Billion $-Plus Deficit. Solution? Raise Worker Wages

Who is lying here? A Republican lawmaker says that the state needs to cut 5% of the budget across the board.
The Democratic governor says she’s trying but wants to wait to see how tax revenue went for the first four months of the year before doing anything.
As it is the way of politics, my guess is that both are not shooting straight. But a Granholm’s spokeswoman concedes that state worker pay is going to go up.
Liz Boyd, spokesperson for Granholm, said state employees will receive a 1% raise in October for 2010, and are scheduled for a 3% raise in 2011.
Which helps make it clear who is not cooperating.

GM/Wagoner - OK, Let's Move On

Are we over this Rick Wagoner episode? It surely was a development that drew many opinions. Was he a sacrificial lamb, as our Gov. Granholm claimed?
The White House promises that no matter what, your GM warranty will be good.
We really believe them. Those White House mechanics are crack.
Perhaps the best take of the day comes from Rick Newman at SeekingAlpha
While we disagree with regard to Newman’s take on Wagoner’s leadership and abilities – the departed CEO really was a major problem via his old school thinking – the new management won’t take the show to any better places. This is a company with problems that will only be solved through a major overhaul that a bankruptcy will put in place.
Let me allow a small story that paints a large picture of how GM is run. Last June, I went to the Hummer dealership in Lansing, Mich., where I live. I wanted to get my father a Hummer hat for his birthday. He is fond of the Hummer for its finger-in-the-eye of the environmentalists. So I walked into the showroom and was greeted with a hostile stare from a woman of about 25, who was very busy turning the pages of a glossy magazine of some sort, perhaps People or something. No greeting, no smile. Just a glare. The place was, predictably, empty.
“Hi, I want to buy a hat with a Hummer badge on it,” I told her.
“The only thing we have is in that showcase at the back of the room,” she said impatiently. I also liked her way of introducing the negative into the conversation.
I walked back and found the hat, good price, $20. She never budged, so I walked back and said I wanted to buy a hat.
Without a word, she picked up her phone and called…someone. She informed him that someone wanted to buy some merchandise and she didn’t have the key to the display case.
So I waited for about 5 minutes while this sales guy made his way. He was a pleasant man, about 60 years old. He pulled the cap and filled the spaces with some good conversation about the brand and hats and birthdays and parents.
But I couldn’t pay for the hat there. We had to go across the parking lot to a cashier in a separate building. We took a golf cart over there, and I went up to the window, where I presented the hat. The guy behind the glass – why do you have security glass in a car dealership? – scanned the hat and gave me a piece of paper.
“Take this over there and you can pay for it,” he said, pointing to another window 20 feet away on the other side of the room. I did as told. A coarse older woman took the receipt and my credit card, and I waited another 5 minutes. The sales guy who drove me over to came by to see how things were going. I told him I was perplexed as to why this would be such an onerous process.
“I really don’t know,” he said, with the air of a man who was used to this Soviet-style line waiting.
Finally, the lady huffed something at me, gave me a receipt to sign, handed me my card and my hat. I was done. I was walking away.
Except the price was different. They had charged me $30. I was 10 feet from the last window when I noticed and noted it to my salesman friend. And to redo the deal, I had to go through the same process again, more line waiting, more huffing.
I did get the hat and for the $20 price. But can you imagine what an ordeal a service issue would be? Or any transaction?
This told me exactly what I needed to know about GM. It was broken. And nothing short of a complete redesign, from the ground up, would fix it. Let’s hope that’s what comes next.
Maybe we can get a clue tomorrow in the new guy’s first presser.

Stimulus Sunshine: How Much Difference Does it Make?

Today’s Freep provides an excellent chat about FOIA and the public’s right to know.
Some of these points are obvious – “Before disbursing a dime of its anticipated $7.1 billion in federal stimulus funds, Gov. Jennifer Granholm and the Legislature should create a very public and straightforward "checkbook" showing deposits from Washington and payouts in Michigan.”
Obvious but very unlikely.
You may have seen the Mackinac Center’s attempts to persuade the governor to be more open and the lack of regard the state’s chief holds for an open government. If not, we’ve posted the correspondence below.
The Center aptly summarizes the exchanges, “Gov. Jennifer Granholm’s office has twice refused Mackinac Center requests to replicate the online spending transparency found on the Secretary of State’s Web site. Claims by the governor’s office that such a project would be “cost prohibitive,” however, don’t add up.”
On the subject of stimulus money: What’s the lead us to believe that the money will be spent any differently than any other government welfare lottery? Political favors will be paid and those tight with the administration will receive most of the proceeds. This is not just the case in Michigan, but how business is done in all states. Lip service is being paid to transparency here and for Michigan, here.
So far, Michigan has handed over stimulus $$ to public health clinics that didn’t even ask for financial help, a stateside arm of the Peace Corp, and law enforcement.
President Obama’s vast expenditure is neither sound nor fair. And even if we can see where this money is going, this is a rare case in which transparency is frustrating in confirming what we know: Special interests rule.
Granholm - Mac Center Letter

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Mac Center Back to Granholm Letter

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Granholm Back to Mac Center

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Florida Guv Apes Michigan's Failed Policy of Accelerated Public Spending

Reading this story in the Wall Street Journal of bringing more New Deal-type policies into play only on a local level contains this:
Florida Gov. Charlie Crist expects to create 39,000 jobs by speeding up the timetable on public-works projects.
Here in Michigan, we’ve seen how effective this notion of “speeding up” is. Recall the state of the state address from Gov. Granholm in 2005, when she announced:
"But, people need jobs today, as well. They can't wait either. So, tonight, I am announcing a Jobs Today Initiative that will create 36,000 jobs in the next three years by fast-forwarding $800 million worth of state infrastructure improvement projects, creating new tools to spark city development, and giving school districts a new way to upgrade their buildings without raising taxes. Rather than waiting years to complete this work, this initiative will get these projects moving this construction season.We will speed up the repair of roads and bridges."
How has that worked? Well, Michigan tops the nation in unemployment, and most construction has ground to a halt. We are among the poorest of states and as for our roads, help yourself. In short, the Jobs Today Initiative did nothing to help this state. Someone give Crist a call, because it's apparent someone in Tallahassee is not doing their homework.

Closing In on a Reason for Our Decrepit Michigan Roads

OK, we are all aware of the pothole deal here in Michigan, but it appears government is coming to the rescue.
Mike Nystrom, a lobbyist representing the unions that will do the road work that an increased gas tax will fund, says, "We believe, with [Gov. Granholm’s] leadership, getting the other legislature leaders together on this, we believe we can finally get something done that will help us to turn around the situation out on our roads."
Some counties are simply unable to care for their roads – Ingham and Wayne stand out. Some do a pretty good job. Oakland, which seems to do most things well, and Livingston, also manage their roads. Today, MDOT held two public public meetings on some road plans in Lansing that begin March 23. They were held at MDOT’s offices off of Collins Road, one at 1 p.m. which had about 10 attendees, I was told. For the 5 p.m. meeting, I was the only member of the public. The question I asked the MDOT folks is: Why do some states manage to take care of their roads while Michigan fails miserably?
I took Minnesota as an example. Anyone who has had the pleasure of driving there knows that the roads are in fine shape. Yet, each year, the elements relentlessly buffer them. There is freezing, thawing, freezing, thawing, the very same things that our public officials blame our pockmarked roads on.
I was told today by an MDOT chief that Minnesota can afford to pay for care of those roads because it has more tax dollars via a higher gas tax and higher vehicle registration fees.
He was mostly right: Minnesota charges an average of $125 a year to register a vehicle while Michigan’s average is $58. On trucks, Michigan averages $975 while Minnesota hits $865.
The gas tax is where Michigan drops the ball completely. It charges 19 cents a gallon while Minnesota charges 25.1 cents a gallon in state taxes. Yet Minnesota’s overall levy on a gallon of gas is 44 cents, while Michigan’s is among the highest in the nation at 48.9 cents. The big difference is the 6% sales tax we charge on each gallon of gas that goes into the general fund. Not to fix roads, mind you. The general fund, which goes for…well…other things, I’d imagine. Michigan also charges motorists another .875 cents a gallon for a fund called the “refined petroleum fund.”
We feel we are closing in on the reason for our awful roads. And I mean awful.

Michigan - The New Denmark?

The governor of Michigan this week held up Denmark as a fine, upstanding
example of “job creation” and lauded its terrific energy policies. It appears that Denmark has it all in her eyes, in fact.
Gov. Jennifer Granholm, in her remarks, says, “Denmark leads the world in wind power technology, an industry employing 20,000 people in a nation with half Michigan’s population. In fact, Denmark has a 2.2 percent unemployment rate. Denmark-based Vestas, the world’s largest wind turbine manufacturer, is a bright spot in a slumping world economy, reporting a 51 percent rise in operating profit for 2008.
Denmark has cut residential electricity usage to less than half of the typical U.S. household while maintaining the highest standard of living among Nordic countries. And that nation’s gross domestic product doubled during the past 30 years while electricity consumption has stayed constant.”
OK, we can go there in that Denmark is an example of good government in that the roads are plowed and free of potholes and most people are employed. And can we add that some there have a good sense of humor? After all, the Danish newspaper Jyllands-Posten is where the cartoons lampooning Muslim Prophet Muhammad first appeared in 2005. Now that’s funny.
In the meantime, in Michigan and in many other U.S. states, we have government here that is appallingly ineffective and wasteful and hamstrung by overwhelming layers of bureaucracy.
Let’s also be aware that nearly 45% of Denmark’s working population lives on government-tied funding, and a full 33% of Demarkians work for the government. This requires a tax rate of around 68%, including sales and other sundry taxes. A new car purchase includes a tax of nearly 100% and gas runs about $7 a gallon. Denmark also has what some call the most stringent immigration laws in Europe, laws that would inflame even the most moderate progressive.
The independent spirit that has served the U.S. in so many ways is quite markedly absent in Denmark. Yes, you can attend university for free. But if you choose not to attend, the government is there to ensure you have a paper-pushing job that provides free health care – which may or may not work out for you – and six weeks of vacation a year.
Oops: headline and subhead in today’s Jyllands-Posten:
"Failure of treatment of elderly…We need a small revolution in health care, says a think tank."
Well, anyway, when Granholm holds up Denmark as any kind of model, be it on energy or otherwise, there is a subtext that should be pondered. Recall the workaday in Orwell’s 1984. The nanny state, one in which the truly wealthy are mostly government connected, is a very scary place. And Granholm, who has no trouble paying her bills, is the perfect advocate for such a state.

Union Lobbyists Push Gas Tax Increase Through

The state of Michigan is considering changing its gas tax structure from a flat 19 cents a gallon to a percentage, according to a report this a.m. on WJR’s Frank Beckman Show. The group that has made its pitch for years to increase gas taxes is called the Michigan Infrastructure and Transportation Association (MITA), a non-profit group that states as its top mission in reporting its financial workings to state and federal government, “industrial labor contract negotiations.” Coupled with another of its stated missions, “lobbying,” MITA is quite simply another union front group that has gained particular heft in the past eight years.
The equation is simple: More money for roads means more work for union workers. Beckman this morning told of a possible 18% tax on the price of gas, which would approximately double the tax cost of fuel in the state. Vehicle registration fees are also set to increase, Beckman said.
In December 2007, Gov. Jennifer Granholm resisted MITA’s call for a higher gas tax under a plan that would max it at 28 cents a gallon in 2010:
"I think raising a gas tax now is impossible, because people are hurting. I think we have to look at other ways to fund transportation."
Things are worse now. But an increase is on the way.
Which is fine for the folks at MITA, particularly those salaried employees who work there.
In 2006, the last year the group’s tax records are available (see below), executive vp Robert Patzer made $240,000. Michael Nystrom, the group’s lobbyist, was paid $124,200. And vp of member services Robert Coppersmith’s salary was $101,000.
The guess is that these salaries are much higher these days. And that increased gas tax? File that under “creates jobs.” If you don’t someone will. Just wait and see.
MITA 990 2006

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More $ for State Appointments from Granholm

How much does it cost to score a Granholm appointment? All three of these appointees to the Michigan Strategic Fund board of directors have donated the maximum to Granholm’s campaigns.

Donations:
Mitchell Mondry $3,400 in 2004
James Petcoff $3,400 in 2005
Paul Hodges III $3,400 in 2006

MEGA addition

The Michigan Economic Growth Authority is overseen by a board of eight. Half of them are major donors to Granholm’s two gubernatorial bids. Who do you think they will follow in terms of recommendations for tax breaks?
These board members include MEGA chair James C. Epolito, who is also president of the Michigan Economic Development Corporation. He donated the maximum $3,400 in 2004 and his wife, Deborah, kicked in another $250 in 2006.
Kirk T. Steudle, head of MDOT, has donated $4,800 to Granholm’s war chest since 2004.
Cullen DuBose also stepped up to the political ass-grab plate with a $3,400 donation in 2005.
And Stanley “Skip” Pruss outdid them all with $8,500 in Granholm donations over the past six years.

MEGA tax breaks for political pals in Michigan

The Michigan Economic Growth Authority was created in 1995 during Gov. John Engler’s administration. Somehow, it went off the tracks under a thick fog of secrecy and stunningly inept bureaucracy (what other kind is there?). The idea was to offer tax incentives to businesses to companies looking for a home, and in 1995, the targeted foes were Ohio and Indiana, which were both giving large tax breaks. It was voted in with a sunset provision of Dec. 31, 1998, which never happened. The Wall Street Journal in an editorial called MEGA, aptly, a “governor’s gimmick." Engler fired back with a letter to the editor: “Those who label MEGA as a vestige of "failed industrial policy" don't understand the reality of the marketplace and what it takes to succeed.”
Among the first companies to receive the break was Borders, which opened its first store in Ann Arbor in 1971. In 1995, its corporate hq was still in Connecticut. It wanted to come home. Would it have without a tax break? Most likely. Have you seen its latest performance reports?
Today, MEGA and tax breaks for businesses are the target of two bills that aim to shine a light on just who is getting these breaks and how. SB 71 passed the Senate 36-0. It requires an annual report from MEGA be given to the legislature to include “the amount of capital investment and the number of jobs required to be created or retained” by each business that enters into a tax break agreement with the Authority.
SB 72 requires the Department of Treasury to prepare and post on the Internet a list of every tax credit available under the Michigan Business Tax, and to submit to the legislature a report showing the number of taxpayers who claimed certain types of credit, including their names and addresses. This one also passed the Senate, 22-14.
Since Gov. Jennifer Granholm succeeded Engler in 2001, there has been concern that many of these tax breaks were given to pals of the administration and ignored smaller businesses because they did not cause headline-drawing job opportunities. The two bills pending in the state House would give citizens some idea of just who is not paying taxes and why. Most MEGA awards are political; at its last board meeting, MEGA handed out tax breaks – 100% for ten years - to Great Lakes Towers, a new wind turbine tower manufacturing company that has zero employees right now. Another recipient was Atwell-Hicks, LLC, a Land Development Consulting firm that is already based in Michigan. The tax break was handed over for its new alternative energy plant.
We can hope these bills will make it through so that more people can see the travesty that these tax giveaways are, and the bad business and political favoritism that MEGA is engaging in.