The proposal, which consists of 11 pages of fine print, sprinkles in a few items that most people support with items that start to look a little too targeted. For instance, the proposal would “strengthen the ban on illegal aliens’ ability to register and vote,” “require post-election audits of election procedures,” and “enact anti-fraud measures to protect the integrity of Michigan’s election process.” Those sound like reasonable reforms, and they are probably added into the proposal to make it easier to support. However, when one starts looking at the other legislative and judicial reforms, one sees that governmental representation is dramatically decreased. For instance, the Senate would be reduced from 38 members (1 Senator per 260,000 Michigan residents) to 28 members (1 Senator per 353,000 Michigan residents). In addition, it would decrease the state House from 110 members to 82. This would further strengthen the political party machinery grip on state elective positions, making it even harder for newcomers and non-politicians to get elected. Not to mention that this is a clearly anti-democratic step in the wrong direction. We would prefer to see an increase in both houses of the legislature, so that there are fewer citizens per representative, making for a truly citizen-oriented elected body.

Next comes the axe drop on the Judicial branch. The proposal would reduce the number of Supreme Court justices from seven to five and the number of appeals court judges from 28 to 21. As though the courts weren’t clogged enough already, this would make it even harder to work a case up through the appeals process.

If this all seems strangely targeted… well, it is. The Michigan Democratic party is solidly behind this measure and we’re finding out more about the motivations behind this measure every day.

What sort of motivations? This week, the Mackinac Center, a free-market think tank in Midland, uncovered the plan on the United Auto Workers’ web site. They had posted a PowerPoint presentation explaining the proposal and its effects. Check out the link for the full report, but here are some highlights:

Destroy Michigan Government Now - Whining Democrats

Destroy Michigan Government Now - Judicial Branch

Essentially, this is a proposal to ensure total Democratic Party control over the legislative, executive, and judicial branches of state government. We here at Grand Rapids Pundit want to be quick to point out that we are not Republicans. We do not think that this would be a good idea if it worked in the Republicans’ favor. Instead, we prefer split government, where no one party controls all the branches of government. This proposal is a thinly-veiled attempt by the Democratic Party of Michigan, in heavy collaboration with the United Auto Workers, to fundamentally change the structure of state government in their favor.

Hopefully voters will do their research before voting on this proposal, should it make it to the ballot.

RIP Fat Boy.

Fat Boy Restaurant in Grand Rapids

Chattanooga won the site because of incentives and tax breaks offered by Tennessee and better infrastructure, the person said. Alabama was a close second while Michigan had been out of the running for some time, according to the person. (Emphasis ours)

Does this surprise anyone? With Michigan’s newly-formed business tax mess, the strangling environment of unionization, and a dismally-performing public school system, no wonder jobs, people, and businesses are not choosing Michigan. When will Lansing wake up and tackle the real economic challenges in this state?

Just for fun, we compared state population growth in the United States with state tax burden levels. The top 20 states that had the highest population growth between 2000 and 2007 are below:

State            Percent  Rank
                 Growth

Nevada           28.41    1
Arizona          23.5     2
Utah             18.5     3
Georgia          16.6     4
Idaho            15.9     5
Texas            14.6     6
Florida          14.2     7
Colorado         13.0     8
North Carolina   12.6     9
Delaware         10.4     10
South Carolina   9.9      11
Washington       9.7      12
Oregon           9.5      13
Alaska           9.0      14
Virginia         8.9      15
New Mexico       8.3      16
Tennessee        8.2      17
California       7.9      18
New Hampshire    6.5      19
Montana          6.2      20

 
Below are the 20 states with the lowest tax burdens:

State           Tax Burden    Rank
Alaska          6.58%         1
New Hampshire   8.01%         2
Tennessee       8.49%         3
Delaware        8.75%         4
Alabama         8.83%         5
Oklahoma        9.00%         6
South Dakota    9.02%         7
Texas           9.30%         8
Wyoming         9.46%         9
Montana         9.74%         10
New Mexico      9.80%         11
North Dakota    9.90%         12
Florida         9.96%         13
Oregon          10.03%        14
Nevada          10.09%        15
Idaho           10.12%        16
Missouri        10.12%        17
Virginia        10.20%        18
Georgia         10.27%        19
Arizona         10.34%        20

 
Surprise! 14 of the 20 states with the lowest tax burdens are in the top 20 states for population (and job) growth. Conversely, the five states with the highest tax burdens are in the bottom 15 states for population growth.

For your information, Michigan is number 45 in population growth between 2000 and 2007 (1.3%), and has the 14th highest tax burden in the United States. That was calculated before last year’s gigantic tax hike, so I’m sure our state has climbed up the list since then.

Discuss this post (and other topics) in the GR Pundit forums.

Although the US has gained more than 480,000 jobs over [the last year], employment in Michigan fell by more than 78,000 jobs.

That’s right - Michigan has had a net loss of over 78,000 jobs in the last year alone. What’s the total damage? According to page 6, Michigan has lost a total of 474,000 jobs since 2001.

It’s time to get serious about fixing our state. Taxes need to be cut dramatically. Right to work legislation must be passed to attract new employers. The nickle and dime “job creation” that the Michigan Economic Development Corporation claims is a corporate welfare joke. The only way to turn this state around is to make it attractive to employers. With the choking union-dominated atmosphere and choking tax rates, Michigan will continue to bleed jobs.

By contrast, France, which historically has always had extremely high unemployment due to bloated government, high taxes, and constantly-striking unions, has an unemployment rate of 7.5%. That’s right. We’ve beat France.

The Budget

We’d like to go through the numbers and explain a bit how government budgeting works. Michigan, like most units of government, has several funds. The General Fund, the one that the legislature can spend on pretty much whatever it wants, is the budget that everyone refers to when there is talk of a deficit or the need for tax increases. The General Fund is about $9 billion of the state’s total $40 billion budget. We discussed the total growth of the budget, as well as how government does accounting, in a previous post. Please follow that link and come back after you have read the explanation of the politicians’ definition of a budget cut.

We’ve heard the Governor and many politicians talk about cutting the budget. However, when the numbers are examined, the state’s General Fund has seen an increase in revenue every year of the Governor’s term. However, there has been a reduction in spending, but only to match the government’s revenue. You see, the state government has been good at spending more than it brings in, whether under Democrat or Republican control.

But wait! Governor Granholm boasts about having to cut billions from the state budget. From the Governor’s office: “Since taking office in 2003, Governor Granholm has cut nearly $3 billion in state spending to resolve more than $4 billion in budget shortfalls - more than any other governor in the state’s history.” Really? Here’s a list of the total annual General Fund spending during Governor Ganholm’s tenure:

Fiscal Year - Spending (millions)
02-03 -       $8,830
03-04 -       $8,770
04-05 -       $8,702
05-06 -       $9,106
06-07 -       $8,966

In other words, in absolute numbers, a grand total of $268 million has been cut during the Governor’s tenure. Just for fun, let’s factor in inflation, so that 2002-2003 is our baseline. If that were the case, and spending had gone up just at the rate of inflation, then 2006-2007 spending would have been about $9.938 billion. Subtract actual spending, and the total possible cut the Governor could take credit for is $1.108 billion. You see, the Governor is using politician math where possible spending is taken into account when declaring a deficit or cut, not actual spending.

The New Taxes

According to the non-partisan House Fiscal Agency, the entity that estimates for the State House how much money the state will bring in, 2007-2008 revenue will be about $8.186 billion. Governor Granholm proposes to spend $9.941 billion in 2007-2008. So this is the deficit that she’s referring to when she has said that $1.8 billion in “cuts” have needed to be made to balance the budget. You see, it’s not actual spending that is being cut, it is proposed spending. The new, higher income tax rate, along with the new 6% tax on services, will raise, according to estimates, somewhere between $1.4 and $1.5 billion this fiscal year. That brings our total General Fund Revenue to about $9.6 billion. That’s an increase in spending, from 2006-2007, of 9%. That’s an increase in revenue, if the tax hadn’t passed, of over 17%. In one year! When’s the last time you got a raise of 9% or even 17%?

But there’s more! Governor Granholm, even after the passage of the new taxes, is declaring that $400 million of cuts still need to occur! But, as hopefully you have figured out, the cut is not in spending, but a cut in what she wants to spend!

What do the new taxes mean to the average Michigander? A $1.5 billion increase, divided by approximately 10 million residents of Michigan, equals a $150 tax increase per person. That includes every single man, woman, and child. According to the Census Bureau, there are about 3.7 million households in Michigan, which means that the tax increase is over $400 per household. That’s in addition to the $7,183 annual cost of state government on a per household basis.

Astrology services
Carpet cleaning
Consulting services
Investigation, guard and armored car services
Janitorial
Commercial landscaping services
Baby-shoe bronzing
Bail bonding
Balloon-o-grams
Coin-operated blood pressure testing
Check room services (coat checks)
Concierge services
Dating services
Social escort services
Fortune telling
House sitting
Coin-operated locker rental
Palm reading
Party planning
Porter services
Psychic services
Rest room operation services
Shoe shines
Singing telegrams
Wedding planning
Wedding chapel services (not churches)
Scenic transportation services
Skiing services
Tour operator services
Personal care (except hair care, including manicure, pedicure, etc.)
Security system services
Mini-warehouse and self-storage unit services
Business service center services (e.g., hire out payroll service)
Investment advice
Consumer-buying services
Discount-buying services
Genealogical investigation
Social introduction services
Numerology services
Pay telephone services
Personal fitness training
Personal shopping services
Coin-operated photographic machines
Phrenology services
Packaging and labeling
Specialized design services
Passenger and ground transport services
Courier and messenger services
Document preparation

Of course, the income tax also increased from 3.9% to 4.35%. What did we get in return? Two reforms, although they are important, they are not worth the tradeoff.

First, the Michigan Education Association (the teacher’s union) runs its own health care plan called MESSA. MESSA health care is, by some estimates, 20% more expensive than market-rate health care plans. Part of the problem is that, for those familiar with how health care works, MESSA premiums are the same for single individuals and families. Most health plans today cost employers more based on whether the employee is single, married, or married with children. With MESSA, it doesn’t matter, school districts get charged the same family rate, regardless of the employee’s status. This translates to much higher costs. The other factor increasing costs for school districts is the fact that MESSA is just repackaged Blue Cross coverage, with a premium attached simply because it is union-run. Basically, MESSA is a money-laundering scheme for the teacher’s union.

The bill that passed the legislature this weekend would require MESSA to publish its claims data, so competing health care plans could quote school districts their rate for the same plans. Previously, MESSA has vigorously opposed this because they will do anything to maintain their stranglehold on healthcare coverage for teachers in Michigan. In fact, the teachers union frequently threatens school boards with a strike if they attempt to bid out health care coverage, even though it is illegal for teachers to strike in Michigan. One MEA bumper sticker shows how militant they are - it reads “You’ll get my MESSA card from me when you pry it from my cold, dead hand.”

You understand why the union is so militant about protecting MESSA? Because it is a union cash cow. Now the legislature has finally stood up and made it easier for school districts to make sure that taxpayers get the best deal by allowing for competition in health coverage. Unfortunately, it only allows school districts to bid out care, it doesn’t require it. This means that local school boards will still have to deal with union threats and potential strikes if they want to do the right thing.

Second, reforms to the state teacher retirement system were enacted. This is a very long-term reform because it will only effect teachers who start working after July 1, 2008. However, it is an important reform because it will increase the time in service requirements for teachers to be able to get health and pension benefits in retirement. Currently, teachers can work as little as five years to get free health care for life. Unfortunately, the reform does not include a phase-out of the defined-benefit plan. Nearly all other state workers have been transitioned to a defined-contribution plan, much like a 401(k), which is sustainable and a bigger benefit to retirees. The current defined-benefit plan will continue to be unsustainable and extremely expensive. This issue will have to be dealt with again in the future, so this bill just put the pain off on future legislators.

And that’s it! We get those two watered-down reforms in exchange for more job-killing taxes. Only two local legislators voted in favor of the tax increases - Mike Sak and Robert Dean, both Representatives from Grand Rapids. We have heard rumors that the Michigan Taxpayers Alliance will target Robert Dean in their recall efforts. We wish them luck.

The good news is that the media is full of stories of ticked off Michiganders today. Lots of people are talking recalls, not just the MTA.

Michael Lafaive, of the Mackinac Center, put it best in an editorial in the Detroit News today:

“The state Legislature has kicked Michigan while it is down. Government is going to take another $1.48 billion out of the hands of residents and private job providers when they can least afford it — and do so with a new tax on services, too.

Michigan is already ranked 50th among the states in economic growth. It has the highest unemployment rate (7.4 percent), and our per capita income growth is well below the national average. By one measure, people are moving out of Michigan in near record numbers. And the bad news just got worse.

Lansing’s political class has pushed its service tax nose under Michigan’s economic tent. Next year, if new revenues do not flow into the treasury at anticipated rates, or if the cost of state government rises, it will be easy to add even more businesses to the 23 now on the state service tax hook.

We should fear for Michigan’s future. All the cheerleading by government officials won’t overcome the fact that it is more expensive to work, live and invest in the Great Lakes State.”

Recall 2007!!

Michigan, the land of the one-state depression, will get even worse. $1.5 billion extracted from the populace and added to the general fund budget is an increase in spending of 18% in one year. That’s right, Governor Granholm has increased spending 18% in one year.

We’ll have more detail on the vote and the associated reforms later today. We are also attempting to confirm that those who voted in favor of the tax hikes will be recalled.

It looks like we are on track for a state government shutdown at midnight Sunday evening. The governor went on TV last night to announce that all “essential” government services will continue. The question arises - then what isn’t essential? Can we do without the non-essential “services?”

The legislature continues to debate a tax increase. Do you want an 18% income tax increase from 3.9% to 4.6%? Do you think that will help our state’s economy? Do you think that serious government reforms should be part of the deal? Be sure to call your state senator and state rep today to let them know. They are set to reconvene at 1pm to continue the debate. This point in time is critical. We can either have long-term systemic government and budget reform, or just another fleece of the taxpayers.

Local Representatives and their contact information:
72nd District - Glenn Steil Jr., 517-373-0840, glennsteil@house.mi.gov
73rd District, Tom Pearce, 517-373-0218, tompearce@house.mi.gov
75th District, Robert Dean, 517-373-2668, robertdean@house.mi.gov
76th District, Sak Michael, 517-373-0822, speakerprotemsak@house.mi.gov
77th District, Kevin Green, 517-373-2277, kevingreen@house.mi.gov
86th District, Dave Hildenbrand, 517-373-0846, rephildenbrand@house.mi.gov
Not sure who your Representative is? Go Here.

Local Senators and their contact information:
28th District - Mark Jansen - (517) 373-0797
29th District - Bill Hardiman - (517) 373-1801
30th District - Wayne Kuipers - (517) 373-6920
Not sure who your Senator is? Go Here.

• Michigan Legislature web site - Find your legislators to contact him/her
• Michigan Taxpayers Alliance - Organization fighting tax increases with recall threats

The question always comes up. What could be cut so that taxes don’t have to be increased? Here is the list of $1.9 billion in potential cuts.

The short introduction is this: Governor Granholm is having a new State Police headquarters built to replace the one that the state currently leases from MSU for $1 a year. The price tag? $116 million - $42 million more than it would cost the state to build itself. And who is the contract going to for the construction? A friend and campaign contributor of the Governor’s. The legislature has the power to stop it, but they haven’t. The video is entertaining to watch - especially as the Governor tries to squirm away from the reporter’s questions.

Video Part 1
Video Part 2
Video Part 3