Friday, March 19, 2010

Grand Rapids Fires Police, Firefighters; Keeps Parking Lot Sweepers

In a story that was the same time baffling and a bit funny, the City of Grand Rapids has decided to keep six full time parking lot attendants on the payroll, even though their jobs were replaced with automated parking lot machines. Here's a quote from the article:
"When automated ticketing machines took over her job, Grand Rapids Parking Facility Attendant Leah Leonhardt feared being laid off.

On Thursday, parking leaders agreed to a plan that would save her job and five other full-time positions, as well as scrap plans to privatize about 20 seasonal employees.

Now, Leonhardt spends her days shoveling snow, cleaning ramp decks, and collecting and counting cash, but that's fine with her.

So let me get this straight: The city fired 44 police officers and 25 firefighters, but has decided to keep 26 parking lot sweepers and other seasonal employees?

Oh, and of course the city is claiming that they need a $7 million tax hike in May, 100% of which will go straight to the city's underfunded pension plan.

What you're witnessing is the breakdown of government's ability to make rational decisions. Look for a lot more bad decisions as revenue continues to decline and unions press harder on their city government puppets to curry more favors, at our expense.

Thursday, March 11, 2010

Michigan Tax Revenue Shows Sharp Decline in February

The state's monthly revenue report for February was released today and my reaction was, "Recovery? What recovery?"

This statement from the report sums it up well: "Revenue from Michigan’s General Fund and School Aid Fund earmarked taxes totaled $474.3 million in February, down 28.8% from last year's level . . . February tax collections were approximately $132.3 million below the level expected. . ."

Year over year revenues are down 28%. This is stunning. A couple of points stand out as potentially contradictory. First, state income tax and business tax revenues are down 8.6% and 67.4%, respectively, on a year over year basis. That's a pretty dramatic drop, particularly for the business taxes. Frankly, that could be considered a collapse in revenues.

But, at the same time, strangely, sales tax revenues are up on a year over year basis. February saw a 5.2% increase over last year. How can these figures be reconciled? On the one hand, personal incomes are down and business incomes are way down, and on the other, sales are up?

There is some chatter lately that these sales tax increases over the last two months have more to do with income tax return money flowing back to taxpayers. For instance, in the state's revenue report, it is shown that the state issued $731 million in tax refunds last month, a 20% increase over February 2009. Federal statistics are showing a similar patter where taxpayers are filing taxes earlier than usual to collect refunds.

So, it might make sense after all that people are collecting large refunds and then spending much of that money, thus resulting in a boost in sales tax revenues. But this is hardly a true economic recovery, it's just another temporary residual blip based on factors that actually point to further economic decline.

Another case in point from today's news: Kent county home foreclosures up 42% in February from January. Hardly a sign of recovery.

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