Since 2008, we have assessed the degree to which cigarettes are smuggled between states. Through 2015, we estimate that 57% of all the cigarettes consumed in New York are acquired in a different taxing jurisdiction, the highest smuggling rate of any state.
New York imposes $4.35 in taxes per pack, not including additional taxes imposed by localities. These high costs mixed with proximity to lower-taxed smokes is a scofflaw marriage made in heaven. The state is surrounded by lower-taxed ones and has Indian reservations that sell cigarettes for less. Virginia, for example, taxes cigarettes at just 30 cents per pack.
The statistical model we built to measure smuggling compares legal paid sales of cigarettes with published smoking rates. The difference between the two must be explained, and we—and other scholars—point to smuggling. Our model also controls for other factors that may influence smuggling rates, such as the presence of Indian reservations, border county population and distance to a major source state, such as North Carolina.
Last year, IHS Global, Inc., suggested New York’s smuggling rate was 62% in 2015, five points higher than our estimate. A 2015 study sponsored by the National Academy of Sciences and the Food and Drug Administration estimated it at nearly 45%. In 2012, consultant John Dunham and Associates placed it at 52%. Regardless of whose estimate is closest to reality, it’s clear New York’s cigarette market borders on lawless.
Smuggling and associated illegal activities undermine the public health goals that typically support higher taxes on cigarettes. A study by economist Mark Stehr from 2005 reported that as much as 85% of changes in legal paid sales after a tax increase are a result of tax evasion and avoidance, not a result of people kicking the habit. So when legal paid cigarette sales drop, it is less a function of not smoking than of not paying full freight.
Anecdotal evidence also suggests that other forms of crime increase, including brazen thefts of cigarettes from legal retailers and wholesalers, public corruption, violence against people and property and more. The tragic death of Eric Garner in 2014 reportedly stemmed from his selling untaxed cigarettes.
Governments’ war on tobacco is starting to mirror its failed experiment with alcohol prohibition. Rather than fight the powerful tide, New York should roll back taxes to more reasonable levels. Leveling cigarette taxes to those of nearby states isn’t likely to harm public health in any way and may just increase New York tax revenues if enough people switch to buying legal smokes instead of smuggled ones.
'Official Time' puts the interests of unions above those served by the VA
(Editor's note: The following is testimony given by Derk Wilcox, senior attorney for the Mackinac Center Legal Foundation, to the U.S. House of Representatives Subcommittee on Economic Opportunity of the House Committee on Veterans' Affairs.)
Chairman Arrington, Ranking Member O’Rourke, and Members of the Committee:
Thank you for holding this hearing and giving me an opportunity to discuss the issue of the use of “Official Time” at the Department of Veterans Affairs.
My name is Derk Wilcox, and I am the senior attorney at the Mackinac Center for Public Policy. The Mackinac Center is a nonpartisan research and educational institute dedicated to improving the quality of life of people in its home state of Michigan and nationwide by promoting sound solutions to public policy questions.
I’d like to note that as a practicing attorney I have had the honor of representing many veterans as their court-appointed counsel in mental health, guardianship, and conservatorship hearings. I have spent many hours at the VA facility in Ann Arbor working with the staff and the veterans there.
VA hospitals are beset with many problems as they try to meet the needs of our veterans. Official Time has added to those problems. Official Time is the practice of releasing employees to perform union functions while they are paid by the government agency — Veterans’ Affairs, in this instance.
H.R. 1461 is a much needed first step requiring tracking and reporting the use of Official Time, and that is what I am here to testify about today.
This bill is not the first effort to track Official Time. Back in 1979 the General Accounting Office found that 18 of 26 bargaining units at four agencies had no record of Official Time usage and recommended that the Office of Personnel Management issue annual reports on its use.
Through the Federal Personnel Manual, OPM directed agencies to develop a record keeping system. However, the Federal Personnel Manual was discontinued in 1994, along with any requirements for tracking Official Time.
Since then, agencies have been subject to different requirements by differing administrations. Hence, the need for legislation to create a standardized database which will assist effective personnel management at the VA.
Official Time has been misreported and underreported.
OPM currently reports sporadically on limited aspects of Official Time. In the fiscal year 2012, the last year for which estimates appear, OPM estimated that Official Time cost the VA $46,868,149.40. This cost represented 253,691 employees performing 1,086,257 total hours. This was up over $4 million from the previous year, when it was estimated to be $42,565,000.79. There does not appear to be published estimates from OPM for the last five years.
But even these costs are merely estimates. As pointed out in the Feb. 16, 2017, testimony before this subcommittee by William “Trey” Lawrence Kovacs III of the Competitive Enterprise Institute, these estimated costs fall short of the true costs because these fail to account for the use of office space, phones and travel by employees using Official Time.
The GAO report from 2014 criticized the OPM’s method of accounting for Official Time. The GAO found that using a more sound method of accounting resulted in higher Official Time costs at four of the six agencies it examined. The estimates by the GAO were 15 percent higher than the OPM estimates because they changed the methodology of determining the amount of salaries devoted to Official Time.
But what the GAO did not look at is whether or not the official timekeeping itself is flawed. From my investigations, it appears that the use of Official Time is underreported. I examined cases brought before both the Department of Labor’s Employees’ Compensation Appeals Board and the Federal Labor Relations Authority. These cases involved the use of Official Time by VA employees, and Official Time was a central part of the case. In so doing I found several cases where more time was devoted to the union’s activities than was being reported as Official Time.
In a case out of the Dayton, Ohio VA Medical Center, a patient services assistant petitioned for workers’ compensation after she was injured while performing a union function. She initially claimed that she had been on Official Time when the injury occurred. But an investigation into the facts found that she had been performing a union-related function during her regular work time – not on approved Official Time. She was a union steward, and chose to attend an appraisal meeting where her presence was not required. She had been granted Official Time usage during the morning, but not during the afternoon when her injury occurred.
In another ECAB claim, this one out of the Philadelphia VA Medical Center, a medical supply assistant was injured while travelling to attend a union meeting. Again, the Board found something similar to the Dayton case: “Appellant’s supervisor and appellant both note that based on her union position she was entitled to use up to four hours a day of Official Time. However, both agree that her time sheet did not reflect that she was on Official Time at the time of injury and that appellant was in a regular duty status when her injury occurred.” Again, the Official Time keeping did not reflect that she was performing the union’s work.
Perhaps most egregious was a FLRA case out of the Medical Center at Leeds, Massachusetts. A clinical neuro-psychologist was also the union president. She was allowed to spend 60 percent of her workweek on Official Time. However, an arbitrator found that, because of her Official Time, it was an unfair labor practice to require her, as part of her performance appraisal plan, to see any patients per week. Because “official union duties placed time constraints on the grievant’s clinical schedule during the workweek” it was “unfair” to require her to see as few as one patient for testing per week. In short, what was recorded as 60 percent Official Time effectively became 100 percent Official Time. Furthermore, she was exempt from the procedures for scheduling patient “consults” — i.e., she was not required to participate in “requests from physicians or others that a veteran be seen for psych[iatric] or neuro-psych[chiatric] evaluation.” Although the time sheets would not show it, Official Time kept this neuro-psychologist from seeing any patients as a requirement of her employment.
In 2013 Senator Rob Portman, R-OH, and Tom Coburn, R-OK, wrote to the then-Secretary of Veterans Affairs, Eric Shinseki, noting that: “Documents show that your department recently employed at least 85 VA nurses, some with six-figure salaries, who were in 100 percent Official Time status.”, Yet as the cases I have cited show, there are others, perhaps many, whose Official Time usage exceeds their allotment and who are effectively on 100 percent Official Time despite being on record as only devoting 60 percent to Official Time.
So while the OPM found that in VA employees spent 1,086,257 hours on Official Time, based on the cases I have cited, there is ample reason to believe that hours reported to the OPM are undercounted.
One of the common responses to the use of Official Time for union-related business is that the unions are required to represent all bargaining unit members, both dues-paying members and nonmembers. And that this universal representation requirement imposes an unfair burden on the unions in their representational activities. However, according to the VA, the union which represents most VA employees is the AFL-CIO-affiliated American Federation for Government Employees .
In fiscal year 2015, AFGE national reported receipts of $134,852,702 on its LM-2 disclosure forms. (This number does not include the locals.) It would not be unreasonable to expect the AFGE and other unions to bear the costs of their own activities rather than shifting these costs to taxpayers and shortchanging the veterans who are supposed to be served by the VA employees who are instead on Official Time. If the burden of representing nonunion members in the bargaining unit is too great, than perhaps the unions should be relieved of that requirement in exchange for nonunion member employees being allowed to represent themselves, a.k.a., “Workers’ Choice.”
The enactment of H.R. 1461 could provide the necessary tool to properly count the hours and total cost of Official Time at the VA. Likewise, it would restrict Official Time activities so that physicians like the psychiatrist in the case above at the Leeds facility are using their skills and expertise on the treatment for which they were trained and hired, and not for union activities. Section 741(a)’s requirement that time be accounted for “accurately and to a specific degree” should eliminate the case of duty time being used for union activities, as the aforementioned cases found. Section 741(2)(E) and (F) should correct the flaws pointed out in the Feb. 16, 2017, CEI testimony before this body, which pointed out that Official Time was not accounting for fringe benefits, office space or other facilities used for Official Time. Section 742(a) correctly restricts Official Time from being used for “political activities or activities related to lobbying.” As noted above, the unions representing VA employees have annual revenues of well over $100 million — under no circumstances should taxpayers be required to fund political activities on their behalf. Lastly, and perhaps most importantly, Section 742(b) is a necessary correction prohibiting physicians and other highly skilled medical professionals from using Official Time when their unique skills and training should be used to treat our veterans.
In summary, when cases have been looked at in-depth, it has been frequently shown that employees have been using more time for union activities than has been allocated to them as Official Time. H.R. 1461 would appear to be a necessary first step to properly track how much time VA employees spend on Official Time, account for the true costs, and restrict the improper uses of Official Time. Following the enactment of H.R. 1461, we should get a more complete picture of the extent of the problem, and better enable managers to effectively use the resources available to help our veterans.
I would like to thank the subcommittee for this opportunity and will welcome any questions.
 Office of Personnel Management Summary Report: Official time for Representational Activities Fiscal Year 2002. https://www.chcoc.gov/content/official-time-union-related-activities
 Federal Personnel Manual letter 711-161
 United States Office of Personnel Management, “Labor-Management Relations in the Executive Branch,” October 2014, https://www.opm.gov/policy-data-oversight/labor-management-relations/reports/labor-management-relationsin-the-executive-branch-2014.pdf
 William Lawrence Kovacs, III, “The Use of Official Time for Union Activities at the Department of Veterans Affairs: Testimony before Subcommittee on Economic Opportunity and Subcommittee on Government Operations,” February 16, 2017. https://oversight.house.gov/wp-content/uploads/2017/02/kovacs.pdf
 Government Accountability Office, “Actions Needed to Improve Tracking and Reporting of the Use and Cost of Official Time,” GAO-15-9, October 2014, http://oversight.house.gov/wp-content/uploads/2014/11/GAO-report.pdf
 Simpson, ECAB Docket No. 04-1809, 57 ECAB 197 (2005).
 K.L. and Dept. of Veterans Affairs, Docket No. 06-2154, 2007 WL 1227942
 NAGE Local R1-274, 68 FLRA No. 160 (2015)
 “Portman/Coburn Letter: Should 188 VA Employees Be Paid To Do Union Work Full-time While Veterans Face Backlog?,” June 5, 2013, Office of Senator Rob Portman, http://www.portman.senate.gov/public/index.cfm/pressreleases?ID=6bbed8f6-35c2-49e3-a0fb-fd10a0089f04
 In another FLRA case out of the Dayton, Ohio VA, a woman was hired as a prosthetics representative. But on becoming union president, she spent 14 years on 100 percent official time. She then filed a grievance and won when the Agency did not consider those 14 years of union business to be equivalent to advancement in the prosthetics field. AFGE Local 2209, 65 FLRA No. 206 (2011).
Diverse Grand Rapids charter readies kids for college
Both in its culture and in its ability to prepare students for college, Wellspring Prep is anything but typical.
Located only a couple miles from the heart of downtown Grand Rapids, Wellspring Preparatory High School is tucked just off the beaten path on the city’s northeast side. The school opened in fall 2010 with only a freshman class, taking time to make itself known.
Its 470 students comprise a healthy mix of ethnicities, cultures and family incomes. About 70 percent arrive from four of the region’s National Heritage Academies K-8 charter schools. Just over half are racial minorities, and nearly half qualify for federal lunch aid. This diverse population attracts some families, but Wellspring Prep’s rigorous academics and emerging track record of postsecondary success are becoming more prominent in the mind of prospective pupils.
Wellspring Prep earned the ninth-highest score out of 640 schools rated on the Mackinac Center’s recent Public High School Context and Performance Report Card, which adjusts multiple years of 11th-grade test scores for student poverty rates. Even as the Grand Rapids charter school’s low-income population grows, it has continued to exceed expectations.
“We make every decision based on college prep,” Principal Matthew Stolz explained. Every Wellspring student is required to apply to a four-year college, with the class’s acceptances and scholarships publicly celebrated. Three in four graduates end up at a four-year institution, with the rest attending community college or pursuing a trade.
Along the way, students must complete two of the school’s 15 Advanced Placement course offerings and three electives, in addition to the state’s Michigan Merit Curriculum requirements. The school’s curriculum is consciously aligned with the SAT, a recent transition after the state shifted from the ACT to the SAT as the required college readiness exam.
Before graduating, everyone must also complete 60 hours of community service. Many different kinds of activities are accepted. “We just want them to think about, and spend time on, someone else,” said Stolz.
Wellspring Prep is one of five Michigan charter high schools affiliated through their relationship with the PrepNet network. The management company provides back office support, managing payroll and other business functions to free up school leaders’ valuable time to focus on overseeing instructional programs.
Two different PrepNet staff members, each of whom is on campus one day a week, offer curriculum guidance and teacher professional development. As in many charter schools, instructors tend to be younger and less experienced. But the school and its supporting organization have a strong focus on upgrading classroom effectiveness. They use Doug Lemov’s bestselling “Teach Like a Champion” as an essential text.
“We develop great teachers very quickly because of the amount of observations and feedback,” said Amelia O’Brian, PrepNet’s director of curriculum and instruction.
As the school has become more established, early challenges with turnover have gone away. Only one new teacher was needed to fill the spot on Wellspring Prep’s 2016-17 faculty. Multiple years of highly effective evaluations trigger larger pay raises. But keeping teachers on staff is about more than just dollars and cents.
A competitive salary “gets them in the door, but they stay because they like their colleagues, [and] their leader,” O’Brian said. “They become very cognizant of the school culture. They want to make a difference in students’ lives.”
Just as Wellspring Prep strives hard to raise teacher quality, it also invests resources into working with students who come in behind academically. A team of paraprofessionals paid for by federal Title I dollars is largely dedicated to that.
The high value placed on academics has not crowded out extracurricular opportunities. A program known as “Monday Electives” provides additional opportunities for students to pursue their interests with the support of teachers, such as creative writing, National Honor Society and Third 90 Network’s hands-on environmental research. While athletics are not the primary emphasis, students can participate in sports in each of the fall, winter and spring seasons. The campus is also proudly adorned by a new gymnasium and soccer field.
School leaders report that Wellspring Prep’s relationship with its authorizing agency, Bay Mills Community College, has grown stronger in recent years. Following its success, the school anticipates a renewal of its charter in the coming months.
Its unique blend of curriculum focus, teacher development and wrap-around services appears to be a recipe for success for Wellspring Prep. It’s no surprise families are flocking to one of the state’s best public high schools.
Licensing rules are a criminal justice issue
A person who has a criminal record or has served time in prison has a very hard time getting a job in Michigan. Private employers may often reject such an individual, and the state may withhold the occupational license required for a job. This frequently results in people returning to criminal activity and eventually heading back to prison.
It makes sense to prevent some people with criminal backgrounds from working in certain jobs. Companies can and should conduct background checks and weigh the risks of hiring an ex-offender themselves. And sometimes, no matter the risk a private company is willing to accept, it makes sense to use the law to keep ex-offenders out of some jobs. For example, a person who has committed a crime against a child should not be allowed to work in a position that involves regular interaction with children.
But in many cases, particularly when it comes to occupational licensing, the state is unjustly denying people the opportunity to work. When this happens, it’s a form of cruel punishment: Ex-offenders have paid their debt to society but then are barred from participating in society in a legal and productive way. They never get the chance to be fully rehabilitated. The consequences are bad for those citizens, the state and the society as a whole.
Stateline, a news publication of the Pew Charitable Trusts, covered this issue in a recent article — “To Help Ex-Offenders Get Jobs, Some States Reconsider Licenses” — with a focus on states making efforts to change their rules.
In Kentucky, legislators included changes to licensing in a bill that would also create work-release programs at jails, reduce some probation and parole terms, and take other steps to help prisoners re-enter society. In Nebraska, a Libertarian senator has proposed rolling back licensing restrictions for all state residents — including those with criminal records — in a bid to improve conditions for businesses in the state.
“There’s now a marriage of interests,” said Lee McGrath, legislative counsel for the libertarian Institute for Justice, a nonprofit law firm. “It’s something that both sides can get their head around — it’s the great Rooseveltian idea that the best social program is a job.”
Research shows that ex-offenders who are steadily employed are less likely to get into trouble with the law again. And at a time when employers are complaining about worker shortages, [ex-offenders] can be an untapped resource. …
“We have spoken with people who wanted a certain type of job without a license, and have been paid under the table,” said Kim Buddin-Crawford of the American Civil Liberties Union of Michigan, which is also pushing for changes to licensing.
Michigan’s licensing laws require a person be of “good moral character,” which means criminal offenses can be used to deny someone the opportunity to work. Other statutes related to health occupations, school employees, insurance agents, law enforcement work and more automatically prevent people from working if they’ve committed certain types of crimes. Our recent study on Michigan’s licensing regulations discusses how this affects ex-offenders:
Though the state and licensing boards are not supposed to consider a criminal record that is unrelated to an individual’s ability to serve the public fairly, in practice regulators can deny anyone from obtaining a license if they fail to meet the subjective moral character standard. This applies even for civil crimes or misdemeanors, which may appear on someone’s record for missing a child care payment or causing minor property damage.
Nearly all states prevent people with a criminal record from getting some occupational licenses. Many states prevent people from ever getting a license again if they have a criminal record, even if it is unrelated to the area of work they seek a license for. … [In state rankings] Michigan [receives] a “minimal” grade because it has a “blanket ban” on some people from ever gaining a state license, has a vague standard concerning statutes of limitation and does not make it easy for a person to demonstrate that they have been sufficiently rehabilitated.
These blanket bans on licensing for anyone with a criminal record [are] important because of the close connection between employment and recidivism rates. A first-of-its-kind study by Dr. Stephen Slivinski of the Center for the Study of Economic Liberty at Arizona State University compared state occupational licensing barriers and the effects on ex-offenders. He writes:
This study estimates that between 1997 and 2007 the states with the heaviest occupational licensing burdens saw an average increase in the three-year, new-crime recidivism rate of over 9 percent. Conversely, the states that had the lowest burdens and no such character provisions saw an average decline in that recidivism rate of nearly 2.5 percent.
An ex-offender is much less likely to reoffend if he is gainfully employed. By refusing to consider giving licenses to people with a criminal record, Michigan increases its recidivism rate. Unless a person has been found guilty of a crime directly related to the area they want to work in, the state should not stand in their way of obtaining a license to work legally.
Legislators should change the laws. A job is the best guarantee against someone returning to criminal activity. The state’s strict but subjective licensing standards prevent too many ex-offenders from ever getting a real chance to matriculate back into society, even after they have supposedly paid their debt.
Learn more at www.mackinac.org/licensure.
March 17, 2017 MichiganVotes weekly roll call report
Senate Bill 46, Revise emergency vehicle flashing lights requirement: Passed 37 to 0 in the Senate
To eliminate a requirement that flashing lights be mounted on the roof of an authorized emergency vehicle. These vehicles would still have to have flashing emergency lights; they just wouldn’t have to be on the roof.
House Bill 4013, Allow electronic vehicle registration in car (versus paper): Passed 108 to 0 in the House
To allow the vehicle registration document motorists are required to have when driving to be an electronic picture of the document on their smartphone or other device.
House Bill 4080, Authorize new energy-related purchase/debt scheme for schools: Passed 106 to 2 in the House
To allow schools to contract with vendors for energy efficiency projects, and pay for these with money the projects are supposed to save (or from regular tax revenue if savings don’t appear).
House Bill 4063, Ban aiming a “directed energy device” at an aircraft: Passed 107 to 1 in the House
To make it a crime to intentionally aim a beam of directed energy from a directed energy device at or into path of an aircraft, with violators subject to a $10,000 fine and five years in prison. This includes lasers and any other "highly focused energy" that could damage or interfere with an aircraft.
House Bill 4150, Expand open records law to legislature: Passed 108 to 0 in the House
To extend the Freedom of Information Act to legislators, whose offices are currently exempt, subject to a broad range of exceptions and exemptions. The House also passed House Bill 4148, which extends the disclosure requirements to certain kinds of documents held by the governor's office.
House Bill 4154, Create process for appealing denial of legislature records request: Passed 108 to 0 in the House
To establish procedures for appealing the denial of a Freedom of Information Act request, or the fees demanded to fulfill it, by the House or Senate open records law coordinator. Appeals would go not to the courts but to an existing Legislative Council appointed by legislature itself, and in cases of improper denial this body would be limited to recommending the House or Senate discipline the House Speaker and Senate Majority Leader.
House Bill 4155, Exceptions to applying open records law to legislature: Passed 108 to 0 in the House
To define the records that would be exempt from Freedom of Information Act requests to the state legislature under House Bill 5469. These include standard provisions on records dealing with security matters, active contract bidding, information of a personal nature or business proprietary records, records that violate attorney-client privilege or involve ongoing litigation, etc. The bill would also exempt records of exchanges between a lawmaker and a constituent. Notably, records held by the Republican and Democratic caucus staffs would also be exempt, including their communications and public relations operations.
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.
More subsidies won’t improve economy
Business Leaders for Michigan president and CEO Doug Rothwell points to economic competition between the states to justify a proposal for new Michigan taxpayer subsidies to certain businesses.
"But the reality is if they've got a machine gun and we've got a pistol, my gosh we're going to get killed here,” Rothwell told the Associated Press.
Yet Michigan’s economy is already thriving even without new corporate giveaways. The state has become a national leader in economic growth and job creation.
Michigan has added 545,000 jobs in the economic expansion that began in 2009, a 14.2 percent gain that is 13th-greatest nationwide, and most in the region.
Per capita personal income — a measure of how well-off residents are on average — increased 30.3 percent from the first quarter of 2010 to the third quarter of 2016, the most recent data available. That’s fourth among the states and also best in the region.
Inflation-adjusted gross domestic product — a measure of how much the state economy produces — increased 16.3 percent during this time, the eighth-fastest nationwide and also best in the region.
Additional business favors (beyond the many that are already offered) are portrayed as weapons in the battle for jobs among the states. Regardless of their caliber, however, the subsidy programs Rothwell supports only shoot blanks. The programs are more about press releases than jobs; they invite corruption and they do not justify their costs. They create a pop and a flash, but no real impact. Michigan’s economy is doing well and adding or losing more subsidy programs won’t change that.
Testimony from the Michigan Pipeline Safety Advisory Board
Editor’s note: This is an edited version of remarks prepared for the Michigan Pipeline Safety Advisory Board.
I would like to thank the Michigan Pipeline Safety Advisory Board, and co-chairs Valerie Brader and Heidi Grether for the opportunity to comment.
My name is Jason Hayes. I am the director of environmental policy at the Mackinac Center for Public Policy.
You have heard comments discussing potential dangers associated with transferring liquid fuels through the Straits of Mackinac. I cannot disagree with people when they argue that we face risks as a result of our energy choices, nor do I fault them for their desire to protect our natural environment.
I can, however, question the improper characterization of those who support the provision of reliable, affordable energy as not caring about environmental protection. No one looks forward to the environmental disruptions and harm to human well-being that would be caused by a pipeline rupture.
I can also question policy solutions like “leave it in the ground,” or “shut down Line 5.” Neither are realistic or credible options, given our state’s current technologies and energy needs and our desire to reduce overall environmental impacts and to improve human life.
There are many reasons to carefully maintain and continue using the Line 5 pipeline. I will list four in this public comment.
First, as a Michigan Department of Environmental Quality spokesperson noted in an October 2015, MLive.com article, "It's easy for an environmental group to call for (Line 5) to be shut down based on the existence of an indeterminable future threat to the environment," but it is a "heck of a lot more complex."
The article explains that to legally shut down the pipeline, the state would need a court order showing clear violations of state law or the 1953 easement. It would also need to show an "imminent threat" of pipeline failure. In the same article, the Pipeline and Hazardous Materials Safety Administration stated that the life of a properly constructed and maintained pipeline is “virtually endless.”
Dr. Edward Timm’s recent paper discusses potential structural integrity issues arising from strong water currents in the Straits and early pipe handling techniques. This paper also recognizes the immediate closure may be “judged to be too extreme based on economic concerns,” and recommends increased inspections and “real-time monitoring of weather events and currents in the most vulnerable areas of the pipeline.”
Second, the use of all energy resources has inherent risks. But, the benefits of using liquid fuels clearly outweigh the harms, and transporting those fuels by pipeline is safer than other comparable options. A 2013 Manhattan Institute study showed that road transportation has a twenty times higher incidence rate and rail transportation has double the rate of incidents of pipelines.
The Association of Oil Pipeline reports that today, 99.999 percent of all petroleum products transferred by pipeline arrive at their destination safely. This is no small feat when one considers that there are over 9,700 miles of pipelines in the state of Michigan, and 2.6 million miles of pipelines across the United States.
Additionally, vice president of U.S. operations at Enbridge, Brad Shamla, noted in a January 2016 MLive article that the state of Michigan requested that Line 5 be built, in part “to eliminate tanker traffic on the Great Lakes.”
Third, natural gas and oil are energy dense and affordable fuels that help maintain Michigan’s economy and our quality of life. For over six decades, Line 5 has carried natural gas liquids and light crude oil to this state. Refineries in the Detroit area refine 30 percent of the crude oil transferred by the pipeline. Over 80 million barrels of Michigan-produced crude have been transported in Line 5 since 1999. In 2014, Enbridge’s four other pipelines, together with Line 5, benefited Michigan’s economy by paying over $22 million in taxes.
Fourth, the Environmental Protection Agency (EPA) just released its “Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2015,” which indicates that “Overall, net emissions (of GHGs) in 2015 were 11.2 percent below 2005 levels,” a larger reduction than any other major industrialized nation. The report explains that a key reason for the decrease is fuel switching from coal to natural gas.
Michigan’s two major electric utilities – DTE and Consumers Energy – are in the midst of a multiyear plan to “retire (their) coal fleet.” Additionally, Consumers Energy has opted to cease purchasing power from the Palisades nuclear plant.
Recognizing that both utilities are switching a majority of their generation capacity to natural gas, it will not be possible to maintain reliable and affordable electricity generation in Michigan without an abundant supply of natural gas.
Petroleum fuels are essential to improving Michiganders’ quality of life and our economy. They also play an important role in improving our health and bettering our environmental quality. For that reason, I believe it is essential to continue the operation of Line 5. I also believe that a hypervigilant maintenance and monitoring schedule be maintained on Line 5 to protect critical environmental values and water quality.
Thank once again to co-chairs Brader and Grether and the Michigan Pipeline Safety Advisory Board for the opportunity to comment.
Lawmakers should reject latest proposal for more
In support of a new business subsidy program, Business Leaders for Michigan writes, “Michigan can no longer afford to be the only state besides Alaska with a corporate income tax – without a program to attract large projects.” But this misleading, because Michigan has dozens of programs that deliver select favors to certain businesses.
The Citizens Research Council gives a list and description of the economic development programs available to businesses in Michigan. It lists 53 programs offered by state, local and federal governments. The report is 166 pages long. Some of the programs mentioned are no longer handing out awards, but most are.
And CRC’s report isn’t all-inclusive. It doesn’t include the Michigan Business Development Program or the Community Revitalization Program that will cost taxpayers $101.5 million this year. Gov. Rick Snyder called for $14 million more for these programs in his budget for next year. The development program alone has offered over $300 million in taxpayer money to select businesses since its inception in 2012.
Based on their historical performance, these programs are more about press releases than jobs. Plus, they invite corruption and do not justify their costs. Lawmakers should stop creating new, similar programs.
The business leaders also write in their blog that the state needs “a simple but potent tax incentive that’s transparent [and] doesn’t pick winners and losers. ... One that will help grow our communities and grow our families’ paychecks.”
That’s a good idea. The easiest way to make that happen would be to cut the income tax for everyone rather than just handing out more business subsidies for a select lucky few.
Senate bills 111-115 being considered
The Michigan Legislature is considering a package of bills that would give a few lucky developers special subsidies. Senate Bills 111-115 are unfair, ineffective and irrational and lawmakers should reject them.
These bills allow a handful of well-connected builders to get subsidies paid for from money that would otherwise fund government programs. Someone who starts a development — say, a sports stadium — would be selected by Lansing and, after putting up the initial capital, be able to take money from taxes paid by nearby individuals and taxpayers and keep it.
The research on these types of deals is clear: Tax increment financing and other selective business subsidies don’t work. For two decades, Michigan’s MEGA program — which gave tax breaks to corporations — created less than 20 percent of the jobs it promised while 96 percent of projects failed to live up to expectations. Research showed that MEGA had zero or a negative impact on job growth, but taxpayers are paying out billions because of it. Recent studies of TIF programs, similar to what these bills allow, show they result in fewer jobs and lower income and do little to help local cities.
Michigan legislators recently rejected a bill to cut the income tax rate for everyone, saying it would be too costly. How can we afford subsidies for big business when we can’t afford a tax cut for families? Rather than give away up to $1.8 billion in taxpayer money to well-connected crony capitalists, lawmakers should allow regular people to keep more of what they are owed.
Members of the House Tax Policy are now considering the bills. The lawmakers on that committee, who can be reached through the links below, are:
Jim Tedder, R-Clarkston
David Maturen, R-Vicksburg
Martin Howrylak, R-Troy
Klint Kesto, R-Commerce Township
Peter Lucido, R-Shelby Township
Hank Vaupel, R-Fowlerville
Steven Johnson, R-Wayland
Bronna Kahle, R-Clinton
James Lower, R-Ionia
Wendell Byrd, D-Detroit
Sheldon Neely, D-Flint
Jim Ellison, D-Royal Oak
Abdullah Hammoud, D-Dearborn.