The MC: The Mackinac Center Blog

School Transportation News Features Center Study

Survey of school service privatization

Mackinac Center research was recently featured in the national School Transportation News magazine.

In January, the magazine wrote about a new study by Michael LaFaive and James Hohman that compares the rates of privatization of noninstructional services in schools across five states. The survey examined the use of contractors for services including busing in Pennsylvania, Michigan, Ohio, Georgia and Texas.

As School Transportation News reported, Michigan came in second to Pennsylvania in contracting transportation services.

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Michigan, Mackinac Center’s home state, came in second at privatizing transportation services at 26.6 percent of school districts. Transportation remains the least privatized major non-instructional service, the study found, but contracted school bus service grew by 12 percent from 2014, and from only 3.8 percent or 21 districts in 2005.

Read the full School Transportation News article here.

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Like Taxpayer-Funded Electioneering for Tax Hikes? Here’s a Bill for You

Legislation would gut new taxpayer-friendly restrictions

Update: On Feb. 3 the House Elections Committee voted to advance the problematic provisions described in this article to the full House for consideration. They did so by pasting nearly identical provisions into House Bill 5219, which modifies but does not repeal the current 60 day pre-election ban on tax-funded electioneering communications. The committee then reported the revised text of HB 5219 to the full House.

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If you don’t mind seeing taxpayer dollars used to fund government electioneering for local property tax increases, you will probably like Senate Bill 721 and House Bill 5249. That’s because the identical bills are likely to quickly erode a law passed in December that restricts this particular abuse.

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The new law prohibits school districts and local governments from referencing an upcoming ballot measure in a tax-funded communication within 60 days of the vote. The restriction is unambiguous and therefore is easily enforced. This feature has local government and school officials upset at the prospect of no longer being able to use their deep pockets and extensive political infrastructure to tip the scales in favor of “yes” votes on tax hikes.

The bills were sponsored by Republicans Sen. Ken Horn and Rep. Holley Hughes (with Rep. Tom Barrett co-sponsoring), following weeks of heavy pressure from local officials, tax-funded lobbyists and some in the media. They compromise the new law by adding a Mack truck-sized loophole to its unambiguous prohibition on pre-election electioneering.

Specifically, they would erase the law’s bright-line restriction by allowing communications that “provide a fair presentation of facts” and which don’t imply a yes or no vote recommendation, as determined by a “reasonable interpretation.”

At first blush that may not seem objectionable, but history suggests schools and locals will easily game these exceptions, which would quickly return us to the previous status quo of almost anything goes in tax-funded electioneering communications.

The obvious question the exception raises is, who will make those “reasonable interpretations,” and how will these referees define “fair” and “reasonable?”

The “who” is easy: Government officials in the Secretary of State’s elections bureau. Their judgments could be appealed to a court of law, but such appeals are very rare and unlikely.

The “how” is much harder: When it comes to political matters like ballot issue campaigns, what constitutes “fair” or “reasonable” is strictly in the eye of the beholder. The current elections bureau director has a reputation as a straight shooter, but he won’t be there forever.

And even the straightest of shooters lacks the capacity to prove that claims of “reasonableness” in dodgy political arguments are completely invalid.

For example, in a mailing last fall to promote a property tax increase labeled as related to “public safety,” the city of Rochester Hills claimed: “When a person is suffering a cardiac arrest, or a home is on fire, the goal is to arrive on the scene in less than five minutes. Our Rochester Hills Fire/EMS Department cannot meet that goal often enough.”

Note the political nature of this argument. In addition to opening with an appeal to emotion, it provides no substantive facts that can be confirmed or falsified. (What’s the definition of “not often enough?”)

Given the ambiguities inherent in all political arguments, which like this one usually rely more on symbols than facts, it would be all but impossible for a civil servant or a judge to declare any of them to be “unreasonable.” If they try, they’ll find themselves shooting at a moving target, because the tax hikers will quickly adapt their messaging to slip through the new cracks. And that is what makes Senate Bill 721 and House Bill 5249 a recipe gutting enforceable limits on tax-funded electioneering.

The nonstandard established in the new bills all but guarantees to return us quickly to the taxpayer abuses the new law was crafted to prevent.

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Some argue that Michigan needs to become a more attractive place for college graduates in order to grow the state economy. But the past decade suggests that simply targeting people with college degrees is an ineffective strategy. The reason is that people move to places where there are employment opportunities, regardless of whether they have a college degree or not.

Since 2007 more college graduates moved to Texas than to any other state. The Lone Star State attracted 218,178 people with a bachelor’s degree or higher. It also drew in 360,144 people who lacked that level of certification. On the other end of the spectrum, 257,871 degree-holders left New York for greener pastures over the period. And another 518,823 people without degrees left that state too.

This is the case for nearly every state. Those that successfully attract college graduates are also successfully attracting people without college degrees. In other words, attractive places entice people to move there regardless of whether they have college certificates or not. And, on the flip side, both those with degrees and those without tend to leave places where opportunities are scarcer.

The only state in the union to break the mold seems to be California, which added 33,195 people with degrees, but lost 557,521 people without them.

pension costs

Regardless of these trends, Michigan residents are pelted with proposals to attract college-educated millennials. Yet plans to gentrify a neighborhood or add bike lanes are not likely to turn around the economy. They may still be worth doing — but not for the promise of economic prosperity.

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Instead, broad-based improvements to the business climate are a better strategy. Based on the data, the added employment opportunities will attract the educated — as well as everybody else.

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The Tax Foundation recently published its latest ranking of state and local tax burdens. The report placed Michigan in 25th place as of 2012.

This is a substantial improvement, but to make this state a growth and opportunity leader the Michigan Legislature needs to go further by rolling back the personal income tax rate, as was promised when it was increased in 2007.

According to the Tax Foundation, Michigan’s state and local governments extracted 9.4 percent from the personal income of residents in 2012, with a per capita tax burden of $3,631. This placed Michigan in the middle of the pack, but that may not hold as new vehicle registration and gas tax hikes enacted last year kick in.

New York residents carried the heaviest 2012 state and local tax load at 12.7 percent, while Alaskans had the lightest, paying just 6.5 percent of their personal income

The rankings are based on 26 categories of taxation — everything from property, sales, income and business taxes; transfer and severance taxes; taxes on licenses for amusements and many more. The full list and an explanation of how the rankings were calculated are detailed in the report, “State-Local Tax Burden Rankings FY 2012.”

Since the Tax Foundation began compiling these annual rankings in 1977, Michigan’s “burden rate” has never been lower than the current 9.4 percent. The rate peaked in 1984 at 10.9 percent; fell to 9.5 percent in 2000, but then crept back up to 10.3 percent in 2009.

Despite our progress since then, other states aren’t standing still and to remain competitive Michigan’s Legislature must build on the gains we’ve made — not erode them. There is an urgency to this given that tax reforms are easier to enact when the national economy is still expanding.

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There are three primary reasons Michigan citizens and voters should demand quick action on this front:

  • It’s not the government’s money, and the state can spend less with no great sacrifices required. The Mackinac Center has recommended reasonable reforms that could save more than $2 billion annually — dollars that could and should be left in the pockets of those who earned them.
  • Tax cuts are good for the state’s economy. They lead to faster growth and more opportunities for residents. Among other things that means fewer grown children who must leave the state to pursue jobs and careers — and fewer Michigan grandparents who must cross the continent to visit their grandkids.
  • Lastly, the state’s bipartisan political class should keep its promises. In 2007, Gov. Granholm, with the help of the Republican-controlled Senate, “temporarily” raised the state income tax rate by 11.5 percent, from 3.9 percent to 4.35 percent. Written into that tax hike law was a schedule to roll it back starting in 2011. Under Gov. Rick Snyder, the roll-back was delayed and then halted after a puny 0.1 reduction to 4.25 percent.

Taxes matter. They shape whole nations, and can ruin them too. This state has made gains but state and local tax burdens are not static: during any given period they are either rising or falling. Michigan’s burden was falling as of 2012, but without a proactive Legislature that trend can easily reverse.

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Government’s Free Pass to Trespass

Some homeowners find property assessor guidelines objectionable

Most people think of trespassing as the crime of going on someone’s property without permission. Yet, government views trespassing differently, particularly when it involves tax assessments. Consider this phone exchange with a city official on what would happen if an assessor came to your house and you weren’t home:

“The assessor would get the information they need and leave a card,” said Linda Gosselin, Assessor, city of Livonia.

“Would that include walking around the property, to the backyard?”

“They would review the property,” she said.

“Does that include walking around the property?”

“I think I answered your question,” said Gosselin.

In Michigan, tax assessors claim they must walk on property to get accurate tax rolls. But there are examples of tax assessors pushing the limits of civil liberties, walking on property when no one is home or even demanding to come inside a home.

The Michigan State Tax Commission guides assessors with rules that have been upheld in court.

If you ask an assessor to leave your property, they must honor that. Assessors are not to peer into your windows. If you say no to an inspection, they are not allowed to penalize you by jacking up your assessment. An advisory issued in 2014 states that all assessments must be based on supporting evidence.

The rules, however, don’t take into account all scenarios. Take the example of Jeff Stout of Cannon Township in Kent County. Not only did he post a “No Trespassing” sign on his property, he called his township to say he did not want the tax assessor walking on his property. Months later, he discovered pictures of his backyard on the township’s website.

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Municipalities defend these actions by stating that Michigan law requires such documentation to be part of the public record and that making those records available in a broad way is a good thing.

“Appraisers, realtors, real estate attorneys, developers, and journalists benefit from having public tax assessment information readily available on the Internet. It also allows citizens assurance that property taxes are being assessed equally, consistently and fairly. And it makes government more efficient by reducing staffing demands to fulfill requests for public information,” said Cannon Township Attorney Jim Scales.

It’s one thing to grant access for measurements and to establish a public record. It’s another to broadcast satellite images of your home or property. In some of the photos, furnishings are visible as well as windows and cars.

Tax assessors can push the limits of their authority in other ways. As a member of the Mackinac Center’s Board of Scholars, Ted Bolema has a full appreciation for the importance of property rights but he also happens to be an attorney. Soon after his assessment case was placed on the docket of the Michigan Tax Tribunal, his township sent him a letter “requesting” an appointment to review the inside and outside of his house. Bolema declined.

“The request was on Meridian Township letterhead and the language in the letter seemed to imply that compliance was required by the Tax Tribunal. My concern is that nonattorneys receiving such letters from a government office might not realize this was a request for information from an agent of an opposing party, two months before a scheduled court hearing, and could easily believe this was a requirement from the Tax Tribunal as part of the appeals process,” said Bolema.

Bolema lost his case at the Tribunal and Jeff Stout’s appraisal went up after he complained publicly about the Internet pictures. There may be not enough information to determine if that was more than coincidence, but it makes taxpayers wonder who government is really working for.

Why can’t assessors find ways to protect privacy if they feel a need to post photos on the Internet? Blacking out windows, furnishings and cars would be a good start. Better, why not find a less costly and cumbersome way to assess the value of property? Some have argued that government needs to make the assessment process more understandable, like basing assessments strictly on square footage and “comps,” what the real estate market uses to determine home values. Real market data comes along more rapidly than many people realize. According to the most recent data from the National Association of Realtors, 58 percent of owners sell their home within 10 years.

By simplifying the assessment process and restricting the use of real estate photos on the Internet, government could not only save money but also win more goodwill with the public.

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Flint crisis money, drone bans, animal abuser checks

House Bill 5220, Appropriate money for Flint water contamination response: Passed 38 to 0 in the Senate

To appropriate $28 million to pay for response activities related to the contamination of the Flint water supply, of which $2.8 million is federal money. The Senate revised details of the House-passed spending plan after consulting with on-the-ground experts in the city.

Who Voted “Yes” and Who Voted “No”

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Senate Bill 328, Authorize more State Police officer grades: Passed 35 to 0 in the Senate

To create two new grades of State Police officer, called "inspector" and "recruit." The current grades are colonel, lieutenant colonel, major, captain, lieutenant, sergeant and trooper.

Who Voted “Yes” and Who Voted “No”


Senate Bill 539, Add more “promise zone” transparency: Passed 98 to 9 in the House

To impose additional reporting requirements on “promise zone” tax increment financing authorities located in low income areas, and provide a means for dissolving them. These entities “capture" a portion school property tax revenue to partially subsidize college tuition for local students.

Who Voted “Yes” and Who Voted “No”


Senate Bill 220, Waive fee for animal abuse background check: Passed 37 to 1 in the Senate

To allow animal shelters to access a government database called the Internet Criminal History Access Tool (ICHAT) at no charge for purposes of checking whether an individual who wants to adopt an animal has been convicted of an animal abuse offense.

Who Voted “Yes” and Who Voted “No”


Senate Bill 394, Streamline rental housing inspection regulations: Passed 73 to 34 in the House

To revise local government rental housing registration and inspection details. Among other things the bill would allow rather than require communities of a certain size to mandate that landlords must register themselves and their rental units. Also, a local government would not be required to inspect a multiple dwelling or rooming house unless it received a complaint from an occupant.

Who Voted “Yes” and Who Voted “No”


House Bill 4783, Increase landfill permit violation penalties: Passed 77 to 29 in the House

To increase the fines a state agency can impose on landfill operators for not meeting state environmental law standards or permits requirements to $75,000 per day for second or subsequent violations, and $25,000 per day the first time. These are civil not criminal penalties, which means the procedural safeguards available to a criminal defendant do not apply.

Who Voted “Yes” and Who Voted “No”


House Bill 4868, Ban using drones to interfere with public safety, or for surveillance: Passed 89 to 17 in the House

To make it a crime to fly a drone in a way that interferes with public safety or public utility activities. The bill would define flying a drone over private property without authority as trespassing, and prohibit using a drone for eavesdropping or surveillance.

Who Voted “Yes” and Who Voted “No”


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

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Vernuccio Testifies on Right-to-Work in West Virginia

Director of Labor Policy described how states benefit from worker freedom

Mackinac Center Director of Labor Policy F. Vincent Vernuccio testified today before the West Virginia Legislature about how right-to-work laws can benefits states. West Virginia is expected to pass a right-to-work law soon, giving workers the freedom to hold a job without joining a union.

F. Vincent Vernuccio Testifies

Vernuccio pointed to the successes experienced in other states that have adopted right-to-work legislation in recent years, something he discussed earlier this week in an op-ed published by the Charleston Gazette-Mail, co-authored by Michigan Capitol Confidential reporter Jason Hart.

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From 2012, the year Michigan passed right-to-work, until mid-2015, incomes in Michigan rose over nine percent faster than West Virginia and the national average,” Vernuccio and Hart wrote. “From 2012-14, average hourly wages increased by 56 cents to $19.94 in Indiana, by 56 cents to $21.70 in Michigan, but only by 37 cents to $18.21 in West Virginia.

Vernuccio was joined at the West Virginia House of Delegates by Terry Bowman, a former UAW member and current president of Union Conservatives, who also encouraged the Legislature to support the legislation.

Terry Bowman Testifies

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Sports Stadium Deals Consistently Strike Out

Cities fail to negotiate deals that protect taxpayers

U.S. Sen. Claire McCaskill has proposed legislation that would force sports teams who relocate to a new city to pay back public subsidies received from their former state or town. This legislation is likely influenced by the St. Louis Rams’ recent decision to move to Los Angeles (Sen. McCaskill hails from Missouri). This is a solid idea, especially given what the economic research says about stadium subsidies and given the inability of cities to protect taxpayers from being left in the lurch on these stadium deals.

The Rams were lured from Los Angeles to St. Louis in 1995 by a new, publicly financed stadium, the Edward Jones Dome. The city borrowed nearly $500 million (inflation-adjusted) to construct the stadium and still owes approximately $100 million. This debt service will cost city taxpayers $5 million per year until 2021. The Rams also get to keep the revenue from the naming rights for the stadium, which is worth just under $4 million per year. Sen. McCaskill’s proposal would require the Rams to pay back the $100 million the city still owes.

But what’s lost in this debate is that it shouldn’t require federal law to prevent pro sports teams from abusing their publicly financed stadium deals. Unfortunately, most of the time, cities negotiate terrible agreements with franchises, leaving taxpayers in a vulnerable position.

For instance, St. Louis agreed to a “state-of-the-art” clause in the Ram’s lease with the city. This required the Edward Jones Dome to be in the top 25 percent of NFL stadiums as measured by various stadium characteristics. If the Dome fell out of the top 25 percent, the Rams were free to break the lease and move. Given the large amount of new stadium construction in the NFL, the Edward Jones Dome quickly fell out of the top 25 percent, and the team claimed that the stadium would need $700 million in renovations to make it a top-tier stadium again. The city didn’t have $700 million to spare (which city does?) and, as a consequence, arbitrators in 2013 ruled that the city was in violation of the lease and the Rams were free to move.

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But St. Louis is not alone. The Cincinnati Bengals have a similar clause for Paul Brown Stadium, which requires Hamilton County taxpayers to pay for any feature in the stadium if at least 14 other NFL stadiums have that feature. Since Paul Brown Stadium opened in 2000, 15 new NFL stadiums have been built, and there of lots of technologies and amenities that Hamilton County taxpayers are now on the hook for. Repayment on the debt issued to pay for the Bengals' home field now consumes close to 20 percent of Hamilton County’s entire budget.

State-of-the-art deals don’t just happen in the NFL. The Charlotte Hornets and Atlanta Braves have worked similar requirements into their leases with their respective cities.

Given that local governments appear unable to competently negotiate stadium leases that protect taxpayers, McCaskill’s legislation could be a step in the right direction. By making it financially prohibitive for teams to move until stadium debt is repaid, the legislation would essentially remove state-of-the-art clauses. Teams would likely try to work around this by demanding cities issue debt for shorter maturities so that the debt is paid off more quickly.

But better than this legislation would be a simple ban on public subsidies for stadiums altogether. The economic literature on this issue is very clear: The economic impact of a sports stadium is zero, or even slightly negative. Banning these subsidies altogether would be sound fiscal policy and provide the ultimate protection for taxpayers.

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Director of Research Speaks at Operation Action U.P.

Van Beek discusses effects of and solutions to over regulation

Mackinac Center Director of Research Michael Van Beek was the keynote speaker at an Upper Peninsula business meeting this week, an event covered by multiple news outlets.

During his speech at Operation Action U.P. – a Marquette conference attended by members of the business and academic communities – Van Beek discussed the hidden cost of government, particularly by way of regulations.

“I hope to equip them with principles of identifying bad regulations and then, also, equip them with information with how to better interact with their legislator down in Lansing and communicate with them in such a way that they can have an impact on improving the kinds of regulations that might impact their businesses,” Van Beek told ABC 10 News.

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Van Beek told TV6 and Fox UP that much of government’s cost to consumers and businesses is the result of over regulation.

"A lot of the focus on regulation and particularly the problem of over-regulation is done at the federal level and that is certainly an issue, but there are problems here at the state level too.”

Read and watch the full report by ABC 10 News here.

Read and watch the full report by TV6 and Fox UP here.

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Give Michigan Special-Needs Students Fair Access to the Best Options

Michigan should consider a full range of choice

Last fall, Lt. Gov. Brian Calley took the helm of a group to recommend reforms to Michigan’s special education system. For affected Michigan families looking for something better, one particular solution, unfortunately, lies out of immediate reach.

The special education task force, primarily comprised of educators and policymakers, is working to address problems Calley identified after a 2015 town hall listening tour throughout the state.

The desire to improve services reflects in part the scale of the challenge. More than one in eight students served in Michigan public schools received special education services during the 2014-15 school year, according to data from the state’s Center for Educational Performance and Information. The nearly 200,000 children have a range of mild to severe disabilities.

Parents like Macomb Township’s Liz and Jamie Roe can personally attest to some real struggles. Last summer, the Mackinac Center documented the frustration they faced in trying to get the specialized help their dyslexic daughter Mia needed. The situation reached the point where Mia was coming home from school in tears, and her teacher told her parents that her case was “hopeless.”

Finding the services of Lutheran Special Education Ministries, for a tuition rate significantly lower than the per pupil tax revenues collected in their local school district, was a watershed moment for the Roe family.

Liz Roe painted a clear picture of the dramatic turnaround in a piece she wrote for the Jan. 24 edition of the Lansing State Journal:

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Because our family could afford the choice, Mia started fourth grade with a clean slate in her new school ….

We finally felt like Mia was in a place where she belonged, where she received individualized assistance for her learning from teachers trained specifically to help her succeed. Instead of a Band-Aid or a diluted curriculum, she was given tools that fit the way she learned. She finally got up in the morning wanting to go to school!

Not every family of special-needs children frustrated by the services they receive can afford such an alternative. Calley’s fifth and final finding reflects the concern: “Support parents more with resources and options,” his report states.

Doubtless the task force is not contemplating the full range of options, because of exceptionally stringent language in Michigan’s constitution that forbids indirect aid to private schools.

Officials are to be commended for seeking to improve public special education services to a consistently high level. But fundamentally, parents ought to decide where the dollars designated to serve their children go.

Currently, nine states have authorized private school choice programs specifically tailored to provide valuable aid to families with special-needs children. Altogether, tens of thousands of students have experienced the benefit.

Among them are Arizona’s Jordan Visser and Max Ashton, Florida’s Faith Kleffel, and Oklahoma’s Phylicia Lewis. Studies in Florida and Arizona have demonstrated significant increases in parental satisfaction. Michigan’s neighbors Ohio and Wisconsin offer similar programs.

We are currently in the midst of National School Choice Week, a grass roots commemoration of parents’ power and freedom to select the best education environment for their children. Getting into the spirit, Gov. Rick Snyder signed a proclamation declaring January 24-30 “Michigan School Choice Week,” as well.

Last year, more than 100 students gathered at the Michigan State Capitol as one of 11,000 events nationwide. This year, the number exceeds 16,000, many of which you can find open to the public.

Here’s hoping that the state’s special education task force leads to better educational services and results for more of Michigan’s special-needs children. But without a drastic policy change, some families will continue to lack a fair shot at the full range of options that just might serve them best.

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