The MC: The Mackinac Center Blog

Amid everything else that happened last night, one result was an unexpected victory for public policy prudence and humility with the defeat of the 20-year millage proposal to fund mass transit expansion in Wayne, Oakland, Macomb and Washtenaw counties.

The plan put forth by the RTA of Southeastern Michigan was deeply flawed. Among other problems, it included incredible assumptions about state and federal funding levels that neither state nor federal transportation authorities would endorse. Oakland County’s deputy executive did the math and found that the plan got its tax revenue assumptions wrong by more than $500 million, while adding to the highest property tax burdens in the nation (Detroit) and state (Wayne County). Additionally, it was promoted in part through untruthful advertising that referenced nonexistent cuts to services for people with disabilities.

The entire mess was sold, as so much bad policy is, through promises of economic development. The plan’s advocates played their traditional game of “but for,” imagining companies that would have created jobs in Detroit, but for a lack of reliable transit options. Left unanswered was the question of which companies would have subjected themselves to what is arguably the worst tax and regulatory structure in terms of burden and complexity of any city in the nation … if only the buses were better.

Whether the voters’ message was received was unclear last night as the vote unfolded. “We’ll have to understand where the problems were, if it does fail, and do some reassessment and I’ll need to speak to my board and talk to our operatives to see why if it does go down where the problems were and what will we need to do differently,” RTA CEO Michael Ford told The Detroit News. “I’m not really prepared to get to that level until I know for sure. I thought it would be close, so I’m not totally surprised.”

At least one pro-RTA regional leader seems to have accepted the implications of yesterday’s vote. In an email to his members this morning, Detroit Regional Chamber CEO Sandy Baruah said, “To say we’re disappointed is an understatement. However, we respect the will of the voters and will continue to seek solutions to connect our region and provide mobility to those without access to personal vehicles.”

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This is an appropriate starting point for discussions about the future of transit in the region. With the grand transit master plan dead on the side of the road and with a two-year waiting period before any future millage could be placed in front of voters, Metro Detroit’s leaders should focus on incremental and achievable improvements to transit services for the people who depend on them.

Improved coordination between the suburban SMART and city DDOT bus systems — rolled out to showcase the RTA’s value in advance of the vote — is a good starting point. Another might be to redirect the tens of millions of dollars that the Michigan Economic Development Corporation is planning to spend on subsidizing automaker R&D toward encouragement of advanced alternatives to fixed-route public transit. While it would be better if the state weren’t to spend that money at all, it’s at least an plausible purpose of government to help create solutions to a societal need such as transportation for people dependent on public services.

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Worker freedom continues to be a winning issue at the state level. Candidates who supported right-to-work were widely successful, and this creates promise for more gains for labor reform in upcoming months and years.

Three states — Missouri, Kentucky and New Hampshire — will have legislatures and governors who support passing right-to-work legislation and possibly other related labor reforms.

Opponents of right-to-work in West Virginia failed to make any gains in that state’s Legislature that would be necessary to repeal their new worker freedom laws. While an effort to provide constitutional protections for existing right-to-work statutes failed in Virginia, similar protections passed in Alabama by a more than a two-to-one margin. A ballot measure in South Dakota that would have effectively repealed right-to-work went down to a massive defeat, with 80 percent opposed.

Additionally, the victory of Donald Trump and retention of the U.S. Senate by a Republican majority will have implications for labor reform at the federal level, especially when it comes to a future U.S. Supreme Court. A constitutionalist appointment could break the existing deadlock on the question raised in Friedrichs v. California Teachers Association of whether forced unionism of public sector workers violates their free speech rights.

Here’s a breakdown of the results we were watching Tuesday night:

Missouri
Right-to-work passed in the Legislature in 2015 but was vetoed by term-limited Gov. Jay Nixon. Republican Eric Greiten won the gubernatorial election last night, meaning right-to-work is likely and other labor reforms are possible.

Kentucky
Republicans took control of the Kentucky House, so right-to-work and other labor reforms are likely.

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New Hampshire
New Hampshire has attempted to pass right-to-work several times. In 2011, the Legislature passed the bill but it was vetoed by the governor. Republican gubernatorial candidate Chis Sununu won the election last night, and since he is a public supporter of right-to-work, labor reform is likely.

West Virginia
West Virginia became the 26th right-to-work state earlier this year. Bill Cole, a main supporter of the bill, failed to advance from the Senate to the governor’s office, losing to Jim Justice. But another backer of right-to-work, Senate Majority Leader Mitch Carmichael, was re-elected to the Senate. Republicans maintained a majority in the House but their margin dropped by a seat, to 63-38. They gained four seats in the Senate, giving the party a 22-12 advantage. Right-to-work is protected and other reforms are possible.

Virginia
An amendment on the ballot to enshrine right-to-work rights in the state constitution failed, gaining only 47 percent of the vote. The status quo of workers having statutory right-to-work freedoms will be maintained.

Alabama
Alabamians also voted on a constitutional amendment. The amendment won 70 percent of the vote and workers’ rights are now protected by the Alabama Constitution.

South Dakota
Measure 23 was pushed by unions as a way to overturn right-to-work. It lost in a big way, with only 20 percent of voters in favor, and right-to-work was protected.

Oregon:
Measure 97, heavily funded by unions, would have imposed a 2.5 percent gross receipts tax on certain businesses, killing jobs. It lost, with 59 percent of voters opposed.

Washington
I-1501 was an initiative pushed by unions to keep groups like the Freedom Foundation from contacting home health care workers to inform them of their rights to leave the SEIU. The measure succeeded  by a vote of 72 percent to 28 percent, which will mean that it will be harder for home health care workers to learn about their rights.

U.S. Supreme Court
The election of Donald Trump as president and retention of control of the U.S. Senate by Republicans means there may be justices appointed who will uphold workers’ rights. Specifically, a new case similar to Friedrichs vs. California Teachers Association may be heard in the next few years to break the tie that resulted from the death of Justice Antonin Scalia.

The Illinois case of Janus vs. AFSCME brought by the Liberty Justice Center is similar to Friedrichs in that it argues that virtually everything done by public sector unions involves political speech, therefore public employees have a First Amendment right not to be forced to support that speech. If president-elect Trump appoints a justice who will uphold the First Amendment and this case reaches the high court, right-to-work may come to public employees in every state across the country.

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Tax Hike Vote in Kent County Expensive, Unnecessary

Unfair to force taxpayers to subsidize the recreation of others

Grand Rapids Public Museum. Photo via Wikipedia Commons.

A Nov. 8 Kent County ballot proposal would impose an annual $9.2 million property tax to subsidize the Grand Rapids Public Museum and the John Ball Zoo. Voters may not realize that the proposal also distributes new tax revenue to other government entities, too.

Kent County’s “animals and artifacts” have already been subsidized by taxpayers and officials want more, even though the museum already has an endowment fund worth nearly $40 million. While the ballot question is being sold as a way to support these cultural institutions, some of the tax hike will go to “local authorities for authorized purposes.”

This is wasteful. Recreation and entertainment facilities should be paid for by those who use them. Forcing people with no interest in zoos, museums, symphonies and sports to subsidize the recreation of those who do is unfair. Maybe zoo and museum proponents don’t share the tastes of motocross, bowling or boxing fans, but that doesn’t justify taking dollars from them to subsidize the tax-hikers’ pet interests and projects.

Moreover, as much as $414,000 from this tax increase will go each year to provide subsidies and indirect benefits to local special interests. The money will be distributed by the Downtown Development Authorities of 10 Kent County municipalities; the Brownfield Redevelopment Authorities of another six; the Monroe North Tax Increment Financing Authority and the Grand Rapids SmartZone Local Development Finance Authority.

If Americans have learned anything from the past eight years, it’s that the political class stinks at picking economic winners and losers. This tax hike will continue that.

Very few of the people who will foot the bill for this tax hike will see any benefit from it. It’s expensive, unfair, and will most likely hurt the region’s economy.

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Friday, November 4, 2016 MichiganVotes Weekly Roll Call Report

Some key votes of the 2015-16 Legislature

The Legislature did not meet this week, so the Roll Call Report continues its review of key votes from the 2015-2016 session.

Senate Bill 434, Authorize highway drug testing pilot program: Passed 28 to 10 in the Senate on January 20, 2016

To authorize a one year pilot program in five counties for roadside drug testing, to determine whether drivers are operating vehicles while under the influence of a controlled substance (marijuana in particular) by means of “oral fluid analysis” (saliva test). After the first year the State Police could continue the pilot programs in other counties.

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Who Voted “Yes” and Who Voted “No”


Senate Bill 434, Authorize highway drug testing pilot program: Passed 70 to 37 in the House on June 9, 2016

The House vote on the bill described above.

Who Voted “Yes” and Who Voted “No”


Senate Bill 501, Require alien drivers have visa or passport while driving: Passed 37 to 0 in the Senate on February 4, 2016

To require resident aliens who drive a vehicle in Michigan to have both a valid drivers license issued by their native land and a passport or valid visa. Current law only requires a valid drivers license. (A legal alien can also get a Michigan drivers license.)

Who Voted “Yes” and Who Voted “No”


Senate Bill 501, Require alien drivers have visa or passport while driving: Passed 90 to 18 in the House on May 12, 2016

The House vote on the bill described above.

Who Voted “Yes” and Who Voted “No”


Senate Bill 302, Ban nude entertainment in bars: Passed 27 to 10 in the Senate on February 10, 2016

To ban fully nude performers at topless bars, or bars showing videos that depict this. This relates to a 2007 federal appeals court ruling that struck down Michigan’s previous law banning fully nude performers in bars, holding it was a violation of the First Amendment. The House has not voted on this bill.

Who Voted “Yes” and Who Voted “No”


House Bill 5219, Permit local tax hike electioneering: Passed 60 to 46 in the House on February 23, 2016

To allow local government and school district communications to reference property tax hike measures they place on the ballot in taxpayer-funded communications during the 60 days before the election. This repeals a ban on these communications within 60 days of an election. The Senate has not voted on this bill

Who Voted “Yes” and Who Voted “No”


House Bill 5070, "Push back" against Obama NLRB franchise unionization rule: Passed 59 to 47 in the House on December 16, 2015

To establish that under state occupational safety and health regulations, the actual owner of a business franchise rather than the franchisor is considered the sole employer of the local company's workers. This is part of a package of bills responding to a 2015 action by National Labor Relations Board appointees to make it easier to unionize fast-food franchises by declaring the franchisor is the employer.

Who Voted “Yes” and Who Voted “No”


House Bill 5070, "Push back" against Obama NLRB franchise unionization rule: Passed 26 to 11 in the Senate on February 11, 2016

The Senate vote on the bill described above.

Who Voted “Yes” and Who Voted “No”


House Bill 4578, Authorize school recreation taxes: Passed 108 to 0 in the House on April 19, 2016

To add school districts to a law that lets several local governments organize a recreational authority with the power to levy up to one-mill of property tax for swimming pools, recreation centers, public auditoriums, public conference centers and parks. The law is silent on whether the recreational facilities could be school facilities if the bill becomes law, but does require them to be open to the public.

Who Voted “Yes” and Who Voted “No”


House Bill 4578, Authorize school recreation taxes: Passed 37 to 0 in the Senate on May 31, 2016

The Senate vote on the bill described above.

Who Voted “Yes” and Who Voted “No”


Senate Bill 564, Criminalize selling aborted fetuses or body parts: Passed 26 to 10 in the Senate on April 27, 2016

To make it a crime to receive a financial benefit or any type of compensation for transferring or selling an embryo, fetus or neonate, including organs, tissues or cells, if this was obtained as the result of an elective abortion. The House has not voted on this bill.

Who Voted “Yes” and Who Voted “No”


House Bill 4962, End "tried as an adult" for some serious juvenile offenses: Passed 90 to 19 in the House on April 28, 2016

To no longer automatically prosecute and sentence 17 year olds charged with serious crimes as if they were an adult. The Senate has not voted on this bill.

Who Voted “Yes” and Who Voted “No”


House Bill 4138, Authorize presumptive parole: Passed 67 to 39 in the House on October 1, 2015

To require that parole be granted to prisoners who have served their minimum time if the person has a high probability under a "validated risk assessment instrument" of not being a risk to public safety, and also meets other criteria specified in the bill and current law, subject to a number of restrictions and exceptions. The Senate has not voted on this bill.

Who Voted “Yes” and Who Voted “No”


SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.

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Senate Proposes Broad Criminal Justice Reforms

Changes could save money and improve outcomes

Reforms to Michigan’s $2 billion criminal justice system may still be on the agenda for the short amount of time left in this legislative session. The Michigan Senate passed a wide-ranging criminal justice reform package in May, and the House passed several more targeted proposals over the last year. And Gov. Snyder has said this issue is a top priority.

The following is a summary of some of the most important elements of a 21-bill package passed by the Senate. They include some solid reforms that would improve Michigan’s current criminal justice system.

Probation and Parole Reforms

The proposed changes are meant to provide accountability for offenders who have been paroled. Generally, better outcomes are achieved when parolees face consistent penalties for violating the terms of their parole. Michigan successfully implemented this principle with an intensive probation program, and one of the Senate bills would establish a similar program for parole.

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The bills also include a proposal that would limit the jail time that parolees could face for minor parole violations, such as missing a meeting with a parole officer. The reasoning is that jail and prison beds are expensive, and cutting parolees off from jobs and re-entry services defeats the rehabilitative goals of parole.

Related bills offer incentives to parole and probation departments that reduce the number of offenders who re-enter prison and provides financial grants to companies and business owners who hire parolees or probationers. Another measure would allow well-behaved probationers to get off probation sooner.

In Michigan, about half of the people in the criminal justice system are parole or probation violators — well above the national average of 30 percent. The system is clearly underperforming, to the detriment of public safety and cost efficiency.

The Senate Fiscal Agency estimates an “indeterminate” fiscal impact from these proposals, but they would likely save taxpayer money. Parole supervision costs the state an average of $5,260 per parolee annually, and while some of these changes may push that cost up slightly, it still is only a fraction of the cost of incarceration. In other words, if these programs improve probation and parole programs, they are likely to save the state money.

Improved Data Collection

The Senate package would create the Data Collection and Management Act, which aims to help policymakers and the public to better evaluate corrections practices and costs. The state’s current data collections practices are disorganized, at best, and nonexistent, at worst. Although the judiciary, prosecutors, Department of Corrections and Michigan State Police all keep records, these departments do not share information with each other. Some data are not readily available to the public. Moreover, there is no unified state program for gathering and evaluating data about crimes, recidivism or corrections programs and facilities, leaving Michiganders at somewhat of a loss as to how to improve public safety and save money.

Parts of the Senate package creates new reporting requirements, which would compel the collection of various types of recidivism data and would make parole boards report the reasons for parole denials.

Funds have been appropriated for the implementation of the proposed data collection requirements, although other state departments may incur costs associated with these reforms. It is hard to imagine, however, a better use for those dollars than to gather the data needed to evaluate and improve a system that is costing the state billions annually.

With the general election fast approaching, it is expected that the Legislature will address these and the other Senate proposals late in this legislative session. These reforms deserve serious consideration as there are many positive reforms included in this proposed package of bills from the Michigan Senate.

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Key Criminal Justice Bills Working Their Way Through the Legislature

Proposed reforms to juvenile sentencing, prisoner parole time and judicial power

In 2003, Michigan made national headlines by passing several dramatic criminal justice reforms, including repealing mandatory minimum sentences for drug offenses. Thirteen years later, three significant measures are before the current Legislature, and they have re-ignited the debate about corrections practices.

The Michigan House passed bills relating to juvenile sentencing, the parole of prisoners and the power of judges. The bills have been pending before Senate committees for months.

Juvenile Sentencing

The juvenile justice package (House Bill 4947 et seq) would raise the age of criminal responsibility to 18, meaning that 17-year-olds, the current minimum age for trying someone as an adult, would no longer be automatically tried, sentenced and housed as adults. Although prosecutors would still be able to charge them as adults in cases of serious crimes, such as rape or armed robbery, most 17-year-olds would have their cases adjudicated in the juvenile system.

Juveniles are tried in the family court division of circuit court, so passing the bills would mean transferring those cases from district court to circuit courts. Last year, district courts handled the cases of more than 17,500 17-year-olds. The House Fiscal Agency estimates the average circuit court caseload would increase by about 26 percent, although it projects that more than a dozen counties will see increases in excess of 40 percent.

The bills would also mean that 17-year-old offenders become wards of the state rather than inmates, and the costs of their housing and treatment would be borne by the Department of Health and Human Services, rather than the Department of Corrections. While this would represent a savings to Michigan’s massive corrections budget, costs at the county level would increase because 17-year-old offenders would become eligible for services and treatments reserved for juveniles.

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Michigan is one of seven states where the criminal age of majority is younger than 18.

Presumptive Parole

House Bill 4138 would authorize a measure known as “presumptive parole,” or “safe and smart parole.” The bill would require that parole be granted to prisoners who have served their minimum time and have no worse than an average re-offending risk profile. In other words, the parole board would have to show a “substantial and compelling” reason to deny parole to prisoners who have served their minimum sentence. The measure passed the House in October 2015 with backing from some civil liberty groups and over the objections of some prosecutors.

The House Fiscal Agency and Senate Fiscal Agency project that the measure would result in a cost savings to the state. The bill would not apply to inmates presently serving time, but the Department of Corrections estimates that it would eventually reduce the prison population by 3,600 and save the state $82 million.

The current average annual cost of imprisoning an offender is $35,000. The cost of supervising a parolee is $5,260, not including the costs of re-entry services. The bill does not impact minimum sentence lengths imposed by judges.

Successor judge veto

Under current law, a parole-eligible prisoner serving a long sentence who files for review by the parole board may have his request vetoed by the judge who sentenced him or the successor of this sentencing judge. A veto means that the prisoner’s parole will be denied for another five years. House Bill 5273 would change the process so that only the original sentencing judge may veto a parole review (although successor judges would still be allowed to weigh in on the case).

The measure would offer limited cost savings to local governments and an indeterminate one to the state. If the bill results in more inmates being paroled, the savings to the Department of Corrections would be about $3,764 per offender per year.

The House bills represent a more focused effort than the wide-ranging 21-bill criminal justice package the Senate passed in May. But both efforts could mean big changes to Michigan’s criminal justice system. These proposals draw much-needed attention to Michigan’s very expensive corrections system.

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Related Articles:

Some Proposals for Criminal Justice Reform in the Legislature

Senate Proposes Broad Criminal Justice Reforms

Finding Agreement in Criminal Justice Reform

Gov. Snyder Announces Criminal Justice Reforms

Reitz Quoted on Criminal Justice Reform Efforts

Gov. Snyder Signs Bill That Makes 'Guilty Mind' Necessary For Convictions

The State Claims ‘Pure Michigan’ is Worth Tens of Millions. It Isn’t.

Other Research does not validate MEDC’s secretive, no-bid contractor

In the past year, we have worked to produce a scholarly, readable and transparent study about state subsidized tourism promotion. Our goal was to measure statistically — and with publicly available data — any impact that the state’s highly touted Pure Michigan program has had on Michigan taxpayers. We found a negative one.

The state and its no-bid consultant, Longwoods International, come to the opposite conclusion. They claim Pure Michigan produces huge returns to taxpayer investments in the form of new tax revenue. The problem is neither party will explain with any precision how their figure is derived. When challenged about such claims, both the MEDC and Longwoods have pointed to other people’s research that allegedly confirms that Longwoods’ secretive technique is valid. The conclusions of that research, however, are questionable.

In a previous publication, we examined the first of these other evaluations, originally touted by then-vice president of the MEDC’s Travel Michigan office, George Zimmerman. Zimmerman now works for Longwoods. He pointed to a validation study from 2011 titled “Validation of Travel Michigan’s Rate of Return on Advertising Estimation System — A Case Study Approach” as evidence that claims made by Longwoods could be taken seriously. The contractor who was hired to perform this study was hired on a no-bid basis and is a former vice president of Longwoods. (See more on the validation study here.)

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In correspondence with LaFaive, co-author of this essay, Longwoods’ founder and principle Bill Siegel also tried to validate his firm’s finding by pointing to other people’s work. He argued that after his firm had done an analysis of Colorado tourism subsidies, D.K. Shifflet and IHS Global Insight did their own analysis and both came to roughly the same conclusion. They agreed that a temporary end to tourism subsidies caused a large decline in tourism in Colorado. Longwoods reported a 30-percent drop in Colorado’s share of American tourism, and D.K. Shifflet appears to repeat that claim without attribution.

We question both reports’ conclusions. In our attempt to research the impact on tourism promotion subsidies on Colorado ourselves, we turned to publicly available data from the Bureau of Economic Analysis and the U.S. Travel Association. One of the authors (Hicks) constructed a regression analysis to measure the impact such spending would have on Colorado from 1974 through 2011 as measured by economic activity on the accommodations industry.

Hicks chose to examine the accommodations industry because it is the tourism-related sector most likely to see an impact from a rise in, or cut to, state promotion expenditures. The regression included an indicator (or “dummy”) variable in an attempt to measure any impact on Colorado’s suspension of tourism promotion subsidies from 1993 to 2000.

The result? We could not find any statistically significant impact to economic activity in Colorado’s accommodations industry from either the state’s promotional activities or the cessation of those activities. The regression’s output table is posted below.

We have written extensively about how the MEDC hired Longwoods with an expectation that the firm would produce a study about Pure Michigan that would help the agency justify its budget. We also reported that Longwoods, on one of its own web page titled “Budget Justification,” bragged about how it had once helped state tourism officials in Colorado justify state tourism promotion spending.

Pure Michigan uses state revenue to buy ads intended to benefit the state tourism industry and by extension, the state economy. Our most recent research shows the program fails even at that, with the average state hotel or motel industry gaining just $20,000 in economic activity for every additional $1 million spent on state promotion.

It appears the only real beneficiaries of this program are the government officials paid to run it and the consultants paid to defend it. Lawmakers and the people they represent should be more than skeptical of the MEDC’s efforts to defend its funding stream for Pure Michigan.

Scholars are often criticized for discussing their findings in heavily qualified terms and not speaking plainly. As an antidote we offer the following, based on our research: Pure Michigan is a bust. It should be shut down and its funding repurposed to core government functions such as schools, roads, public safety and pensions for public employees.

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Pure Michigan Spent $295 Million and Even Hotels Only Got Scraps Back

Let Them Take Selfies: Explaining Michigan’s Law

Ballot selfies are still prohibited in Michigan, for now

Michigan’s ban on “ballot selfies” — photos that voters take of themselves and their ballots in the voting booth — was lifted for four days last week before the Sixth Circuit Court of Appeals stepped in and put it back into effect, for now.

The brief reprieve occurred after a decision in a lawsuit filed by a Portage man, Joel Crookston, against the Secretary of State. In 2012, Crookston published a Facebook post that featured a photo he had taken of his ballot, where he had written in a friend’s name.

Though he didn’t realize it until later, Crookston had broken a 125-year-old Michigan law that forbids voters to show their marked ballots to anyone. He also learned that his plans to post a 2016 ballot selfie would be frustrated — recording devices have been banned at Michigan polling places since 2014, and the votes of those who take selfies are not counted.

In September, Crookston sued the state, arguing that the ban impairs his right to free speech. U.S. District Judge Janet Neff agreed and issued an injunction last Monday preventing election officials from enforcing the ban.

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But four days later, the Sixth Circuit Court of Appeals voted to stay Neff’s ruling at the request of state officials, putting her decision on hold until after the election. “With just ten days before the November 2016 election,” the opinion says, “we will not … suddenly alter Michigan’s venerable voting protocols, especially when [Crookston] could have filed this lawsuit long ago.”

So for now, the selfie ban remains in place. Secretary of State Ruth Johnson says that’s good because it saves local clerks from having to train elections workers on new rules right before the election.

Backers of the ban also argue that the prohibition doesn’t prevent voters from sharing how they voted with anyone they like once they’ve left the polling place. They also say that the ban would make it harder for people to pressure others into proving how they voted. Moreover, proponents say, allowing photography could result in such long waits at polling places that some would-be electors might leave without voting at all.

Sixth Circuit Chief Judge Cole is on the pro-selfie side, writing in his dissent to the stay that the ban puts voters “in the position of choosing between their freedom of expression and their right to vote.” He notes that every other court that has considered selfie bans has found them unconstitutional and faults Secretary of State Johnson for putting administrative interests above citizens’ fundamental rights.

As Judge Cole notes, Crookston is ultimately likely to win, as he should. The secret ballot is an institution that is meant to serve citizens, not the government. It happens that these days many people prefer publicity to privacy. If voters want to publish their proof of participation in our democracy, the government should allow them to do so while maintaining privacy for those who don’t.

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Pure Michigan’s ‘Budget Justification’

Why an independent review is necessary

A new study examines the economic impact of government tourism advertising programs. We are the authors of that work, called “An Analysis of State-Funded Tourism Promotion,” which offers empirical support for the hypothesis that these programs are ineffective.

Our conclusion is based on examining 39 years of state tourism promotion data with a statistical model that incorporates lessons learned by previous scholars, obtained through a thorough academic literature review. The statistical model we built, its rationale and output are completely transparent, and have been peer reviewed by economists not known to us. Replicating its results will be simple for a genuine scholar — a key test of any investigation’s integrity.

We describe the details of our study at great length in its text and elsewhere. The purpose of this piece is to describe why a study like this is needed.

One might think an outside investigation of this program would be redundant, given the extensive analytical resources available to the state of Michigan: House and Senate fiscal agencies, a Legislative Auditor General, a Department of Treasury with vast computational resources and more.

Surely one of these organizations has produced an objective, arms-length, methodologically defensible answer to a simple question: Is Pure Michigan worth the taxpayer dollars spent on it?

But they have not. What has been produced on the question issues from the same agency that annually receives tens of millions of dollars to run this program. This agency has strong incentives to protect this funding, and has a long record of using manipulation and spin to keep the money flowing.

That agency is the Michigan Economic Development Corporation, and the contrast between the scholarly rigor of the Mackinac Center’s study and the MEDC’s dissembling spin is a case study in truth-seeking economic research versus no-bid contractors selected to justify government budgets.

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The MEDC claims the Pure Michigan program generated $7.67 in state tax dollars for every $1.00 spent in 2015. This is an extraordinary claim, which, to be credible, would require high-quality evidence and independent analysis.

What the agency offers instead is the very opposite. The MEDC’s claim is based on a study the agency paid a consulting firm to produce. Internal documents reveal the real purpose of this product:

“The objective of this contract is to prove that the benefits for conducting a paid advertising program for tourism out weight [sic] the costs;” so that “the effectiveness of the program can be demonstrated and the continued funding of the program can be justified.”

The consultant is a firm called Longwoods International. As in the firm’s other no-bid contracts with the MEDC, both the company and its government customer refuse to disclose the method used to produce these claims with sufficient specificity that it can be replicated and its findings confirmed. Such transparency and openness are the core prerequisites of all valid scholarly inquiry. Their absence is a huge red flag.

No academic journal would take such secretiveness seriously. The inherent conflict of interest — an agency that receives tens of millions of dollars to run a program pays a contractor hundreds of thousands to quantify success that is presumed — means that no such product would likely ever be submitted to a scholarly journal (as opposed to an industry trade publication).

These activities are not unique. The MEDC’s consultant is one of several firms in the business of producing products for government tourism agencies that give the appearance of independent scholarly research (a partial list is here). What they actually produce has been described on one these firms’ website as “budget justification.”

The players seem oblivious to how unseemly this is. The head of another company that received no-bid contracts from the MEDC has bragged publicly about their prowess at budget justification. The company is called Tourism Economics, and in the nearby video you can see its president Adam Sacks tell his audience of potential customer “Destination Marketing Organizations” (DMOs) that:

… We’ve worked with numerous DMOs to help with the renewal and increase of your funding, not the least of whom is Brand USA who have reauthorized not long ago. We’ve supported DMO budgeting, and planning with market forecasts … we’ve conducted dozens of visitor economic impact studies to establish the importance of travel and tourism and we released late last year …

The potential customers in that audience — many government-funded agencies spending taxpayer dollars on tourism promotion — aren’t interested in purchasing studies that call their existence into question. This is probably why Sacks let them know up front that his firm will “establish the importance of travel and tourism with our studies.”

Elsewhere, emails obtained by the Mackinac Center show Sacks participating in a discussion of how to rebut the Mackinac Center’s findings about the Pure Michigan program. The email thread also includes suggestions from a PR firm under contract with the agency suggesting that officials work to “discredit” the Center’s findings.

Apparently, the MEDC realizes its tactics and claims stretch credulity, because in the past it has hired another consultant to reinforce the Longwoods International claims. Once again, the outfit was selected on a no-bid basis, and completing the circle, its product was co-authored by a former Longwoods vice-president.

This so-called validation study was later cited by George Zimmerman, then-head of the MEDC’s tourism marketing arm, to defend Pure Michigan. Speaking of circles, Zimmerman has since been hired as chairman of Longwoods International, USA. (Check out this link for a closer look at the MEDC's relationships with its no-bid contractors.)

It is hard not to regard all this activity as anything other than self-serving manipulation and spin by the MEDC. Representing these public relations products and claims as independent and valid investigations is patronizing to scholars who transact in transparency, citizens, and policymakers, including state legislators.

When independent researchers like us address the effectiveness of state tourism promotion using valid, transparent and easily replicable methods to assess the most relevant data available, the answer is clear: The budgets of these programs are not justified. They waste taxpayer dollars and should be halted.

We have posted on the internet the transparent methods, assumptions and model that led us to this conclusion. The data is publicly available. In addition, we are available to explain and answer questions for any interested party. We invite the managers of the Pure Michigan program and their vendors to do the same.

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Related Articles:

Study: Pure Michigan a Poor Investment

MEDC’s Pure Michigan Puffery: Part I

State Not Transparent with Effectiveness of Multi-Million-Dollar Program

Pure Flummery: Seeing Double on Corporate Welfare Spin

The State Claims ‘Pure Michigan’ is Worth Tens of Millions. It Isn’t.

Research Is Clear When It Comes To School Choice

DeGrow op-ed published in The Detroit News

A recent article in Bridge magazine claimed school choice is causing segregation in metro Detroit, but Mackinac Center for Public Policy’s Director of Education Policy Ben DeGrow said there’s more to the charter-school picture.

While determining if “segregation has occurred as the result of numerous voluntary decisions is complicated and controversial,” DeGrow said in a recent op-ed for The Detroit News that some studies have shed light on what happens when choice is allowed.

A 2009 RAND study of eight states found that when students enroll in charter schools, the new school tends to look like the old one, at least in its racial make-up. An Urban Institute analysis of all U.S. counties found no connection between increased choice and how many white classmates minority pupils have.

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A study by Michigan State University found that low-income and black students are more likely to exercise choice and be mobile. More importantly, research shows these students benefit from choice.

Taking away educational options because the law is not perfect would disproportionately harm Michigan's lower-income and minority families. Instead, lawmakers could consider ways to enhance the program's role as a helpful lifeline for parents seeking something better.

Read the full op-ed in The Detroit News.

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Related Articles:

Why School Choice is So Valuable

Michigan Celebrates School Choice

New Survey Finds Broad Support For School Choice In Michigan

School Choice on the National Stage

Spalding Quoted in The Detroit News