Do Millionaires Need More Subsidies?

In pursuing economic development, Michigan may repeat past errors

State lawmakers are once again rushing to embrace another program designed to benefit a few at the expense of the many. The new proposal is known colloquially as “Good Jobs for Michigan” but if history is any guide, it will produce few of note. It is a state “tax capture” program loosely modeled on the state’s failed multibillion dollar corporate welfare subsidy program known as MEGA, and it could be passed as early as this summer.

The proposal effectively allows well-connected corporations and others to keep tax dollars for projects that would have otherwise accrued to the government. It should not be adopted into law. It is unfair, supported only by questionable economic analyses, doesn’t work and is expensive, too. Michigan’s jobs bureaucrats should just quit while they are behind. A better development tool is a fair field and no favors — tax cuts for all and not just a few big business owners selected by state politicians.

Government — as many have long argued — has nothing to give anyone it hasn’t first taken from someone else. In order for legislators to give financial favors to big business they must first, directly or indirectly, reach into the pockets of small business owners and other taxpayers.

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Robbing Peter to pay Paul is poor economics, especially because an expensive bureaucracy is necessary to run expensive corporate welfare programs. This program could cost $250 million for up to 10 years, for starters.

The proposal’s authors have tried to give it some intellectual respectability by calling for a “regional” computer-based analysis. The computer model is supposed to assure whether the tax capture scheme “will result in an overall positive fiscal impact to the state.” But this means nothing.

In truth, the bill mandates a facade of science be constructed to obscure the program’s costs and perhaps puff up its alleged benefits. The state’s hugely expensive and failed Michigan Economic Growth Authority subsidy program also required such analyses.

And those analyses, published by the program administrators, repeatedly found net positive benefits for handing out fiscal favors. Yet we now know that only about 2.3 percent of MEGA deals lived up to their expectations, meaning the computer analyses were wrong. The only thing they demonstrated was the inability of state bureaucrats and their consultants to accurately predict the future.

The failed MEGA program itself is a reason not to create a new MEGA program. Five academic- style studies have been performed of the old MEGA between 2005 and 2014. Four of them said MEGA had a zero-to-negative impact, despite the effort of billions in taxpayer dollars. The fifth found a positive impact, but it was small. If MEGA, a huge program, could not move Michigan’s job needle, it is unlikely that this new, smaller program will either.

Kansas tried a tax capture program called PEAK, or Promoting Employment Across Kansas, which was similar to Good Jobs for Michigan. When he studied PEAK in 2014, economist Nathan Jensen concluded that firms that had received special treatment were no more likely to create jobs than similar firms that did not receive an incentive.

Good Jobs for Michigan is officially capped at $250 million worth of deals. But this can easily be increased by the Legislature. Remember, the first MEGA program was sold as a narrowly tailored, rarely used incentive deal program, too. It quickly expanded when it was politically convenient. Last year, the now defunct MEGA program cost the state treasury $1 billion, roughly equal to all the money generated by the state’s corporate income tax.

It should not strain credulity to think that a future governor might happily expand a new MEGA into something as unrecognizable and expensive as the original MEGA became over time.

The proposed Good Jobs for Michigan program is as unfair, ineffective and could easily become as expensive as Michigan’s past, failed jobs programs. It should not be adopted.

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On Cigarette Tax Evasion, I Told You So

Additional four million packs to be smuggled into Minnesota next year

In 2015 I was graciously invited to testify before a Minnesota state committee on taxes regarding an automatic tax inflator for cigarettes. The invitation was a result of my decade long investigation — in partnership with professor and economist Todd Nesbit — of cigarette excise taxes and their impact on illicit activity, most notably tax evasion. I told the committee what it apparently did not want to hear: that their recent tax increase and associated tax inflator would lead to rampant smuggling.

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In my testimony I outlined the mountain of research showing a causal link between smuggling, high excise rates and tax differentials on cigarettes between states. At the time I could only report that the North Star State had the 16th highest smuggling rate in the nation. The data was not yet available to measure the impact of the 130 percent excise tax increase imposed in 2013. Using our statistical model we forecasted that smuggling would leap to 32.9 percent of the overall market from just 18 percent.

Most Minnesota lawmakers were completely dismissive of my concerns and perhaps even more so when I asserted that smuggling would only get worse as the state’s tax inflator raised the overall price of cigarettes. Since that February day the evidence has borne out my forecast and more. The implicit admission by the state of smuggling trouble came that same winter when the governor’s proposed budget said that 40 percent of inspections of Minnesota retailers “resulted in either a seizure or assessment related to the discovery of untaxed tobacco products.”

Using our statistical model with data from 2015, we estimate that Minnesota’s smuggling rate will increase to 37.4 percent of the total market over the next year, or almost 1.5 percent points above our last estimate.

This should surprise no one. The state currently imposes a combined excise and in lieu sales tax of $3.59 per pack. Its neighbor, North Dakota, charges just 44 cents per pack. One doesn’t need a doctorate in economics to recognize that both consumers and criminals are going to take advantage of the tax-induced price differentials to save a buck transiting state borders near and far.

Two men from Illinois recently pled guilty to charges in Minnesota for running a truckload of illegal smokes with a retail value of $78,000 over from Wisconsin last year. It was a record bust in the state but puny compared to those in other states. States with higher excise tax rates have seen arrests that discovered millions of dollars of smuggled cigarettes. On June 8, three Canadian citizens plead guilty to moving $17 million in illicit smokes from Kansas to New York, as one example.

Minnesota will probably see similar large-scale smuggling efforts in the near future, if they aren’t already. After all, the state has guaranteed smugglers a high pay out with its high excise tax rate and automatic (upward) adjustments. We estimate that four million cigarettes will be trafficked into the state by casual users and by organized crime in the next year. The sources will range from North Dakota to North Carolina and even overseas, via mail and shipping containers. Illicit smokes acquired in Virginia have been found as far away as California.

Regrettably, cigarette smuggling isn’t the only unintended consequence of the practice. Indeed, we’ve seen cigarette tax-related thefts of wholesalers and retailers, hijackings of cigarette laden trucks, counterfeiting of legitimate products (which are often adulterated like the Bath Tub Gin of the Prohibition Era), corruption of public officials and even murder-for-hire schemes. Most if not all of this behavior can be laid at the feet of high cigarette excise taxes.

The first step in addressing the problems I cite above is to repeal the automatic inflator on cigarette taxes. As I predicted years ago for Minnesota, automatic tax hikes will lead to automatic increases in tax-related lawlessness.

In endorsing a proposal to give businesses more subsidies, The Detroit News says that failing to pass this package “stunts not just job creation, but the state’s population growth as well.” But that assumes the proposal will help the state economy and fails to consider the full costs of this subsidy program.

The empirical and historical evidence of similar programs suggest that these proposed subsidies will not have a meaningful impact on job creation and certainly won’t increase the state's population. Economists have assessed dozens of similar programs in Michigan and other states and the results are pretty negative.

Opponents of this recent selective subsidy program are being accused of being “ideological.” But the real ideologues are those who support delivering hundreds of millions of taxpayer dollars to politically favored business owners based on flimsy evidence.

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June 9, 2017 MichiganVotes weekly roll call report

Senate Bill 343, Give students government predictions related to careers: Passed 37 to 0 in the Senate

To require school districts to give students a regional “career outlook” forecast document created by a government "Bureau of Labor Market Information and Strategic Initiatives." This would be part of a process that seventh-graders must undergo of creating an "educational development plan" with school officials.

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Who Voted "Yes" and Who Voted "No"

Senate Bill 297, Mandate electrician have proof of licensure while on job: Passed 37 to 0 in the Senate

To mandate that an electrician on a job must show a government official or inspector a photo ID and evidence of licensure status if ordered.

Who Voted "Yes" and Who Voted "No"

House Bill 4457, Authorize new energy debt scheme for colleges and universities: Passed 108 to 0 in the House

To include state colleges and universities in a scheme authorized by a 2016 law for counties, which lets them contract with vendors for energy efficiency projects, and pay for these with money the projects are supposed to save (or from regular tax revenue if savings don’t appear).

Who Voted "Yes" and Who Voted "No"

House Bill 4416, Allow law-abiding citizens to carry pistol without special permit: Passed 59 to 49 in the House

To establish that a person who is not prohibited by law from possessing a firearm may carry a gun in public including a concealed pistol. In other words, the bill would eliminate the requirement for a law-abiding citizen to get a special permit to carry a concealed pistol.

Who Voted "Yes" and Who Voted "No"

House Bill 4636, Criminalize female genital mutilation of minors: Passed 105 to 2 in the House

To make it a crime subject to 15 years in prison to perform a clitoridectomy, infibulation, or other female genital mutilation on person less than age 18. Claims that the procedure is required by custom or ritual would be explicitly excluded as a defense to prosecution. Related bills would ban transporting a girl for this purpose, authorize lawsuits from victims, and permanently revoke the license of a medical professional convicted of this.

Who Voted "Yes" and Who Voted "No"

SOURCE:, 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

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(Editor's Note: The following is an edited version of a speech given by Michael LaFaive to the Florida chapter of Americans for Prosperity on June 8, 2017. Some of the language used here was taken from previously published remarks or essays.)

There are few areas of research where I find such widespread agreement in academic and other studies than those involving targeted “economic development” programs. In short, so-called development programs run by governments are ineffective and expensive. They don’t work, they’re unfair to those who pay full freight, cost billions of dollars that could be better used elsewhere and are potentially corrupting.

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The modern “war between the states” over jobs has been active since the Great Depression. Fifty states run some 1,829 incentive programs designed to create jobs and wealth, according to the Council for Community and Economic Research, and economists have written hundreds and hundreds of studies trying to measure their effectiveness.

In 2004, some economists in Iowa did a meta-review of the economic development literature. That is, they looked at studies other people had made of the subject, how they conducted them, and what they found. The title of their review tells the tale: “The Failures of Economic Development Incentives.” The authors came to a significant conclusion: Any claim that government economic development programs improve economic growth or lead to positive fiscal benefits for the public treasury is probably false.

Since their study was released, I have found nothing in the professional or academic literature to suggest anything has changed. In fact, if anything, the frequency and clarity of published evidence against such programs has only increased. Here’s some of what we’ve learned recently about different economic development programs:

  1. Last year, I was a co-author of a study that looked at 39 years of data from 48 states concerning state tourism promotion. We wanted to know if state spending on tourism helped the economy. What we found is that for every $1 million increase in promotion spending, there was an increase of just $20,000 in extra economic activity in the average state’s hotel and motel industry. Other sectors fared worse, which suggests that most of that $1 million was essentially wasted.

    A 2011 academic study published in the Journal of Travel Research looked at tourism promotion by using data through 2003, the latest year available at the time. It concluded that only states that started out with very low levels of spending to promote tourism gained any employment from increasing their spending. Even then, though, the gains were so small they did not translate into greater gross state product, which is a measure of economic well-being.

  1. A 2016 paper from a Texas professor examined some high-profile government subsidy and loan programs in Maryland and Virginia that were meant to create jobs and develop more capital. Such programs, it said, have “no impact on growth or job creation.”

A 2008 literature review on sports stadiums, franchises and big events had this to say: “The evidence reveals a great deal of consistency among economists doing research in this area. That evidence is that sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation.”

  1. An April 2016 academic paper found the opening of a new sports facility does not increase new businesses, though it registers a slight uptick in additional workers. Most other academic papers on professional sports stadiums and teams also show no impact, or, worse, a negative one.
  1. A 2015 study from Ball State University argued that Tax Increment Financing projects in Indiana were “associated with less employment, less taxable income and slightly higher tax rates.” Again, an attempt by government to pick the next great winner in economic development failed.
  1. A 2014 paper titled “Evaluating Firm-Specific Incentives” examined a state program in Kansas that allowed lucky companies there to capture tax revenues otherwise meant for the state treasury. The author found that program recipients were no more likely to create new jobs than similar companies that had not received an incentive.
  1. There have been five scholarly studies since 2005 on Michigan’s huge refundable tax credit program called MEGA, which offered up billions in incentives during its life. Four found an impact that ranged from zero to negative. One found a positive impact, but it was tiny.

The record gets worse when you consider opportunity costs. That is, if billions of dollars weren’t spent trying to create economic development, might they be used more effectively through across-the-board tax cuts or infrastructure improvements? A 2000 tally by professor Kenny Thomas said the annual value of incentives offered reach as much as $50 billion. That’s a lot of money that could be redirected.

In all of my research, I’ve only encountered one paper — and from a consultant — that looked at the opportunity cost of a program from a broad-based perspective. If, instead of handing out a tax credit or subsidy, we made across-the-board tax cuts of the same amount, what would happen? In most instances, and for the biggest program examined, the net result would be more jobs with broad-based tax cuts. Yet none of the academic studies I’ve read attempt to factor in opportunity costs. Most of them still report zero to negative impacts, meaning that in real-world terms, they overestimate the (already meager) benefits of government-directed development programs.

Why do incentive programs fail? I suggest four big reasons.

First, government can’t give anyone something it doesn’t first take from someone else. I believe it was Frederick Bastiat who said, “Government is the great fiction through which everybody endeavors to live at the expense of everybody else.” Government doesn’t raise money for its subsidy programs by selling Girl Scout cookies. It gets it through confiscation of taxes. That money, left in the hands of the people who first earned it, would also create jobs and wealth if only its owners were allowed to dispose of it as they see fit.

Bureaucrats who run develop programs do not have profound skills at picking winners from losers in the marketplace to “invest” your confiscated dollars in a profit-maximizing way. To think otherwise, in the words of Friedrich Hayek, is the “fatal conceit” of economic planning. It is a folly stemming from conceit to think that a small group of planners can somehow grasp our economic lives, in all their nuances and details, and then reorganize them forcefully in a way that would be better off than if we had simply been left to our own devices.

Let me offer two examples to drive this point home. Forgive me if the first one, which I learned from economist Paul Romer, seems a little “wonky” but I promise it is worth your time.

How many ways can you arrange just three playing cards? The answer is easy. Six. Three times two times one equals six. Now, how many ways can you rearrange just 20 of them? The answer exceeds 2 quintillion or roughly the number of seconds that would tick by in 75 billion years.

Yet central planners like those at state economic development agencies are implicitly claiming that they can ponder all the possible combinations of outcomes. With that superhuman skill applied, they then confiscate our wealth, invest in some allegedly job creating entity and have the result be better than if had all been simply left alone.

Let me drive this point home with an example, though more of an extreme one. In 2010 the Michigan Economic Development Corporation saw fit to offer a $9.1 million subsidy to a company called RASCO, which promised to create 765 jobs over five years in Flint, Mich.

Keep in mind that state law mandates that the state jobs officials ensure “the plans for the expansion, retention, or location are economically sound.” But, as it turns out, RASCO was apparently invented from thin air from a rented single-wide trailer near Flint and the products it was said to offer may have never existed. But it gets better. The head of the company was actually a convicted felon out on parole. By the terms of his release, he was not even allowed to have a debit card.

This very state government that failed to catch this felon, we are told, is supposed to be able to pick winners and losers in the marketplace and ensure that the plans for the relocation of this alleged business were economically sound. Yet it did not even have the good sense to Google the CEO’s name, Richard Short. If the economic development officials had, they would have seen him profiled in a Flint Journal article about how hard it is for convicted felons to re-enter society.

Just for fun, can anyone here take a wild guess as to how felon Richard A. Short got caught? His parole officer saw him in press coverage of the deal. By the way, that coverage included a press conference with then-Gov. Jennifer Granholm, who unwittingly shared the stage with Short to announce the deal.

As a coda, I can’t help but point out that Short had at least one other scam going on. He apparently stole a pink poodle with a fake check from an employer he claimed as his own, but who had never actually employed him. He presented the check to a dog rescuer along with false power of attorney documents of the elderly dog owner, perhaps with the intention of reselling the poodle at a profit. He went so far as to perpetrate fraud. On a dog. I never learned what became of the dog.

Third, economic development programs encourage rent seeking (a growth retardant) and distort decision-making, turning some market entrepreneurs into political ones. Rent seeking is a fancy way of saying favor-seeking. It describes ways in which business and industry might collect higher “rents” than they otherwise might earn in the private marketplace by seeking subsidies, tax credits and abatements or protectionist tariffs of some sort. Research shows that states with high degrees of rent-seeking have slower rates of real economic growth as measured by state GDP.

Finally, the opportunity costs are high. Cutting taxes for a few politically well-connected firms makes it harder to cut taxes for everyone. By running these programs, states are effectively trying to feed sparrows through a horse. That is, instead of letting sparrows eat seeds of their own collection, the state takes it from them, feeds it to a bureaucratic horse and then forces those sparrows to pick through what comes out the other end for whatever seeds may have survived the journey.

As government analyses of state economic development programs go, the state of Florida runs an impressive shop. The analysts there at least try to measure the next-best alternative foregone, though they define that alternative as a basket of some other government goods, not a broad-based cut to some onerous tax, which they should do to put the true cost of these programs in proper perspective.

In my home state of Michigan, we had a film subsidy program and after its first year the state’s economic development department — the Michigan Economic Development Corporation — hired a contractor to measure the impact of the program. He declared it a big hit and produced lots of positive numbers. The Mackinac Center discovered the consultant left out 100 percent of the costs. Yes, all of them.

Years later, the department hired a different contractor to do an analysis, using the same computer model. This analyst included the cost and found the program to be a net loser. The program cost $500 million before the plug was pulled and apparently did more harm than good.

Most of the evidence — theoretical, empirical and anecdotal — do a little more than suggest that these programs don’t work. Politicians and other apologists for state and local incentive programs may squeal that “we can’t unilaterally disarm,” but in fact the programs were never armament in the first place. Ultimately, these programs are just expensive ribbon cutting ceremonies — or public relations cover — for politicians, funded by their constituents.

A better way to development is to take the “fair field and no favor” approach. People and markets were creating jobs and wealth long before government officials ever thought it should be their responsibility.

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Conservatives and Liberals Rally Support for Repealing Mandatory Life Sentences in Michigan

Senate proposals would complete 15-year effort to end mandatory minimum drug sentencing

A 15-year battle to repeal some of the few mandatory life sentences remaining on the books in Michigan could soon be won as the Legislature considers a package of bills. The issue has seen liberals and conservatives aligned.

Mandatory sentences are different from the typical way courts decide a punishment for a crime. First, let’s describe how sentencing usually works.

In Michigan, which uses a system called “indeterminate sentencing,” every crime on the books carries a maximum penalty that was set by the Legislature at the passage of the law creating the crime. When someone breaks that law, a judge will refer to a book known as the Michigan Sentencing Guidelines to get a sense of what’s considered a proportional penalty for that offense. The judge also will have a report about the specific offender in the case. Using the guidelines, the report, and professional discretion, the judge imposes a minimum sentence. Michigan has a “Truth in Sentencing” policy, which means that the offender will serve every day of the minimum sentence set by the judge (there’s no “credit” for good behavior or self-improvement). The Michigan Parole Board determines whether the offender who has served the minimum sentence should be released. If it says no, that person will have to serve time even longer, even up to the maximum amount set by law.

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But mandatory minimum sentences are different. In those cases, the judge has no discretion when imposing a minimum sentence. The Legislature specifies the minimum the judge must impose. Mandatory minimum sentences were created largely as part of the war on drugs, but some officials say they contribute more to bloated budgets than safer communities. A coalition of liberal and conservative interest groups have circulated a letter supporting the legislation among lawmakers and others in Lansing. It quotes David Morse, who was president of the Prosecuting Attorneys Association of Michigan when mandatory drug minimums came into vogue. He described them this way: “The idea of stiff severe penalties for drug kingpins was a problem because we weren’t getting [them]. … We were getting people who were carrying on behalf of kingpins.”

Michigan repealed most of its mandatory drug minimum sentencing laws in the early 2000s. Now Morse and a coalition of like-minded advocates are urging lawmakers to finish the job. A number of organizations have called for ending mandatory life without parole sentences for drug offenders. They include Families Against Mandatory Minimums, the Citizens Alliance on Prisons and Public Spending, Prison Fellowship, FreedomWorks, Right on Crime, Americans for Tax Reform, Reason and U.S. Justice Action Network. These stakeholders have spoken out in support of two bills that would repeal a mandatory sentence of life without parole for a second conviction of possessing small amounts of certain illegal drugs. The bills would change the punishment for a second conviction from a sentence of mandatory life imprisonment without parole to one that is double the punishment for a first offense.

These are good proposals. One-size-fits-all sentencing policies are an affront to the idea of proportionality of punishment. Mandatory minimum drug sentencing results in the unnecessary and very expensive incarceration of thousands of nonviolent offenders, wreaking havoc on families and local communities. The first waves of drug sentences reforms in this state, which lessened punishments, were followed by a 40 percent overall reduction in crime between 2003 and 2015 and inspired over a dozen states to follow our lead. These latest bills represent the long-overdue completion of Michigan’s leadership on sentencing reforms and a clear step in the right direction on smart criminal justice reform.

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Pension Protestors Should Be 401(k) Supporters

Offering 401(k)-style benefits is good for teachers and taxpayers alike

Taxpayers are paying $2.5 billion more each year than they should for state-mandated school employee pensions. Lawmakers are getting heavy pushback on a bill that would fix this over time. The people that are fighting against this should actually support the effort.

The reason that this pension system is so expensive is that government officials have promised benefits and pushed the costs onto future taxpayers. And those costs have piled up: Taxpayers put $3.2 billion into the system last year. Roughly one out of every seven dollars spent on education in Michigan is spent on the pension system.

Of those costs, 89 percent are not for paying for benefits earned by people working today but rather to catch up on promises made in the past.

That’s not right. Pensions are intended to be prefunded — when an employee earns a pension, the employer is supposed to set aside money to pay for it. The money gets invested, grows, and is used to pay the worker’s pension once retirement comes.

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But government pensions don’t get funded, they get underfunded. The pensions earned by employees will cost $72 billion, according to state estimates. The fund managers have only saved 60 percent of that, leaving a $29 billion gap.

That’s why benefits are so expensive even if they are not especially generous. Lawmakers requires high employee contributions to pay for pensions. It takes 10 years to earn any pension at all, and roughly half the teachers won’t make it that long.

Nevertheless, the plan is expensive due to underfunding. It costs taxpayers 37 percent of employee payroll.

Offering new employees a defined contribution, 401(k)-style retirement system would stop the state from being in this situation over the long term. With a defined contribution approach, lawmakers cannot promise benefits now and pay for them later. The plan under consideration in Lansing would cost taxpayers a maximum of 9 percent of payroll with retiree health care benefits included. That is an improvement, but still high by private sector standards.

The state could save up to $2.5 billion per year when compared to the current costs of the underfunded pension system, perhaps even more if the funding gaps in the legacy plan continue to increase.

Yet even with this savings, the proposed plan would be more generous than the so-called hybrid pension new school employees are set to receive now. Under the current plan, employees put up to 6.4 percent of their payroll and employers put in 3 percent. The proposed plan requires less of employee contributions and more from employers, with 4 percent coming automatically from employers and a dollar-for-dollar 3 percent match available for employees. (Additional retiree health benefits would stay the same.)

An added benefit is that containing the ability to rack up further unfunded liabilities protects the workers in the older system. The ever-inflating unfunded liabilities have caused employers to negotiate salary concessions, and at some point they can jeopardize the solvency of the plan.

That’s why offering new employees 401(k)-style benefits is good for teachers and taxpayers alike. It’s good to see the Legislature considering this.

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House Bill 4184, Restrict local government “phone-in” voting: Passed 96 to 12 in the House

To restrict members of an elected public body casting a vote without being physically present. This would be allowed in one meeting per year per member, if the individual is absent for what other members deem to be good cause. It would also be allowed if a delay on a personnel or infrastructure issue could raise costs or liability.

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Who Voted "Yes" and Who Voted "No"

House Bill 4302, Increase penalty for assaulting court and municipal employees: Passed 93 to 14 in the House

To increase from 10 to 15 years in prison the maximum penalty for an assault on a local government employee or officer that causes a serious injury. The bill was introduced after two Berrien County bailiffs were killed by handcuffed defendant who grabbed a deputy's gun while being escorted to court.

Who Voted "Yes" and Who Voted "No"

House Bill 4612, Extend expansive court cost levies: Passed 85 to 23 in the House

To extend until October 2020 a 2014 law that expanded the costs that can be imposed on an individual convicted in a criminal case so they also include some of the routine costs of operating a court. See also House Bill 4613 (next vote), which addresses the legality of these impositions.

Who Voted "Yes" and Who Voted "No"

House Bill 4613, Investigate restricting expansive court cost levies: Passed 103 to 5 in the House

To create a state commission to recommend changes to trial court funding in light of a Michigan Supreme Court ruling that questioned charging defendants for costs that are unrelated to their case and instead cover routine court and municipal operations.

Who Voted "Yes" and Who Voted "No"

House Bill 4580, Expand scope of MSHDA lending: Passed 103 to 4 in the House

To expand the scope of a state government housing development authority by allowing it to also participate in residential loan refinancing.

Who Voted "Yes" and Who Voted "No"

SOURCE:, 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

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Second Chances Start in Midland

Local organization helps ex-offenders reintegrate safely and successfully

“There are some evil people out there – but most aren’t.” So says Rob Worsley, the executive director of Midland Community Former Offenders Advocacy and Rehabilitation, located in Midland, Michigan.

Worsley, an Army veteran, has more than 37 years of experience working with offenders in law enforcement, jail administration and the Michigan Department of Corrections. He started the Midland organization after working for the Michigan Prisoner Re-entry Initiative. During its tenure, the initiative gave local agencies funding to help ex-offenders find housing and employment when they return home. But it was replaced by a more centralized program run by the Michigan Department of Corrections that uses state re-entry money on in-prison programming.

When the state shuttered the re-entry initiative and took back the money it had previously sent to fund community-based programs, Worsley decided to start something new. Something had to be done, he realized, to help returning prisoners, former jail inmates and other offenders meet their basic needs. That wasn’t happening once the re-entry dollars disappeared from local organizations. Although the Corrections Department now provides in-prison programs to prepare ex-offenders for re-entry, Worsley maintains that it’s not enough. “Close to 100 percent of the offenders who return to this area come to [us], and close to zero percent of them have had the re-entry preparedness that we think [MDOC provides them].”

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Once ex-offenders do return home, finding help can be a challenge. “This area hasn’t had a dime of re-entry money in five years,” Worsley says, adding that many prisoners return home under the mistaken impression that they will find other sources of aid. “I wish people would tell offenders that they will be held as long as we can keep them, and then monitored without being given anything.”

Midland Community Former Offenders Advocacy and Rehabilitation is the only nonprofit in the Tri-City area that helps returning prisoners. It works with faith communities, community assistance agencies and government offices, including law enforcement, the courts and parole and probation offices. Worsley’s devotion to this work has paid off: Of the 86 parolees he is actively working with, only two have returned to prison. He says this is a win for public safety and a major savings for taxpayers, who would bear the $45,000 cost of imprisoning an offender for a year.

Although Worsley estimates that his nonprofit service saves taxpayers approximately $3 million per year in prison housing costs alone, he operates it on a much smaller budget. Fundraising is a challenge, he says, because of the stigma of criminality. Still, he says, “they are who they are, and we’re trying to turn them and their kids around. We’re making a huge impact.”

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Detroit Can Fill Teacher Shortages

Credentials, compensation offer keys to solve problem

During his first day on the job, Detroit Superintendent Nikolai Vitti was greeted with concerns about the district’s high number of teacher vacancies that have left many students without a full-time teacher. The new schools chief has a number of tools at his disposal, while state lawmakers could provide even more.

Credentials and compensation are two main policy areas that could help address this challenge in the newly reconstituted Detroit Public Schools Community District. According to the Free Press, “about 100 classes are operating without a permanent classroom teacher.”

As part of the 2016 Detroit schools legislative reform package, the district was specially granted the option to hire noncertified teachers to fill vacancies. Shortly after the law passed, however, a lawsuit was filed to pre-empt any possible use of that option.

Even so, studies of other urban school systems have shown teacher certification is “a poor predictor of teacher effectiveness.” The first two years of a teacher’s experience, not certification status, proved a far more telling indicator of future classroom performance. A school system like Detroit’s has less to lose by expanding the base of prospective teachers to fill its empty ranks. DPSCD already benefits from some of the 75 Teach for America members active in the city. These recent college graduates have passed through a streamlined training program rather than receive traditional certification.

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But there’s also a compelling case to give schools all over Michigan greater flexibility to hire teachers that fit their students’ needs. No legislative action is needed for the state to welcome innovative certification providers who can attract more capable candidates into the field. The state’s department of education can approve more alternative certification programs that would expand the pool of eligible candidates.

Not all teachers are equally effective at motivating and challenging students to succeed. Research shows that students who are exposed to higher-quality classroom instruction enjoy major economic gains in their adult working life. Nowhere is the need for this significant impact more acute than in a high-poverty, low-performing district like Detroit, where so many students start out behind and face numerous obstacles to greater achievement.

DPSCD already has taken a stab at rewarding top-notch teachers – following a 2009 state law that most large Michigan districts have ignored. About one in 30 teachers received a $1,000 bonus in 2016 for raising student test scores and demonstrating strong professional behavior. In his last job, Vitti used similar incentives not only to reward excellent teachers but also to give principals more authority to remove poor performers.

Still, the district could do more to limit future shortages. First, it will need to revisit its evaluation standards to better match results. Almost 7 out of 10 teachers have received the top mark on a four-tier rating system, with 96 percent getting either a “highly effective” or “effective” rating. Among Detroit charters – which outperform the district, according to multiple measures – those figures are considerably smaller: 19 percent and 86 percent, respectively.

The district also could offer premiums to qualified applicants in hard-to-fill subject areas. It could also use a premium to entice current teachers to transfer to challenging schools. These kinds of differential pay are seldom used in K-12 education, but they have been shown to alleviate the problem of shortages. If Detroit receives 50 applicants for an English teacher position, but only two for math, it is common sense that the salary offers should be different.

The final change that could fill Detroit’s classrooms with capable teachers is a major reform being contemplated in Lansing: pension reform. Most Michigan teachers end up as net losers from the current defined benefit pension system.

That system doesn’t help retain teachers early in their career, and actually encourages many great teachers to leave once they reach 30 years of service. Switching all new teachers to 401(k)-style investment plans would enable Detroit schools to attract young teachers and career-changers with better upfront compensation.

While waiting for help from Lansing, Superintendent Vitti should boldly seek creative strategies to ensure more district students have access to a quality teacher.

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