Archive for the 'Grand Rapids City Government' Category
Michigan Unemployment Insurance Fund is Bankrupt
A little-discussed news item is that, as the Great Recession drags on, states are getting crushed under piles of borrowing to continue to pay unemployment benefits. As states run out of money, they begin to borrow from the Federal Government.
Why is this issue important? Because the state will eventually have to repay this borrowed money. We’re talking about billions of dollars.
According to the web site Pro Publica, Michigan is the number two borrower of federal funds to pay unemployment benefits (behind California). The negative balance of the state’s unemployment fund now stands at $3.429 billion. This negative balance is rising almost exponentially. In December alone, the state paid out $243 million more than it collected in unemployment taxes from employers.
2009’s “stimulus” law contained a provision that allowed states to avoid interest payments through 2011, but the bill will eventually come due. The kicker is that higher unemployment taxes on employers will be imposed to attempt to pay this shortage back, but that will just serve to kill more jobs as businesses are saddled with even more costs of doing business.
As the private sector has collapsed under the weight of debt saturation, government has begun to take on the debt load.This won’t end well.
The problem is that so many people are now dependent on government handouts, the political will to fix the situation will be almost impossible to come by. The entitlement culture will only be curtailed where there is no other choice. And that may be sooner than we think.
We see our own microcosm of this with the crushing pension costs in Grand Rapids. The city’s commission is asking for an income tax increase, 100% of which will go to pay pension costs. And that’s just for the first year. They will have to come back to taxpayers to cover the tens of millions more they will need to pay just to keep the pension fund solvent. Let me repeat, just so it’s clear. This income tax increase will do nothing to improve or prop up city services. It will go only to pay for pensions.
Multiply this by all the cities in Michigan by all the states in the nation by all the people on federal benefits.
Just to illustrate, please observe the national debt’s growth rate:
National Debt Doom
That’s called a parabola. It will fail. Nature doesn’t tolerate exponential growth rates.
Posted by: GRPundit on Tuesday, 16th Feb, 2010
Appeal Your Grand Rapids Property Tax Assessment
2010’s property tax assessment documents were sent out last month and you have a very small window of time to appeal your assessment. In many cases, taxable values went up while property values went down. The city of Grand Rapids has a web page with the required documentation you need to fill out for an appeal, available here.
There are several tools available online to see the values of homes that recently sold in your area for comparison to your own, such as trulia.com and zillow.com. Be sure to look for the “recently sold” sections of those web sites. Since property values have dropped approximately 30% in the area, it’s well worth it to challenge your taxable property values.
The Michigan Taxpayers Alliance also offers a DVD workshop that helps you with the process, for $10. You can check it out here.
State Representative Dave Hildenbrand offers a useful guide for appealing here.
Be aware, the deadline for filing appeals is February 12th!
Posted by: GRPundit on Wednesday, 3rd Feb, 2010
Fiscal Armageddon – Time for Tough Choices
The October revenue report for the state of Michigan has been released, and there’s very little good news to be had. Revenues were again below the most recent projections. October saw tax collections that were $31 million below expectations. The best real-time indicators of economic activity, sales taxes and income tax withholding, are both down, again.
Due to the near-complete collapse of state revenues, the cuts have (finally) been forthcoming. Public schools received per-pupil cuts of approximately $300 for the current fiscal year. State agencies have been ordered by the governor to cut 10% of their budgets. The cycle of layoffs and reduced revenues continues.
The result? Governor Granholm and the MEA have begun hyperventilating. This week they staged a massive lobbying effort to get legislators to increase taxes. Apparently they don’t require Economics 101 in teacher colleges.
On the city level, Grand Rapids has seen a similar decline in income tax revenues and property tax revenues will probably see declines due to historic drops in resale values of homes and commercial property. Immediately upon announcing the layoffs of 125 city employees, Mayor Heartwell called for a ballot question to raise taxes in the city. He claims there hasn’t been a tax increase in 15 years. Apparently the constant reduction of the personal income tax exemption, the added property tax bill “service fee,” and the increase in trash collection property tax don’t count as tax increases in the mayor’s book.
Oh, and don’t forget that The Rapid is coming back, probably in early 2010 to ask, again, for a tax increase to build the redundant and wasteful “Silver Line” bus service, to clog up Division during rush hour.
But the fiscal problems are just beginning, and there is very little sign that anyone is proposing real solutions. The “easy” way out, increasing taxes, will only work so much. They will run in to the law of diminishing returns. The speaker of the state house, Democrat Andy Dillon, apparently grew some huevos and bucked his MEA masters by proposing the pooling of all public school health plans into one statewide health plan. The MEA, fearing the loss of their money-laundering cash cow health plan MESSA, promptly went ape-sh*t. This illustrates the difficulty of real, substantive change at the state level. So many special interests peddling their influence (in the form of money) makes it nearly impossible to propose an innovative solution to the state’s structural budget problems.
Of course, then there are the unsustainable defined-benefit Ponzi public pension plans. They will fail. It’s just a matter of time. Even politicians can’t repeal the laws of compounding numbers. But I’m sure they will try.
But we should turn to the local level, where real people can have the most chance of affecting change. We can, as a city, choose to continue down the ultimately disastrous path of “the easy way out,” or we can have real, substantive change in how city government does business.
A quick overview of what’s going on at the local level: As state revenue declines, so does the state subsidy to cities called revenue sharing. Revenue sharing has been on the decline for several years. City leaders keep pointing to how much has been “lost,” but their complaints fall on deaf ears – or at least ears that understand that cities fall further back in line from other special interest groups.
As revenue sharing declines, so have city income tax receipts. The city’s income tax revenue is down 14% (apparently year on year).
Not only has revenue been on the decline, the gigantic hydrogen bomb of the city’s pension system is preparing to detonate. The city’s 2010 fiscal plan (published before the layoffs were announced this week), is available here. One paragraph should stand out and set off all the alarm bells in the city:
In FY2007 our two pension retirement trusts were 110% and 120% funded. Both employer and employee contribution levels were at or near the lowest possible levels. This advantage was eliminated by the breathtaking decline of the financial markets over the past 18 months. We now know that our retirement funds are significantly underfunded. This means that both employee and employer contributions must move dramatically higher. Proposed changes to actuarial assumptions and plan provisions will freeze employee contributions at the bottom of the contribution range and provide additional time for the City to adjust to higher employer contributions. Nonetheless, the employer share will go from 7.7% in to 9.29% in FY2010, and 13.62% in FY2011 for the General Pension and from an FY2010 rate of 0% to an estimated 23% in FY2011 for the Police/Fire Pension. These percentages assume that we will be able to implement critical smoothing techniques that will mitigate the intense upward pressure on required contributions. The increase in employer funding requirements contributed to the FY2010 GOF operating deficit of $2.9 million. Unless we see a significant increase in the market value of retirement plan assets over the next couple of years, the estimated pension contribution will continue to rise. (emphasis mine)
Translation: 2010 layoffs are just the beginning. Fiscal Year 2010 includes a pension contribution (as a percentage of salaries) for the police and fire employees of 0%. Yes, 0%. This will go from 0% to 23% (of salaries) in one year. A search of the fiscal plan shows that total personnel costs for police and fire are about $67 million. Let’s back out about 40% of that (just a wild guess) to come to actual base salary cost. We come up with about $40 million. Now, re-read the above paragraph. The city is going from contributing $0 in the current fiscal year to the police and fire pension plan to (my estimate) of 23% of salaries in 2011 – or about $10 million. The increase in contributions for the other defined-benefit pension participants on the city’s payroll will increase from 9.29% this year to 13.62% next year. This is unsustainable.
The mayor’s solution? Raise taxes.
Lest I be declared someone who only points out problems and no solutions, here are a few suggestions:
- Lay off all non-essential employees. This includes the “equal opportunity” department of five people.
- Outsource information technology (IT) services.
- Eliminate the Office of Children, Youth, and Families.
- Convert all employees, now, to a defined-contribution retirement plan. NOW.
- Eliminate the Downtown Development Authority. This entity sucks up about $17 million of local property tax revenue that would normally go to the city’s general operating fund. The DDA also currently owns the Van Andel Arena. Sell the arena, pay off the outstanding bonds, and use the excess to pay off some of the DeVos Place bonds. The DDA currently operates as a taxpayer-funded subsidy to developers, giving away free money to those who ask.
- Implement a fire department response fee. Most (if not all) homeowners insurance plans offer coverage if you’re charged for fire department response.
- Eliminate the city’s trash collection services. There is a special property tax levied for this. There are plenty of private trash haulers. Once the trash collection services are eliminated, go to voters and ask them if it’s ok to convert the current trash levy on property tax to a general fund levy so that it can be spent on other city services (including police).
- Contact every citizen and ask them what their priorities are. Do you prefer Police and smooth roads, or do you prefer an equal opportunity department and subsidies for developers?
If serious, dramatic changes are not implemented, the city will go bankrupt. This has started to happen in other states. There is no chance in h*ll that the economy is going to return to anywhere near where it was at the peak of the last cycle in 2007 – at least not any time soon.
Tough choices need to be made now – if our politicians can stomach it.
Posted by: GRPundit on Friday, 13th Nov, 2009
Rapid Silver Line: They Almost Got to Take Credit
An important article appeared in the Grand Rapids Press last week that highlights several issues regarding the failed Silver Line bus system and the false claims of economic development that are touted by the Silver Line’s supporters.
The Grand Valley Metro Council (very much pro-Silver Line) won $400,000 in federal grants to clean up several abandoned sites along Division avenue, in the hopes that this will attract more development. You can almost hear how this would have been announced if the Silver Line had passed. It would have been touted as the first in a series of positive developments because of the Silver Line. Of course, the Silver Line had nothing to do with this grant award, but it underlines the claims that these sorts of transportation projects somehow spur development. However, as this news item shows, the development is largely spurred by government subsidy, not the appearance of a fancy silver-colored bus line. The Rapid supporters confuse correlation with causation. It goes against logic that replacing the current buses with buses that are painted silver will someone convince people and business to move to Division Avenue.
As we have previously pointed out, the development in Portland around mass transit, as the pro-Rapid supporters love to point to, only occurred after government subsidies were enacted. The development did not occur due to the mass transit system. This is the heart of the pro-Silver Line argument; that the Silver Line “would have” spurred several dollars’ worth of development for each dollar spent. This is simply not the case. The only evidence the Rapid points to in support of their argument is a thinly-documented three page article, as we pointed out here.
However, this Press article also points out that they haven’t given up on the Silver Line boondoggle. The article states, “Although [The Rapid] expects the Silver Line route eventually to win the voters’ blessing, plenty of other properties could be helped in the meantime . . .” Clearly they aren’t done with trying to sell this mess to the voters. Based on the negative Silver Line feedback both in the Press and on other online sources, it seems unlikely that they can salvage this project without significant changes. Even the pro-transit people weren’t convinced about the need for the Silver Line.
Posted by: GRPundit on Wednesday, 13th May, 2009
Pigs Feeding at the Trough of Government Largesse
General Motors, the City of Detroit, and Everyone Else Feeding At the Trough of Government
It was only a matter of time. Now that the Congress and US Treasury have decided that it is legitimate for the Federal Government to spend $700 billion “bailing out” various banks and financial companies, the line is getting longer of those holding their hands out for free money from heaven.
First, we were told that if the Federal Government didn’t spend $700 billion (a figure pulled out of thin air) to buy “toxic assets” from failing banks, that the world would end. Then, this week, we are told that they don’t plan to buy any toxic assets at all. Instead, everyone and their brother is holding their hands out to get more free money from the government.
General Motors is in dire straights as they burn through $2 billion in cash each month because they are such a colossal failure of a company. But hey, who cares, let’s lend them another $10 billion or more to keep the doors open, even though they already have a negative net worth of over $59 billion. Just because they’ve lost $75 billion over the last few years and they can’t pay the bills as it stands, borrowing more money from taxpayers, when no bank in the universe would do so, is a sure way to fix things, right?
But wait, don’t look twice. Now cities are asking for bailout money. That’s right, the City of Detroit is asking for $10 billion to shore up their budget. That’s in addition to Philadelphia, Phoenix, and Atlanta. More to come, just stay tuned.
Next, our own City of Grand Rapids admitted this week that their financial manager, apparently having the intelligence level of a monkey with a typewriter, has lost $225 million of pension funds since May. Nowhere in the discussion was mention of firing the idiot who has lost that much. No, instead they discussed how to dump an additional $10 million into the fund next year. Oh, and they promise they won’t raise taxes to do so (wink wink).
Folks, this is the worst financial crisis since the Great Depression and the moronity in Washington (and Lansing) seems to be at an all time peak. These bailouts do not come without consequence. Bad companies need to fail. Cities need to get their financial decks in order. Unsustainable pyramid-scheme defined-benefit pension plans are destined to fail. It’s just that no one wants to face the facts now, they prefer to defer those problems to future ill-informed politicians.
Well, the cows have come home, and we have yet to see any real intelligence shining through the political class. No, instead we have the Michigan House of Representatives ramming through a law to ban wine retailers from shipping to Michigan residents. Ah yes, priorities.
It looks like the national debt is going to increase by $2 trillion or more next year as the US Treasury issues debt like there’s no tomorrow. The next problem is that foreign countries will slow their buying of US debt. We’re already seeing a decrease in demand for treasury issues. Countries like China and Japan are more interested in spending money on their own people than buying US Treasury securities. The stuff is coming even closer to intersecting with the fan.
Folks, this problem was created by government in the first place. We have a federal reserve that prints money out of thin air, encourages malinvestment through artifically low interest rates, and encourages leverage through fractional reserve banking. This house of cards is beginning to fall. Government can not spend its way out of this. In fact, government is making things worse.
Stop the bailouts. Stop the futile “stimulus” discussions. Reduce taxes and spending dramatically. Phase out the Federal Reserve, Fannie Mae, Freddie Mac, and all the pseudo-government entities that created this mess in the first place. It will be painful and rotten, but it will clear out the cancer of perverse government incentives in the market and allow our economy to heal itself.
But, frankly, there is no hope of any of that happening. That’s why we ain’t seen nothin yet.
Posted by: GRPundit on Friday, 14th Nov, 2008
Grand Rapids: The Next Stop for the Light Rail Boondoggle Train
This weekend’s Grand Rapids Press had an article about the ballooning cost of a potential “light rail” system that is in the works for Grand Rapids. The project hasn’t actually even begun, but already the potential cost has jumped from $69 million to $79 million – in the span of one year. The Rapid is ready to spend $800,000 of taxpayer dollars just on studying the concept.
What would this light rail system look like? The plan is to have one rail route, from the Sixth Street/Monroe intersection, south on Monroe Avenue, to the Rapid bus depot. That’s a grand total of about 3 miles. $24.8 million per mile.
The plan also calls for up to 2,900 passengers per day. The $1.30 cost of riding the streetcar would cover only about one third of the annual $1.75 million cost to continue operations.
Never mind the rediculous re-engineering that Monroe would need to build this thing (seven lanes wide?), why can’t buses accomplish the same thing? We’re no fan of the inefficient fixed route bus system that The Rapid employs, but good God, anything would be better than the joke that this light rail system would be.
Of course, the magical benefits of this system are touted, such as $5 in development growth for each $1 spent on the system. Where do they get that number? They often point to Portland’s light rail system, which supposedly spurred so much development. But did it really? A recent report from the Cato Institute looks at just that question. A couple of telling excerpts:
[W]hen Portland’s first light-rail line opened for business in 1986, the city zoned much of the land near light-rail stations for high-density development. Ten years later, city planner Mike Saba sadly reported to the Portland city council, “we have not seen any of the kind of development—of a mid-rise, higher-density, mixed use, mixed-income type—that we would’ve liked to have seen” along the light-rail line.
…
Over the next decade, the city experienced a boom in high-density developments, virtually all of which were [taxpayer] subsidized.
…
Measured by value, the vast majority of the $1 billion of investments supposedly stimulated by the [Portland] light rail consists of government buildings, some built in response to executive orders by President Clinton and Oregon’s Governor Barbara Roberts that all federal and state agencies should relocate to downtown areas.44 One government-funded building supposedly stimulated by the lightrail line was a $5 million downtown parking garage. If light-rail works so well, why is a new garage needed and in what sense did light rail stimulate the construction of that garage?
Laughably, The Rapid’s web site has on its FAQ page the following item:
- Why not change the current bus system instead of spending new money on streetcars?
- Streetcars have several desirable features for downtown areas. First, with metro dwellers and workers nationwide demonstrating a strong preference for rail transit, streetcar systems draw more riders than equivalent bus systems.
- Second, streetcars have no vehicle emissions and therefore help improve air quality.
- Third, while streetcars have a higher initial investment, their operating cost is typically lower than equivalent bus systems. Higher operating cost for buses is attributed to escalating diesel costs, and shorter service life. The average life span for streetcars is 25 to 40 years and 12 years for buses. This trade-off will be part of the feasibility study evaluation. Is it worth a higher initial cost to provide increased benefits for many years to come?
First, the idea that more people like streetcars because they are cooler than buses has got to be the worst possible reason to spend $79 million. Second, the idea that streetcars don’t pollute is false, since they use electricity, and since much of our nation’s electricity is generated by coal power plants (or natural gas), there certainly are emissions. And third, as we’ve demonstrated previously, the Rapid loses about $5.82 per passenger when they ride a traditional bus. The Rapid will lose approximately $2.60 per passenger when they use the light rail, and that doesn’t include the capital costs. When you factor in a 30 year usable life for the initial capital costs, the loss per passenger rises to about $8.39 each. Where do you think that subsidy comes from? You guessed it… us, the taxpayers! That’s hardly more efficient than a traditional bus.
What are these people thinking? Can they see the forest from the trees?
You can read more excellent points debunking the value of the Portland light rail system at the Antiplanner web site.
Posted by: GRPundit on Monday, 28th Jul, 2008
Producers vs. Plunderers
This past weekend there was an article in the Grand Rapids Press about the benefits that Grand Rapids City Commissioners receive. We weren’t even aware that Commissioners got both health care and pension benefits for their one day a week job.
It seems as though five Commissioners participate in the City’s health care plan, though four of them make a voluntary contribution (James Jendrasiak pays nothing). The health care plan costs the city (consequently, us) $11,000 a year.
In addition, Commissioners receive pension benefits. Again, for a one day a week job.
One is reminded of the work of the great 19th century French economist, Frederic Bastiat. In his short treatise, entitled The Law, he separates people into two classes, those who produce something valuable and those who use the law to plunder the producers:
Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property.
But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.
Now since man is naturally inclined to avoid pain — and since labor is pain in itself — it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly.
Remember this the next time the City Commission complains more about how they need to raise taxes.
Posted by: GRPundit on Wednesday, 25th Apr, 2007
23 is No Longer Enough
Grand Rapids’ favorite son, Ambassador Peter Secchia, now appears as though he has changed his mind. Formerly the chair of “23 is Enough,” an anti-Wayland casino group, Secchia now seems to believe that 25 is just right.
According to Sunday’s Grand Rapids Press, Secchia has resigned his position at 23 and is now campaigning for a new casino in downtown Grand Rapids. One wonders why the change of heart.
The idea is that the GR casino would be basically a funding mechanism for the government, paying for the local pools, museums, parks, etc. While the idea seems to be in the right place, we’re very skeptical of any government unit owning an running an enterprise that the private sector should. Each time one of these publically-owned enterprises comes into existence, it generally entails the creation of new bureaucracies and un-elected governance boards (such as the DDA, the money-losing Kent County Convention and Arena Authority, etc).
One is left to wonder, though, when Secchia makes a statement like this, “I’m talking about a casino like Detroit has, (but) owned by the city, county and local people who would share the profits…” Does Secchia plan to be one of the “local people” who shares the profits? Who would own the casino? Who would operate it? Will it be just another government boondoggle, like the current city-owned golf course?
Posted by: GRPundit on Wednesday, 28th Mar, 2007
Proposal 2: Mayor Heartwell and the U of M
The fallout from Proposal 2 continues. Grand Rapids Mayor George Heartwell has apparently decided that he wants the taxpayers of the city to pay for a federal lawsuit to stop the implementation of Proposal 2. Heartwell uses the same logical contortions of groups like BAMN to try and make an argument that banning racism and sexism somehow is discriminatory. The article linked above actually says that Prop 2 is a “civil rights violation.” It’s not clear if that’s a Heartwell quote or summary of his position, but it’s typical of the utter hypocrisy of the pro-racism lobby that Heartwell apparently belongs to.
But an even more interesting issue arises here. Mayor Heartwell, along with all the public officials in the state of Michigan, are required to take an oath of office. That oath reads as follows:
I do solemnly swear (or affirm) that I will support the Constitution of the
United States, and the Constitution of this State, and that I will faithfully perform the duties of the office of __________________ in and for the City of _________________, County of ____________ and the State of Michigan, according to the best of my ability, so help me God.
Mayor Heartwell has taken a similar oath to “support… the Constitution of this State…” Proposal 2 is an amendment to the state’s constitution. The mayor is therefore looking at violating his oath and defying the state’s constitution. Filing a lawsuit to try and stop a state constitutional amendment certainly cannot be defined as supporting the constitution.
Perhaps the University of Michigan’s president, Mary Sue Coleman, has seen the legal light on this issue. She has decided to back off her earlier statements that she would fight Proposal 2 in court. When she addressed the university’s Board of Regents this week, she didn’t mention any lawsuit. In fact, she committed to working within the law:
“With last week’s passage of Proposal 2, I want to again assure the campus community that we remain fully dedicated to a diverse university and that we will obey the laws of our state,” said Coleman. “What will be essential is that all of us – students, faculty and staff and administrators – pursue all possible creative solutions to achieve diversity at the university within the boundaries of the law.”
We tried to find some statistics relating to minority enrollment at the U of M to compare with minority graduation, but we were unable to find that information. However, we did find some information on how California’s Proposition 209, similar to Michigan’s Proposal 2, affected universities in California.
The interesting outcome in California appears to be an increase in the number of minorities graduating from universities. That’s right, an increase. Why? Because enrolling students who would not otherwise qualify for admission to a top-tier university actually does the student a disservice. Think about it this way: if you were a B-average student and a top university admitted you based on something other than your grades, chances are you wouldn’t do so well, surrounded by A-average students in a very rigorous academic environment. Students not qualified to attend a top-tier university tend to drop out in higher rates. Therefore, it does them a disservice.
By admitting students to universities largely based on academic ability, students tend to apply for and attend the university that is closer to the academic rigor level they will succeed in. Therefore, the effect of Proposition 209 is that minority students tend to apply for admission at universities at the level of rigor they are more comfortable in. Therefore, instead of dropping out due to an inability to keep up, they tend to graduate at higher levels.
The reality of minority graduation rates bear this out. Rates stayed the same both before and after the passage of Proposition 209. That is, regardless of admissions levels of minority students, graduations rates were flat.
But of course, special interests to hate to see special favors melt away will do anything they can to preserve the status quo, as our mayor is demonstrating. Never mind the fact that the city is constantly complaining about a lack of funding and funds for critical services – apparently it’s more important to use our taxpayer dollars to try and overturn the vote of a majority of Michiganders.
Posted by: GRPundit on Wednesday, 22nd Nov, 2006
State Budget Gnashing
The stage is already being set for a possible state (and probably local) tax increase. Today’s Detroit News reports that state revenues for the just-completed fiscal year 2005-2006 are down by $170 million. That’s about 0.85% less than they anticipated, yet we are already hearing that the world is going to end for schools and no more police will be on the streets.
But, before we get ahead of ourselves, let’s take a quick look at the budget. We compiled the graph at left from data published by the Senate Fiscal Agency. It is a summary of the total state revenue and expenditures since the 1990-1991 fiscal year. The only year when the expenditures actually went down was 2002-2003, when they declined by 0.28%, or about $118 million. However, every single year, revenue has increased.
A couple of quotes will show you how bureaucrats and politicians are so good at making situations sound much worse than they are in order to scare us into being more accepting of tax increases. From the article above:
The governor and lawmakers have erased more than $3 billion in cumulative deficits over the past four years by making budget cuts, increasing cigarette taxes and fees, and shifting money from other accounts.
You’ll see, that even though one reduction in the budget from 2002 to 2003 occurred, a grand total of $118 million, bureaucrats seem to be able to conjure up at least $3 billion in “cuts” over the last several years. How do they do this? Here’s how:
If a government budget is $100 million this year and it is budgeted to increase to $110 million next year, but the actual increase is to $102 million, it is called an $8 million cut, even though more real money is being spent. Our Grand Rapids city politicians are very good at making this sort of obfuscationary budget argument. You see, the “cut” isn’t a real reduction in spending, it’s a reduction in the anticipated increase in spending.
Now, of course, the bureaucrats’ special interest groups are crying foul. Justin King, executive director of the Michigan Association of Schools Boards, the lobbyist organization for school districts, claims that any cut in school funding this year would be “devastating.” He says that 50 school districts are approaching bankruptcy, even though schools have received a 35% increase in funding, after adjusting for inflation, over the last ten years. One presumes that he is including our own Grand Rapids Public Schools when he says that districts are on the verge of bankruptcy, even though GRPS spends $10,770 per student. You see, a reduction in the state budget of 0.85% is billed as devastating to schools.
But the sky doesn’t stop falling there. Dan Gilmartin, executive director of the Michigan Municipal League (the lobbyist organization for Michigan cities), says, “Any additional cuts would be suicidal for communities,” and, We’re laying off cops, not paving roads and not attracting new jobs.”
This is all attributed to a state payment to cities called revenue sharing. Basically it’s a redistribution of state-collected taxes to city governments. Our city bureaucrats and politicians are fond of stating that the city government has “lost” $30 million in revenue sharing. However, we again look at the real numbers. Annual city revenue from revenue sharing has declined from a high of about $27 million a year to about $23 million this year. Yes, that’s a real reduction of $4 million, but instead of saying that they have had to cut $4 million out of the budget (that doesn’t sound too sexy), they add up what they would have gotten each year if the state continued to boost revenue sharing. Presto – they’ve “cut” $30 million out of the city budget!
The cry from cities is now that they will have to cut police and fire to make up the difference of any additional “cuts.”
Never underestimate a bureaucrat whose job is on the line. They will obfuscate the budget numbers as much as possible to scare us. Instead of cities and schools engaging in simple and small (0.85%) wage cuts to preserve jobs, they will lay off teachers, policemen, and firemen, all the while still maintaining extremely generous benefits packages for those who remain.
While the rest of us have had to tighten our belts and deal with the still-stagnant and even declining economy in Michigan, government will continue to expand. Government never will have “enough” – don’t forget that.
Posted by: GRPundit on Thursday, 16th Nov, 2006
