The MC: The Mackinac Center Blog

Repeal Post and Hold Alcohol Rules

Beer and wine wholesalers gain, consumers lose

(Editor’s note: These are remarks delivered recently by Michael LaFaive, director of the Morey Fiscal Policy Initiative, to the Michigan Liquor Control Commission.)

Thank you Commissioners. My name is Michael LaFaive and I am director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy.

I am here today to exercise my right to request the partial rescission of two rules, R.436.1625 (1-4) and R.436.1726 (1-2). These are commonly referred to as "post and hold" rules. As you know, these rules mandate posting of price schedules for beer and wine and the holding of those prices for a length of time depending on the product.

Research shows that these rules suffocate competition to the benefit of narrow special interests, such as Michigan's beer and wine wholesalers, and do so at the expense of consumers.

In fact, one working paper published in 2010 and titled, "State Regulation of Alcohol Distribution: The Effects of Post & Hold Laws on Consumption and Social Harms," found that such laws increased price of beer and wine by between 6.4 percent and 30 percent, depending on the product.

I have for each of you the copy of a letter that I have formally mailed to Chairman Deloney, and an essay I published in 2012 titled, "Unnecessary State Rule Enriches Crony Capitalists."

Thank you for your time and attention in this matter.

Fox Covers MEA's Attack on Teachers

Vernuccio, teacher with host Neil Cavuto

Labor Policy Director F. Vincent Vernuccio and recently retired teacher Lisa Jelenek were on Fox News Wednesday with host Neil Cavuto, discussing how the Michigan Education Association is threatening the credit ratings of teachers who have stopped paying union dues under Michigan’s worker freedom act by turning them over to collections agencies.

Jelenek, who recently retired from Laingsburg Public Schools, is one of several teachers who explain at www.augustoptout.org why they no longer support the MEA.

Vernuccio also appeared on The Blaze TV with host Andrew Wilkow to discuss the matter.

Oh, The Things You Will Learn

An intern's brush with bureaucracy

Gathering up-to-date public pension data is no trivial task. While all municipalities are required to report basic accounting and financial information, many make it quite difficult to obtain.

Cities and townships are required to file audits and most list a Comprehensive Annual Financial Report (CAFR) with this information. But just because the reports have to be filed doesn't mean they are easy to find. Even among Michigan's 100 largest municipalities, there are large discrepancies between how the reports are posted online.

Taxpayers should take note because politicians across the spectrum and at all levels of government talk about working for the people and increasingly many promise transparency. But a look at how CAFR reports are filed shows there is a lot of work to do.

The first problem is how the information is presented on the CAFR itself. Many start with a title page and an introduction to the report. From there, it seems there is no order other than broad section requirements of introductory, financial and statistical sections. This means that to find the type of pension plan the municipality offers and the statistics behind it, you have to sort through every page after the introduction.

Using keywords to search helps, but many CAFR reports are uploaded in one giant picture format scanned onto the computer instead of an easy-to-read, text-based PDF file that would cooperate with shortcuts.

Another problem is the delayed posting of information. The reports are to contain information updated through the end of the third quarter, which was June 30 (based on an Oct. 1 through Sept. 30 fiscal year). But when searching in June, many municipalities still didn’t have the information through June 30, 2013.

Michigan's Department of Treasury also provides a link to CAFRs from cities and townships. But when that data is old, or not even posted, it requires a visit to the municipalities' main website. Some CAFRs still weren't there. What good is this depth of information if by the time you are able to view it the information is out-of-date and irrelevant?

That forces people to then reach out to local public employees for the current information, but when contacted, some were unsure of what the information was, or how to get it.

In one township, the treasurer passed the note on to another employee and wrote: "I think that this request may fall in your area."

She responded: "A CAFR is the annual budget/audit. I'll send this to [name withheld]. Not sure if it's legit."

Eventually, I got the information.

Taxpayers deserve better, especially for documents that are supposed to be readily accessible and up-to-date.

(Editor's note: This column has been slightly modified since its original posting.) 

Vernuccio Discusses MEA's Attack on Teachers

Guest on SiriusXM radio's 'Wilkow Majority'

Labor Policy Director F. Vincent Vernuccio was a guest Tuesday on “The Wilkow Majority” with host Andrew Wilkow on SiriusXM satellite radio, discussing the MEA’s attack on teachers who exercise their worker freedom rights and how teachers can opt out of the union.

Washington Examiner: MEA Attacking Teachers

Fox News: Union sending members to collections agency

The Washington Examiner today is reporting on how the Michigan Education Association is attacking the credit ratings of its members who chose to opt out of the union under Michigan’s new right-to-work law.

Fox News also reported on the situation.

Skorup on WNEM-TV5

State has enough money to fix roads

Research Associate Jarrett Skorup told WNEM-TV5 that an over-budget project in Lansing involving which buildings state workers should occupy shows why legislators should not be pushing for a gas tax hike.

June 13, 2014, MichiganVotes Weekly Vote Report

Education, e-cigarettes and guns

The Legislature has adjourned for an extended summer break, but not before there was a high volume of activity.

House Bill 5477, Replace fuel tax with higher wholesale tax: Failed 17 to 21 in the Senate

To replace the current 19 cents per gallon gas tax and 15-cent diesel tax with a 7 percent wholesale fuel tax, gradually increasing to 15 percent in 2019, which would be equivalent to around 41 cents per gallon at current fuel prices. When combined with the sales tax levied on fuel this would give Michigan the highest gas and diesel taxes in the nation.

Who Voted "Yes" and Who Voted "No"

House Bill 4630, Increase vehicle registration taxes: Passed 21 to 15 in the Senate

To eliminate the current 10 percent annual reduction of vehicle registration (license plate) tax rates for a new vehicle's second, third, and fourth years of registration. This would represent a $145 million annual tax increase on vehicle owners. The bill would also increase the drivers license renewal fee from $18 to $25, and increase a number of other fees on different kinds of vehicles and trailers. However, with the Senate's unwillingness to pass a related $1.2 billion gas tax increase the bill's future is in question.

Who Voted "Yes" and Who Voted "No"

House Bill 5313, Senate vote on state budget: Passed 24 to 12

The state government budget for the fiscal year that begins on Oct. 1, 2014, not including education spending (see House Bill 5314 below). This bill authorizes $37.4 billion in spending, compared to $34.4 billion originally authorized for the current fiscal year (which was prior to adoption of the federal health care law's Medicaid expansion). Of this, $17.6 billion comes from state tax, fee and other revenue, compared to $16.9 billion the previous year. The rest is federal money ($19.8 billion, compared to $18.1 billion the previous year).

When education spending is added, the total state budget for the next fiscal year will be $53.15 billion, up $3.63 billion (7.3 percent) from the $49.52 billion budget originally enacted for the current fiscal year. The state portion of this will be $31.45 billion, up $1.25 billion (4.1 percent) from the $30.18 billion originally approved for this year.

Who Voted "Yes" and Who Voted "No"

House Bill 5314, Senate vote on education budget: Passed 21 to 17

The final education budget for the fiscal year that begins Oct 1, 2014. The bill authorizes $13.870 billion for K-12 public schools, a $509 million increase. It also appropriates $1.516 billion for state universities, compared to $1.430 billion this year; and $364 million for community colleges, up from $335 million.

The bill increases per-student "foundation allowances" for higher-spending K-12 school districts by $50, and by $125 for lower spending ones. However, distributions to school districts are understated by around $400 per student compared to pre-2012 budgets, because the state is now depositing a portion of their pension costs directly into the pension system (rather than the previous practice of sending it all to the districts to deposit). Reportedly, the gap between funding levels at the highest and lowest spending districts has decreased to $848, compared to around $2,300 when the Proposal A school finance overhaul was approved in 1994.

Who Voted "Yes" and Who Voted "No"

Senate Bill 789, Revise concealed pistol license procedures: Passed 24 to 13

To eliminate county concealed weapon licensing boards, and transfer the responsibility for administering and issuing concealed pistol licenses to county clerks, with the State Police still performing the background checks required by the law. The bill also lowers the application fee and revises a number of other details in the CPL law, including details of mental health disqualifications.

Who Voted "Yes" and Who Voted "No"

Senate Bill 850, Exempt public safety from no-contract "step pay hike" ban: Passed 27 to 10 in the Senate

To exempt law enforcement and fire department employees from a 2011 law that banned automatic seniority based automatic pay hikes for individual government employees (“step increases”) during the time when a government employee union contract has expired and no replacement has been negotiated. Specifically, the bill would exempt public safety workers covered by a 1969 compulsory arbitration law.

Who Voted "Yes" and Who Voted "No"

House Bill 5615, Make buying ephedrine for meth a RICO crime: Passed 107 to 2 in the House

To include purchasing ephedrine or pseudoephedrine knowing it will be used to illegally manufacture methamphetamine, and closely related offenses, in the list of "predicate" crimes that come under the state racketeering law (RICO), which among other things would allow the seizure and sale of a violator’s assets, with the proceeds going to law enforcement agencies.

Who Voted "Yes" and Who Voted "No"

House Bill 5414, Reduce, then end “driver responsibility fees”: Passed 37 to 0 in the Senate

To gradually reduce the so-called driver responsibility fees (aka “bad driver tax”) imposed for certain traffic violations, ending them for most offenses as of Oct. 1, 2019. These fees were adopted in 2003 to avoid state budget spending cuts. Reportedly, thousands of low-income individuals have lost their licenses due to inability to pay these penalties. Senate Bill 633 would authorize doing community service as an alternative in many cases.

Who Voted "Yes" and Who Voted "No"

Senate Bill 667, Ban minors from using e-cigarettes: Passed 94 to 16 in the House

To prohibit minors from using electronic cigarettes, making it a misdemeanor crime punishable by a $50 fine, community service, and being ordered into a health promotion and risk reduction program. Senate Bill 668 adds e-cigarettes to the law prohibiting merchants from selling tobacco to minors.

Who Voted "Yes" and Who Voted "No"

Senate Bill 536, Expand real estate development tax breaks: Passed 70 to 39 in the House

To authorize property tax exemptions of five to seven years for property owned by a nonprofit organization whose purpose is real estate development, if the local government agrees, and if the organization is approved by the political appointees on the board of the state agency responsible for granting and overseeing selective tax breaks and subsidies to particular corporations or developers (the Michigan Economic Development Corp. an arm of the Michigan Strategic Fund).

Who Voted "Yes" and Who Voted "No"

House Bill 5314, House vote on education budget: Passed 60 to 50

The state education budget for the fiscal year that begins Oct. 1, 2014. See Senate vote above for description.

Who Voted "Yes" and Who Voted "No"

House Bill 5313, House vote on state budget: Passed 100 to 10

The House vote on the state government budget for the fiscal year that begins on Oct. 1, 2014. See Senate vote above for description.

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.

 

Low-Hanging Fruit Can Help Fund Roads

There's plenty of money in the current budget

An old saying goes, "Those who love sausage or legislation should never watch either being made."

The road funding debate now underway in the state Capitol is a prime example, with multiple proposals swirling around Lansing. Currently, rather than trim some fat from Michigan's $52 billion budget and reallocate the money to road repairs, Republicans in the state Senate have suggested reaching more deeply into taxpayer pockets for an additional $1.5 billion.

But how to get that done? Knowing the difficulty of passing a massive tax increase in an election year, Senate Democrats have suggested that their votes are available. If, that is, Senate Majority Leader Randy Richardville, R-Monroe, agrees to undo recent reforms that have contributed to Michigan's climbing out of an economic lost decade, and pledge to not enact certain additional reforms (such as repealing a state prevailing wage law that increases the cost of government construction projects).

This comes even as rumors circulate that to get Democratic votes on a minimum wage increase pre-empting an even worse ballot initiative, Republicans already gave more ground than needed in return for votes on a big road tax hike.

There is a better way that doesn't require costly policy abdications, in the form of cutting some low-hanging fruit from the excessive state spending tree, and using that money for road repairs instead. It's likely that taxpayers and voters on both sides of the political divide would prefer this ahead of a tax increase even larger than the one inflicted by Gov. Jennifer Granholm in 2007.

Indeed, the state House has already passed a reasonable funding bill along these lines, cobbling together nearly $500 million for roads by redirecting some existing state revenue streams. Some $130 million would come from simply dedicating previously unallocated gasoline sales tax revenue to roads, and another $239 million would come from use tax collections. Mackinac Center for Public Policy analysts have identified a number of possible spending cuts that could juice these amounts even more:

Eliminating Michigan's department of corporate welfare (otherwise known as the Michigan Economic Development Corp.) would save $300 million a year.

If lawmakers regard a complete dismantling as too far of a reach, they could at least forgo doubling expenditures for film producer subsidies from $25 million to $50 million. Forking over these taxpayer dollars to Hollywood moguls just adds taxpayer insult to a huge tax hike injury.

Speaking of low-hanging corporate welfare spending (agribusiness), eliminating a government Agricultural Experimental and Cooperative Extension Service would free up another $50 million that could go to roads. This list could include an additional 40 or 50 savings recommendations, along with full, line-item budget analyses from 19962003 and 2004.

As mentioned, one of the compromises that may enter the tax hike sausage is not repealing Michigan's prevailing wage. That would be a shame, because doing so could provide a conservative $100 million for roads and other state projects (or maybe even tax cuts).  

There's nothing wrong with asking for a little "shared sacrifice" to improve Michigan's roads. The question is whether taxpayers will be the only ones making any sacrifices.

RTW States Lead the Way

More income, population growth

During the debate in Michigan over right-to-work, critics commonly incited fear that it would result in lower incomes for Michigan workers.

For example, President Obama claimed in 2012 that the law meant "giving you the right to work for less money."

As right-to-work is being discussed in other states, including Missouri, the fears about its impact on income are reiterated. The Committee to Protect Missouri Families, a coalition fighting right-to-work legislation, claims on its website that the law "cuts wages and stifles job growth by reducing people's discretionary income. When people have less discretionary income, they spend less, which in turn, hurts the economy."

The evidence, however, contradicts these claims. According to data from the Bureau of Economic Analysis, inflation-adjusted per capita personal income growth in right-to-work states is higher than in non-right-to-work states. Between 1990 and 2013, inflation-adjusted per-capita personal income in all right-to-work states grew by 30.7 percent compared to 27.5 percent in all forced unionization states.

In fact, of the 10 states with fastest inflation-adjusted per-capita personal income growth during that time, seven were right-to-work and one, Oklahoma, became right-to-work about halfway through the period.


The advantage right-to-work states have in income growth becomes more apparent when the components of per-capita income growth are considered. Right-to-work states have enjoyed even more considerable advantages in both population and gross personal income growth. Population in right-to-work states grew by 42.7 percent between 1990 and 2013 as opposed to 18.7 percent for forced unionization states. For inflation-adjusted gross personal income, right-to-work states gained 86.5 percent between 1990 and 2013 versus 51.3 percent for forced unionization states.

When it comes to disposable income — the income workers receive after state, federal and local taxes — right-to-work states also dominate. According to the BEA, inflation-adjusted per-capita disposable personal income growth between 1990 and 2013 in right-to-work states was 31.8 percent as opposed to 27.2 percent in forced unionization states. Seven of the 10 states with the fastest growth between 1990 and 2013 in inflation-adjusted per-capita disposable personal income were right-to-work states, (again including Oklahoma, which became a right-to-work state halfway through the period).


As previous analysis by the Mackinac Center has shown, right-to-work states tend to have higher growth in median household income and employment as well.

A 2013 study by Michael J. Hicks, a member of the Mackinac Center’s board of scholars and a professor at Ball State University, and Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Center, analyzed the impact of right-to-work legislation on real incomes between 1947 and 2011. The study used an econometric model designed to overcome timing difficulties, economic variables and policies unrelated to right to work, and other research difficulties by dividing the data into four time periods. LaFaive and Hicks found that right-to-work laws boosted average annual real personal income growth by 0.75 percent between 1947 and 2011 compared to the growth states would have experienced without right-to-work laws.

Many factors influence the growth of income in these states besides right-to-work and the data does not mean right-to-work alone causes income to grow faster. The predicted decline in income made by opponents, however, is tough to find. Right-to-work states have some of the fastest growing incomes in the country over the past few decades.

Media Details Center Efforts to Help Teachers

New website can help teachers opt out of the MEA

WJRT-TV12 in Flint and the MIRS newsletter are reporting on a new website the Center has established — www.AugustOptOut.org — to help teachers wishing to resign from the Michigan Education Association.

“Union members around Michigan have the ability to say ‘yes I want to stay in a union’ or ‘no I want to opt out,” F. Vincent Vernuccio, director of labor policy, told WJRT.

The MEA claims its bylaws trump state law and that it’s so-called “August window” is the only time members can resign.

“We are trying to inform MEA union members any way we can to make sure they are well aware of the August window,” Vernuccio told MIRS.

Peter Boyd, a science teacher in the Martin Public Schools who opted out of the MEA, sent an email to teachers across the state informing them about www.AugustOptOut.org. The site also has testimonials from other former MEA members about why they chose to quite the union.

MIRS, in a story titled "How To Break Up With Your Union 101," reported that a website known as “Eclectablog” posted Boyd’s letter online, including links to www.AugustOptOut.org. It also has a running tally of school districts in which teachers received the resignation information.

MEA President Steve Cook in a YouTube video posted Tuesday reminded members that the Center “will help you in every way possible” to leave the union.