State Retirement Managers Develop Convenient, Hypocritical, Excuse

Tantamount to only brushing your teeth when you go to the dentist

Michigan lawmakers might offer new school employees defined-contribution, 401(k)-style retirement benefits instead of defined-benefit pensions. The state-run pension system’s managers in the Office of Retirement Services contend that this will generate large and unavoidable “transition costs.” But their reasoning for defending the status quo suggests that they are more interested in pressuring lawmakers away from reform than in maintaining a well-funded pension system.

ORS argues that moving to a 401(k)-style plan would force them to change the way they pay off the $29.1 billion in unfunded liabilities in the system. Right now, they have chosen to pay this off over the next 21 years by increasing the payments by 3.5 percent per year, the rate at which they assume schools’ payroll will grow annually.

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If the system goes to a defined-contribution retirement plan, they argue, “best practices” recommend they stop assuming that payroll will grow. Thus, they would need to put more cash into the system in the near term, since they would no longer be able to backload payments. This is what they mean by transition costs.

One problem with invoking so-called best practices, however, is that ORS has a history of ignoring them when it’s convenient. And while it’s true that best practices do call for not assuming payroll growth when a pension plan gets closed, this is something the state should have been doing all along.

ORS has assumed that payroll would grow 3.5 percent per year, which equates to 60 percent growth over the past 15 years. But payroll hasn’t grown at all over this period — in fact, it has steadily declined. Keeping this in mind, what ORS calls “transition costs” might be better called “the cost of doing what you should have done all along.” Basically, ORS is saying that you don’t need to brush your teeth until you go to the dentist.

ORS officials say they will still pay off the unfunded liabilities over time, pointing out that they make extra payments if their assumptions are faulty and they fail to put enough money into the system. But it’s important to remember these payments are made entirely at their own discretion, and they can simply cancel the process, as they did from 2012 to 2015.

Using this artificial price tag, ORS has succeeded at scaring a lot of lawmakers away from voting in favor of fiscal prudence and closing, once and for all, the school pension system. But the reality is that there is no mandate to pay the so-called transition costs, and keeping the state’s plan to pay down unfunded liabilities would be just as prudent with a closed system as it would be with an open one.

If state lawmakers can find money in the budget to pay ORS’s transition costs, great; they would be paying down the state’s largest debt at a faster pace. That would also be prudent, saving interest expenses over the long term. But there is no mandate that lawmakers do so, and ORS managers are hypocritical for even raising this as a reason to oppose switching to a defined-contribution retirement system.


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School Funding in Michigan Reaches All-Time High

Record revenues for schools likely will continue

Last summer’s release of a $400,000 taxpayer-funded study generated a number of headlines proclaiming that Michigan schools received insufficient funding.

“The adequacy study released today proves what many of us in public education have been saying for years: Michigan’s education funding is inadequate, and it’s harming student performance,” Michigan Education Association president Steve Cook told Michigan Radio.

Backers of a proposed follow-up report have shied away from definitively saying schools need additional funds to improve. Small Business Association of Michigan CEO Rob Fowler was quoted in MLive earlier this year: “I don't know that more money is the answer. It could be that if we spent the resources we have today differently, that we would do a much better job of educating across the board.”

A look at the latest overall education funding picture suggests this cautious statement is well-informed, even if the typical Michigan resident has little idea how much schools already are spending. When looking at all sources of income, state figures for 2016 show that public schools brought in $14,108 for each student enrolled, the highest ever.

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Even after adjusting for changing dollar values, that per-pupil revenue figure surpasses the previous high of 2010. This chart shows that schools experienced their biggest funding boost between 1995 and 2002. After falling from the previous high, real per- pupil revenues have increased the last three years running.

Data for total revenues are complete through 2016, and don’t take into account dollars collected or spent this year. It’s likely that the line will go up for 2017, as well.

Lansing’s fiscal analysts now estimate that the state’s School Aid Fund will take in $153 million more this year than they projected just four months ago. The forecast for next year’s fund revenues is nearly $13 billion, up $189 million from the January projection and more than $800 million greater than the 2016 total. For the average district, 96 percent or more of state tax dollars comes from the School Aid Fund.

Local property taxes also remain a sizable part of the K-12 funding picture. Some local school districts are starting to raise more funds from one type of property tax, the regional enhancement millage, which pools and redistributes money across several school districts. Voters in two of the state’s largest intermediate school districts recently approved increases. Wayne County taxpayers are on the hook for another $80 million after last November’s election, while Kent County passed a $20 million measure earlier this month.

It’s time to put to rest the myth that Michigan schools are starving for lack of funds and have serious policy conversations about how to use current dollars more effectively.


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Criminalize Female Genital Mutilation, Authorize Flint Promise Zone Tax

May 19, 2017 MichiganVotes weekly roll call report

Senate Bill 337, Criminalize female genital mutilation of minors: Passed 37 to 0 in the Senate

To make it a crime subject to 15 years in prison to perform a clitoridectomy, infibulation, or other female genital mutilation on person less than age 18. Claims that the procedure is required by custom or ritual would be explicitly excluded as a defense to prosecution.

Who Voted "Yes" and Who Voted "No"

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Senate Bill 98, Authorize Flint “promise zone” tax increment financing authority: Passed 35 to 2 in the Senate

To expand from 10 to 11 the number of “promise zone” tax increment financing authorities located in low income and “low educational attainment” areas, with the new one in Flint. These entities “capture" a portion of increases in school property tax revenue and use the money to partially subsidize college tuition for local students.

Who Voted "Yes" and Who Voted "No"


Senate Bill 103, Revise school truancy and chronic absence rules: Passed 28 to 9 in the Senate

To prohibit a public school from suspending or expelling a child solely for truancy or chronic absence. Senate Bill 104 would require school officials to attempt to meet with a parent, and authorize legal action if other steps don't work.

Who Voted "Yes" and Who Voted "No"


House Bill 4065, Let Corrections Department hire former prisoners: Passed 104 to 3 in the House

To repeal a prohibition on the Department of Corrections hiring former convicts. Individual hires would require permission from the department director.

Who Voted "Yes" and Who Voted "No"


House Bill 4205, Limit state department rulemaking authority: Passed 57 to 50 in the House

To prohibit a state department from promulgating rules more stringent than required by federal standards, unless specifically required by state statute, or if the department director determines "the preponderance of the evidence" shows a need to do so. Republican Gov. Rick Snyder has vetoed a previous version of this proposal.

Who Voted "Yes" and Who Voted "No"


House Joint Resolution C, Protect "electronic data and communications" from unreasonable search and seizure: Passed 107 to 0 in the House

To place before voters in the next general election a constitutional amendment to add “electronic data and communications” to the Article I provision that recognizes the right of the people to be secure from unreasonable government searches and seizures of their “person, houses, papers, and possessions.”

Who Voted "Yes" and Who Voted "No"


SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.


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Why Michigan Has a Pension Problem

Everyone wants to avoid responsibilities on retiree benefits

The largest fiscal issue facing the state of Michigan is retiree benefits. For decades, the state and local municipalities have promised more retirement benefits to employees than they have set aside to pay for.

Gov. Rick Snyder and the Legislature are debating what to do about this. There is nothing inherently wrong with pension systems — the problem is that politicians simply don’t fund them and instead pass the costs of today’s government onto future taxpayers. For example, the state has saved $29 billion less than what is needed to fund the school employee retirement system and local government pension systems are similarly underfunded. That being the case, state and local governments should shift new employees to 401(k)-type plans, which pay the full cost of retiree benefits as they are earned and cannot be underfunded and passed along to future taxpayers.

But interest groups are resistant. Unions, which have largely kept quiet while governments shortchanged their members’ retiree benefits, defend the status quo. And local governments, especially those who have not properly funded their systems, are pushing back on reforms.

The governor has a committee which is supposed to be figuring out the problem and suggest reforms for municipalities. But by all appearances, the local government and employee unions are using that committee to simply call for higher taxes.

The Lansing State Journal provides a vivid example of how this is framed in the media:

Despite the improving economy, local government leaders have said property taxes and revenue sharing from the state have not risen fast enough to keep up with those and other rising costs.

For example, the state paid Lansing $15.9 million in 2007, before the recession. Keeping up with inflation would have meant an $18.4 million payment last year, but the state actually paid the city $13.6 million. The city took in $43.9 million in property taxes in 2007, which would have equaled $50.8 million last year based on the rate of inflation. The city actually took in about $43.5 million in taxes last year.

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Such shortfalls across the state put services such as police and firefighting at risk, officials have said.

So, according to this framing, local governments’ debt is a result of a lack of revenue from the state and local property taxes. Putting the picture into perspective shows that that’s not the real issue.

The city of Lansing had unfunded liabilities in its pension systems of $113.6 million at the end of 2007 ($45.8 million for general employees and $67.8 million for public safety employees). That increased to $382.3 million in liabilities at the end of 2015 ($132.8 million for general, $250.4 million for public safety).

Lansing would have gained an extra $10 million if the state had increased revenue sharing and property taxes had been recession-proof. But the city added nearly $270 million in debt over that time — the extra $10 million would have been about as useful as a band-aid on a gunshot wound. The problem is not one of revenue; it’s that the city has not set aside enough to pay for the benefits that they promise their employees in retirement.

The issue is the same across Michigan, and the only way to solve it is to stop letting the hole get bigger by closing the system to new employees and offering them defined-contribution, 401(k)-type plans instead. Only then will cities like Lansing and other municipalities around the state and the state government be able to meaningfully address the debt owed to current workers and retirees.


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School employees are the state’s largest creditors

Defined benefit pensions could work just fine for both employers and employees. But government pensions have a major problem: They are ultimately run by politicians who are good at and used to making promises, but also good at and used to passing the bill to somebody else. The consequences of failing to pay the true cost of these promised pensions occur decades into the future, so it’s very easy for politicians to just push the burden onto future taxpayers.

Michigan’s largest government pension system, the one for school employees, is a slow-motion fiscal disaster. Lawmakers have promised current and past employees some $72.3 billion in benefits but only saved enough to pay 60 cents on the dollar of those promises. The pension fund, then, is $29.1 billion short of the amount the state’s own actuaries estimate is needed.

The costs of the shortfall are immense. The annual interest payments on this debt alone cost more than what the state spends annually on prisons.

In fact, that $29.1 billion unfunded liability makes school employees and retirees the state’s largest creditors. This is not fair. School employees never consented to let the state borrow money from them.

Under a defined-benefit pension system, when an employee earns benefits, the employer is supposed to set aside enough money in the same year to pay the costs of that benefit. In the case of public employment, this practice keeps the costs of today’s service from being a burden on future taxpayers and assures employees their benefits will be there when they retire.

The future is uncertain, so to determine how much to save and invest to meet the system’s promises, pension managers must make assumptions: how much will employees earn, how long they will live, and what kind of returns can be expected from pension fund investments going forward are three key assumptions.

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There are many ways to get it wrong, and the perhaps the easiest one is to make overly optimistic assumptions, particularly about investment returns. Unfortunately, the state’s been too optimistic for a long time. The result is that Michigan’s school pension system has been underfunded in 42 of the past 43 years.

When pension administrators recognize there’s a funding gap, they develop a plan to fill it. But the plan that Michigan’s pension managers chose for the school system was so inadequate that, until recently, it wasn’t even paying the full interest costs on the system’s debt.

The solution is simple: State leaders must stop the practice of promising benefits now and trying to pay for them later. This means no longer promising lifetime pension benefits to every new employee hired by a Michigan school. New employees should instead be offered automatic contributions, with optional matching funds, to 401(k)-style savings plans that generate no long-term taxpayer liabilities. People still in the system can continue to earn pensions, and the state will continue to pay out what has been promised, but over the long haul, lawmakers will be prevented from pushing retirement costs onto future taxpayers.

Some interest groups are concerned about this proposal. They include school administrators, unions and the managers of the current school pension system. Some of them have falsely claimed that the current system poses little risk to taxpayers and that no longer enrolling new hires would incur “transition costs.”

But this is not correct. Such costs are entirely optional, and even if they are paid, it saves taxpayers in the long run. Interest on pension debt is one of the most expensive types of state debt that taxpayers are responsible for.

The other claim is that a newer, so-called “hybrid” retirement plan has fixed all the problems. It remains susceptible to underfunding like the older plans and has only existed since 2010. During its brief life, the plan has benefited from stellar returns from the stock and bond markets; even so, it has just 0.1 percent more in assets than liabilities. So to say that the plan will never go into debt is Panglossian and irresponsible.

Finally, the system’s defenders argue that defined-benefit pensions are inherently better for employees than a 401(k)-style, defined-contribution plans. If they really believe this, though, they have a moral obligation to match their deeds to their words to ensure that pensions are funded as they are earned.

This means that pension managers should have used realistic assumptions — not pie-in-the-sky ones — about future payroll growth and investment returns. They should have actually made the required annual contributions. And long ago, they would have stopped kicking the costs into the future. School interest groups would have to have been watchdogs to ensure that this happened.

The system’s current $29.1 billion unfunded liability is a testament to how far short these groups fell in this endeavor.


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Unions for Underfunding

Claims of AFSCME aside, an underfunded pension plan benefits from closing it, not keeping it open

Nick Ciaramitaro of the American Federation of State, County and Municipal Employees union argued on a MIRS podcast that transitioning to a defined contribution plan would “cost a half billion” to “provide significantly less benefits” to employees. I guess he is proposing a paradox that the plan would both cost more and be less generous. He is mistaken. The proposed 401(k) plan would be more generous, but not trigger huge transition costs.

The 401(k) plan proposed last year was, on paper, more generous than the state’s plan. It would cost 10 percent if an employee maxed out contributions, with the employee putting in 3 percent and getting 7 percent from the employer. The current system for members costs 12.5 percent, with employees responsible for up to 8.4 percent and employers pitching in just 4.1 percent. So the 401(k) defined contribution plan costs slightly less, but employees receive more in employer contributions.

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Of course, if the state were good at estimating the costs of pension plans, they wouldn’t be underfunded by $29.1 billion.

There is an additional cost to employers for the increased generosity of a 401(k) plan. Last year, the state estimated it at $16 million for the first year of implementation. There would be savings to employees, however, of around $40 million.

But the extra employer contribution was not the cost Ciaramitaro was complaining about. The state’s pension fund managers have manipulated accounting rules to argue that offering new employees 401(k) benefits would trigger massive “transition costs” for the legacy plan. Yet the payments the state would make to shoulder these allegedly new costs would not make the legacy pension plan more expensive. Instead, they would simply bolster the health of the plan.

Nothing in the design of a 401(k) plan requires the state to make those payments for the transition costs. Lawmakers get to control how the state pays down the unfunded liabilities of the pension plan, regardless of when or whether they launch a 401(k) plan. Abstaining from the managers’ recommendation to make transition-cost payments would be as prudent as the current payment plan.

If lawmakers decide to put more cash into the retirement system, that’s great. Its debt increases at the state’s assumed rate of return of 7.5 percent, making it some of the highest-interest debt in the state, so decreasing the debt makes financial sense.

That’s why it seems odd that the union president is arguing against putting more money into the pension system. Doing so would secure more worker benefits and save money over the long term.

Ciaramitaro says that the state’s move to offer new employees 401(k)s, starting in 1997, caused underfunding of the legacy state employee retirement system. There were $0 in unfunded liabilities in 1997 and there are $5.8 billion of them now, he observes. Thus, closing the plan to new hires caused it to be underfunded.

But he is mistaken, and we can see that by comparing the closed pension plan for state employees to a pension plan that is still open. In 2004, Gov. Granholm and other policymakers put only 40 percent of the actuarially recommended amounts into the state employee plan. They put 71 percent of the recommended amount in the school retirement system. They repeated the pattern in 2007, when they put 48 percent of the recommended amount into the state plan but 91 percent in the school system.

So naturally you would expect the school plan to be better funded now. Even though the still-open plan for school employees received more cash than the closed plan for state employees, it is the latter plan that is in better shape today. So the key difference is whether the plan is closed or open. Closed is better.

When policymakers closed the state pension plan to new employees, they gave them a 401(k) plan. In raw numbers, that plan, which now covers the majority of state workers, cost state taxpayers $116 million in employer contributions in 2016. Meanwhile, the legacy pension plan cost $716 million, largely to pay down unfunded liabilities in the system. The costs of underfunding are the prime pension system costs, and they cannot be written off.

Ciaramitaro also says that the hybrid plan splits the risk between employees and employers. This is incorrect. The underfunding risk is exclusively borne by the employer, and thus the taxpayer. Employees do not share it.

He does make one agreeable point: “You don’t do something that specifically is known to not work.” Pension managers have promised benefits now and deferred costs to the future. The result is a broken system that has accidentally made school employees the state’s largest creditor. As Ciaramitaro’s actions demonstrate, unions have been poor watchdogs at ensuring that pensions are properly funded. Transitioning to a 401(k) plan is better and it’s good that lawmakers are interested in it.


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If School Pensions are ‘Vital,’ They Should Have Been Properly Funded

A Sad Passing, and Some Budget Votes

May 12, 2017 MichiganVotes weekly roll call report

House and Senate sessions were shortened this week due to the tragic death by suicide of Rep. John Kivela from Marquette after a second drunk driving arrest. This report includes some Senate budget votes and amendments from the previous week.


Senate Bill 135, Senate version, 2017-18 Health and Human Services budget: Passed 25 to 13 in the Senate

The Senate version of the Department of Health and Human Services budget for the fiscal year that begins Oct. 1, 2017. This covers Medicaid and welfare programs and is by far the largest state budget. The Senate proposes $25.401 billion in gross spending, with $18.345 billion being federal money and the rest from state and local taxes and fees. The House-passed version (part of a multi-department "omnibus" spending bill) proposes spending $25.171 billion, or around $230 million less.

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Who Voted "Yes" and Who Voted "No"


Senate Bill 135, David Knezek amendment, add refugee assistance spending: Failed in the Senate 12 to 26

To spend $1 million from state tax revenue on a refugee assistance program. Michigan already has this program, which is paid for with federal money. The amendment would add state tax money also.

Who Voted "Yes" and Who Voted "No"


Senate Bill 135, Bert Johnson amendment, add homelessness spending: Failed in the Senate 12 to 26

To spend an additional $3.7 million on government homeless programs. Specifically, to give private and government social service agencies $16 for each night an individual stays, to be used for efforts to get these individuals into permanent housing and reduce recidivism. The budget includes a $100 "placeholder" for this and talks are continuing.

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Senate Bill 135, Vincent Gregory amendment, increase Medicaid "behavior services" spending: Failed 15 to 23 in the Senate

To add an additional $196 million for spending on Medicaid behavior-related mental health services, and move forward a scheduled pay increase for direct care workers from next April to this October.

Who Voted "Yes" and Who Voted "No"


Senate Bill 140, Senate version, 2017-18 Department of Environmental Quality budget: Passed 26 to 12 in the Senate

The Senate version of the Department of Environmental Quality budget for the fiscal year that begins Oct. 1, 2017. This would appropriate $490 million in gross spending, of which $170 million is federal money, and the rest is from state and local taxes and fees.

Who Voted "Yes" and Who Voted "No"


Senate Bill 140, Hoon-Yung Hopgood amendment, give Flint more for water contamination response: Failed 12 to 26 in the Senate

To give the city of Flint an additional $15 million to cover water bill reimbursements to residents after its 2015 drinking water contamination crisis.

Who Voted "Yes" and Who Voted "No"


Senate Bill 149, Senate version, 2017-18 K-12 School Aid budget: Passed 23 to 15 in the Senate

The Senate version of the K-12 school aid budget for the fiscal year that begins Oct 1, 2017. This bill would appropriate a total of $14.414 billion, compared to $14.161 billion approved last year. The House proposes to spend $14.309 billion, and in both versions $1.726 billion is federal money.

Who Voted "Yes" and Who Voted "No"


Senate Bill 149, Coleman Young II amendment, give Detroit schools money for students who left: Failed 11 to 27 in the Senate

To allow the Detroit School District to keep getting per-pupil state money next year for students who had been enrolled in one of its schools that closed, but now go to a different school district.

Who Voted "Yes" and Who Voted "No"


Senate Bill 149, Hoon-Yung Hopgood amendment, remove private school "unfunded mandate" money: Failed 13 to 25 in the Senate

To remove $2.5 million allocated to reimburse private schools for the costs they incur meeting various unfunded state mandates.

Who Voted "Yes" and Who Voted "No"


SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.


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Do Renewables Really Make Economic Sense?

Let’s find out by letting them compete in a free market

(Editor’s Note: A modified version of this article was published by the Detroit News as a letter to the editor on May 4, 2017.)

Renewable energy advocates regularly argue that wind and solar are cost competitive, meaning as economical, as other energy options. If it’s true that solar and wind power make financial sense, there shouldn’t be any need to subsidize them. But we do.

It’s easy enough to test this theory. We can see if it makes financial sense to use renewable energy sources by ending their politically based advantages.

These advantages include direct subsidies — like the federal production tax credit handed out to big wind and solar developers each time they install new wind turbines or solar panels. They also include protective mandates, like Michigan’s renewable portfolio standard, which forces renewables into the market ahead of other sources, like nuclear or natural gas.

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Until all of the special favors that help this politically favored industry are removed, all claims that renewables are cost competitive are little more than green marketing and spin.

Green energy advocates often push another popular fiction: That fossil fuels benefit far more from subsidies than renewable energy. That’s false. The most recent numbers from the Energy Information Agency show that renewable energy (not including hydroelectric) provided just over 6 percent of the nation’s energy in 2013. But, from 2010 to 2013, direct federal subsidies to renewables increased from $8.6 billion to $13.2 billion. In comparison, subsidies to fossil fuels — which provided almost 68 percent of the nation’s electricity in 2013 — dropped from $4.0 billion to $3.4 billion over the same period.

Prominent investor Warren Buffet clearly understood what it takes to ensure wind gets built when he bluntly stated that the subsidies and tax credits were “the only reason to build them.” He continued, “They don’t make sense without the tax credit.”

The renewable energy industry also appears to recognize this fact. When its generous handouts are threatened in any way, the entire industry goes into shutdown mode, threatening to lay off thousands of workers and cease building new turbines and solar arrays. This happened in 2012 and again in 2015, when Congress considered letting the production tax credit expire.

This is truly strange behavior for an industry that boasts it is cost competitive with other energy sources.

But there are still other reasons to question whether renewable energy really can compete. Take, for example, the on-again, off-again routine of Saginaw-based solar manufacturer, Suniva. Michiganders recently learned that, after providing it millions of dollars in state and federal grants and subsidies, this ostensibly cost-competitive organization announced “significant” layoffs at its plants in Michigan and Georgia.

In one of its most recent reports, “Levelized Cost of Energy Analysis,” the financial advisory firm Lazard says it costs between $32 and $62 per megawatt hour to install wind power. It puts the cost of large-scale solar power between $46 and $61 per megawatt hour. These numbers are different — and significantly lower — than the ones in the Michigan Public Service Commission’s 2017 annual report on Michigan’s renewable energy mandate. Many of the current wind and solar contracts in Michigan cost between $90 and $100 per megawatt hour — one is even as high as $160.

Again, if the renewable industry is as competitive as its proponents claim, why are Michiganders paying so much more than the standard industry rates Lazard has published?

Of course, none of this discussion even begins to touch on the fact that the wind doesn’t blow and the sun doesn’t shine 24-7. In fact, the National Renewable Energy Laboratory admits that even in prime conditions wind and solar only produce electricity 35 and 20 percent of the time, respectively.

Until we develop affordable and reliable means to store energy on a massive scale — a feat that’s probably decades away — we need something to give us electricity when renewables can’t handle the task. In simple terms, that means we need to have natural gas, nuclear or coal running behind the renewables to catch them when they fail to provide the essential electricity that we have grown to expect and rely upon.

We can still have the policy discussion about whether the environmental benefits of renewable energy makes it worth the additional cost to build it. But, until renewable energy can actually compete in Michigan’s markets — on a fair and level playing field — let’s stop pretending it is cost competitive.


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Let People Rent Out Their Property

New bills would let homeowners use Airbnb, other services

In places around Michigan, local governments prevent people from legally renting out their own property. But some new bills would change that, freeing up private property rights for homeowners.

In Traverse City, the government doesn’t allow short-term rentals of homes. That means residents can’t use services like Airbnb or HomeAway. Even in business districts, the city requires residents to be licensed and at least 1,000 feet away from other license holders. As The Detroit News reports:

Those rules don’t stop some Traverse City residents from renting their homes on websites such as Airbnb, [Traverse City’s Zoning Administrator David] Weston said. He routinely pens letters to those homeowners who violate city policy, and occasionally sends them $400 tickets for operating against the ordinance.

Previous city leaders contended short-term rentals were commercial uses of residential property and inappropriate for residentially zoned swaths of the city, Weston said.

This is absurd. In cities across the state and nation, tens of millions of people are able to safely and efficiently use home-sharing services. This allows people to earn money while providing travelers with more options and lower prices. Home sharing also allows vacationers to nestle themselves into the heart of the local community, rather than settling for a touristy hotel out near the highway.

There are newly introduced bills in Michigan that would re-establish rights for property owners. House Bill 4503, sponsored by Rep. Jason Sheppard, R-Temperance, and Senate Bill 329, sponsored by Sen. Joe Hune, R-Fowlerville, would “prohibit local governments from using zoning laws to prohibit homeowners from letting out their property for vacation or short-term rentals, which would apply to owners who use services like Airbnb.”

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The hotel industry and local governments aren’t thrilled with home sharing. Other short-term renters, like hotels, don’t like the competition, and local governments called the bills “stunning” and “unhealthy” in a story by MIRS News.

But governments at any and all levels should not be banning homeowners from using their property in certain ways unless there are sufficient and compelling reasons for doing so that have a direct impact on the well-being of the public. Under the proposal, municipalities could still regulate short-term rentals and enforce regulations related to things like noise control or other nuisance issues. These bills simply say that local governments cannot ban people from renting out their property for short periods of time.

Private property rights are a foundational principle of this country. It’s good that someone in Lansing is attempting to protect them from being undermined by local governments.


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Federal spending bill lets the air out of protestor’s tires

For several weeks, we have been inundated with media reports about thousands of protesters publicly opposing what they feared was the end of science in the United States, and possibly the world.

The March for Science website described how an “unprecedented coalition” gathered together on April 22 – Earth Day – in over 600 separate marches to “defend the role of science in policy and society.”

The Peoples Climate March, held on May 1, said that “more than 300,000 in Washington, D.C. and across the country” banded together to move away from “a cruel, polluted and divided country, and towards a clean energy economy that works for everyone.”

Much of the motivation driving the two widely covered marches was to respond to Trump administration actions aimed at rolling back environmental regulations and questioning the potential long-term impacts of climate change. At the Washington, D.C. March for Science event, Bill Nye, “the Science Guy,” charged elected officials worldwide with “deliberately ignoring and actively surpassing science.”

Few would question the intensity of the marcher’s feelings. But when the final congressional spending bill was rolled out on May 1, much of the frenzied wailing, brought on by proposed cuts to science- and climate-focused federal agencies, proved to be much ado about nothing.

In fact, despite widespread concerns about a proposed 31 percent budget cut and the removal of approximately 3,200 employees at the Environmental Protection Agency, the EPA will only see a 1 percent budget cut and no staff losses.

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There’s no question that the EPA could endure a much larger budget cut in 2017. As I recently asked a Bridge Magazine reporter, “Honestly, is there any government agency that can’t cut somewhere?” After all, the EPA actually classified a mere 1,069 out of its 16,205 employees as essential during the 2013 federal government shutdown. So asking department officials to struggle through with an $8.06 billion budget in 2017 — compared to the $8.2 billion they received in 2016 — is not imposing a serious hardship.

A few additional examples will show how science avoided any serious funding restrictions in this spending bill.

  • Initial fears about cuts to the Great Lakes Restoration Initiative were the focus of Michigan’s news in March. But the $300 million budget for this program was untouched. The president’s request for an immediate $50 million cut to GLRI funding was refused by Congress, which instead dedicated $50 million in spending to “support fishing, boating, hunting and stopping invasive species.” To help put a touch of perspective into this topic, the GLRI is one of those spending areas that people are loathe to consider reducing because water and its management is so important to the state. But the fear of questioning that funding is likely to also lead to a lack of serious oversight. Therefore, when I was seeking input from friends in Michigan’s environmental community on the potential cuts, I did hear grudging admissions that not every dollar in GLRI funding went exclusively to Great Lakes restoration projects. Michigan Capitol Confidential has highlighted a few examples of those projects that did not meet the stated goals of the GLRI. Additionally, when the Obama administration recommended almost $16 million in cuts to the spending program in fiscal year 2013, there was little if any outcry from these protest groups.
  • The Centers for Disease Control and Prevention will have small cuts to its budget. But of special interest to Michigan residents will be the $35 million in additional emergency funding for Flint.
  • NASA had a $368 million increase, moving it to almost $20 billion in total funding.
  • The National Oceanic and Atmospheric Administration also fared well, with only a 1 percent cut to its now-$5.7 billion budget. The NOAA Office of Oceanic and Atmospheric Research – the office focused on climate studies – will actually see an increase from $462 million to $478 million.
  • The U.S. Geological Survey is targeted to have a $23 million bump. Much of that spending is expected to support earthquake preparedness work.
  • The U.S. Fish and Wildlife Service will have an $11 million budget increase. A portion of that spending will be directly targeted toward removing plant and wildlife species from the endangered species list.
  • The National Park Service will receive an additional $81 million in 2017. Much of that money is expected to go toward infrastructure upgrades and repairs in the nation’s parks.
  • In contrast to Trump’s proposed $900 million reduction, the Department of Energy’s Office of Science will see $42 million added to its spending.

After all the marching, chanting, and forecasts of doom, Congress was actually quite generous to science and climate research. In fact, this spending bill effectively let all the air out of all the tires on all the buses that were hired to ship worried protesters around the country.

Given the fact that elected officials across the political spectrum rushed out to take bipartisan credit for spending another $1.1 trillion in 2017, the only thing seriously at risk from this year’s omnibus spending bill is the American taxpayer.


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