Public Safety Workers in Michigan Now Enjoy Right-to-Work

Janus v. AFSCME decision gives right-to-work to police and firefighters in Michigan

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.

Michigan became a right-to-work state in 2013, meaning workers cannot be forced to pay money to a union in order to hold a job. But there was a catch — the law made exceptions for public safety unions. But with the Supreme Court decision, nearly 25,000 police and firefighters in Michigan now have the right to choose whether they want to support a union.

Granting public safety officers right-to-work status was the most direct impact of the Janus v. AFSCME decision on Michigan. The biggest effects from the Janus decision nationally will be felt in states that were not already right-to-work, such as New York and California.

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Legislators not extending right-to-work status to public safety workers when they passed the law five years ago was a mistake. This exception was unusual compared to other right-to-work states. Last year, some lawmakers introduced legislation to give public safety workers right-to-work status, but the bill has never left committee.

There have been claims that unions are essential to workplace safety and allegations that right-to-work laws lead to increased workplace injuries. That’s false, though. Despite far more people being employed in the state today, Michigan has seen a 17 percent decline in workplace-related injuries and illnesses from 2012-16, according to the Bureau of Labor Statistics. In fact, workplaces across the country have seen a decline in injury and fatality rates, regardless of right-to-work status. Whether that is from enhanced safety features, higher standards or just safer jobs in general, unions will be hard-pressed to take credit for the decrease.

With-right to-work in effect, people are simply allowed the opportunity to choose whether to support a union. The law does not ban unions from advocating safety measures for their current members, negating the argument that right to work has any effect, positive or negative, on workplace safety.

While worker freedom laws have no clear impact on workplace injuries and fatalities, they have had many positive economic effects. For the past 30 years, right-to-work states have grown significantly faster when it comes to jobs, income and population. In addition, people in right-to-work states also typically have more buying power — money spent on goods like housing, food and transportation goes further.

Right-to-work states hold many advantages over other states, but the benefits of the Janus decision extend beyond economic growth. It grants nearly 5 million individuals the freedom to exercise their First Amendment rights. No one should be forced to give his or her hard-earned money to a private organization as a condition of employment, especially if that money is being used for political activity.

If workers find value in their union and choose to join it, they are exercising their freedom. If they choose to not join, they are also exercising their freedom. The important thing is that they have a choice. Millions of public workers across the country — including public safety employees in Michigan — now have the right to choose what is best for them.

Employees can learn more about their rights and opt-out options at www.MyPayMySay.com/MI.


Related Articles:

U.S. Supreme Court to Hear Pivotal Right-to-Work Case

Teachers Union On Supreme Court Janus Ruling: ‘Women And Minorities Hardest Hit’

Supreme Court Could Bring Right-To-Work To Government Employees Nationwide

Unions Admit Forcing People to Pay Dues is Political

US Supreme Court Cites Mackinac Center in Landmark Ruling On Unions

Where Michigan Stands on Civil Asset Forfeiture

The Detroit News chronicles the past, present and future of this misguided policy

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 Michigan Legislature and U.S. Supreme Court are both examining the practice. From the article:

In May, the state House approved a bill that would require police in Michigan to secure a criminal conviction before seizing property. The bill is being debated in the Judiciary Committee.

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The U.S. Supreme Court agreed last month to hear the case of an Indiana man whose $40,000 Land Rover was seized after he pleaded guilty to selling less than $200 worth of drugs. The High Court will decide if the seizure violated the Eighth Amendment’s ban on “excessive fines.”

Critics of civil forfeitures say they violate the presumption of innocence by punishing people before they’ve been found guilty of a crime. Supporters of the practice insist forfeitures help police fight drug dealers and other criminals.

While some law enforcement officials are in favor of reform, many are not. Former Livonia police chief Robert Stevenson, the director of the Michigan Association of Chiefs of Police, said law enforcement officials need forfeiture before getting a conviction.

“Let’s say you raid a dope house and find drugs and a lot of money. In order to get a criminal conviction, you’d need to give that money back to them, even though it’s clearly proceeds from drug trafficking,” Stevenson told the News. “So if you do get a conviction, where do you think that money will be? By the time the case gets through the court process, that money would be long gone.”

But requiring a conviction wouldn’t change that. There’s a different between “seizure” and “forfeiture.” The former can be done based on probable cause, while the latter is the actual transfer of ownership of the property. Even if Michigan joins the states — standing now at 15 — that require a criminal conviction prior to forfeiture, police can still seize assets while they investigate a crime. But if the owner isn’t convicted, officials should return the property.

The Detroit News notes many interesting statistics from the latest Michigan forfeiture report:

Last year, police in Michigan seized about $13 million in assets, according to the state police 2018 Asset Forfeiture Report, which was released June 30 to the Mackinac Center and is set to be released to the public soon.

Among the findings in the 2018 report, which was provided to The News:

Law enforcement forfeited $11.8 million in cash and $1.3 million in property, including eight homes, 711 weapons and 7,999 vehicles.

Of the 2017 forfeitures, 736 people were not charged with a crime, with another 220 were charged but not convicted. Another 228 weren’t charged because they cooperated with prosecutors. Only 43 percent of those whose property was forfeited were charged and convicted.

“The rest were either not charged, found innocent, cooperated or are still pending,” Skorup said. “This is problematic because it means that the state took ownership of their property before proving these citizens were guilty of anything.”

The majority of Michigan’s law enforcement agencies did not initiate civil forfeitures. Of the 673 local police departments, sheriffs offices and prosecutors in Michigan, only 265 agencies seized property. Only five prosecuting attorneys prosecutors out of 83 counties in the state handled seizures.

To track Michigan’s forfeiture legislation and learn more about the process, visit www.mackinac.org/forfeiture.


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Mackinac Center’s Forfeiture Expertise Cited

New federal lawsuit claims forfeiture violated due process rights

Photo courtesy of The Detroit News

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.

“Normally, the Supreme Court has looked at these cases as violations of the Fourth Amendment (which covers probable cause and unreasonable search and seizure), and they’ve been upheld, but now they’ll look at it from a different perspective” Skorup explains. “The argument the court will now hear is that forfeitures constitute an unreasonable fine on people’s assets.”

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For the past five years, the Mackinac Center has been conducting research on civil asset forfeiture in Michigan. A 2015 report it published identified many problems associated with forfeiture and offered policy recommendations. Since 2001, Michigan law enforcement agencies typically forfeited between $20 million and $25 million in assets yearly. In 2017, the state seized and kept about $13 million in assets. Last year, nearly 1,000 people had their assets transferred to the government without being charged or being found innocent of a crime. Though a significant amount of reform has been achieved, there is still more that should be done.

“Nobody should lose their property until they’ve been convicted beyond a reasonable doubt,” Skorup said. “Then, after the conviction, the court should decide if their assets were part of that criminal activity.”


Related Articles:

Where Michigan Stands on Civil Asset Forfeiture

No Charge, No Conviction — But 956 People Still Lose Stuff To Cops

Michigan Should End Civil Asset Forfeiture

Michigan Forfeiture Laws Improving, But State Transparency Still Falls Behind

Key Part of Civil Asset Forfeiture Law Ruled Unconstitutional

Firearm Seizures, Sexual Assault, Lock Away Painkillers and More

Michigan Votes looks at some recently introduced bills

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

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

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


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


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


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


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


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


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


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


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

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

State Corporate Handout Program Milks Taxpayer for Cass City Operation

Subsidies continue to prove to be utterly pointless

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Related Articles:

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

Politicians focus on higher status than taxpayers

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

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

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

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

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

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

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

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


Related Articles:

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National Publications Cite Mackinac Center in Wake of Supreme Court Decision

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

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

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

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

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

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

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

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

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

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

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

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

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


Related Articles:

Public Safety Workers in Michigan Now Enjoy Right-to-Work

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

Unions Admit Forcing People to Pay Dues is Political

U.S. Supreme Court to Hear Pivotal Right-to-Work Case

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

A Political Fiction that Won’t Go Away

Candidates wrongly claim state education funds have been cut

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

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

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

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

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

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

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

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

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

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

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

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


Related Articles:

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Snyder Budget Whacks $10 Million from Business Subsidy Programs

Pure Michigan scores $1 million increase

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

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

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

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

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

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

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

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


Related Articles:

State Business Handout Program Wastes Another $2 million

Legislature Approves New Business Subsidies

A Look At The State Budget for Business Subsidies

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

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

Legislature Approves New Business Subsidies

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

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

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

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

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

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

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

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

 


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