Michigan’s business subsidies are unfair and ineffective. And they waste taxpayer money.
They don’t work because they cost a lot of money and only influence a miniscule part of the economy. Hundreds of thousands of jobs are being lost in any year in Michigan and hundreds of thousands of jobs replace them. Meanwhile the state’s “economic development” programs only influence a handful of jobs, and always and only at taxpayer expense.
By Jack McHugh
The Legislature remains on a summer campaign break with no sessions scheduled until after the Aug. 7 primary election. Rather than votes, this report contains some interesting or noteworthy recent bill introductions.
Senate Bill 1041: Mandate pill jar labels have overdose hotline number
Introduced by Sen. Steve Bieda (D), to require prescription pill jar labels to have the number of a substance abuse hotline on them. Referred to committee, no further action at this time.
By Kahryn Riley
The Mackinac Center for Public Policy’s research is supplemented by work from a group of academics who make up our Board of Scholars. One Center Scholar, Dr. Sarah Estelle, an associate professor of economics at Hope College, just published new findings on the effects of harsher sentences on future crime. The results, appearing in the Journal of Public Economics, indicate that a harsh approach to criminal sentencing does not always reduce recidivism rates.
Is the state budget growing faster than inflation? Answering that question can inform policymakers about whether the state can afford to cut taxes. But there isn’t always a clear answer. It matters when you start the comparison. Starting in different time periods can yield different results.
By Ben DeGrow
Unlike any other state, Michigan faces potentially serious consequences for its dismal record in special education. Rather than wait for federal officials to intervene to help students, Michigan should look to other states for dramatic changes.
As reported in The Detroit News, the U.S. Department of Education singled out Michigan among the 50 states for failing to adequately serve children with special needs. Of Michigan children with a recognized disability, not nearly enough achieve at grade level, and far too many drop out of high school.
Editor’s note: This article first appeared in The Detroit News on July 14, 2018
Police officers and firefighters are now no longer excluded from Michigan’s right-to-work law, due to last month’s U.S Supreme Court ruling in Janus v. AFSCME. The 5-4 decision granted freedom to nearly 5 million public sector workers across the country by ruling that they no longer have to pay dues or fees to a union to keep their jobs.
There’s a class-action lawsuit in Michigan challenging civil asset forfeiture. At the same time, the U.S. Supreme Court is considering its constitutionality, and state lawmakers consider additional legislative reforms to the practice.
George Hunter of The Detroit News just wrote a piece covering these issues. Three people in metro Detroit allege that the government seized and attempted to take ownership of their property without showing that the assets were related to any illegal activity. One man has been waiting for three years to get his car back after it was seized and towed.
The practice of civil asset forfeiture continues to be under scrutiny in Michigan, as three forfeiture victims filed a class-action federal lawsuit last month. The plaintiffs allege that law enforcement agencies either forfeited property without a hearing or have seized property for extended periods of time while not giving them an opportunity to get it back, violating their due process rights. Civil asset forfeiture allows law enforcement to seize and keep property without any criminal conviction. Jarrett Skorup, director of marketing and communications at the Mackinac Center, was extensively quoted by The Detroit News on the lawsuit.
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.
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.
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.
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.
By Ben DeGrow
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 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.
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.
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.
By Ben DeGrow
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.
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.
By Jack McHugh
Senate Bill 196, Authorize foster care scholarships tax checkoff: Passed 104 to 5 in the House
To allow an individual to choose to automatically contribute $5 or more from his or her state income tax refund to provide college scholarships to children in foster care.
In 2013, just prior to filing for bankruptcy, the city of Detroit closed 900 businesses and had a goal of shutting down 20 per week through its “Operation Compliance” program.
The city has so many arbitrary and silly licensing requirements on the books, that it seemed that everyone was violating a rule or two, and subject to fines or shut downs. Officials claimed this was done to fight blight and crime, but also admitted getting extra revenue was a factor.
By Kahryn Riley
Fans of the board game Monopoly know that, if you land in jail, it’ll cost you $50 to get out. But it may surprise you to learn that real inmates in Michigan jails may also owe that much – and a lot more. County jails in our state are allowed to bill inmates nightly, and many do. But few recoup their costs by doing so, because criminal defendants are frequently indigent. While incarceration is an expensive prospect and inmates aren’t the most sympathetic of people, it’s unfair and unsustainable for counties to expect them to fund jails. Still, if it must be done, we should enact policies that reduce jail populations and give inmates better options for paying their debts.
In energy policy, you’re often asked to choose between a few bad options. If you address one problem, you can end up promoting something that’s at least as bad. That’s often because government has a habit of setting up regulations in a way that benefits friends and supporters in politically favored businesses. And of course, when other, competing businesses feel the pinch of those unfair regulatory practices, they push back. Instead of mediating between conflicting financial interests, government officials need to stop playing the crony capitalism game and recognize that, while their actions do help their friends and supporters, they harm consumers and the economy.
State programs to give particular companies taxpayer-funded business subsidies are often described by politicians in terms that make them sound like a deal-closer fund. These have been created by some states to enable their governor or other high-ranking officials to land a major employer shopping around for a place to locate a new factory or headquarters.
By Ben DeGrow
Last week, the campaign of Michigan Democratic gubernatorial candidate Gretchen Whitmer released an official policy document outlining her plans for the state's public schools. A close look at the document's misleading premises and the candidate's past voting record raises serious questions and concerns.
Legislators are considering whether to give more subsidies to select companies, and the proposals seem to be getting a favorable ear. A bill to subsidize developers to renovate historical property has been passed by the Senate. A bill to give an investment company $50 million of taxpayer support in the name of rural development has been introduced in the House.
