EVIP madness

As I was filling out my NCAA bracket last week I had an epiphany—maybe this is how statutory revenue sharing is going to be decided in the future, thanks to a complicated Snyder administration program known as EVIP. For example, municipalities could get ranked and placed into a bracket with one another, advance by submitting more meaningless documentation to the state, and maybe receive enough to provide some of the public safety services they have had to stop delivering.

The odds of how much, if any, statutory revenue sharing a municipality will receive are surely similar to the largest of March Madness office pools.

The governor’s Economic Vitality Incentive Program, or EVIP, was created in 2011 with the goal of increasing accountability and transparency by attaching certain requirements to receive statutory revenue sharing funds.

The real problem with revenue sharing, however, is that the Legislature has fallen short of its promise to provide revenue for such local services as public safety — $6.2 billion short, in fact, over the last decade.

And after attending the Michigan Municipal League annual conference last week I can tell you that a lot of municipalities have had enough. Essential services are not being delivered in many cities, villages, and townships precisely because of the gargantuan revenue sharing cuts over the last decade. Statewide, more than 2,300 police officers and 1,800 firefighters have been lost since 2001.

Municipalities that have been declared to be in a financial emergency by the governor are the same ones that have suffered most from these draconian revenue sharing cuts. There must be some kind of relationship there.

While it is certainly true that municipalities cannot blame the governor for cuts made to revenue sharing before he was elected, they can blame him for EVIP which has only added insult to injury.

EVIP is much maligned by municipal managers as “busy work.” To be fair, EVIP had some altruistic intentions like transparency and government collaboration, but the entire program has forced managers to jump through hoops to get much-needed funds for their municipalities.

All this was bad enough–and then the governor released his 2015 budget that proposed putting even more complicated requirements into EVIP.

The proposal dangles more carrots in front of those municipalities who have received EVIP dollars in the past. It still doesn’t restore revenue sharing near where it should be, and more than a 1,000 cities, villages, and townships would still see nothing.

A change to the EVIP formula was approved by the House General Government Appropriations Subcommittee Tuesday that would distribute the shared revenue more widely based on a population formula, though still not restoring full funding. The change would  restrict how some larger communities will be able to spend their EVIP dollars.

The change has some merit but still puts municipalities at odds with one another because the 496 municipalities already receiving EVIP dollars would see most of the governor’s proposed increase to them go to their neighboring municipalities instead.

Let the EVIP madness begin.

– Jason Escareno

Not a pie-in-the-sky idea

From the League’s First Tuesday newsletter
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  • Life is a bowl of cherries.
  • It’s the pits.
  • That’s a pie-in-the sky idea.

My staff and I have been making a lot of cherry puns over the last week. But it’s all for a serious reason.

We used a cherry pie to show what 20% of Michigan families earning the least would get if we roll back the Michigan personal income tax from 4.25% to 3.9%. Yep, that’s just $12 – enough to buy a cherry pie from the bakery.

For those right in the middle, it would be $88 (that’s about $1.70 a week). What will that get you? Perhaps a used dough mixer.

But the top 1% — who would get a full 17% of the benefits from a rollback — would receive, on average, $2,618. That will buy you a trip for two to Paris, where you can see all the sights and enjoy French pastry at a café.

Along with a bite-sized analysis, the League sent a slice of cherry pie to each lawmaker to serve up an important message: An income tax rollback is a sweet deal for those at the very top but the pits for the rest as it would take away the best opportunity in a decade to reinvest in education, safe communities, roads and the other engines of our economy that were neglected as Michigan struggled with a long economic downturn.

The League is fortunate to have access to an analysis using a sophisticated tax model created by the Washington, D.C.-based Institute on Taxation and Economic Policy.

That allows us to show the potential impact in a very tangible way. And what it clearly reveals is that the proposed income tax rollback plans are bad for Michigan.

Gov. Rick Snyder’s plan to instead pump up the Homestead Property Tax Credit is a far better alternative and will especially help seniors and those with disabilities. Even better, would be to include an increase in the Earned Income Tax Credit for low-income working families or to forgo the tax reductions and instead use the resources to invest in education that has been so severely cut since the Great Recession began.

In fact, a new poll of 600 Michigan residents shows that most agree. They prefer paying for education or road repair over an income tax cut.

Another study by the Economic Policy Institute examines who has benefited from the post-recession recovery. From 2007 to 2009, more than 90% of the economic growth has gone to the top 1% in Michigan, further deepening income inequality.

Those at the top have benefited the most from the economic recovery, and they will benefit the most from the tax rollback.

Please tell your lawmakers to vote NO on rolling back the income tax.

It’s a far sweeter deal to invest in education and other services that will rev up our economy or directly target tax reductions to those who continue to struggle with low wages.

Those would truly be plans deserving of a cherry on the top.

– Gilda Z. Jacobs

What’s your agenda for Michigan?

Consider this: This November, voters will elect a governor, all 38 state senators and all 110 state representatives.

Clearly, it’s an important year for our state’s future. The Center for Michigan, described by founder Phil Power as a nonpartisan “think and do tank,” wants your input. What issues do you want elected officials to address on the campaign trail – and in the state Capitol once they are elected?

The League is hosting a Community Conversation, one of many held around the state, from 1 to 2:30 p.m. Monday at the Greater Lansing Housing Coalition, 600 W. Maple St. Lansing.

The Center for Michigan is gathering opinions to summarize and share with policymakers. Topics include the size of government, taxes, investing in roads and bridges, the minimum wage, and education and job training. What services should be increased? Decreased? If you were to increase taxes, which ones would you choose? If you were to decrease taxes, which ones would you choose?

It’s an important opportunity to speak up and make sure your priorities are part of the mix.

There are still a few seats available for the Monday conversation. Please join us to make your voice heard. RSVP to mlogan@mlpp.org by noon Monday.

For more information on community conversations, go to www.thecenterformichigan.net.

– Judy Putnam

Exhausted but inspired

I recently returned from Health Action 2014, Families USA’s annual conference, in my usual condition – exhausted yet inspired! It was a good year for Michigan: Dizzy Warren, of Michigan Consumers for Healthcare, was awarded one of the three Advocate of the Year awards, and Michigan blogger Amy Lynn Smith won the painting created onsite by Regina Holliday!

The conference opened with a cancer survivor sharing her story of having her COBRA coverage end on Dec. 31, 2013 during her cancer treatment. Thanks to the Affordable Care Act, she was able to sign up for coverage starting Jan. 1 and continue her treatments uninterrupted.

She introduced Vice President Joe Biden who shared his relief that we will no longer debate whether healthcare is a right or a privilege. With implementation of the ACA, it’s a right.

“And we’re not going back!” Biden said.

He stressed the importance of healthcare coverage, sharing his own story, and spoke of the peace of mind those who gain coverage will experience.

A few highlights:

  • Ezra Klein shared thoughtful comments about the need to implement the law, learn from experience, and modify it as needed. The ACA is a real law, and because of it, real people are able to go to the doctor!
  • Kentucky Gov. Steve Beshear embraced the Affordable Care Act as a great opportunity for historic transformation in his state. “It is the morally right thing to do,” he said. Through an executive order, he established a state-operated marketplace, and through executive authority he was able to expand Medicaid eligibility. He expressed disappointment that more states are not setting politics aside and doing what is right and best for the people.
  • Dr. Harold Freeman described his patient navigator programs which coordinate care and remove barriers to needed services by piecing together the fragmented healthcare system for individual people. He described it as a ‘relay races in which the patient is the baton and the hand-offs must be well done.’
  • George Halverson shared a number of stunning statistics on brain development and the need for interventions and upstream efforts similar to those used in the medical system to prevent heart attacks or strokes. The No.1 predictor of who will go to jail can be linked to the number of words in a child’s vocabulary upon kindergarten entry! Furthermore, 70% of people in jail can’t read or read poorly. The first three years of brain development are critical and current science can predict with high accuracy who will be able to read and who won’t. It was a most sobering presentation.
  • Regina Holliday, an inspiring presenter, talked about using art in patient advocacy efforts. She used art to sustain her in her grief after her 39 year-old husband died. She painted during the conference; Amy Lynn Smith won the painting.

The conference was chocked full of great presentations and workshops. I presented on Michigan’s Bumpy Journey to passing the Medicaid expansion legislation. I was thrilled to be able to say that Michigan has done the right thing.  It was heartbreaking to hear the stories from the states where policymakers are refusing to accept the federal funds to expand Medicaid eligibility.

There is still much to be done to make the promise real.  Time to get to work!

– Jan Hudson

League vs. Mackinac Center on the minimum wage

Recently, I’ve had two opportunities to debate the Mackinac Center on the minimum wage. The events took place at the Hauenstein Center of Grand Valley State University and on a public affairs show on WGVU, the public station at Grand Valley.

The minimum wage has been on the minds of many lately – particularly after fast-food workers held rallies and called for an increase to $15 per hour, and a ballot campaign formally launched last month.

On one side of the debate are those who understand that $7.40 is too low – at this wage, full-time work is just $15,400 annually. On the other side are those who are opposed to increasing or even having a minimum wage at all.

During the debates, I argued in favor of raising the minimum wage and indexing it to inflation – a measure that would benefit 1 million Michigan workers. My debate opponent proposed abolishing the minimum wage.

The debates touched on several points, including:

  • Are minimum wage earners teens or adults? Opponents of the minimum wage argue that this wage is mostly earned by teenagers, and therefore not a pressing policy issue. However, evidence suggests the contrary. In Michigan, 87% of workers who earn at, or just above the minimum wage, are at least 20 years old.  (Nationally, their average age is 35). Further, 20% of these workers are parents raising 15% of Michigan’s children. The changing demographics of low-wage workers suggest that this is an economic issue that we must confront now, so we’re not asking low-wage adults to live in poverty, or parents to turn to public assistance to support their children.
  •  Would an increase hurt jobs and the economy? My debate opponent referred to studies claiming that job losses are an inevitable result of raising the wage floor. However, more recent studies show that neither job losses nor gains should be expected in significant numbers. Nonetheless, if Michigan increased its minimum wage to $10.10, the state could see a small boost in employment – 3,300 full-time jobs – and an increase in economic activity – $886 million. These modest improvements make sense when we consider that, when low-wage workers have a little more money in their pockets, they tend to spend it right away (mostly at local businesses) to purchase basic necessities. Over time, increased spending leads to a higher demand for workers to staff local businesses or create more of the products being consumed.
  •  Would increasing the minimum wage hurt small businesses? My opponent argued that Walmart supports an increase because this would eliminate its small business competitors. While it is true that nearly a decade ago, Walmart “urged” Congress to increase the minimum wage, it did so while hiring anti-minimum wage lobbyists. My opponent also failed to mention that, rather than being concerned, small business owners support an increase and many already pay their employees a wage higher than the minimum.

We need an economy that works for everyone, including our lowest-paid workers. Increasing the minimum wage, so that hard work is fairly compensated, is a first step to building such a fair economy. For more information, see the League’s fact sheet and report on raising the minimum wage.

– Yannet Lathrop

Rolling back progress

The Senate Finance Committee Wednesday approved a bill to reduce the state’s personal income tax rate from 4.25% to 3.9% by 2017, a move that would reduce state revenues by up to $874 million when fully implemented in Fiscal Year 2018.

While the purely political appeal of a tax cut during an election season is obvious, the League testified, based on a recently released report, that the risks to Michigan’s economy far outweigh any benefits. Low- and moderate-income workers will see little in return while the wealthiest taxpayers would benefit the most. (more…)

Early reading critical

Michigan is losing ground on a key benchmark in its long-term goal of expanding its educated workforce. The state is among only six that showed no improvement in reading proficiency among fourth-graders over the decade between 2003 and 2013, according to a just released Data Snapshot from the Annie E. Casey Foundation.

Almost seven of every 10 Michigan fourth-graders did not demonstrate reading proficiency in 2013—up 1 percentage point from 2003 while the national average dropped by 4 percentage points, according to the review of national test results across the states. Just over half (53%) of all fourth-graders in the best state, Massachusetts, scored below proficient in reading compared with almost four of five Mississippi fourth-graders. (more…)

Priorities Michigan launch

Last week marked the launch of a new organization, Priorities Michigan, a civic engagement and education project aimed at changing the conversation around the state budget and promoting needed investment in public goods.

The Michigan League for Public Policy is proud to be a partner organization on this as we join with others to highlight the effects of over a decade of devastating budget cuts to schools, communities, higher education, infrastructure and human services. (more…)

Tax cuts won’t grow the economy

A new report by the League demonstrates that across-the-board cuts in the state’s personal income tax would not boost Michigan’s economy, but could affect long-term prosperity by locking in cuts in funding for public schools, community colleges, universities, health care and public safety—the very services that fuel economic growth.

Despite the claims of several legislative leaders advocating for a tax cut, there is no evidence that income tax cuts generate good jobs or economic growth. In fact, a study of 65 years of data by the Congressional Research Service found that top income tax rates have had no discernible impact on economic growth, and states that cut taxes the most during the 1990s and 2000s saw their economies fall behind in job creation, as well as production and income growth. (more…)

Making Michigan a true comeback state

You may be hearing a lot about “surplus” revenue as the state budget season kicks off – and more importantly, how to spend it.

Last week, the House Fiscal Agency, Senate Fiscal Agency and Michigan Department of Treasury, put their heads together to give a new prediction. The upshot — nearly $1 billion more than expected. It would have been higher, but Treasury gave a very conservative estimate of $700,000 in unexpected revenue for the three years — the 2013 fiscal year that ended Sept. 30, the 2014 fiscal year that started Oct. 1 and Fiscal Year 2015. (more…)

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