Traverse City Continuing Push for Government-Run Internet

Similar efforts have failed in city after city

It’s Groundhog Day and Traverse City is closely imitating the plot of the movie of the same name by moving forward with a plan for a government-owned and -operated internet service provider. This despite the fact that similar attempts have failed time after time in other cities across the country.

According to the Traverse City Record-Eagle, the city’s public electricity provider is pushing forward with a $16 million plan to build out and run a fiber network. The utility board apparently believes that the government can offer better internet services than those already provided by the private sector.

The evidence shows otherwise. Studies from the Mercatus Center and the University of Pennsylvania show that virtually every time government-owned networks have been tried, they lose money and don’t meet their expectations, leaving taxpayers with a bill and little else.

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Traverse City’s plan is supported by government employees and local business and tech workers. The local chamber of commerce says there is “already a lot of interest” in the project. That’s what the promoters of government internet in Sun Prairie, Wisconsin, and Lake County, Minnesota, said too. These small Midwest cities lost money, and, after extending huge subsidies to the effort, were forced to abandon their networks.

Technology moves too fast for government. If Traverse City wants faster internet, it should explore options that get government out of the way and increase competition among private providers. Markets will sort out what people are willing to pay for these services without having to force taxpayers to foot some of the bill.

The Traverse City Light & Power utility, which has already put taxpayers on the hook for huge amounts of pension debt, is scheduled to discuss the plan this month.


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Couple Could Lose Their Home Through Civil Forfeiture

Under Michigan law, people with a criminal record are severely limited or banned from working in health care professions. But a package of bills recently taken up in the state House would help more ex-offenders rehabilitate themselves back into society by finding legal work.

House Bills 5450, 5451 and 5452 have been introduced by Reps. Klint Kesto, Jeff Noble and Curt VanderWall, respectively. They would shorten the time people are ineligible to work in a health-related field, if they’ve been convicted of certain misdemeanors and lower-level felonies. The bills would also eliminate laws that automatically ban people with certain felonies and other misdemeanors from working.

This would be a huge step in the right direction. While there is some justification for employers to consider the criminal background of potential employees, a blanket state ban on hiring ex-offenders is bad policy. Such a ban affects people like Laurence Reuben, who worked as a nurse in the state of New York for years but lost the ability to find employment after moving to Michigan.

Michigan has hundreds of laws that prevent people with a criminal record from working in licensed professions. The evidence shows that these laws cause higher unemployment and make people more likely to reoffend. These bills are a step in the right direction by giving ex-offenders a better chance at contributing positively to society and the economy.

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Snyder, New Report Pitch for More Education Dollars

Evidence lacking for any significant impact on achievement

Editor’s note: This article has been revised since its original publication to reflect the budget proposal put forth by Gov. Rick Snyder.

Twice this month, the drum has sounded for more dollars to fund Michigan’s public schools. As of now, we don’t know where the extra funds would come from, but there’s every reason to doubt more money will have any significant impact on student achievement.

The chief recommendation of a Jan. 17 report released by the School Finance Research Collaborative, a group representing businesses, foundations and public education interests, was to increase the state’s base funding amount to $9,590 per pupil. Days later, in his final State of the State address, Gov. Rick Snyder called for “the largest increase in the basic per pupil student foundation allowance in the last 15 years.” He followed it up with an official proposal.

Snyder’s funding proposal figures to be a lot less dramatic than the report’s recommended boost. This century’s largest effective annual boost to the basic foundation allowance was 8.3 percent in 2001. The next largest occurred in 2006, when the Michigan Legislature bumped it up by 3.4 percent.

In his budget proposal, the governor called for increasing the foundation allowance by $120-$240 per student, or $312 million in total. The lofty demands of the Collaborative's “adequacy study” make the governor’s proposal, wherever it might fall, look puny by comparison. The new adequacy study calls for a total of about $2.8 billion in additional K-12 funding requests. The lofty demands of the Collaborative's “adequacy study” make the governor’s proposal look puny by comparison. The new adequacy study calls for a total of about $2.8 billion in additional K-12 funding requests.

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For all its significance, the foundation allowance represents only one of many different pieces to the overall school funding puzzle. Considering all revenue sources, total Michigan K-12 funding reached its highest level ever at $14,108 per pupil in 2016.

Hopes are misplaced that raw funding increases will drive improvements from Michigan’s current 43rd ranking nationally in academic achievement. A 2016 Mackinac Center multiyear analysis found that spending levels had no impact on 27 out of 28 different test scores and other benchmarks. Only on the state’s 7th grade math test did results improve when a school’s spending increased, but even there the gains were small.

New sources of tax revenue would need to be tapped to meet the new adequacy study recommendations. Yet constrained by political and fiscal realities, the governor may pursue a different approach. Instead of raising taxes, the Legislature could shift money from noneducation items or from categorical grant programs in the School Aid budget.

To the extent that money can be redirected from these targeted or “categorical” programs and used instead to follow students to their choice of educational provider is a good thing. It creates incentives for schools to attend to what parents and students actually want rather than just operating a program the Legislature thinks is good for them.

Instead of looking for new tax dollars to bolster existing institutions, policymakers should steer this year’s education budget discussion toward financing students and making schools more directly accountable to parents to meet individual learning needs.


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Politicians Cannot Keep Up With Dynamic Economy

Subsidies for a handful, costs for everyone else

State lawmakers created new business subsidy programs last year. This new taxpayer spending will have little effect on the state economy and will not likely justify its costs. This is because politicians cannot keep up with the massive dynamic job loss and job creation that occurs outside of Lansing’s watch.

Michigan lost 199,000 jobs from April to June in 2017, according to data from the Bureau of Labor Statistics. It also added 215,000 jobs over the same period. State “economic developers,” meanwhile, offered some public money from the Michigan Business Development Program to companies. The companies pledged to create 1,779 jobs and will be rewarded with up to $11.8 million in taxpayer dollars. Even if all of those announced jobs turn into real jobs — and state administrators have a bad record of delivering on those promises — administrators would be able to replace less than 1 percent of the jobs lost.

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Lawmakers using residents’ tax dollars to deliver favors to select businesses is both unfair and ineffective. Instead, lawmakers should improve the business climate for everyone. That includes lowering barriers to entry by revisiting occupational licensing rules, lowering tax rates and saying “no” the next time a business, industry or other interest asks for favors.


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Come or Go, Amazon’s HQ Decision Means Little to Michigan Economy

It’s a magnet for agenda-driven interpretation though

Rock Ventures founder and chairman Dan Gilbert made a valid observation in response to Amazon’s decision to exclude Detroit and other Michigan bids from its short list of cities contending for its HQ2 project: “The fact is, nobody outside of Amazon knows exactly all of the factors that went into this complicated decision.”

Yet media voices are happy to tell us exactly what’s needed here to win a project like Amazon. Phil Power at Bridge Magazine says it’s more college preparation. Nancy Kaffer at the Detroit Free Press added more taxpayer-financed transit to the list. Charlie LeDuff at Deadline Detroit says less crime. Others point the finger at a nebulous inability to attract talent, whatever that means. Daniel Howes at The Detroit News agrees and says Detroit’s reputation for “decline and dysfunction” also contributed.

But Gilbert’s point is right: Only those on Amazon’s team really know. So this is weak evidence to support any individual’s favored policy agenda.

Amazon’s choice doesn’t really matter though: Despite all the hype, one company is not enough to change one state’s fortunes, or even those of whatever city lands the project. Sure, it’s a big project, but it’s still tiny compared to the regular ongoing job creation that is a routine part of the dynamic Michigan economy.

Even if Amazon’s pledge to create 50,000 jobs comes true, it would be just 23 percent of the new jobs created in Michigan every three months. And all those new jobs appear with no government officials offering to spend extraordinary amounts of tax dollars to subsidize them.

There are good reasons to want better schools, less crime or a good business climate. How to get them is always worth talking about.

But Amazon’s actions offer little guidance for how to help Michigan thrive. The state’s success does not hang on hype. Business decisions will instead be based on real data. The data is telling a good story right now. It could be better one, no doubt, but things are moving in the right direction already: Jobs are being created and incomes are rising in metro Detroit. With a strong economic backdrop and progress that has been made to improve public policy, this is likely to continue with or without flashy projects like a second Amazon headquarters.

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January 26, 2018 MichiganVotes weekly roll call report

Senate Bill 749, Increase child care income tax credit: Passed 37 to 0 in the Senate

To establish that an individual is entitled to claim the same child care tax credit against Michigan income tax as the credit authorized by the 2017 federal tax reform law. This is a means-tested credit that is based on a percentage of child care expenses that are related to the taxpayer having a job (up to $6,000, or $3,000 if there is just one dependent). The credit would not be "refundable" (meaning the taxpayer would not get a check from the state for the amount the credit exceeded their income tax liability).

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Who Voted "Yes" and Who Voted "No"


Senate Bill 652, Subject new environmental rules to authoritative review: Passed 26 to 11 in the Senate

To create a state environmental rules review committee comprised of certain officials and representatives of specified interests, with the duty to oversee and make judgments on whether plans by the Department of Environmental Quality to impose new rules meet certain specified criteria including reasonableness, and to propose revisions if they do not. The committee would be empowered to stop the DEQ from imposing a rule that did not meet the criteria. Senate Bill 653 was also adopted, which creates a similar authoritative oversight process for DEQ permit decisions.

Who Voted "Yes" and Who Voted "No"


House Bill 5100, Exempt bike racks, tow balls, etc. from ban on obscuring license plate: Passed 104 to 2 in the House

To establish that removable bicycle racks, trailer hitches, tow balls or similar devices are not included in the definition of “foreign materials that obscure or partially obscure” vehicle license plates, which is a civil offense.

Who Voted "Yes" and Who Voted "No"


House Bill 5257, Make possession of ransomware a felony: Passed 103 to 3 in the House

To make it a crime punishable by up to three years in prison to possess ransomware software with malicious intent. The bill defines ransomware as “a computer or data contaminant, encryption, or lock” that can be placed or introduced without authorization into a computer or network, and that restricts access in a manner that enables the perpetrator “to demand payment of money or other consideration” to remove it.

Who Voted "Yes" and Who Voted "No"


House Bill 5422, Authorize “refundable” $100 senior income tax credit: Passed 100 to 6 in the House

To authorize a $100 refundable tax exemption against the state income tax for individuals aged 62 and above. “Refundable” means the state will send the individual a check for the amount that the credit exceeds his or her tax liability.

Who Voted "Yes" and Who Voted "No"


House Bill 5420, Increase personal exemption in state income tax: Passed 105 to 1 in the House

To increase the $4,000 personal exemption that is currently allowed under the Michigan state income tax. The bill would immediately increase it to $4,300 and then gradually to $4,800 in 2021. Taxpayers can claim a personal exemption for themselves, their spouse and each dependent, and these are subtracted from the amount of income that is subject to income tax. The Senate has passed a version that increases the exemption to $4,700 by 2020.

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 www.MichiganVotes.org.


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Renewable Energy is Not Cheaper After All

Popular measurement of renewable energy's cost ignores its unpredictable nature

In her Jan. 21, 2018, critique of my Detroit News op-ed, “State Needs Sound Energy Regulations,” Liesl Clark, president of the Michigan Energy Innovation Business Council, attempted to justify keeping Michigan’s recently expanded renewable portfolio standard. Her critique misrepresented my basic claims and wrongly argued that renewable energy is competitive, yet still deserves special government favors to force people to choose it over other options.

My article called out renewable energy advocates who claim wind energy is an obvious, market-based energy choice. I argued that, if wind is as affordable as they claim, removing targeted subsidies and mandates should cause them no distress. Ostensibly, low-cost renewables sources would be built without protective government policies like the RPS.

Clark also argued that Michigan’s electric utilities are regulated monopolies and will, therefore, follow incentives, “which might encourage them to stick with fossil fuels.” So, “strong policies” must force them to “invest in the lowest cost energy for their customers.” But, if correct, she would be making a strong argument for expanding competition, and returning choice to Michigan’s electricity markets. Her words certainly do not justify forcing further expensive and market-distorting policies onto Michigan’s residents.

In truth, regulated utilities are primarily concerned with selling a product – electricity – to their customers at a government-approved rate that will bring a healthy return to their investors. So, Clark’s concerns notwithstanding, if renewable energy can provide electricity at a rate that will ensure a profit for utility investors, it will be built and used.

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But, short-term prospects for renewable energy in Michigan could soon be waning, as generous federal tax provisions and subsidies for renewable energy, like the production tax credit, are being phased out. And changes in federal tax incentives could make investing in renewables a much less attractive strategy for reducing corporate tax obligations. Pairing those challenges with the public’s increasingly pronounced distaste for living next to wind farms means arguments for building more renewable generation in Michigan are rapidly losing strength.

It is precisely those market and political signals that drive renewable advocates to push for special market carve-outs for wind and solar. With a 15 percent RPS in place, state law requires new wind and solar be built, period. Until that state mandate is met, the views of investors, markets, customers and Michigan’s residents really don’t matter.

Clark closes out her letter by referring to Lazard Investment Bank’s analysis of energy markets, and its preferred metric for measuring the relative costs of energy options, the LCOE (levelized cost of electricity). Of course, she claims that “the lowest-cost energy” just happens to be the sources she wants built – wind and solar. While Lazard’s metric has some uses, it is also widely recognized as a confusing, or incomplete, method of comparing renewable energy, an intermittent energy resource, with more predictable and reliable generation sources.

For example, a November 2017 Berkeley Labs study on the “Impacts of Variable Renewable Energy (VRE) on Bulk Power System Assets, Pricing, and Costs,” says that “comparing the LCOE of different technologies that provide varying services is misleading.” For example, you can’t use the same measure to weigh the value of a small natural gas turbine to a large nuclear facility, or renewable energy – a variable resource – to more reliable coal plants. Doing so gives the perception that they are able to provide the same service. The study goes on to explain that the more renewable generation facilities you build, the more it costs the system to make up for their variability, and the less value they provide to electricity markets.

To determine the real price of renewable energy, or its ability to replace nuclear or fossil fuels, you must account for the high costs imposed by its variable nature. One example is the cost of many new transmission lines that link distant renewable generation installations to the electrical grid. You also need to include the construction of “fast ramping” natural gas plants, battery storage units or pumped hydroelectric facilities that can come online quickly to supply electricity when variable renewables suddenly cut out, as when the wind stops blowing or the sun stops shining.

Instead of a mandate requiring electricity from renewable sources, state legislators should remove special favors, crony capitalist subsidies, protective market carve-outs and any other form of unique help to politically favored industries or market sectors.

Remove all of them – whether they are aimed at renewable energy, fossil fuels, nuclear energy or some other energy source – and allow all energy producers to compete on an open, level and transparent playing field. Doing that will provide the best means of ensuring competition and choice, which will lead to reliable, affordable electricity for the people of Michigan.


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New Additions to Mackinac Center Board of Scholars

Three new faces join Center's Board of Scholars

The Mackinac Center for Public Policy is pleased to announce that it is adding three new members to its Board of Scholars. This group of academics and business leaders supports and contributes to the Center’s mission of improving the quality of life in Michigan through high-quality, public policy research that promotes the benefits of free markets, limited government and the rule of law. They will be joining 47 other Board of Scholar members, rounding out the Board to an even 50. The three new scholars have distinct and diverse experiences in media, academia, law and public policy. They are profiled below.

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Matt Coffey is an attorney with 26 years of statewide practice in the areas of auto negligence, insurance defense, creditors rights and commercial litigation. He is also a 19-year member on the faculty of Central Michigan University, where he is a lecturer in the Finance and Law Department of the College of Business Administration.

Coffey is an expert on auto insurance regulation in the state of Michigan. He wrote a policy brief published by the Mackinac Center in 2017, which argued for reforming Michigan's extraordinarily expensive auto insurance system. He also testified in support of a bill that would have reduced premiums for almost all Michigan drivers. Coffey lives in Midland.

Shikha Dalmia is a senior analyst at Reason Foundation, a nonprofit think tank advancing free minds and free markets. Dalmia is a columnist at The Week and writes regularly for Reason magazine. She also writes frequently for The Wall Street Journal and numerous other publications such as the Times of London, Time, USA Today, Bloomberg View and The Daily Beast. She previously served as a columnist for Forbes and the Washington Examiner. She was co-winner of the first Bastiat Prize for online journalism in 2009 for her columns in Forbes and Reason.

From 1996 to 2004, Dalmia was as an award-winning editorial writer at the Detroit News, covering a variety of policy issues, including the environment, immigration, Social Security, welfare reform, health care and foreign policy. She also worked as a reporter for the Patriot, a national daily newspaper based in New Delhi, India, where she grew up and earned her B.S. degree in chemistry and biology from the University of Delhi. She currently lives in metro Detroit.

Chris Surprenant is an associate professor of philosophy at the University of New Orleans and founding director of the Alexis de Tocqueville Project, an academic center for research and programming focusing on issues at the intersection of ethics, individual freedom and the law. In 2012, he was recognized by The Princeton Review as one of the "Top 300 Professors" in the United States, and, in 2014, was selected by Questia as one of their "Most Valuable Professors," awarded to three professors in the country who "have made lasting impressions on the education and lives of their students."

His work focuses on topics in the history of moral and political philosophy; contemporary issues in criminal justice reform, including the ethics of punishment; the connection between human well-being and entrepreneurship; and the importance of open inquiry and free exchange to the proper functioning of a free society, both in academic institutions and the community as a whole. He will soon publish a book titled "Justice, Inc.: How Financial Incentives Corrupted and Can Fix the US Criminal Justice System," which argues that meaningful criminal justice reform requires recognizing the existing profit incentives connected to many aspects of our current approach to justice and punishment and then modifying these incentives to better serve the interests of justice. Suprenant received his B.A. from Colby College and his Ph.D. from Boston University.


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Michigan House Votes to Protect Electronic Data

Nearly unanimous in support of prohibiting state cooperation with illegal federal searches and seizures

The Michigan House of Representatives recently passed a bill to protect personal electronic data, with nearly unanimous support.

The House Bill 4430 would “prohibit state agencies, local governments and their employees from assisting or providing material support to a federal agency in collecting electronic data or metadata concerning any person, except with a warrant (or under a legally recognized exception to a warrant) or with an individual’s informed consent.”

As people shift more and more of their personal information to digital devices and virtual storage, it is critical that electronic data and metadata receive the same constitutional privacy protection as homes, persons and any other personal property.

The need for protection has become greater in light of the apparent increase in federal surveillance. This measure, then, is an important step toward ensuring that Michiganders’ state government is not complicit in the illegal search or seizure of electronic personal information.

The bill’s definition of electronic data includes “information related to an electronic communication,” such as the contents, sender and recipients of an electronic communication, and the location or identity of the sender or recipients. “Metadata” would refer to details that describe the history or tracking of an electronic document, things that are generally not contained in the document’s text.

The United States Supreme Court has repeatedly held that people are protected by the Fourth Amendment from unwarranted intrusions on their privacy by the government. It is well-established in law that these privacy protections may only be breached when the government has probable cause supported by a warrant issued by an objective magistrate. This measure would clarify that Michiganders have a property right to their electronic data and an expectation of privacy when they create and share it. Protecting that right, in this case, means setting a policy that agents of our state government will not assist federal agencies when they seek to violate it through illegal searches and seizures.

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Cash Bail Hurts Innocent Poor People

The practice should be reformed to serve its purpose better

Most people are aware that the Michigan legal system uses bail requirements to bolster public safety and ensure that criminal defendants make their court dates. But they may not know how it perpetuates inequalities in the system, keeping legally innocent people behind bars because they can’t make bail.

Violent criminals pay bail and walk free every day, while some people accused of less serious crimes — and who may, in fact, be innocent — are detained because they can’t afford to pay bail. The solution to this inequity is not to abolish bail. We can use it to bolster public safety, but the amount of cash a defendant has on hand is not the key factor in achieving that. If a defendant is a danger to himself or others, incarcerate him. If he isn’t, make it possible for him to go free – whether by setting a manageable bail sum, or, as other jurisdictions have done, requiring none at all.

Here’s how the cash bail system works. Someone who is accused of a crime appears before a judge to be formally charged and apprised of their rights. Defendants who are charged with the most serious crimes, or committed a violent felony while on probation or parole, or who have prior violent felony convictions are incarcerated until their trial. But almost everyone else is entitled to some kind of bail unless the judge finds them a danger to society. Many people are judged safe to release, but are nevertheless stuck in jail because they can’t come up with the hundreds or even thousands of dollars required.

Many Michiganders, myself included, do have access to that kind of money, either because we have savings or because we know someone who would be willing and able to give it to us. We might find the requirement frustrating or difficult, but we would pay the money and retain our jobs and, most importantly, the income we’d need to pay a lawyer and participate in the preparation of our defense. But many other people have no access to even a few hundred dollars. They face the possible loss of their job and housing, as well as custody of their children. On top of this, they must deal with the difficulty of coordinating with a defense attorney while stuck in the local jail. Remember, this can happen to someone who has been not been convicted of anything, and indeed, has been judged safe to release.

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This system needs to change so that it does a better job of doing what we want it do. We must tie the bail decision closely to real factors that matter to public safety and ensure that the ability to pay is never the sole reason an otherwise eligible defendant is incarcerated. We should start gathering data about this practice so that we can observe its effectiveness and improve it further. There are no one-size-fits-all decisions when it comes to incarceration. Customizing bail decisions to the circumstances of the defendant is an important reform, and policymakers should actively work to protect the rights of the innocent and save taxpayers the very expensive bill for needlessly incarcerating people who have not been convicted of a crime.


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