Source: Calculations based on data from the Michigan Department of Civil Service, the U.S. Bureau of Labor Statistics and private-sector sources. *Total compensation range centerpoint.
Gov. Jennifer Granholm has offered an unpalatable choice to
Michigan taxpayers: Accept a high-cost government status quo or leave. Sadly,
many are choosing the latter, as evidenced by the Comerica and Pfizer exits and
the near-record number of emigrating families, according to recent U.S. Census
Bureau and moving company data.
In presenting this choice, the administration has ignored
another option, which is reforming government to do more with less. The Mackinac
Center has recommended $1.9 billion worth of such savings, including $400
million in school employee health care reforms, almost $200 million from prison
privatization, $150 million that could be realized by repealing the so-called
"prevailing wage" law on school construction projects and millions more dollars
that could be saved by changing Medicaid incentives.
Many suspect that the political establishment has elevated government and school employees into a privileged class to be protected at all costs from economic changes that affect everyone else.
Meanwhile, the public is already grumbling over existing tax
burdens, which explains their lack of enthusiasm for proposed tax increases.
Excluding the direct beneficiaries of state spending, there’s widespread
consensus that fundamental reform is needed. How can we break the impasse and
bring about real change?
Let the people decide. Just as it did with the 1994 Proposal A
school finance and property tax reform, the state could schedule a special
election that presents two competing options: A tax increase proposal that feeds
the expensive-government status quo or a $3 billion (out of $26 billion in state
taxes and fees) budget reform mandate. The proposal should not contain
politically driven "close the prisons and schools" cuts, but real cost-saving
reforms like those mentioned earlier.
Some in the administration say that some of those
recommendations aren’t practical or won’t save money fast enough. We have two
First, our list presents a direction, not a precise roadmap. The
state and the public schools have more than 200,000 employees. They know where
the waste and savings opportunities are — but aren’t likely to cough them up as
long as they’re protected by the promise of ever greater tax revenue.
Therefore, let’s establish a process by which that insider
knowledge can be turned to finding ways to save instead of spend. The budget-cut
alternative on the ballot could include a process similar to the federal "Base
Realignment and Closing Commission." Outside finance and efficiency experts
would be teamed with legislators and department insiders to devise the mandated
Second, a question to the budget reform naysayers: Whose side
are you on — taxpayers' or public employees'? Many suspect that the political
establishment has elevated government and school employees into a privileged
class to be protected at all costs from economic changes that affect everyone
If they deny holding this perspective, there is a way they can
prove it. Gov. Granholm’s own tax increase commission recommended reforming
excessive school health care benefits to help remediate a budget situation that
the administration calls a "crisis." Well, Michigan businesses facing real
crises have asked employees to share the burden and thousands have made painful
wage and benefit concessions.
So, do the same with school employees. Open the state employee
health insurance system to school districts, and announce that henceforth state
funding to districts will be reduced by the amount their current health expenses
exceed what this alternative costs.
Sure they will howl, but is there a crisis or not? This move
would save millions of tax dollars and still provide quality health insurance to
school employees. School boards and local bargaining units would have a choice:
Stick to current contracts and accept layoffs or concede to the state insurance
plan. Choosing the latter would be eased by the knowledge that when current
contracts expire, everyone will be forced into the state plan anyway.
Armed with a cost-cutting mandate from the people, other
measures become possible. Concessions could be extracted from prison workers who
reportedly earn 33 percent more than the national average. (Privatizing a few
prisons might help bring about a willingness to negotiate.) Devolving state
police road patrols to counties could save $65 million without the loss of
single public safety officer. Cutting non-need-based college scholarships in
half could save more than $60 million. These are just a few of many ways to do
more with less.
Michigan voters should be given the chance to decide for
themselves: Pay higher taxes for government employees to earn better benefits
and higher salaries than comparable private sector workers, or don’t pay more
and let them live like the rest of us.
Jack McHugh is a legislative analyst and Kenneth M. Braun is a
policy analyst specializing in fiscal and budgetary issues for the Mackinac
Center for Public Policy, a research and educational institute headquartered in
Midland, Mich. Permission to reprint
in whole or in part is hereby granted, provided that the author and the Center
are properly cited.