Michigan's political class needs to protect the perks and privileges of government and school employees in the face of revenue shortfalls, so they're pushing for tax hikes, a.k.a. "new revenue," that will take more from you, me, and the man behind the tree.
Political rhetoric aside, the Great Recession of 2009 has not provoked unemployment numbers anywhere near the 25 percent rates seen at the height of the Great Depression. Except in Detroit.
This summer, Detroit's official unemployment rate hit a record 28.9 percent. The city's economic pain was on public display Wednesday as a riot scene out of the 1930s erupted here. An estimated 35,000 city residents rushed the doors of Cobo Hall in a desperate attempt to grab 5,000 federal assistance applications made available to Detroit as part of the "Homelessness Prevention and Rapid Re-Housing Program," a federal stimulus fund designed to help residents pay rent and utility bills.
The state's economic development department has stopped releasing important information about the state's flagship incentive program, the Michigan Economic Growth Authority. To help make the program more transparent, the Mackinac Center requested documents about each credit awarded through this program and made them available online. You can view the updated database here.
Detroit Mayor Dave Bing has recommended outsourcing the management of the Coleman A. Young International Airport to save money, as recommended by the Mackinac Center back in 1998. When we did so the city had recently provided the airport with a $1.9 million subsidy. In 2007 (the latest year for which data is available), the subsidy was down to $900,000, but the city's ability to afford any subsidy has collapsed altogether.
If you want to understand what’s going on in Michigan, you need to know about PERA. Here’s a great example of why.
Yesterday, Detroit Mayor Dave Bing announced that he would be terminating contracts for city employees unless union officials agreed to major concessions, including 10 percent wage cuts. Although some unions have agreed to concessions, AFSCME in particular has refused.
Unemployed Michigan workers are being told by environmental groups and our governor that we should forgo shovel-ready construction jobs in building new, environmentally cleaner coal-fired power plants for the promise of jobs sometime in the future building windmills. Approximately 1500 construction workers gathered at the state capitol on October 6, demanding that Gov. Jennifer Granholm abandon her anti-coal bias and let them go to work. Most of the workers are unemployed and need a job — even if it isn't a politically correct green energy job that the governor and environmental groups seem to think they should have.
Can Michigan, a poorer-than-average state, continue to support teachers that are paid more than average? The debate continues...
Julie Mack of the Kalamazoo Gazette blogged this morning that she was unable to find the underlying data regarding average teacher salaries produced by the American Legislative Exchange Council and cited in my blog post last week. (Mack called it a "quibble," but we take even quibbles seriously.) ALEC reports a difference of $11,889 per teacher between Michigan and the national average for 2006-07. Mack cites several other sources, each showing a smaller difference, but all showing Michigan is well above the average, ranging from a low of $3,788 per teacher above the national average (National Education Association claiming 2007-08 data) to $5,713 above average (U.S. Census report from April claiming 2006 data).
While some in the Michigan Film Office, film industry and state government are quick to boast about the ever-increasing number of movie productions that have come to Michigan as a result of film tax subsidies, there have been some unforeseen and hard-learned lessons for some Michigan businesses, schools and organizations.
WJR's Paul W. Smith mentioned the Mackinac Center and policy analyst Ken Braun's analysis of public school teachers’ salaries during a radio interview of Nolan Finley of the Detroit News. (audio)
As an aside, the alleged "$700 million health insurance savings" claimed by an MEA person who called in on the same show was debunked on this Web site last week in a post by Mike Van Beek.
In a profile that appeared in today's Washington Post, Gov. Jennifer Granholm misused data on her targeted business tax break and subsidy programs, the administration's primary response to a Michigan economy that has lost 632,600 payroll jobs since Gov. Granholm's inauguration back in 2003.
It appears to be a done deal that Michigan’s Departments of Natural Resources and Environmental Quality will be combined into one agency. Now it appears that the Department of Agriculture may also be rolled into a new tripartite “super agency.” The very mention of this should frighten any Michigan resident involved in agriculture.
The Mackinac Center has been cited in various media outlets in the past few days.
The Detroit News highlights a Mackinac Center budget-reform suggestion as part of its "50 ideas to fix Michigan" series.
In today's "Idea 12," the Mackinac Center suggests that Michigan "[p]rivatize some state prisons -- not just some functions within state-run prisons, but entire facilities."
Cross-posted from State House Call.
A new study shows insurance premiums in Massachusetts climbed 50 percent faster than the national average between 2006 and 2008. Nearly a quarter (24.6 percent) of “workers in firms with <51 employees” pay twice as much to their premium as the state average, up from 16 percent of similar workers in 2006. So much for minimum creditable coverage and consumer protections making insurance more affordable.
Cross-posted from State House Call.
Parents routinely struggle to get their children to eat veggies. Now it looks like government is going on an “eat your veggies” mission as well.
The Arizona Republic reports that the WIC program (free food for women and children) will now make sure that some of the money its recipients spend on food can’t be spent on anything but fruits and vegetables. WIC is also going after whole milk.
Cross-posted from State House Call.
In 1985, public school teachers and retirees in Alabama paid $10 a month for single-coverage health insurance. In 1986, the amount they paid went to … $2 a month, and it’s stayed there ever since.
An outrage? Perhaps. It certainly has sheltered teachers from the realities of health insurance costs, which are by virtue of this arrangement largely obscured from their view. Over the years, state officials have tried to raise the employee payments, only to be overruled by the insurance plan’s governing board.
Cross-posted from State House Call.
No wonder Congress isn’t concerned about a government health care plan implementing rationing: Members have their own medical staff close at hand, according to ABC News.
And why should they worry about costs? “When specialists are needed, they are brought to the Capitol, often at no charge to members of Congress.”
In a press conference today, Gov. Jennifer Granholm argued that tax hikes are necessary. "What we're fighting for is Michigan not becoming Mississippi," she said.
However, the rhetorical flourish is undermined by the reality that Mississippi is no longer the "small government = high-poverty" foil that Michigan's political class has often used to justify keeping their government employee constituencies well-fed with more tax dollars.
Rep. Eileen Kowall, R-White Lake, called me today about our recent blogging regarding the House Republicans recommended by the Michigan Education Association and how that may be impacting whether the House can pass the $218 per pupil reduction -- a seemingly reasonable 3 percent trimming of the state's School Aid budget. Rep. Kowall wanted to clarify that while she did receive a recommendation from the state's most powerful public school employee union in the most recent election (2008), she did not do anything to ask for it other than answer their candidate question sheets and express a willingness to speak with them after getting into office. And furthermore, she proceeded to point out that she has never received money from the MEA's political action committee.
A week from today Michigan State University's School of Labor and Industrial Relations will host a conference on Project Labor Agreements. PLAs effectively require that any bidder on a public construction must have an agreement in place with local construction unions -- effectively freezing non-union contractors out of bidding. Since the overwhelming majority -- close to 80 percent -- of the construction industry in Michigan is non-union, this chokes off most of the potential competitors and raises the cost of construction.
The Michigan Education Association is trying to scare the public and the Legislature by claiming that a $218 per pupil reduction in the state school aid fund would result in 10,000 teacher layoffs. Since this reduction in spending only accounts for 2 percent of the total cost of public schools, it seems highly unlikely that it would require downsizing the number of instructional employees by 10 percent. Looking closely at teacher compensation shows that we could achieve the same savings with exactly zero layoffs, and even if savings came directly from layoffs, it would be less than a quarter of what the MEA threatens.
Research by Policy Analyst Ken Braun was highlighted in a column by Nolan Finley in today's Detroit News.
Braun's numbers show that Michigan pays teachers about $12,000 a year above the national average, which adds up to $1.3 billion annually.
An Op-Ed by Communications Director Michael D. Jahr and Assistant Editor Hannah K. Mead was published in today's Midland Daily News.
The piece details how the state of Michigan, in the midst of a multi-billion overspending crisis and without a balanced budget for fiscal year 2010, can still find time to create Web sites giving people advice on everything from what to eat to what to wear.
(The following is a reply to an email that was sent from a reader of this morning's Current Comment. The entire text of the e-mail from the reader is reprinted underneath the reply. -- KB)
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Mr. G:
Please note that I did not advocate balancing the entire state budget on teacher salary cuts alone. Indeed, I was pointing out that the $218 per-pupil reduction being advocated for the School Aid Fund budget – a cut of just 3 percent – was reasonable. And to demonstrate this, I grabbed just one large metric related to that program – average teacher salaries – where our costs appear to be way out of line with what other states pay for this SAME service. This is why you lose me when you discuss what you believe you could earn in the private sector, because my comparison was merely to what PUBLIC school teachers are paid in a reasonably prosperous state that is paying just an AVERAGE salary for the same service – namely Washington public school teachers.
The Obama administration’s announcement this week that EPA is going to regulate CO2 emissions from industrial facilities and power plants for the first time by requiring those plants to obtain a permit under the Clean Air Act is bad news for Michigan. The EPA’s action amounts to a new tax on Michigan business and families, which will lead to the loss of more jobs in the state which already is suffering from a 15.2 percent unemployment rate — highest in the nation.
Cross-posted from State House Call.
The Republican Party hasn’t done a really good job of breaking through with useful health reform ideas, but they do a great job of pointing out the hypocrisy of President Obama’s assertion that compulsory insurance is not a tax. It’s in this short video.
