Michigan made better choices on forest management

Good Neighbor Authority has proven to be a good choice

In a recent op-ed, published in The Hill, I pointed out that poorly managed federal lands are the source of many of the fires being widely reported in the media. Fires on public lands are often aggravated by a condition known as the “process predicament,” where land managers are handcuffed by onerous regulations and strident protests from special interest groups, leaving them unable to move forward on necessary land management. That inability to manage ensures that when fires strike, the flames have all the fuel they need to grow into dangerous and destructive conflagrations.

While the op-ed focused on California’s fires, many of the same challenges face Michigan’s public land managers. Clearly Michigan and California have different climates and, like so many Western states, California has a much higher percentage of federally owned and managed lands (45.9%) than Michigan (10.0%). But Michigan has made better choices, by going further and faster with the Good Neighbor Authority, a federal program that allows state foresters to carry out essential forest management activities on federal lands.

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Conflict to Collaboration, a Mackinac Center report on how collaborative management techniques can be used to better manage Michigan’s federal lands, explains how the GNA program is growing in Michigan. After the state signed a 10-year agreement with the federal government in 2015, Michigan foresters have helped to manage several thousand acres of federal forests. Good Neighbor Authority projects are expected to cover as many as 6,000 acres of federal forests in Michigan in 2019. This is a small amount when compared to the total of 3.6 million acres of federal lands in Michigan. But the program is still in its early stages and is receiving support at both the state and federal levels.

In contrast, a 2018 report by the Rural Voices for Conservation Coalition argued that due to “strict state-level environmental regulations, more limited state capacity in forest resource management, and fewer timber-driven projects, California has struggled with how to effectively expand the use of GNA.”

Whether in the form of individual commenters to an op-ed, or influential environmental interests, the groups opposed to logging in California represent the challenges the state faces. When limited and reasonable fuel management options are suggested as a means of reducing fire risk, the hand-waving and opprobrium is immediate. The critics lash out at suggestions that the state allow selective logging to help address fire risk. They claim only the biggest and most valuable trees will be cut — a practice known as high-grading — or that managers will sell natural areas to logging and industrial interests.

But their professed concerns for the natural environment are belied by their apparent refusal to recognize some basic ecological realities. They attack essential forest management prescriptions, claiming that stopping climate change is the primary — or only — means of addressing the issue. Even if one conditionally accepts the theory that climate change is the reason for the massive fires, reducing the dangerous buildup of dead or dying trees, shrubs, and grass on public lands still remains the best method of reducing fire risk.

In fact, if climate change were making California’s droughts more extreme and encouraging increased insect attacks on its forests, active forest management would be even more important. That is because removing old, dead, and dying trees, as well as dense shrubs and grass before extreme heat and drought can dry them out, will make future fires less intense.

In other areas, like the land around Paradise, California, public lands are thick with grasses and shrubs, as opposed to forests. In those areas, the proper management mix is to send in crews with hand tools, or to allow grazing so livestock can consume the dense vegetation before it becomes a fire hazard. This is especially important in developments that are next to natural areas at risk for wildfire (known as the wildland-urban interface). In any area, however, carefully managed prescribed burns can also be used to help decrease fuel loading — the built-up flammable materials described above — and to reduce fire hazards.

The growing impacts of these massive fires have caught the attention of California’s elected officials. Even outgoing Gov. Jerry Brown — not well-known for actively supporting the forest industry — encouraged the California Legislature last August to remove the heavy restrictions on logging that have been demanded by environmental groups.

In the past, natural and human-managed fires burned through wooded areas frequently. Regular, limited fires reduced fuel loads and kept many of the big, hot fires from occurring. Today, strict regulations that require natural areas to be managed in a roadless and imaginary wilderness-like state, compounded by the Forest Service’s traditional policy of immediately suppressing all forest fires, have put us in the current precarious state.

Together, these well-intentioned but simply outdated management options have ensured that trees on many public lands have become decadent and overgrown, and more susceptible to disease and fire. We should return to a more active style of managing forests by opening them up and rejuvenating them with proper harvesting techniques, or with thinning and spacing trees in densely packed, overly mature stands.

By doing that, we can move beyond the demands that human activity be stopped in service to climate concerns. By doing that, we can reinvigorate forests and reduce fire hazards and, more importantly, save human life, as well as private and public property.

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December 7 MichiganVotes roll call

Senate Bill 1250, Create non-partisan “Fair Political Practices Commission” to oversee election law: Passed 25 to 11 in the Senate
To create an independent, bipartisan commission within the Secretary of State department that would prescribe rules and definitions related to many campaign finance and election law provisions, including the political redistricting process created by voter passage of 2018 Proposal 2. The commission would consist of three Republicans and three Democrats named by their state parties, in a manner similar to the Federal Election Commission. This and Senate Bill 1254 are reportedly intended to prevent a future Secretary of State from potentially making partisan choices in the many areas of these laws where important details are left to the discretion of state officials.

Senate Bill 1238, Prescribe rules for early voting, same-day registration, more: Passed 26 to 10 in the Senate
To prescribe details of rules needed to implement the election-day registration and early voting provisions enacted by voter approval of 2018 Proposal 3. That measure eliminated the requirement to register to vote at least 30 days before an election; authorized “no reason” absentee ballot voting for all voters; mail-in voter registration; automatic registration with drivers license or state ID interactions; and a straight-ticket voting option. Senate Bill 1254 would similarly prescribe rules for the political redistricting process required by voter approval of 2018 Proposal 2.

Senate Bill 1197, Authorize Straits of Mackinac pipeline and utility tunnel: Passed 25 to 13 in the Senate
To create a new Mackinac Straits Corridor Authority with the duty of overseeing the construction, maintenance, operation, and decommissioning of a utility tunnel under the Straits of Mackinac, which among other things would contain a controversial oil pipeline.

Senate Bill 1211, Revise restrictions on owners of property deemed “wetland”: Passed 23 to 14 in the Senate
To revise many rule and process details related to enforcement of restrictions imposed on owners of property deemed to be a wetland. The bill is said to give state officials less discretion in interpreting regulations in a way that restricts use or subjects landowners to sanctions. Among other things it would authorize damage awards to property owners harmed by such actions unless the state demonstrated that its position was "substantially justifiable."

House Bill 6269, Take over federal coal ash permit program: Passed 103 to 3 in the House
To provide for assumption by the state of a federal permit program for coal ash disposal and landfills. The bill proposes many revisions to a comprehensive state environmental regulatory regime to accommodate this proposal. This would align state law and regulations with provisions of a 2015 federal law, and largely resolves an ongoing controversy on addressing this issue.

House Bill 5939, Repeal preemption of some local fireworks restrictions: Passed 92 to 17 in the House
To revise a 2012 law that restricted the authority of local governments to regulate fireworks use. Under the bill a local government could not restrict fireworks use on New Years Eve and from midnight to 1 am on New Years Day; until 11:30 pm on the Saturday before Memorial Day and on weekend before the Fourth of July, and on the Saturday before Labor Day until 11:30 pm. Also, to add new requirements and restrictions on seasonal licensed fireworks retail operations, and require them to have signs that explain time and place restrictions on fireworks use. A related bill would regulate "sky lanterns" as consumer fireworks.

House Bill 6465, Adopt Coast Guard ballast water discharge permit standards: Passed 80 to 28 in the House
To adopt the U.S. Coast Guard standards for ballast water discharges from oceangoing vessels. Michigan adopted its own permit requirement and standards in 2006, which was before the Coast Guard finalized theirs in 2012, and the bill would make compliance with the federal rules sufficient to get the state permit, which would still be required.

House Bill 6553, Empower legislature to intervene in legal challenges to state laws: Passed 58 to 50 in the House
To authorize the state legislature, including either the House or Senate on their own, to intervene in any court of this state to protect a right or interest of this state, or of that body. The bill is reportedly intended to allow a future legislature to pursue the legal defense of previously passed laws it favors should future Attorney General, Secretary of State or Governor choose not to defend them in court.

Senate Bill 1171, Initiated minimum wage law 're-do': Passed 60 to 48 in the House
to revise the initiated law enacted in Sept. 2018 that increased the state minimum wage mandate. The original version of this law was brought to the legislature by a petition drive, and would have increased the current $9.25 minimum to $12 in 2022, and eliminated a separate lower minimum wage that applies to tipped workers. This bill extends the phase-in of the $12.05 minimum to 2030, keeps a separate and lower minimum wage for tipped workers (employers must still pay the difference if tips come up short of making the regular minimum wage), and eliminates indexing the minimum wage to inflation.

Senate Bill 1175, Initiated paid leave law 're-do'
To revise the initiated law enacted in Sept. 2018, which imposed an employee paid leave mandate on employers. The original version of this law was brought to the legislature by a petition drive, and would have granted workers one hour of paid leave for every 30 hours worked, up to a maximum of 72 hours a year. The revised version mandates one hour of leave for every 35 hours worked, with an annual paid leave cap of 40 hours. Firms with 50 or less workers would be exempt. The revised version also removes provisions that would impose extensive record keeping requirements on employers, with a potential legal presumption that incomplete records means an employer has violated the law. The Senate has concurred with these changes and sent the bill to the Governor for approval. The Senate has concurred with these changes and sent the bill to the Governor for approval.


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Striking a Balance on Environmental Regulations

'No more stringent' will benefit Michigan

It’s nice to be able to chalk up a win every once in a while. It’s even nicer when that win has the threefold benefit of helping Michigan’s businesses compete, protecting Michigan’s environment and promoting transparency in state government. For nearly 14 years, the Mackinac Center has encouraged the state of Michigan to adopt legislation that would keep state agencies from imposing environmental regulations that are more strict than those already imposed by federal regulators. The House had passed this legislation — House Bill 4205 — in May 2017; the Senate finally caught up and passed the bill yesterday. It’s now Gov. Snyder’s turn.

In a January 2005 blog post, my predecessor and former director of the Michigan Department of Environmental Quality, Russ Harding, encouraged legislators to pass, “a law that curtails the Michigan Department of Environmental Quality’s ability to issue regulations that are more stringent than those of the federal government.” We have repeated that request in a mix of publications since that day.

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Our 2010 pamphlet, “Environmental Regulation in Michigan,” recommended that legislators who are unable to settle on an appropriate regulatory path for the state, “should at least pass a law that prevents state agencies from promulgating regulations more stringent than federal requirements without approval of the Legislature.” Then again in a May 2018 blog post, we described the bill, as it had been passed by the House.

In each missive, we reiterated the value of this legislation. Among those benefits were, the fact that the bill will help Michigan’s businesses avoid burdensome and repetitive paperwork, as well as thousands of dollars in unnecessary costs complying with duplicative state and federal regulations.

And we weren’t alone. The National Federation of Independent Business agreed, arguing in their March 2017 testimony to the Michigan House Oversight Committee that regulatory pressures disproportionately impact small businesses. They pointed out that federal regulatory burdens alone impose costs as high as $11,724 per employee in 2012 — as much as 36 percent higher than those paid by larger businesses. HB 4205 will help reduce these costs for small businesses.

Additionally, given the critiques being leveled at the Senate version of the bill, Harding’s 2005 argument that “a good argument can be made for the law on environmental grounds alone,” is especially pertinent. That is because groups like the Natural Resource Defense Council and the Michigan League of Conservation Voters have attempted to tie the legislation to concerns over the use of certain chemicals known as PFAs. They attack the bill, claiming it will stymie state efforts to regulate dangerous chemicals before EPA regulations are written.

But such an argument can only be made if one has not read the text of the law. HB 4205 has a clearly stated safety valve for the situations that Michigan’s environmental groups are raising as a concern. When an unusually dangerous situation presents itself — whether there is federal regulation already in place, or the feds have not yet moved on an issue — the bill would allow state agencies to make the case for a more stringent standard. They must simply demonstrate a “clear and convincing need” before they are allowed to impose a more stringent standard.

With that in mind, it quickly becomes clear that media reports tarring the legislation with inflammatory epithets like “a double-barreled assault on state-level environmental protections” are more about frightening headlines than a strong connection with real, serious environmental concerns. The strength of this legislation is in its recognition of the value of reasonable environmental regulation, while still protecting Michigan’s businesses, and promoting transparency in the regulatory decisions made by state agencies.

Once again, it is time for Gov. Snyder to step up and complete the job.

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The supporters of the paid sick leave ballot proposal are upset that the Legislature is considering amendments to it. They argue that the amendments “gut” the proposal. But even with the changes and even with improving the compliance problems the original proposal creates, this remains an expensive mandate on employers that will likely do many employees more harm than good.

The proposal originally required that workers get one hour of paid leave for every 30 hours they work, up to nine days per year for larger employers and five for smaller companies. The amendments changed this to 40 hours and a cap of 4.5 days annually.

While the majority of employers already offer paid sick leave, the proposal and the amendments makes these benefits mandatory. Given the breakdowns for the number of employees covered, the proportion of business establishments with fewer than 10 workers, the proportion of part-time workers as a percentage of the workforce, the average hours worked by part-time employees, and the average hourly wage, the proposal requires an estimated $7.1 billion in benefits to be paid out. The amendments reduce this mandate to about $3.4 billion.

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That is not the increased cost of the benefits, though, it is only the cost of the mandate. Employers already providing benefits at these rates won’t face new costs. Assuming that all employers providing paid leave benefits offer them at levels at least as generous as the new mandate, and that Michigan offers the same proportion of paid leave benefits as the regional average, employers are going to need to provide an estimated $2.3 billion in new benefits. The amendments proposed by the Legislature reduce this to about $1.1 billion.

Even the amended mandate will cost businesses more than the corporate income taxes this year. And it does not include the extra human resources costs to comply with the mandate.

There may be some further unintended consequences if employers are required to pay $2.3 billion or $1.1 billion in paid leave benefits. They have options to lower their costs elsewhere. They may cut back on vacation days. That would be a loss for employees that would prefer to have vacation days rather than paid sick leave. Or they may drop the average wage rates. Or they might lay off employees as the mandatory costs of employment increase.

Bottom line: These new mandatory costs will be paid for by reductions in spending elsewhere, and it’s likely that most businesses will have no options but to make changes that will result in more employees being worse off than before. As others have put it, there’s no free lunch.

While the amended mandate is still an expensive requirement, it fixes the compliance problems of the proposal. The proposal gave little recourse for employers to ensure that benefits were being used for allowable purposes. An employee could be a “no-call, no-show” with impunity. The business could not even request an explanation about why an employee was missing work until the worker missed three straight days. Complaints from employees could give them a “rebuttable presumption” that employers were violating their rights and subject employers to court costs, double damages and a fine of up to $1,000. The amendments do away with these rules and let employers use their already-established processes for managing paid sick leave benefits.

The amendments to the paid sick leave proposal leave the essential features of the policy intact. They make it less burdensome and allow employers to keep their enforcement policies. This is far from “gutting” the original proposal, as it leaves the essential structures in place.

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November 30 MichiganVotes weekly roll call

Senate Bill 1171, Initiated minimum wage law 're-do': Passed 26 to 11 in the Senate
To revise an initiated law enacted in September that increased the state minimum wage. The measure was brought to the legislature by a petition drive, and originally would have increased the current $9.25 minimum to $12 in 2022, and eliminated a separate lower minimum wage for tipped workers. This bill extends the phase-in of the $12 minimum to 2030, keeps a separate and lower minimum for tipped workers (employers must pay the difference if tips come up short of the regular minimum wage), and eliminates indexing the minimum wage to inflation.

Senate Bill 1175, Initiated paid leave law 're-do': Passed 26 to 11 in the Senate
To revise an initiated law enacted in September imposing a paid leave mandate on employers. The law was brought to the legislature by a petition drive, and originally would have granted workers one hour of paid leave for every 30 hours worked, up to a maximum of 72 hours a year. The revised version mandates one hour of leave for every 40 hours worked, with an annual paid leave cap of 36 hours. Firms with 50 or less workers would be exempt. The revised version also removes provisions that would impose extensive record keeping requirements on employers, with a potential legal presumption that incomplete records means an employer has violated the law.

Senate Bill 796, Ban schools and local governments paying union officials to do union work: Passed 20 to 17 in the Senate
To prohibit the state and local governments including public schools paying employees who are also union officials for doing union work on school or government time. Under these so-called “release time” arrangements many public school districts pay a local union official a full time teacher's salary and benefits even though the individual does not teach or perform any other educational functions.

Senate Bill 1176, Ban mandating donor disclosure by nonprofits: Passed 25 to 12 in the Senate
To prohibit government agencies from imposing a donor disclosure mandate on nonprofit organizations, which would require them to turn over the names and personal information of contributors for posting on government databases. Agencies and their staff would also be prohibited from disclosing such information if they already possess or acquire it, with violators subject to misdemeanor penalties and civil fines.

Senate Bill 1188, Restrict local restrictions on property owner tree removal: Passed 23 to 15 in the Senate
To preempt local governments from restricting residents in trimming or cutting down trees that are located on private property with an agricultural, business, commercial, or industrial zoning classification, except for “heritage trees” as defined in the bill. Also banned would be "mitigation” mandates that require property owners to plant other trees or pay a fee.

Senate Bill 747, Increase National Guard director and assistant pensions: Passed 37 to 0 in the Senate
To grant state pensions equal to 45 percent of their final base pay for state military affairs directors and assistant directors (called Adjutant Generals). Fiscal agency projections indicate the bill will add $2.5 million in liabilities to this severely underfunded state military pension system.

House Bill 5916, Expand state dog sale regulations: Passed 57 to 52 in the House
To prohibit animal shelters and pet shops from selling or transferring a dog unless it is at least eight weeks old, has a health certificate and implanted microchip ID, and unless the seller can document it was obtained from an animal control shelter, animal protection shelter, dog retailer, or a USDA-approved breeder that is not an unlicensed “large-scale dog breeding kennel."

House Bill 6420, Permit and regulate fantasy sports games: Passed 85 to 24 in the House
To establish a permissive licensure and regulatory regime on fantasy sports games and contests that offer money prizes, with games subject to specified restrictions and requirements, and an initial license fee of up to $50,000 for would-be vendors. Game outcomes would have to be the result of player skill and knowledge and not just chance, with prize amounts specified in advance. Individuals who run small scale fantasy sport games from their home would be exempt from licensure. A related bill to legalize sports betting appears to be dead for this year.

Senate Bill 637, Cap allowable fees for 5G 'small cell wireless' networks: Passed 74 to 35 in the House
To establish a regulatory framework for installing small cell wireless phone and internet systems in public right of ways. These systems use small wireless internet transmitters on power line poles and other existing infrastructure to provide expanded cell phone and internet access without needing expensive towers. The bill would cap the amount the state and local governments could charge for zoning, permits and other fees imposed on these "5G" networks.

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Bullying is a Huge Problem – School Choice is Helping Solve It

Bold action is needed to give families more options

Michigan has the unwanted distinction of being a national leader in school bullying, which is one key reason thousands of parents are taking their kids out of traditional districts. But huge obstacles to school choice remain, leaving many in a bad situation.

Different children who sadly have experienced bullying may need different solutions to help them cope and persevere. It's a difficult situation for families to face, and the costs can be all too real and painful. In recent weeks alone, local media have covered several stories of school bullying, including one that has led to a federal lawsuit against a Grand Rapids-area school district, and another that drove a 12-year-old Saginaw girl to attempt suicide.

How the availability of educational options might fit into those particular stories isn't clear. But in less publicized cases, it's made all the difference. This past spring, the Mackinac Center conducted an online survey of more than 1,400 Michigan parents with children enrolled in public charter schools. Asked why they opted for a different learning environment, more than 20 percent identified concerns related to safety as one of the main reasons.

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Many specifically shared the role that bullying played in prompting them to choose a safer school. Some accounts are heart-wrenching, like one from a mom in northern Michigan: "[T]he bully made a hit list and put my child at the top of it…. We were in fear for my son's safety and he was very depressed."

More than a few parents said they tried but were unable to resolve the problem at the original school. "I was tired of seeing my children being bullied, especially my special needs child," a parent in Adrian wrote. "I fought for years to get it to stop to no avail."

The good news for many is that their new school has improved the situation. A Bay City mom succinctly explained: "My children were enrolled in public school, but my son was bullied for six years and the district did nothing about it. I pulled both of them out of public school and enrolled them in the charter school where they would be safe."

The dozens of cases found in our survey represent a tiny fraction of what's taking place statewide. Data collected by the Michigan Department of Education reveal more than 16,000 reported incidences of public school bullying during the 2016-17 school year. These cases are not evenly distributed: 90 percent occurred in a little more than one-quarter of the schools, while more than half of schools reported no incidents whatsoever. It makes sense that parents would see some campuses as safe havens compared to others.

Only five states have a greater prevalence of school bullying than Michigan does, according to a September analysis from WalletHub. Bringing it home, the Heartland Institute's Tim Benson observes from the U.S. Department of Education's latest reported data that "26 percent of Michigan high schoolers reported being bullied on school property in 2017, the eighth highest rate in the nation. Additionally, 19 percent reported being electronically bullied, which placed Michigan fifth worst in the United States."

The cyber school model provides the answer for some of these families, one way the tuition-free option to learn from home can be a lifesaver. Yet charter schools — be they online or brick-and-mortar — are not a panacea. Some charters report having their own share of bullying and violence. This reality calls for giving parents more options, not less, especially families with more limited means.

That's why the Heartland Institute's proposed solution of Child Safety Accounts bears a closer look. The bold, creative idea is an offshoot of the education savings accounts available in six states — mostly for students with special learning needs. The CSA program would benefit students facing threats to their health and safety. Their families could access a restricted-use debit card to pay for private school tuition, tutoring, learning software, textbooks or other needed educational products and services.

Approving such a program in Michigan would face the monumental obstacle of a constitutional provision that restricts parents' ability to use public funds or tax incentives to underwrite their private educational choices. But if removing that obstacle is what's needed to help free more children from dangerous circumstances so their learning can thrive, then the time has come to reassess our state's priorities.

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Michigan Should Adopt a Pilot Program to Fund Roads With Road Usage Charges

The state should look at a different source of funding for road maintenance

When I was running for state representative for Birmingham, I knocked on a lot of doors. Some clear top issues emerged: roads, roads and roads. Everyone I talked to agreed that Michigan, the state that built the first concrete paved road in the nation, should be able to maintain its roads to an acceptable standard. Unfortunately, to date, this has not been the case.

Gov.-elect Gretchen Whitmer made her campaign about roads. Her commercials talked incessantly about fixing “the damn roads.” Unfortunately, she did little to explain how she would pay for it. The Legislature and the governor-elect need to work together figuring out this vexing issue without blowing a hole in the budget that would rival a Fraser sinkhole.

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Fortunately, this is not an intractable problem, merely a difficult one. As the once and hopefully future premier pioneer in the ground transportation industry, Michigan should be leading the way in finding creative solutions for transportation funding. Unfortunately, our government has not been up to the task so far. While the Legislature passed an increase in the gas tax a few years ago, placing Michigan in the top five states for fuel taxes, the additional revenue may still not even be enough.

On top of that, the current scheme of funding roads through taxing fuel and car ownership is unsustainable in a world of increasingly fuel-efficient cars and as more people pay for transportation services rather than cars and gallons of gasoline. Michigan needs to be prepared, and to do so, it should look at a different funding mechanism for road maintenance.

Lawmakers should consider piloting a program that charges users a fee based on their actual use of the roads. It is possible today to easily log the exact amount of driving that a person does and estimate the amount of damage that driver’s vehicle does to the roads. These Road Usage Charges, or RUCs, would charge drivers a customized fee based on how much and where they drive, and this revenue would be used to maintain the exact roads that each driver used.

By charging a vehicle based on its distance traveled, RUCs have the flexibility to reflect actual wear and tear costs of using roads. Adequately sophisticated systems could be flexible enough to charge drivers differently based on vehicle weight, time of day, or other factors, avoiding the draconian step of completely banning heavier vehicles, something that is occasionally proposed. Actual economic costs will be reflected in the usage fees, making them fundamentally different from a gas tax, which only indirectly charges the user of this vital infrastructure and sometimes doesn’t work at all. For instance, when an electric semi-trailer truck uses a road, it pays no fuel taxes, but causes the same wear as a diesel truck.

Oregon has had a RUC system in place for years, and close to a dozen states or jurisdictions have enacted a pilot version. Indeed, a majority of Americans support such a change and even President Donald Trump has endorsed the idea. Yet Michigan, a place that was built on concrete roads, should get to the front of the line on this issue rather than let other states lead.

This is not to say that Michigan is not making strides toward being a main player in the mobility future. There is great movement in autonomous vehicle testing with both M-City and Willow Run's American Center for Mobility, and the Detroit Mobility Lab and Michigan Mobility Institute. Major metro Detroit companies are making serious strides in the right direction, including Ford, GM, FCA and Aptiv. But if Michiganders are to retain their position as a key player in transportation in the future, they must continue to drive forward to new ideas, such as a program of road usage charges.

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More Insights from Mackinac Center’s Corporate Welfare Scorecard

New leadership brings hope for cutting corporate handouts

The recent elections in Michigan provide an apt opportunity to revisit the Mackinac Center’s 2018 corporate handout scorecard. The scorecard is a tally of business subsidies approved by state lawmakers back to 2001. Each lawmaker is assigned a dollar value of the subsidies he or she voted to approve. It was released last May and will be updated periodically to reflect any new votes by lawmakers in favor of or against corporate welfare subsidies in the Great Lake State.

According to the scorecard, the governor-elect, Democrat Gretchen Whitmer, voted to approve the vast majority of corporate welfare subsidies that came before her as a state legislator. Those subsidies totaled more than $4.5 billion. In one way, her campaign for governor was consistent with this record. At an event of economic development officials in Lansing last summer, she promised to “unleash” the Michigan Economic Development Corporation. This agency takes money from lots of taxpayers and gives it to a few businesses in the hope they will create more jobs than might otherwise be born (or saved).

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In a mostly two-party system, there is an opposition party, however, and the current crop of Republican members include some who have shown courage in standing up to demands for targeted corporate handouts. Perhaps the most interesting appointment in recent days has been that of Rep. Shane Hernandez of Port Huron to lead what is arguably the most important committee in the state House: appropriations.

Hernandez sports a perfect score in the Mackinac Center’s corporate welfare scorecard, having voted against 100 percent of the corporate handout legislation that previously came before him. In other words, he approved $0 of $1.2 billion in subsidy offerings that he had a say in. This is no small thing. Fewer than one out of 20 lawmakers in the scorecard voted against all corporate welfare.

As chair of the appropriations committee, Hernandez will be in a prime position to knock down attempts to appropriate more corporate welfare dollars, and in fact, he could advance bills that might roll back current levels of appropriations. He is not the only sitting House member with a $0 tally, which suggests that there will be some tension — though perhaps not enough — between the Whitmer administration and the state House.

The scholarship is clear on the types of corporate handout programs we have tallied up in our scorecard. They’re ineffective and gobble up precious resources to run programs that would be better spent fixing Michigan’s roads. Indeed, maybe that points to what ought to be a first grand compromise of each party come January. Whitmer campaigned on a pledge to fix roads, and that task that requires tax dollars.

So perhaps Republican leadership, including Hernandez, can agree with the governor-elect that trading away corporate welfare dollars in favor of sound infrastructure spending is a worthwhile endeavor. Shifting wasteful —even job-killing — corporate welfare handouts to higher uses such as improving Michigan’s transportation infrastructure will create (and perhaps save) more jobs than the Michigan Strategic Fund and Michigan Economic Development Corporation could ever hope to.

Regardless of how appropriations for roads or the state’s jobs agencies turn out, rest assured that the Mackinac Center will continue to tally and report each lawmaker’s support of or opposition to corporate handouts, and do so in a very public way.

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Lawmakers Have the Authority to Repeal Paid Leave Act

The margarine wars show that the Legislature has the power

Supporters of the new paid leave act do not like that legislators are considering repealing the mandate after having voted for it in September. And they may consider it an affront to the thousands of people that signed a petition to put the question on the ballot. Yet the rules of our constitutional democratic system were designed to encourage the Legislature to adopt initiatives so they can amend or repeal them.

The people gained the ability to directly draft legislation and have it submitted for popular approval through Michigan’s 1908 constitution. That document granted legislators the power to later ask voters to amend such a law — called an initiated law — but they could not amend it themselves.

In 1961, Michigan revisited the question at a new constitutional convention. Delegates tweaked the rules and allowed legislators to make changes, though only if three-quarters of them in each chamber approved. In the run-up to that decision, delegates to the convention discussed the incentives facing the lawmakers.

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Delegate Richard Kuhn stated about the initiative process, “If the legislature sees fit to adopt the petition of the initiative as being sent out, if the legislature in their wisdom feel it looks like it is going to be good, and they adopt it in toto, then they have full control. They can amend it and do anything they see fit. But if they do not, and you start an initiative petition and it goes through and is adopted by the people without the legislature doing it, then they are precluded from disturbing it.”

He also elaborated, “Now, what happens if [legislators] place [an initiative] on the ballot and the people adopt it? They lose control of it. They can’t amend it, they can’t repeal it, and they can’t change it in any way unless the people give them consent in their initiative petition, or unless they go back to the people and ask them to do this. This makes it rather strong.”

At the time, the delegates were informed by the only successful initiative they knew of: the repeal of the ban on selling colored margarine. Butter producers had gotten a tax on margarine products enacted at the federal level, and an even larger tax on the sale of margarine that was colored yellow to look like butter. Michigan went further than that, banning the sale of all colored margarine.

As a way to get around the ban, margarine producers sold their product with a vial of food coloring, which people would mix into margarine. (I asked my grandmother if she remembered this, as she was young when the ban was repealed. She had, and added, “I think the dairy industry had something to do with that.”)

But by 1948, margarine producers had switched to using oil made from vegetables instead of animals and won the support of powerful domestic farm lobbies. They were able to get the federal taxes repealed and went after some of the state laws, Michigan’s included.

The people that wanted to sell yellow margarine collected enough signatures to call for a vote in Michigan. Republican lawmakers, who held the majority in both chambers, were sympathetic to dairy producers. Despite that, they decided to pass the repeal themselves. The vote was 86-7 in the House and 21-7 in the Senate, and the majority did it in order to retain their ability to control the legislation.

The governor at the time, Republican Kim Sigler, wanted people to be able to buy colored margarine without having to mix it themselves, so the pro-dairy Legislature was unlikely to be able to get any anti-margarine legislation approved. In response, the dairy interests instead got their own signatures to call a referendum to repeal the ban on margarine. (That’s a kind of a triple negative: A repeal of the repeal of a ban.)

But voters wanted to be able to buy colored margarine without having to mix it themselves and when confronted with the new initiative, they voted that way. As a result, consumers could buy colored margarine starting in 1950.

Between 1950 and 2015, legislators approved six initiatives themselves after supporters gathered enough signatures. (This term, they approved three initiatives.) The six included four on abortion, one on the state’s single business tax, and another on using scientific principles in wildlife management. All six came after the 1961-62 constitutional convention.

The initiative to repeal the Single Business Tax was a case where lawmakers approved the initiative but later went against its supporters’ intent. The initiative called for the complex and burdensome Single Business Tax to be replaced by a less complex and less burdensome tax. What lawmakers could agree on, however, was the Michigan Business Tax, which was arguably just as complex and inarguably more burdensome.

Lawmakers had the authority to do that because they control legislation under the rules of the constitution, which allow them to approve and repeal initiated legislation. And now, they should consider repealing the paid sick leave mandate. You butter believe they have the authority.

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The Costly Part of Government-Owned Broadband

Government-led broadband projects leave taxpayers on the hook

Residents of 10 towns in Minnesota will see property tax hikes to cover a shortfall in subscriber revenues to a government-led broadband project. This should serve as a warning to municipalities in Michigan implementing or pursuing their own plans.

Ten cities and 17 townships in rural Minnesota created a cooperative and sold $13.7 million in bonds to help finance the construction of a $55 million fiber optic network. According to documents from the cooperative, reported by Tom Steward of the Center for the American Experiment, a $1 million revenue shortfall quickly developed, which will result in higher property taxes for some of the communities.

The network is meant to cover 6,200 homes and 3,000 subscribers were needed to break even. But only 2,000 actually signed up. As a result, the cooperative, RS Fiber, said they could not make the bond payments for two years, putting taxpayers on the hook.

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In Michigan, Traverse City and Holland have joined a few smaller municipalities in pursuing government-owned or operated broadband networks. Other areas, scared by the high costs and taxpayer commitment, have rejected similar proposals. These include Sharon Township and Laketown Township.

Government internet service is typically sold the same way everywhere: high-speed networks are needed to compete in the global economy and a larger network with more people can provide faster service at lower costs. But these promises rarely come true: A 2014 paper from the Mercatus Center analyzing 80 municipal broadband projects found little economic benefit to the communities pursuing them. And a 2017 report from the University of Pennsylvania found that only two of 20 municipal fiber projects generated enough revenue to cover their costs.

That’s because most projects are sold with rosy projections, especially about the number of households that will sign up. And when there are shortfalls, taxpayers pick up the bill.

The good news is that the Michigan Legislature and Federal Communications Commission have pursued ways to expand access to broadband internet with market forces, chiefly by limiting local fees and streamlining permitting. Internet speeds have been increasing for decades while costs have been flat or in decline thanks to a competitive private market, and, in some cases, in spite of government interference.

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