The MC: The Mackinac Center Blog

Vernuccio Cited in Forbes

Why Wisconsin and others become right-to-work

A recent Washington Times opinion piece by Director of Labor Policy Vincent Vernuccio and Brett Healy, president of the John K. Maclver Institute in Wisconsin, is cited in Forbes for supporting evidence for the benefits enjoyed by right-to-work states. On Monday, Wisconsin became the nation’s 25th right-to-work state.

Right-To-Work For Taylor Teachers Begins Today

Mackinac Center Legal Foundation case in the news

Starting today, Taylor teachers are no longer constrained by a 10‑year union “security” agreement, and may opt-out of financially supporting the union if they wish. A request by the Taylor Federation of Teachers and the Taylor School District to place a hold on the ruling, pending the ruling’s appeal in court, has been denied.

The MERC decision called the 10-year agreement “arbitrarily, indifferent and reckless.” Mackinac Center attorney for the case, Derk Wilcox, says “Despite attempts from the union and school district to force these teachers to pay an organization which they don’t agree with, it looks like freedom of association won here.”

News outlets including The Detroit News and The News-Herald have reported on the state's newest right-to-work district.

March 3, 2015, MichiganVotes Weekly Roll Call

Pension debt, double-dipping, film subsidies

Now with one click you can approve or disapprove of key votes by your legislators using the VoteSpotter smart phone app. Visit votespotter.com and download VoteSpotter today!

Senate Bill 86, Authorize more local pension debt: Passed 38 to 0 in the Senate

To extend for one year a 2012 law that allows local governments to incur long term debt to cover unfunded pension liabilities, but only if they close their traditional “defined benefit” pension system to new employees. The 2012 law also allows new debt to pay for retiree health insurance, which unlike pensions is not a legal obligation.

Who Voted “Yes” and Who Voted “No”

House Bill 4078, Spend $24.7 million for state land purchases & recreation projects: Passed 31 to 5 in the Senate

To appropriate $24.7 million from the state Natural Resources Trust Fund. Royalties from oil and gas wells on state land are earmarked to this fund. At least 25 percent of its annual spending must be for land acquisition, and not more than 25 percent for recreation projects.

Who Voted “Yes” and Who Voted “No”

House Bill 4059, Remove sunset on allowing school retiree “double dipping”: Passed 108 to 2 in the House

To repeal the sunset on a law that allows a “retired” teacher to work in schools with shortages in certain subjects and collect pension checks alongside his or her current pay.

Who Voted “Yes” and Who Voted “No”

Notable Committee Actions: Terminate State Film Subsidies

On Wednesday the House Tax Policy Committee voted 8 to 3 to advance a bill that would end state subsidies to film producers. Specifically, the committee sent House Bill 4122 to the full House with a recommendation that it pass.

The previous week the committee heard testimony for and against. On one side were individuals and businesses saying they have benefited financially from the subsidies. On the other side were individuals and organizations critical of the state having spent nearly $500 million on subsidies over seven years with little or no impact on the small number of full time film industry jobs in the state. Notably, the Michigan Chamber of Commerce and the state branch of the National Federation of Independent Businesses recommended that the program be ended.

The current state budget has $50 million allocated for film subsidies. Gov. Rick Snyder has recommended the same amount next year, but is also on the record saying the program should be ended.

Republicans in favor: Jeff Farrington, David Maturen, Lee Chatfield, Gary Glenn, Martin Howrylak, Brandt Iden, Pat Somerville, Ken Yonker
Republicans opposed: None
Republicans not voting: Michael Webber (“abstained”)
Democrats in favor: None
Democrats opposed: Jim Townsend, Wendell Byrd, Bill LaVoye
Democrats not voting: Paul Clemente (“abstained”)

 

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.

Hohman in Wall Street Journal

Right-to-work states enjoy higher per capita income

Research conducted by Assistant Director of Fiscal Policy James Hohman appeared in the Wall Street Journal this week. The article, titled "The Right-to-Work Advantage," discusses the economic advantages and freedom-based benefits that lead states to adopt right-to-work policies. Hohman’s research found that “right-to-work states have 4.1 percent higher per-capita personal incomes than non-right-to-work states” once cost of living is factored in.

Wisconsin is currently considering legislation that would give public and private sector workers the freedom to choose whether they wish to financially support their union. The Wisconsin Senate has already passed the bill and it is now in the state House.

House Committee Votes to End Michigan Film Incentives

$500 million spent with no overall increase in jobs

The House Tax Policy Committee voted 8-3 to end Michigan’s $50 million per year film incentive program. The vote passed House Bill 4122 out of committee and it is on to the full House.

The bill was supported by Rep. Jeff Farrington (R-Utica), Rep. David Maturen (R-Brady Twp.), Rep. Patrick Sommerville (R-New Boston), Rep. Ken Yonker (R-Caledonia), Rep. Martin Howrylak (R-Troy), Rep. Lee Chatfield (R-Levering), Rep. Gary Glenn (R-Midland), and Rep. Brandt Iden (R-Portage). It was opposed by Rep. Jim Townsend (D-Royal Oak), Rep. Bill LaVoy (D-Monroe), and Rep. Wendell Byrd (D-Detroit).

Rep. Michael Webber (R-Rochester Hills) and Rep. Paul Clemente (D-Lincoln Park) abstained from voting.

“It’s on track to be taken up soon, but there is no firm timeline,” said Gideon D'Assandro, spokesman for House Speaker Kevin Cotter, R-Mt. Pleasant.

Passage in the House is the most immediate hurdle the legislation needs to clear, but the general view in Lansing is that if House Bill 4122 is destined to run into obstacles, it will most likely happen after it reaches the Senate.

The vote taken on House Bill 4122 in the House Tax Policy Committee took place as soon as the hearing opened. There was no discussion other than Committee Chair Rep. Jeff Farrington, R-Utica, pointing out that the bill had already received a full hearing a week earlier.

Last week, Assistant Director of Fiscal Policy James Hohman testified in front of the committee, saying film incentives are a poor use of public money.

Taxpayers in Michigan have spent about $500 million on the film subsidy program since it began in 2008. According to the Bureau of Labor Statistics, there has been no overall increase in film jobs in the state. Film incentive programs are widely seen by economists across the spectrum as one of the worst “economic development” programs governments are involved in.

Wright on the Beckman Show

MEA president earning taxpayer-funded pension.

Vice President for Legal Affairs Patrick Wright was a guest on the “The Frank Beckman Show” of WJR Radio to discuss the Mackinac Center’s investigation of the MEA President Steve Cook’s pension. Steve Cook appears to be earning a taxpayer-funded pension as an “employee” of the Lansing School District, despite not performing any duties under the school district.

 

Vernuccio in Washington Times

Wisconsin at work on right-to-work

Director of Labor Policy Vincent Vernuccio and Brett Healy, president of the John K. Maclver Institute in Wisconsin, coauthored an opinion piece that appeared in The Washington Times. The authors discuss the effects stemming from right-to-work passage in Michigan and Indiana.

Wisconsin is poised to follow Michigan as the nation’s 25th right-to-work state. Earlier this week on Feb. 24, Vernuccio testified before the Wisconsin Senate labor committee in support of right-to-work legislation.

February 27, 2015, MichiganVotes Weekly Roll Call

BB guns (‘Ralphie’s Law’), more corporate subsidies, and more...

Senate Bill 71, Extend, expand job training subsidies to some employers: Passed 37 to 0 in the Senate

To eliminate the $50 million debt cap in a 2008 law that authorized state job training subsidies for particular employers, provided through community colleges. Other bills in the package would make this program permanent, and prohibit companies granted subsidies under a different program (see next bill) from “double dipping” by taking subsidies from both programs.

Who Voted “Yes” and Who Voted “No”

House Bill 4110, Revise school aid budget: Passed 23 to 14 in the Senate

To shift funding sources in the current year school budget to compensate for lower than expected balances in the state general fund. This is due to higher than expected payouts to corporations granted selective “tax credit” deals (often cash subsidies) by the previous administration. The unexpected draw-down of some state accounts comes despite revenue collections actually rising faster than spending this year. The bill also reduces spending to reflect lower than expected school enrollment, and suspends payments intended to “catch up” on underfunding of the school pension system.

Who Voted “Yes” and Who Voted “No”

Senate Bill 34, Revise concealed pistol license procedures: Passed 76 to 34 in the House

To eliminate county concealed pistol licensing boards, and transfer their duties to the State Police and county clerks. Personal protection order provisions that triggered a Governor’s veto of a similar bill last year have been removed.

Who Voted “Yes” and Who Voted “No”

House Bill 4160, Revise firearms “brandishing” law: Passed 95 to 15 in the House

To establish that the crime of illegally “brandishing” a firearm requires it be done “willfully.” Also, that using a firearm to defend one’s home or property under a 2006 law repealing a legal “duty to retreat” requirement is not brandishing. House Bill 4161 clarifies the definition of “brandishing” and passed with just two “no” votes.

Who Voted “Yes” and Who Voted “No”

House Bill 4151, Repeal criminal sanctions for minor with BB gun: Passed 80 to 29 in the House

To repeal a law that makes it a misdemeanor for a minor unaccompanied by an adult to possess a BB gun except in his or her own home or yard.

Who Voted “Yes” and Who Voted “No”

House Bill 4155, Revise firearms definition: Passed 88 to 21 in the House

To revise the definition of “firearm” in the state penal code so it longer applies to BB, pellet, paint ball or “air-soft” guns. The new definition would be a gun that “expels a projectile by action of an explosive.” However, using a non-firearm to commit a crime would still be subject to criminal penalties.

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.

Hohman on Film Incentives

Price tag of $500 million for no industry growth

Assistant Director of Fiscal Policy James Hohman is quoted by the Detroit Free Press, Grand Rapids Press, Lansing State Journal, Livingston Daily, WLNS, and HometownLife.com on the ineffectiveness of Michigan’s film incentive program. The House Tax Policy committee continues to debate a bill that would repeal the film incentive program.

The state has spent $500 million on the film subsidies and is authorized to spend another $50 million in the current fiscal year. Over the seven years of the program’s existence, the state has gained no permanent film industry jobs.

LaFaive's Minnesota Senate Tax Committee Testimony

Fiscal policy expert shows analysis of cigarette taxes and smuggling

(The following is a transcript of the testimony given by Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, on February 26, 2015, in front of a Minnesota Senate Tax Committee.)

Good morning. My name is Michael LaFaive and I am director of fiscal policy for the Michigan-based think tank, Mackinac Center for Public Policy. I was invited to speak today by the Minnesota Wholesale Marketers, Grocers and Retailers Associations, respectively.

I am the co-author of national studies on cigarette taxes and smuggling. My colleague, Dr. Todd Nesbit and I, first published a study on this subject in 2008, though our interest in cross-border economic activities pre-dates this work.

Our peer-reviewed statistical study is designed to estimate the degree to which cigarettes are smuggled in the United States. It does so by comparing published smoking rates with legal paid sales per-capita. If smoking rates tell us how much should be smoked but legal paid sales are much lower, the difference must be explained somehow. We believe it is explained by smuggling.

Through calendar year 2013 we estimated that Minnesota’s total smuggling rate was almost 18 percent. Minnesota currently has the 16th highest smuggling rate in our most recent study.

I stress, however, that our most recent study does not yet include the influence of the July 2013 excise tax hike. Our estimate is based on an excise tax rate of $1.60, not the higher cigarette tax rate of $2.83 per pack enacted July 1 2013, nor the automatic increase of another 7 cents per pack on January 1, 2015.  When the higher rate gets factored in next year we expect our estimate for Minnesota’s overall smuggling rate to leap, and dramatically.

To get an idea for the type of smuggling changes that may be reflected in next year’s model update (which would include the 2013 tax hike data) we used our statistical model to run “what if” scenarios for $2.83 and then again for $2.90. Our model told us that:

  • Cigarette smuggling would leap to 32.9 percent of the total market.

That is, of all the cigarettes consumed in Minnesota nearly one-third are illicit. This figure would be higher if we did not subtract out exports to Canada.

I realize this is just an estimate, but if confirmed next year, it would give Minnesota the 5th highest smuggling rate in the nation, displacing Rhode Island in our rankings.

  • When we re-ran the model at the higher excise tax rate of $2.90 the model told us smuggling would increase to 33.7 percent of the market.

That represents a 0.8 percentage point increase year-over-year. If such a figure becomes an annual average increase due to the automatic accelerator Minnesota will easily remain a top five smuggling state.

I know supporters of this hike are very well intentioned. They believe people will quit with higher taxes. They’re right. Theory and evidence show this, too. But not as many will quit as they believe.

Dr. Nesbit and I have pointed to studies that suggests as much as 85 percent of the legal paid sales response to cigarette excise tax increases is a result of tax avoidance and not of quitting. More people are simply getting their nicotine through other — and sometimes more dangerous — sources than are kicking the habit.

Maintaining the automatic accelerator all but guarantees that smuggling and other intended consequences will continue to rise.

Thank you for your time.