Firearm Seizures, Sexual Assault, Lock Away Painkillers and More

Michigan Votes looks at some recently introduced bills

The Legislature is on a summer campaign break with no sessions scheduled before the Aug. 7 primary election, except for one tentatively planned for July 25. Rather than votes this report contains some interesting or noteworthy recent bill introductions.

Senate Bill 937: Authorize “extreme risk” firearm seizures from individual
Introduced by Sen. David Knezek (D), to authorize courts to order firearms to be seized from an individual based on a “reasonable cause to believe” that the person poses “a significant risk of personal injury to himself or herself or others.” Family members, roommates or people in a close relationship with the target could petition a court to issue an order to seize the individual’s firearms, and the court could issue this order without any notice to the target. The bill prescribes standards and procedures for this, and an appeals process. The court order would be in effect for up to one year and could be renewed. House Bill 4706, introduced in the House by Rep. Robert Wittenberg (D), would enact similar provisions. Referred to committee, no further action at this time.

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Senate Bill 944: Revise road tax revenue distribution formula
Introduced by Sen. Steve Bieda (D), to revise the formula adopted in 1951 to allocate state road tax revenues between the state, county and local road agencies. The bill would change the formula from one based on the miles of roads in a jurisdiction to miles of lanes, which would have the effect of transferring more money to more densely populated jurisdictions that have more multi-lane roads. The formula has not been substantially changed since 1951 because there has never been a consensus on how to reallocate this money. Referred to committee, no further action at this time.


Senate Bill 967: Require police agencies have specific form for reporting police sexual abuse
Introduced by Sen. Ian Conyers (D), to require a state board to create a standard form for reporting sexual misconduct by employees of a law enforcement agency, and require the form be distributed to all police agencies. Referred to committee, no further action at this time.


Senate Bill 971: Make drivers slow and move over when passing any stationary vehicle
Introduced by Sen. Morris Hood, III (D) , to revise a law that requires drivers to move over or slow down when passing a police car or other emergency vehicles on the side of the road, by expanding the requirement to include passing any stationary vehicle, not just emergency or service vehicles. Referred to committee, no further action at this time.


House Bill 5734: Mandate “sexual assault and dating violence” lessons in sex ed classes
Introduced by Rep. Tom Cochran (D), to require public school districts that offer sex education classes to include lessons on “sexual assault and dating violence,” and lessons on “affirmative consent.” Also, to require specified state officials and political appointees to develop a model curriculum for this. Referred to committee, no further action at this time.


House Bill 5804: Authorize unlimited tax credits for contributions for Department of Treasury spending programs
Introduced by Rep. Martin Howrylak (R), to authorize income tax credits of any amount for contributions made by a taxpayer to a separate state account the bill would create called the “Advancing Michigan Future Fund,” which could be spent on whatever public purposes that Department of Treasury officials may select. Tax credits that exceed a person’s tax liability for a year could be “carried forward” and used to offset future tax liabilities for up to five years. Referred to committee, no further action at this time.


House Bill 5857: Mandate painkillers come in lockable containers
Introduced by Rep. Joseph Bellino, Jr. (R), to mandate that pharmacists dispense schedule 2 controlled substances (including pain killers) only in lockable vials that require patients to enter a password before they can get their drugs. Referred to committee, no further action at this time.


House Bill 5870: Let communities opt-out of regional transit authority (and tax)
Introduced by Rep. Jeff Yaroch (R), to allow local communities and counties to withdraw from the Detroit area regional transportation authority created by a 2012 law, and presumably from the extra property and vehicle taxes this authority is authorized to impose. Referred to committee, no further action at this time.


House Bill 5871: Repeal local plastic bag ban preemption law
Introduced by Rep. Robert Wittenberg (D), to repeal a 2016 law that preempts local governments from imposing regulations, restrictions or taxes on plastic grocery bags or other "auxiliary containers." Referred to committee, no further action at this time.


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.

Permission to reprint this legislative summary in whole or in part is hereby granted, provided that www.MichiganVotes.org is properly cited.

State Corporate Handout Program Milks Taxpayer for Cass City Operation

Subsidies continue to prove to be utterly pointless

Editor’s note: This article first appeared in the Tuscola Advertiser on June 30, 2018

The state of Michigan operates corporate handout programs that are supposed to create jobs where officials think none or fewer might otherwise be created. One of those initiatives — the Michigan Business Development Program — has given a $500,000 subsidy to Dairy Farmers of America for its Cass City location. Another state agency and programs sweetened the deal with even more handouts and financial incentives, as did the local municipal government.

While DFA may appreciate the taxpayer subsidy and other fiscal favors, the state program promotes unfair competition. It effectively imposes taxes on workers and other businesses for the benefit of a lucky few corporations. The recipients of such handouts are often billion-dollar behemoths and, not surprisingly, easily find financial favors by turning to Lansing politicians and their highly paid lieutenants. Research shows that programs such as the MBDP are typically ineffective at creating net new jobs.

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The MBDP was born in 2011 and was the brainchild of the Gov. Rick Snyder’s administration. It offers direct cash grants, loans and other incentives to corporations that Lansing politicians and other government bureaucrats deem worthy.

One of those is DFA, based in Kansas City. The state gave DFA $500,000 to create just 25 new jobs in Cass City. In addition to this grant, it was also given a $300,000 subsidy from the Michigan Economic Development Corporation’s “corporate funds.” These dollars come from gaming revenues and are not appropriated by the Legislature. The state arranged for an additional $1 million in federal dollars to flow to the project through Community Development Block Grant money.

The Michigan Department of Transportation kicked in a $439,000 grant for road work, and the site was designated an Agricultural Processing Renaissance Zone. This last favor exempts the company from the state education property tax as well as personal and real property taxes for 15 years. In addition to state favors, the village of Cass City offered a $5.7 million incentive, which the MEDC estimated is equal to 85 percent of all the infrastructure investment costs associated with the project.

All told, the value of known federal, state and local incentives exceeds $317,000 per job — and at least half the jobs associated with the MBDP deal pay an average salary of about $40,000 per year, according to state documents. If this sounds like an irrational approach to job creation there’s a good reason — it is.

Between March 2012 and through September 2016, some 33 percent of MBDP deals either had been or were in some stage of default or had been dismissed from the program. The default rate would be much higher if the state were not quick to grant amendments in its various deals that lower performance requirements. In fiscal 2016 alone, the state granted 38 amendments, 28 of which appear to lower some previous performance objective.

In addition, the Mackinac Center built a statistical model to study the impact of the program in counties that hosted these subsidized projects. We found a link between the programs and jobs, but it was negative. For every $500,000 disbursed by the state by the business partnership program, there was an associated loss of 600 jobs. In other words, the program appears to kill more jobs than it creates.

This finding is consistent with other scholarship produced by the academic community. Research from a broad array of scholars shows such programs to be largely ineffective. There are a number of likely reasons.

Politicians in Lansing and elsewhere have little to give any company that they don’t first take from someone else. Any good a subsidy program might do, then, is offset by the cost of the subsidy and the cost of bureaucratic transactions. Government employees don’t shuffle-and-stamp mountains of paperwork for free.

What if, instead of authorizing $16 billion in corporate handouts since 2001, as Lansing politicians did, they instead authorized the same amount for road infrastructure or across-the-board personal income tax cuts? Our economy and more of the state’s citizens would probably be much better off as a result.

There is another insidious cost associated with such programs: favor-seeking. States that maintain large favor-seeking apparatus, composed of hordes of lawyers, lobbyists, contractors and others, do worse economically than those with smaller ones. In other words, the very act of maintaining a fat and expensive corporate handout bureaucracy that rings a “come and get it for free” dinner bell retards economic growth. In his Cato Journal article on this subject economist Harold Brumm concluded, “An implication of this finding is that a state government which promulgates policies that foster sustained artificial rent (favor) seeking does so at considerable expense to its economic growth.”

Big business isn’t playing by the same rules as everyone else, and Lansing politicians make it all possible. They do so by creating unfair competition that transfers taxpayer dollars from the many to the few. It is unfair, and research shows it’s ineffective.

A better approach is to stop milking taxpayers for the benefit of a favored few corporations and instead create a fair playing field for all. End corporate handout programs and the government bureaucracies that manage them. Roll back taxes for all businesses and people while protecting and improving the valuable public services people and companies both need and want, such as a solid transportation infrastructure. We will all be better off as a result.


Related Articles:

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Michigan Lawmakers Consider More Handouts

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Corporate Handouts Run Amok

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How Business Subsidies Cut to the Front of the Line for Michigan Tax Dollars

Politicians focus on higher status than taxpayers

State politicians finalized the budget for next year, pledging to spend $57 billion, of which $23 billion comes from the federal government. Businesses that made special deals with the state, however, get favored treatment. They will collect $644 million from taxpayers in the upcoming year, and they didn’t even have to argue their case in the budget process.

The state signed deals with a couple hundred companies to provide them with refundable tax credits. The tax credits are worth more than what the companies owe in taxes. So to them, these credits represent a “tax” that gives them money instead of a tax that provides revenue to the government.

The $644 million could repave a bunch of roads. Or buy the state a half dozen F-35 fighter planes. Priorities.

The spending shows that business subsidies have a higher priority in another way. It goes to companies without legislators first having to approve it in the budget. It gets counted in state revenue estimates and the state doesn’t consider it spending.

The state stopped offering new deals in 2012, but the deals extended up to 20 years into the future, so taxpayers will continue to pay out for years to come. By one state estimate, there is another $7 billion left to pay out.

The state got back into the refundable tax credit ruse last year. Lawmakers authorized new programs to pledge another $1.2 billion of taxpayer money. And they’re considering new programs this year.

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In an attempt to justify the spending, lawmakers sell the excuse that the subsidies will pay for themselves. They argue that subsidies encourage growth that wouldn’t happen otherwise and thus send more money to Lansing. Try to use the same rationale with your representative for some spending you’d like to do, and see how far that gets you.

Not far? That’s because it’s not about the economy. State politicians know that these programs cost taxpayer dollars. It is not about fairness, either. They know that recipients cut to the front of the line. It is about status. The people getting these deals have higher status, in the eyes of politicians, than regular taxpayers.


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National Publications Cite Mackinac Center in Wake of Supreme Court Decision

Staff members quoted in The Wall Street Journal, USA Today, The Washington Post and more

Last week, the U.S Supreme Court gave freedom to millions of workers across the country with its ruling in Janus v. AFSCME. Government workers in 22 states are no longer forced to pay unions any types of fees as a condition of employment. The Mackinac Center’s amicus brief was cited in the decision.

Over the years, the lines between unions and political activism have been questioned. Vincent Vernuccio, senior fellow with the Mackinac Center, told The Daily Signal what the Janus case says about the politicization of unions:

We are not just talking about direct donations to candidates. When unions are negotiating for higher salaries and more benefits, those are taxpayer dollars we are talking about, and the decision to raise salaries and benefits at taxpayer expense is a policy choice that not everyone shares. At the heart of the Janus case is the idea that government unions are purely political.

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This is not the first time the Mackinac Center has faced off with unions. The Mackinac Center has spent decades fighting for worker freedom, both in its home state of Michigan and nationally. When Michigan became a right-to-work state in 2012, the Mackinac Center helped 100,000 workers exercise their rights — but the road to freedom is never an easy one.

Joseph Lehman, president of the Mackinac Center, and John LaPlante, a senior fellow with the Center, recently wrote in USA Today about some of the roadblocks Michigan encountered when it became a right-to-work state.

Some of the union’s locals enacted their own schemes. Conspiring with local school boards, they violated state law by setting up special deals known as union security agreements. Their purpose: obligate school employees to pay the union an amount equal to 75 percent or more of membership dues, even after leaving the union. While a standard school contract lasts three years, the security agreement in one district was set for 10 years, even as the collective bargaining agreement called for a 10 percent pay cut. In December 2017, or five years after Michigan enacted right-to-work, teachers were still asking groups such as the Mackinac Center to take legal action against union locals that wouldn’t let them go.

Anticipating a similar response from unions in the states directly affected by a positive Janus decision, the Mackinac Center created a national campaign known as My Pay My Say. Launched in March, the My Pay My Say is educating workers across the country about their rights.

Lindsay Killen, vice president for strategic outreach and communications, told The Wall Street Journal what the effort will entail:

Our efforts will be hyper-focused on the 11 states with the highest number of public employees. Workers are going to need to understand the impact of that ruling.

The efforts of My Pay My Say have been crucial in the wake of the decision, as unions are already pushing back. Patrick Wright, vice president of legal affairs for the Mackinac Center, wrote in the The Washington Post:

In response to Janus, unions and their legislative allies are already taking steps to blunt the impact of the ruling. Tactics have included legislation limiting the dates during which employees could resign, requiring new employees to attend a union sales pitch and preventing third parties from obtaining government employee information, thereby making it more difficult for those parties to inform the workers of their new Janus rights.

Despite union pushback, the Mackinac Center will continue to bring awareness to workers across the country through its My Pay My Say campaign. To learn more, visit mypaymysay.com.


Related Articles:

Supreme Court Restores, Strengthens Rights For Millions Of Public Employees In Janus Ruling

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Mackinac Center Files Amicus in Pivotal Right-to-Work Case

Dems Get 99.9 Percent of 2018 Teacher Union Political Cash

A Political Fiction that Won’t Go Away

Candidates wrongly claim state education funds have been cut

Even as the state once again approves more dollars for Michigan schools, the notion that their funding has been cut remains a political fiction that just won’t go away. In the latest case, all three Democratic candidates for governor have based their education platforms on that claim, and all three are wrong.

Gov. Rick Snyder recently signed into law a budget that gives nearly $17 billion to the state's public schools, universities and community colleges. Of that amount, $14.8 billion (including $1.7 billion in federal funds) will go to K-12 education.

For schools, that $13 billion from the state treasury is a big increase from eight years ago, even after adjusting for inflation. The increase comes even though Michigan has about 89,000 fewer students to pay for than it did then. Yet the three Democrats who all want the keys to the state's executive office refuse to let basic facts get in the way of a good story.

“Our educational system has shown a steady decline in recent years because Lansing politicians have cut funding,” Shri Thanedar says. His rival Abdul El-Sayed similarly laments that Michigan's “public education system has been ravaged by disinvestment.”

And front-runner Gretchen Whitmer's campaign plan alleges that “over the past eight years, Republicans in Lansing have sided with Betsy DeVos to push an education agenda that included slashing school funding.”

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Today’s Democratic gubernatorial hopefuls also carry on a tradition that dates back at least to their party’s 2014 candidate, plus the state’s last Democratic governor and the party’s current legislative leadership.

While it’s useful to know that the state continues to set aside more money for K-12 education, another important question is how it distributes those funds. As widely reported, the highlight of this year’s school aid budget is a sizable boost to the foundation allowance, the guaranteed minimum revenue that districts get for each student. The state assigns these core dollars to districts and charter schools based strictly on the number of students who enroll.

Media reports have done little to inform people that lawmakers increased the foundation allowance, in part, by trimming the number of dollars assigned to categorical grants. These are annual grants the Legislature makes to school districts and other local agencies for specifically designated purposes. School district officials across the state should welcome the increased flexibility the shift gives them.

Future state leaders should do more to shift funding from these grants, many of which follow political priorities rather than students, to the foundation allowance. To her credit, Whitmer prescribes redirecting more than $100 million from legislative “pet projects.”

Such change could help reverse another ongoing trend we should understand. The state's intermediate school districts have been the biggest beneficiaries of extra state revenue in recent years. In 2017, ISDs directly served about 1 percent of Michigan’s public school students (mostly in special education programs), but they spent about 10 percent of K-12 dollars. That figure doesn’t, by the way, include certain funding streams passed through ISDs for programs they administer on behalf of other units of government.

Allocating more of the state’s education dollars through the foundation allowance — attaching them to students — would help move some power from these regional bureaucracies back to local educators and to families seeking the best schools for their children. Lawmakers could take that approach without raising additional taxes.

But setting the right course toward wiser spending of education dollars also requires having a clear and accurate picture of where we have already been, especially if your case relies on claims that don’t match the historical record. Some Michigan candidates for governor have extra homework to do.


Related Articles:

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Snyder Budget Whacks $10 Million from Business Subsidy Programs

Pure Michigan scores $1 million increase

Gov. Rick Snyder has signed his last budget (fiscal year 2019) into law, and it manages to cut more than $10 million, or 8.8 percent, of spending on two major subsidy areas of his own creation. Despite this reigning in of the state’s corporate and industrial handout complex, the state’s tourism promotion wing garnered an extra $1 million for a 2.9 percentage point increase.

Both types of spending should be reduced to $0 and the money spent instead on more vital priorities. These include, but are not limited to, higher spending on efficient transportation infrastructure or cuts to Michigan’s personal income tax rate.

The “Business attraction and community revitalization” line item in the state budget will be funded at $105 million and supports the Michigan Business Development Program and the Michigan Community Revitalization Program, along with several smaller items.

I recommend cutting every dollar from the business attraction portion of the line item. It funds the grants given out by the Michigan Business Development Program, something the Mackinac Center has studied at length. The MBDP was created to replace the failed Michigan Economic Growth Authority program, and it was supposed to create jobs by handing out taxpayer-funded subsidies to companies state bureaucrats deemed worthy of fiscal favors. But it has failed in its task.

Mackinac Center research released last February showed that – by our count – one-third of all deals approved between 2012 and 2016 were in or are in some stage of default or had been dismissed from the program outright. A statistical model we created to isolate the impact of the program showed a negative impact: For every $500,000 in grant money disbursed, there was a loss of some 600 jobs in the average county in which projects were located.

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Another program that should be cut is the state’s Pure Michigan tourism promotion program. It is also a money-losing venture for state taxpayers.

The state says that the campaign is successful, but its conclusions are built upon questionable methodology. As just one example, the state claims Pure Michigan has a huge return on investment. The contractors who estimate that ROI, however, exclude about 50 percent of the costs associated with the program, including the cost of making the commercials — a keystone of the program. Where else but government can you ignore the cost of an investment while promoting the benefit of that investment?

The state’s corporate handout complex deserves to have its budget cut, and cut deeper than we have seen this year. Still, it’s a good start, and the next governor could cut more still. He or she could do better by spending the money on transportation infrastructure or letting people keep more of what they earn through a cut to the personal income tax rate.


Related Articles:

State Business Handout Program Wastes Another $2 million

Legislature Approves New Business Subsidies

A Look At The State Budget for Business Subsidies

How Business Subsidies Cut to the Front of the Line for Michigan Tax Dollars

Governor’s 6-Year-Old Corporate Handout Program Should Be Shuttered

Legislature Approves New Business Subsidies

Big budget bill makes it more difficult to hold lawmakers accountable for spending

Lawmakers approved a new budget containing $162 million in new business subsidies. Unfortunately, holding lawmakers accountable for these votes is difficult and they will not factor into our legislative scorecard on business subsidies.

That is because the votes are in a budget bill that includes the rest of state government spending, aside from funding for public schools, community colleges and higher education. The bill authorizes $39.9 billion in total spending, $20.8 billion of which comes from the federal government (which state residents contribute to in part, obviously). Thus, the $162 million is just a small part of a $39.9 billion budget bill and makes for a pretty lousy test of an individual lawmaker’s support for new business subsidies. This is why we excluded these types of votes from our business subsidy scorecard.

It didn’t use to be this way. Lawmakers used to vote for separate bills for each department. That meant that legislators faced more direct accountability concerning their stance on business subsidies or other issues. They could vote yes for some budget bills and no on others.

It is unclear whether splitting budget bills up or voting on one big omnibus bill makes a difference on how much and what type of spending lawmakers approve, however. The latest budget contained a small reductions in spending on business subsidies, for instance.

A portion of the new subsidies are included in our scorecard, however, because the funding was approved in a separate bill passed by legislators back in 2013. The budget authorizes $75 million from the 21st Century Jobs Fund to be spent on subsidy programs. This money was set to expire in 2016, but lawmakers voted in 2013 to extend the program through 2019. Lawmakers wouldn’t have the money to spend in this year’s budget had it not been authorized in 2013.

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The money from this comes from the state’s settlement with tobacco companies years ago, and this could be spent elsewhere or returned to taxpayers if it wasn’t spent on business subsidies. The vote to extend this arrangement had seven dissenters in the Senate — all Republicans — and 26 dissenters in the House, 23 Republicans and three Democrats.

All told, $16.1 billion in business subsidies have been authorized since 2001, $6 billion of which we include in our legislative scorecard on business subsidies.

 


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Another MBDP Jobs Subsidy Project Doesn’t Work

State officials can’t pick economic winners from losers and shouldn’t try

In a previous blog post, I have highlighted companies that received subsidies from the Michigan Business Development Program and then later filed for bankruptcy. The taxpayer dollars lost by state officials in those deals will likely never be paid back.

Those were poor choices made by government officials in Lansing, but they are far from being the first and unlikely to be the last. The MBDP itself is a failure. State taxpayers should demand a repeal of the program and insist that their money be used for higher spending priorities — such as road infrastructure — or be returned to them by cutting the personal income tax rate.

The most recent MBDP stumble to pop up in the news involves Adient Plc. The firm announced in 2016 that it planned to move its headquarters to downtown Detroit. It was offered a $2 million grant to add 115 new jobs at that location from the Michigan Strategic Fund, one of the state’s economic development agencies. Adient has since reversed course, telling Crain’s Detroit Business that “it can no longer fund the project in a way that will properly restore this historic gem to the city’s landscape.”

The good news here is that the state has not yet paid out any MBDP subsidies to the company. The bad news is that it is yet another example of the state’s inability to bet on a winning horse. Adient has struggled with its profitability, and any firm’s financial prospects are hard to predict, even for highly trained investors, let alone state bureaucrats. Oddly enough, officials’ inability to properly anticipate the future didn’t stop the state from issuing one of its frequent brag notices.

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Developing the D” was the headline on its Nov. 11, 2016, press release celebrating state incentives for two firms, including Adient. These deals would, allegedly, attract hundreds of millions of dollars of investments and add more than 200 jobs to the Motor City, according to the Michigan Economic Development Corporation.

“These projects reflect each private companies’ long-term commitment to the economic viability of Detroit,” said Steve Arwood, then the MEDC’s chief executive. But clearly, the very economic viability of Adient itself prevented the company from keeping any long-term commitment to Detroit, a fact that should not be lost on policymakers. Those who take money from lots of people and give it to a few in the name of job creation are not imbued with magical talents for seeing the future. That is probably why so many business handout programs do so poorly.

State governments have been running economic development, or “jobs programs” for decades, and economists have been studying them for nearly that long. The verdict on them is unflattering. Most disinterested reports seem to show that economic development programs are not the job- or wealth-creating dynamos their supporters hope. Simply put, they don’t have good track records.

For the MBDP, a Mackinac Center analysis found that from 2012 through 2016, some 33 percent of deals had been or were in some stage of default or had been dismissed. Our statistical analysis indicated that for every $500,000 offered, there was a corresponding loss of 600 jobs in the average county in which projects from the development program were located. In other words, it hurts more than helps.

Adient now joins a long list of deals that have come to the public eye with promises that were not kept. The state should get out of the corporate subsidy game and instead adopt more useful policies. Those include, but are not limited to, investing more in state transportation infrastructure, or cutting taxes for all.


Related Articles:

State Corporate Handout Program Milks Taxpayer for Cass City Operation

State Business Handout Program Wastes Another $2 million

State’s MBDP Job Creation Claims an Inconvenient Fiction

Snyder Budget Whacks $10 Million from Business Subsidy Programs

Bonfire of the Bureaucratic Vanities

Higher Taxes Would Offer Little for Ottawa Schools

Millage money more fairly shared, but promises little results

The Holland Sentinel recently broke the news that local officials are weighing a tax increase to bump up spending on many West Michigan schools. But a fuller perspective of financial facts and trends should give voters a reason to pause and consider whether more funding necessarily leads to student success before they adopt this approach.

According to the June 12 article, the Ottawa Area Intermediate School District board is considering whether to add a regional enhancement millage to this November’s ballot. Millages are taxes assessed on a home or business, using a definition of property value specified in law. School districts can request a tax increase for construction or infrastructure projects, but they can’t do so for their general operating expenses. To get more operating funds, they can petition an ISD to place a regional tax on the ballot.

This type of millage has been available to the state's 56 intermediate school districts since 1997. But only six ISDs currently collect a tax from local residents. Monroe, Kalamazoo, Midland and Muskegon have had one in place for several years. The option gained further traction when two of the most populous regions in the state signed on. Wayne County voters approved an $80 million regional enhancement millage in fall 2016, and Kent County followed suit with a $20 million tax in May 2017.

What would set Ottawa’s situation apart is a new legislative requirement that the regional tax dollars must be shared by charters and conventional districts, on a per-student basis. Charters in the other six ISDs receive none of the regional enhancement millage funds. Charter public schools, which operate independently of districts, have no other means of raising local property tax funds for any purpose.

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The proposed 0.9-mill tax would cost Ottawa ISD taxpayers roughly $45 per year for every $100,000 of property value they own, likely raising $10.5 to 11 million annually. Since there are roughly 50,000 public school students in the affected area, including more than 3,000 in charter schools, an approved millage would generate a little more than $200 for each student. That's an average increase in revenue of about 1.5 percent.

The area's charter schools, on average, would still receive about $3,000 per pupil less than the surrounding districts, which made for a disparity of $12,600 vs. $9,600 in 2016-17. But at least the new law would prevent this millage from expanding the district-charter revenue gap.

(An exception may be iCademy Global, a Zeeland-based online charter school. At least 80 percent of cyber school students must reside within the ISD before it gets a share of the millage money. Only two-thirds of iCademy Global's 2017-18 students live in the Ottawa ISD – an area which includes Holland, Hudsonville and Grand Haven.)

The Sentinel article attempts to make the case for the tax, saying that funding is declining, both in districts that are losing students and in those that are growing. But, even when adjusted for inflation, Ottawa districts took in and spent about 5 percent more money per student in 2017 than in 2004.

Additionally, two Mackinac Center studies demonstrate that simply increasing spending on district schools won’t necessarily result in better student outcomes. A 2016 analysis found no relationship between extra school-level spending and better outcomes for students on 27 of 28 measures. And according to a study published earlier this year, charter schools in both Holland and Zeeland, as well as in most other cities, get a significantly better bang for their buck in state test scores than do neighboring districts.

Should Ottawa ISD proceed to ask voters for a regional enhancement millage this fall, voters should be skeptical that those extra dollars would actually help improve student achievement.


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State Business Handout Program Wastes Another $2 million

Another state subsidy deal fails to deliver

The state’s Michigan Business Development Program, a creation of the Gov. Rick Snyder administration, was meant to replace the demonstrably failed Michigan Economic Growth Authority program and — presumably — have more success at creating jobs. The Legislature should shut down the MBDP in its entirety, but short of that, cut the program’s annual budget at least by the amount of taxpayer dollars it loses to bad decisions.

One such bad choice involved RNFL Acquisition LLC, which was located in Marquette County in the Upper Peninsula. This firm did business as “Michigan Renewable Carbon” and was a subsidiary of Biogenic Reagents. It was given $2 million in state subsidies through the MBDP and a “Renaissance Zone” designation, which exempted it from real and personal property taxes. State officials did this for a firm that they knew was “in a pre-revenue stage” and that, without the subsidy, the “project could be at risk.”

The state subsidy deal required RNFL to create 27 new jobs and comply with “revenue participation” terms, which mandated it to pay back to the state 112 percent of the subsidy — that, is, a profit. Michael Finney, then CEO of the Michigan Economic Development Corporation, said that several subsidy deals, including this one, “demonstrate growing momentum of real opportunities here[.]” The MEDC serves as an administrative arm of the Michigan Strategic Fund and recommends MBDP deals to the strategic fund’s board.

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But it was not to be. RNFL Acquisition laid off its employees in June 2016, according to Development Specialist’s Inc., which was hired to help solve the company’s debt-related issues. The company pursued a state-level proceeding that is very similar to Chapter 7 federal bankruptcy law by becoming an “assignee for the benefit of creditors.” This arrangement, according to one description, is “an interesting alternative to a bankruptcy proceeding where the parties’ primary goal is designed to liquidate and distribute assets.”

A March 2018 report to the Legislature from the MSF and MEDC acknowledges that the company defaulted on its deal and that “the MSF is currently in discussion with the company regarding a repayment of funds.”

The discussions must not have gone well. The MEDC’s spokeswoman, Michelle Grinnell, said, via email, “We have not received any repayment, and at this point don’t expect that we will. The asset sale was not sufficient to cover all of the creditors, including MSF.” Despite this failure, the company deal still appeared on an MEDC webpage as late as June 7, 2018, under the heading “Pure Michigan’s Business Success Stories.” In summary, state taxpayers ponied up $2 million in job creation subsidies that didn’t create any jobs.

The choices made by the state’s economic development agencies frequently fail to work out as advertised. RNFL is just one company in the suite of bad decisions made by state officials, joining others such as Cherry Growers Inc. of Traverse City, Spiech Farms of Paw Paw and Suniva Inc. of Saginaw.

The Mackinac Center’s research has found that one-third of the Michigan Business Development Program deals approved between 2012 and 2016 either were or are in some stage of default or had been dismissed from the program outright. Failed deals, it seems, are a regular occurrence. Even those that don’t face a formal or quasi-bankruptcy may be a drag on the economy.

As part of our analysis, Mackinac Center scholars created a statistical model to isolate the impact of the program. We found that for every $500,000 in grant or loan subsidies, there was a corresponding loss of 600 jobs in the counties in which these projects were located. In other words, the program did more harm than good.

Biogenic is just another failed subsidy deal. State bureaucrats thought it was a good vehicle for risking taxpayer dollars, but it didn’t pan out. A larger review of deals approved between 2012 and 2016 show the whole program is ineffective and expensive.

The MBDP should be eliminated and its current appropriations used to fix roads, or cut taxes for everyone, not a favored few. Short of that, lawmakers may wish to consider reducing annual appropriations to the MBDP by the amount it loses in bad deals.


Related Articles:

Study: Michigan Business Development Program of Questionable Merit

Snyder Budget Whacks $10 Million from Business Subsidy Programs

Want Money For Roads? Take It from This Failing Program

Governor’s 6-Year-Old Corporate Handout Program Should Be Shuttered

Firm Gets $220,000 State Subsidy Deal, Files For Bankruptcy