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Budget Battle Redux: Business or Education?

khopdome — Thu, 03 May 2012 19:13:49 +0000

Columns

Jack Lessenberry

Budget Battle Redux: Business or Education?

May 4, 2012

LANSING — Few may have noticed, but there was a skirmish in the Michigan Senate this week that was likely the opening volley in what promises to be a long war over the state’s future.

And just maybe, the next campaign for governor.

The battle lines are drawn, and the issue clear: Do we spend money to make sure high school students get the higher education they will need for the jobs of the future — or do we give a business property tax cut to men whose ideas were formed in the past?

Senate Minority Leader Gretchen Whitmer (D-East Lansing) who has suddenly found her voice as the main Democratic leader of the opposition, thinks it essential that we have a workforce trained for the jobs of the future. Yesterday, she told members of the state senate finance committee, “Now, more than ever, we need an action plan. Studies have shown that by 2025, Michigan will need an additional 1 million (college graduates.)”

As a result, her minority Democrats are pushing what they call their “Michigan 2020 Plan” to offer every state high school graduate free college tuition. They would do that, they say, by closing various tax loopholes, a move that would provide an extra $1.8 billion a year.

Surprisingly, majority Republicans don’t quarrel with that figure — and themselves aren’t opposed to closing the loopholes. But though they slashed the state’s business tax rate by two-thirds last year, they are insisting on yet another business tax cut, this time on the so-called personal property tax for businesses.

“I don’t think we can afford both,” Senate Finance Committee Chair Jack Brandenburg told the Gongwer News Service, making it clear that for him, tax cuts were more important than education.

Testifying on the other side, however, was Lou Glazer, president of the non-partisan think tank, Michigan Future. “Today, education has surpassed other resources as the engine of economic growth,” he said. “The folks that have income in this economy, increasingly, are college-educated folks.”

Nobody seriously disputes that Michigan badly needs a better educated workforce. A smaller percentage of its young adults have college degrees than is the case in surrounding states.

That’s a legacy of the state’s old brawn-based, assembly-line era economy, where for many years kids could come out of high school and land a boring, but high-paying, auto assembly line job.

Those days are gone now, forever. The knowledge that Michigan needs a better educated workforce isn’t new. Eight years ago, then-Lt. Gov. John Cherry presided over a special commission looking into Michigan’s higher education needs.

That group produced a comprehensive report that concluded that if Michigan were to remain economically competitive, it would have to double the number of students earning bachelor’s degrees within a decade. But then Gov. Jennifer Granholm and the Legislature proceeded to repeatedly cut higher education budgets.

That sent tuition spiraling, and made it harder for some students to stay in school. Next, with revenue dropping during the Great Recession, the politicians broke their promise to the state’s young people and canceled the Michigan Promise scholarships.

Needless to say, the number of students with degrees is unlikely to come anywhere close to the Cherry Commission targets. That’s what’s behind the Democrats’ push to fund higher education. Michigan, once one of the nation’s richer states, is now a sad 39th in per capita income — and 36th in proportion of adults without college degrees. If the state is ever to regain prosperity, it will have to do so by attracting high-tech, new-economy jobs.

You can’t do that, experts agree, without a highly educated workforce. But 60-year-old Jack Brandenburg doesn’t see that. Though he did earn a business degree from Ohio’s small Ashland University, he essentially built an industrial supply company from scratch, at first selling inventory out of the trunk of his car.

The senator said Wednesday he thought giving business the break was more important. “Myself, I think that what we have to do here in Michigan is create an economy and get this economy working. And (then) our kids will stay here.”

But what the former industrial supply salesman may not realize is how much the economy is radically changing. And though he has complained about how much it cost to send his four kids to Michigan colleges, Brandenburg doesn’t seem to realize that many other kids are having grave difficulty affording college at all.

Democrats have no chance of winning this battle this year. They have less than a third of the seats in the Michigan Senate; not enough to even stop any bill from taking immediate effect

Yet the Senate Minority Leader made it clear that she is focused on the future, while Republicans seem wedded to making those in the present richer by following the policies of the past.

What played out in the Senate Finance Committee this week just might have been the opening round of the next campaign for governor, a race in which Gretchen Whitmer is the early favorite to be the Democratic nominee. But in any event, the argument over education funding vs. business tax cuts was likely just the opening skirmish in what promises to be a very long and very important war.

Veteran journalist and national Emmy Award winner Jack Lessenberry teaches at Wayne State University, serves as Michigan Radio’s senior political analyst and writes regularly for several publications. He also serves as The Toledo Blade’s writing coach and ombudsman and is host of the weekly television show Deadline Now on WGTE-TV in Toledo.

Michigan Always Comes Up Short in Federal Budget – So Get Over It!

khopdome — Wed, 22 Feb 2012 00:18:50 +0000

Columns

Washington / Michigan

Michigan Always Comes Up Short in Federal Budget –
So Get Over It!

by Sarah Kellogg
February 21, 2012

Every February, the president of the United States submits a budget to Congress and then lawmakers, the media, public interest groups, local and state governments, lobbyists and a host of others descend to pick it apart. It is a Washington ritual of sorts, right along with the State of the Union address, the cherry blossom festival and standing to the right on the Metro’s up escalator.

Another annual ritual is the race to come out on top in the federal appropriation process. With the president’s new budget, the scrambling begins to secure more funding for states and local governments. It’s a process that can drag on for months, even years.

Once a budget is finally determined late next fall, after the November election, the resolution of this process will either lead to a glorious round of chest thumping or abject humiliation and embarrassment. For Michigan, it likely will be the latter.

Despite its prominence in population (albeit shrinking) and congressional clout, Michigan is considered a middle-of-the-packer at 38th in per capita federal spending. With many states ahead and some behind, there’s not much to brag about in federal spending. And when Michigan does cluster toward one end or another, it’s usually at the bottom of the rankings. Michigan ranked 45th in federal procurement and 50th in salaries and wages in FY 2010.

Federal procurement, grants and direct spending have always seemed to come up ho-hum for Michigan. Even in retirement and disability payments – the cash cow of federal spending with Social Security and Medicare – Michigan levels out at a tolerable 16th, although it is the state’s highest showing. Michigan’s average age may be rising but not fast enough to boost its standing in this all important category.

The finger pointing for Michigan’s poor budget showing tends to begin and end with Congress. Michigan has long had an impressive list of lawmakers who, because of their seniority, have held prized committee chairmanships or top leadership posts. But they never seemed to translate into federal spending levels on par with Alaska, Virginia or Maryland, the three states at the very top in the FY 2010 per capita list, according to the U.S. Census Bureau.

It’s unfair to compare Michigan’s per capita federal spending of $11,045 to states like Virginia and Maryland, which had per capita expenditures of $17,008 and $16,672, respectively in 2010. The federal government calls the mid-Atlantic region home, and much of the payroll and other government spending stays within this region and plumps up its states’ rankings. At No. 1, Alaska ($17,762) has the rare combination of a very small population, a great deal of government land and many grants to support federal work there.

Interestingly, Michigan’s congressional clout is uniquely bipartisan. No matter whether Democrats or Republicans control the U.S. House, Michigan ranks in the top 10, often the top 5, on the clout meter. That rare standing is mostly due to seniority – and a wee bit of ambition, of course.

Michigan currently has five full committee chairmanships: Republicans Dave Camp at House Ways and Means, Mike Rogers at House Intelligence and Fred Upton at House Energy and Commerce, and Democrats Carl Levin at Senate Armed Services and Debbie Stabenow at Senate Agriculture.

Despite all the muscle, Michigan wallows in mediocrity in federal spending, although that’s not saying those five members and their other colleagues aren’t slipping money into the budget for Michigan whenever they get the chance. Welcomed by government officials and interest groups alike, those funds are rarely large enough to boost Michigan’s standing.

The great secret of federal spending is that, for the most part, it is all relative and pre-determined. Many factors and dynamics determine where states end up on the tally sheet, and most of those cannot be controlled by states, regardless of congressional clout.

The truth is Michigan isn’t poor or old or sick enough to completely cash in on federal social service and retirement spending. It doesn’t have nearly enough federal land to secure those extra bucks. It doesn’t have enough Pentagon installations to crack the Defense Department budget. It isn’t a haven for federal workers, so forget salaries and wages. And there are just too many people who still live here — a critical factor in determining per capita figures.

Lately, Congress has reconfigured the process that gave lawmakers and lobbyists power to influence spending with special grants and earmarked funding for local projects. The big budget items – health care, defense spending and federal payroll – aren’t necessarily things that a committee chairmanship can affect in any significant way. Lawmakers who once bragged about earmarks they had snagged for their districts in terms of new roads, programs and projects now must toil in back rooms for pennies on the dollar in complex formulas.

The hush-hush reality of federal spending is there are times when moving up in the rankings isn’t such a good thing for a state either. Take Michigan’s unemployment compensation issues of late. Because Michigan’s unemployment rate was 13.9 percent in 2009 and 11.4 percent in 2012, it qualified for an extra 20 weeks of federally funded unemployment benefits. That’s obviously a double-edged sword for the state. With the rate now below 9.9 percent, it’s losing those extra benefits.

As this year’s budget process begins, it seems better to take a deep breath and hope for the best but expect the worst. Michigan’s congressional delegation certainly could do more to improve Michigan’s anemic rankings, but that’s mostly nibbling around the edges.

Michigan’s on its own out here like a lot of its Great Lakes neighbors, and that seems apt for a region that’s long been known for its self-sufficiency and economic independence. And isn’t that something really worth bragging about?

Sarah Kellogg covered the Michigan congressional delegation and the federal government as the chief Washington correspondent for Booth Newspapers for 14 years. Before joining the Washington Bureau, Sarah covered state politics and government in the Booth Newspapers Lansing Bureau and directed Lansing coverage for United Press International. She helped launch MIRS’ Capitol Capsule, and served as its first writer and editor. A regular Dome columnist, she currently works as a freelance writer and editor for regional and national publications.

Trick Question for Detroit

khopdome — Fri, 17 Feb 2012 03:35:49 +0000

Columns

Lawrence M. Glazer

Trick Question for Detroit

February 17, 2012

The state’s largest municipality is in deep fiscal trouble. It can’t pay its bills. Its former leader is in prison for corruption. The governor’s office has been evaluating the situation and trying to negotiate a resolution, but the municipality’s legislative body and employee unions have been unable to give enough ground.

Time has run out. Only one, drastic solution remains. Nobody wants it, but there is no other choice now. So the step is taken.

An emergency manager for Detroit?

No. Bankruptcy for Jefferson County, Alabama.

Jefferson is the state’s most populous county (it contains within its boundaries the state’s largest city, Birmingham). Alabama has no emergency manager statute. So Jefferson county filed for bankruptcy in November.

Much has been written about Michigan’s 2011 Public Act 4 and the draconian powers it grants to a state-appointed emergency manager to run a local municipality or school district. Little has been written about the alternative, a municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code.

If Michigan did not have PA 4, then Detroit might well be facing the prospect of filing for bankruptcy under Chapter 9.

Detroit’s fiscal situation appears to qualify it to apply for bankruptcy protection under the federal law. It is “unable to pay its debts as they become due,” according to media reports. This meets the federal definition of municipal insolvency.

Municipal bankruptcies have been relatively rare. Only 44 have been filed by cities or counties in the last 32 years. The reasons for this are not hard to discern. No political leader wants his or her name associated with the bankruptcy of the government he or she led. In fact, when the Harrisburg, Pennsylvania, city council petitioned for bankruptcy in 2011, it was over the vociferous objections of the mayor, who argued that only he — not the council — had authority to file (and the federal court agreed with him, dismissing the council’s petition).

The prospect of a major municipal bankruptcy also makes the state’s governor and treasurer very nervous, fearing that the bond market may react by making it more expensive for other nearby cities and counties, and possibly even the state, to borrow. A bankruptcy is, after all, a court-approved default on debts.

The largest municipal bankruptcy was Orange County, California, filed in 1994. The county’s treasurer had lost $1.7 billion of taxpayer funds by investing them in risky derivatives he did not fully understand.

The City of Vallejo, California, filed in May 2008. Its insolvency was mainly the product of unsustainable retiree pensions. Vallejo emerged from bankruptcy at the end of 2011, having spent some $11 million in legal fees, much of it fighting police and firefighter unions over whether the City met the legal requirements for bankruptcy.

One notable result of the Vallejo bankruptcy was a ruling by the court that federal bankruptcy law could trump state labor law under some circumstances, and that the court could therefore reject an existing collective bargaining agreement. This decision has provoked much comment in law journals. However, the ruling only applies to the Vallejo case; it is not a precedent that other courts must follow.

Although federal law provides for municipal access to the bankruptcy courts, there is a major qualification: the state must first grant its permission. This is so because cities, counties and other local governments are creations of the state. They are enabled to exist solely by virtue of state laws. Nothing in the U.S. Constitution requires their existence. But the U.S. Constitution does recognize the existence and powers of the states, and prohibits federal government interference with state laws except under certain specified circumstances.

So, many states have enacted laws governing that permission. According to the National Association of State Budget Officers, 26 states expressly authorize it by law (12 of these impose no restrictions, while 14 require approval from a state authority before filing). Georgia law prohibits any municipality from filing, and the remaining 23 states have not enacted any laws on the subject.

Michigan is one of the 14 states that require state permission. The small city of Hamtramck sought the state’s permission in 2010 and was denied.

Comparisons between bankruptcy and an emergency financial manager takeover are instructive. Each is a form of receivership, but they are different in fundamental ways.

A municipality initiates a bankruptcy itself, with the state’s permission. An emergency managership is initiated by the state, which does not need the municipality’s permission.

The primary focus of a bankruptcy is debts, and the bankruptcy judge has the power to amend or cancel any debts, including bonds. The emergency manager has no power to amend undisputed debts.

An emergency manager can literally run the municipality without consulting the local elected officials. In fact, the emergency manager can fire the local officials. A bankruptcy judge cannot interfere with the local elected officials’ ongoing exercise of their powers.

The Michigan statute authorizes an emergency manager to unilaterally modify collective bargaining contracts between the municipality and its unionized employees. The law is not yet clear whether a bankruptcy judge can do this.

Then there is the matter of due process — the right to be heard before an authority makes a decision affecting one’s rights. Since bankruptcy is, by definition, available only from a court, it is no surprise that nearly every affected party has a right to a hearing at nearly every stage of the process — one reason it can take so long and cost so much.

Public Act 4, on the other hand, provides only one opportunity for a hearing. If the governor determines that a local financial emergency exists, the municipality has seven days to request a hearing. After the hearing the governor makes a final determination based on the record made at the hearing. If the final determination is to appoint an emergency manager, the decision is appealable to the Ingham County Circuit Court. That’s it.

The Snyder administration is currently in the early stages of determining whether a financial emergency exists in Detroit. Coming back to where we started, what would happen if Detroit were to file for bankruptcy?

Well, we probably would be treated to several years of expensive litigation over such issues as whether the court can modify the city’s existing labor agreements, and how large a bath Detroit’s creditors would take. And at the end of the process the city would have some breathing space, though its long-term fiscal future might not be all that much brighter (by most accounts, Vallejo’s isn’t).

But the chances of Detroit filing for bankruptcy on its own initiative are nil, because under current Michigan law it must first obtain the permission of a specific state official: the emergency manager. Yes, you read that right. Before Detroit can file for bankruptcy, it must first be taken over by the state, which under Public Act 4 can run the city a lot more efficiently than a federal judge, who is tied down by all that pesky due process.

Finally, a couple of potential monkey wrenches are dangling ever closer to the whole emergency manager works.

A group of activists has filed suit in Ingham County attacking the constitutionality of the statute. Gov. Snyder has requested that the Michigan Supreme Court fast-track the case to itself, but the Court has not yet made a decision.

Another group is gathering voter signatures on a referendum petition to put repeal of Public Act 4 on the November ballot, and would also suspend the law pending that election.

If either of these attacks succeeds, then bankruptcy could become Detroit’s only alternative. Unless, of course, Mayor Dave Bing’s ongoing negotiations with multiple parties avoid the financial emergency in the first place.

Lawrence M. Glazer is the author of Wounded Warrior, a recently published biography of former governor and Supreme Court justice John Swainson. He is also a retired Ingham County Circuit Court Judge and former legal advisor to Gov. James J. Blanchard.

Rolling in Dough…Kinda

admin — Fri, 16 Dec 2011 02:57:55 +0000

Columns

John Lindstrom
Gongwer News Service

Rolling in Dough…Kinda

December 16, 2011

Who says reporters never report good news? Lansing was good news central these recent days. And no better time for some good news with Christmas and Hanukkah around the bend.

The state is rolling in money. Well, no it isn’t really, so say the fiscal experts. But it sure feels like easy times, and given a decade of uncertain and weak finances, boy does it feel nice once again to pretend the two peninsulas are rolling in dough.

Even better, at least for long-term hopes, the unemployment rate has dropped below 10 percent. For the first time in three years, the state’s jobless rate is below a critical psychological break point. It may not be far below that break point, but it is below 10 percent, and that could have an important psychological effect on economic trends.

So, good news aplenty for every girl and boy. Good enough news to even make one forget about the bad news that accompanies the good news. Of course there’s bad news. How could one think there wouldn’t be a dose of bad news to salt down the sweet?

However, being giddy with the good news, let’s look at it a bit closer.

First, the money.

There is an honest-to-goodness chance the state could end up with a surplus of more than $1 billion from the end of the 2010-11 fiscal year. That’s the fiscal year that ended September 30. Remember, this is all unofficial since the state’s books have not been closed yet.

How could that surplus come to be? Revenues came in far stronger than what was expected during the fiscal year. Income taxes for the year were $121 million more than forecast, helped by a variety of factors, including a marginally better jobs picture that led to improved withholdings and a much lower demand for refunds.

Then there’s the sales tax, up $274 million more than forecast, as consumers who had held off buying for some years marched back to the checkout lines. Ah, but there is a bit of bad news folded into this as well, since the increased sales taxes also benefited from higher fuel costs.

Add into that improved collections from the Michigan Business Tax — soon, so soon, to be laid to rest — and total revenues above forecasts and allocations come in at nearly $1 billion, maybe as much as $500 million each in the general fund and School Aid Fund.

Then, you add yourself in more than $200 million in unspent allocated funds from all the departments in the state, and the prospective surplus looks like it could be close to $1.2 billion.

How is it the state had all that unspent money, called lapses in the land of fiscal lingo, you ask? Remember a year ago as former Governor Jennifer Granholm was leaving office she and the legislature agreed to enact an early retirement program for state workers? It took longer to fill the spots the state was going to fill, which meant savings.

Plus, the state was able to save some money, especially with some Department of Community Health programs, as it put into play some new requirements.

Any bad news on the lapse front? Not really, unless you consider the nature of that money means it can’t be forecast to continue in upcoming years.

What is the real bad news with such a surplus then? You can’t spend it. Is that bad enough for you?

Actually, a lot of the money is already kinda spent.

According to Sen. Roger Kahn (R-Saginaw Township), chair of the Senate Appropriations Committee, more than $300 million is slated both for the Budget Stabilization Fund and to prepay obligations on state retirees. Okay, fine, good sound fiscal practices, one says, even though it doesn’t sound like much fun.

Then the state is forecasting increases in Medicaid caseloads. It actually got a little lucky caseload-wise in the fiscal year just past. Caseloads didn’t go down, but neither did they increase as expected. Officials don’t expect the state to be so lucky, even if the economy continues to strengthen, and figure caseloads will go up in the 2011-12 fiscal year. That will take care of a bunch of bucks.

In other words, hopes and dreams the state could and would put that money into new roads or helping out universities so they can cut their tuitions or any of a bunch of other programs is unlikely to happen.

Still, the state came in with a big, if still unofficial, honking surplus — and after the miserable decade it endured that is very good news.

Even better is the unemployment news, because of the important psychological boost it could provide.

Reporters recall all too well the day in winter 2008 when then-Governor Jennifer Granholm looked positively ashen as she announced the state had exceeded 10 percent unemployment. It was a figure the state had not crossed in nearly two decades. During the time Ms. Granholm and the state were being excoriated for existing in a one-state recession, the unemployment level had hovered between 7 percent and 8 percent. At the moment Ms. Granholm announced we were back over 10 percent, it was a knowledge that made one both sick and scared.

Which is why announcing that the unemployment rate had fallen to 9.8 percent could prove significant beyond its confirmation that the economy is better.

The importance of mass psychology to an economy cannot by underestimated. If 10 percent was a tipping point for the public psyche that things are really bad and we have to burn the furniture for warmth and prepare to salt down the neighbor’s puppies for jerky, then a sub-10 percent unemployment rate should be the counter-tipping point. It does not mean that people have license to spend without thought or care. But it does mean people do not have to be so scared, and they can perhaps spend on long-term needs (and take themselves out for a nice dinner to celebrate having so done).

In itself the unemployment rate could help drive economic growth a little faster. Not only could it urge people to spend a bit more, it could possibly spur shy companies that have the means but heretofore not the will to hire more folks.

Add to that recent national indications that new first-time unemployment filings are going down, and the combination of these developments could prove a critical economic booster.

What’s the bad news in this? Well…while most of the decrease if attributable to more people getting jobs, a good share of the decline is also due to thousands of people just dropping out of the workforce, tired of looking for a job.

One critic using social media said the only reason the state’s unemployment rate is so much lower is because people have left Michigan. That is not true, but it is true that even as Michigan has seen slow and tentative job growth for almost two years, it has also seen the total number of people employed decline.

In fact, if no one had departed the labor force, it is entirely likely the unemployment rate would not have slipped below 10 percent in November.

It is also not quite clear how many of those newly employed people are working full-time. Statistics have shown that when calculated for the under-employed, the jobless and under-employed rate is closer to 18 percent.

Also, most of the job growth was in the retail industry as the state prepared for the Christmas holidays. Which could mean both additional job growth for December and then an increase in joblessness in January as those temporary jobs dry up.

Still, even calculating and adjusting for that bad part of the good news, the news is positive. It is even hopeful.

It is, in fact, exactly the kind of news Governor Rick Snyder needs to hear as 2012 dawns. For it is in 2012 the new corporate income tax takes effect and the state will see if that policy does, in fact, help spur economic growth even further.

Being able to show off a surplus and lower unemployment is just what he needs to help convince businesses to take a chance on the state.

Because it is still a chance one is taking. Not just in Michigan, but everywhere. The economy remains extremely tenuous. If Europe collapses, it will drive the rest of the world back into recession, and even controversial new tax policies will not help reverse that.

Should that grim outlook occur, the flip side to Mr. Snyder’s tax proposal — the tax on pensions — could be blamed for helping hurt the economy more as older individuals find themselves with less to spend on goods and services.

It is a chance thing. Reporters — real reporters, not twits with cell phones and iPads but no knowledge of how to track a story — will be there to report the outcome, good or bad.

Until then, it’s all good news, mostly, sort of, kinda, so go make the holidays even brighter and merrier.

John Lindstrom is publisher of Gongwer News Service. For nearly 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.

$7 Billion Hidden in Small Type

admin — Fri, 09 Dec 2011 04:03:12 +0000

Columns

John Lindstrom
Gongwer News Service

$7 Billion Hidden
in Small Type

December 9, 2011

So much commentary on government focuses on headline issues, the ones easily chewed and spun into bumper stickers and soundbites. Let us consider something else, something that those who know the newspaper industry know might be stuck in the agate columns.

If one massed about 220,000 people in Michigan into one spot, it would be a pretty sizeable fondue of flesh. It would, in fact, qualify as the second largest city in the state.

If one spent the 2010 Michigan per capita income of $35,597 on each person in this entire group of 220,000, about $7.8 billion would be spent. A tidy sum indeed.

That being the case, the $7 billion the state and federal governments actually spend on this group of 220,000 seems a relative bargain. Then again, maybe it’s not a bargain. Maybe we can spend the money better and more cheaply. Maybe we can do that and make sure none of the 220,000 people is harmed. Maybe.

This is not a theoretical group of 220,000 people. There are actually about 220,000 people in Michigan who are eligible for both Medicaid and Medicare. And it is them, and the amount of money being spent on them, that is at the heart of one of the more complex, potentially important and largely unknown stories ongoing in state government. As was said, to find it you have to read the agate columns.

This group also represents two of the essential elements government must wrestle with constantly: money and personal well-being. It must wrestle with the two issues, yet somehow not quite win on either count.

It is also one of the big hidden issues of government. Hidden not so much because government or anyone else is trying to hide it. It’s hidden because it’s complicated, because it is difficult to reduce to a bumper-sticker. One would have to be willing to stretch adhesive paper across the entire bumper to fit Justice For Dually Eligible Medicaid/Medicare Recipients or Hell No, I Won’t Pay For Dually Eligible Medicaid/Medicare Recipients!. It’s hidden because it is weighted down with jargon and no dictionary yet exists to make sense of what people are saying.

And it’s hidden, probably, because it deals with people whom we are uncomfortable acknowledging. This issue deals with the old and the poor, and the disabled and poor, and the mentally ill and poor. It deals with, in fact, people we could all one day become.

This also is the kind of issue government ends up dealing with a lot. It is not the kind of issue that outraged groups create social media sites for and hold rallies with tri-corn hats and bullhorns, insisting they alone know the true meaning of the constitution. It is not the kind of issue reporters tend to spend a lot of time following. This reporter knows, since he has been about the only reporter following the story.

But it also shows how despite cries from so many critics from both sides that fixing government ought to be easy, it is often anything but easy.

As backdrop, recall that Medicare, which pays for the medical care of the elderly and many disabled persons, is entirely federally funded.

Medicaid, which pays for medical care for the poor, is a joint federal/state program with both paying for care.

For years now, states have clamored for the federal government to do something about dually eligible recipients. Those tend to be older, poorer people who often are in nursing homes. Tend to be older and poorer. Many are not so old, but they suffer from multiple disabilities. Many struggle to be heard because they struggle to even speak. They are in wheelchairs. They fight off mental illnesses.

They are the people any one of us could one day become. We all will be older, we could well be poorer, we could find ourselves disabled and ignored.

They are the people whom even the most strident anti-government opponent agrees need help to live. Admittedly, the most strident anti-government advocate might say that help should come from families or churches. To others this is one reason why government exists, to care for those who truly need care.

States, including Michigan, have pushed for the federal government to pick up the costs of those individuals as a way of easing their own budget struggles.

That, the federal government has not done.

But the federal Centers for Medicare and Medicaid Services did call for the states to propose ways of consolidating and coordinating those services. Doing so would make them more efficient, possibly even save some money. Hard to argue against that.

Could consolidation and coordination also help ensure that recipients get as good or maybe better services at less money? Always that is the Holy Grail of any government restructuring: doing more with less.

Michigan applied for and received federal funds to help set up a coordinated system for dually eligible recipients. And at a hearing this week on the issue, Rep. Matt Lori (R-Constantine) said finding a way to coordinate the services in hopes of saving money — $7 billion is on the table, after all — definitely interests him.

It was in its proposal to the federal government, however, that alarm bells, warning sirens, watchdog yowls, blowing whistles and frightened screeching set the care industry — and by that we mean community mental health agencies, agencies for the aging, organizations that care for the developmentally disabled and others — on the warpath against the proposal.

That proposal called for “a single contractual relationship between the payers (Medicare and Medicaid) and the entity responsible for service delivery and quality.” Separately, managed care organizations on the local levels would be contracted to actually provide the care, but it would come through this one proposed entity.

And that proposed scared the living breathing guts out of every person involved in the issue. Local directors warned their agencies would be shut down, that patients would have to get care through a centralized agency. Patients and their families were terrified. A level of fear and anger that surpassed even that seen over the proposal to tax pensions was evident among this population.

Candidly, the state was stunned at the reaction, and has had to bend anyway it can find to bend to assure those individuals it wasn’t trying to ram anything through, that it’s first consideration was always patient care, and that all affected persons would be part of the discussions on setting the program up. The state added more public hearings, so affected individuals could talk about the issue. It live-streams meetings of different workgroups on the different facets of the issue so people across the state can see how the discussions are proceeding.

None of this seems to have assuaged the critics, who before Mr. Lori this week urged the state go slower in developing its proposal (which it now intends to take to the federal government in spring), and to be sure the work they do is included in whatever proposal is made.

In its own way this issue triggers so many catch-phrases we have heard on a federal level applied now to the state. Is this an example of “one size fits all” governing? Will patients be able to “keep their own doctor (or therapist, or case worker)?” Isn’t this an overreach by a centralized government against local control?

One cynically could also say these agencies are simply trying to keep their piece of the pie, no matter what the state does.

What is indisputable though is the genuine worry by recipients and their families that their care will be dramatically and drastically affected by whatever changes are made. The changes the state makes wouldn’t amount to a set of inconveniences. Those changes could trigger a massive change of life for some of these recipients.

It is also indisputable that the state workers drafting these changes understand that. Get this wrong, hurt too many people, and they can count on political blowback hitting them harder than a hurricane.

All that makes this the really tough work of governing, the kind of work that goes on all the time though usually over less personally pressing issues. It is also the hard work that goes on outside of public view, mostly because the public is preoccupied elsewhere.

The public is preoccupied even though everyone in the public could be affected by the decisions made on this issue. So much of the agate stuff is exactly that, important but unnoticed.

This issue may never reach major headline size. It’s a sucker bet to say most of the public will have any idea about this in a year or more.

But it’s important. One should pay attention. It should at least be bumped out of the agate columns and stuck in among the crosswords.

John Lindstrom is publisher of Gongwer News Service. For nearly 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.

1980s Flashback at the Capitol

admin — Fri, 10 Jun 2011 02:51:50 +0000

Columns

John Lindstrom
Gongwer News Service

Flashback at the Capitol

June 10, 2011

There have been no homeless people sleeping in the legislative galleries lately.

Even so, suddenly the 1980s have returned to the Capitol. The legislature finished the budget by May 31, which is the earliest since 1981.

And when Governor Rick Snyder addressed the Detroit Regional Chamber meeting on Mackinac Island he said he did not want the state to return to the misery it suffered in 1982.

Ah, the 1980s. What can one say about a decade that began the year John Lennon was murdered and ended the year the Berlin Wall was torn down? For one thing, one can say Michigan went on an economic rollercoaster that, in many ways, the long grinding anguish of the decade past still did not eclipse.

Much of today’s modern world saw its birth in the 1980s. People first began using personal computers. Cell phones were large bag-like things in cars (until portable phones that resembled World War II walkie-talkies showed up) and you made phone calls that were quite expensive. Text, after all, was something in a book (which was published on paper). There was a war in Afghanistan and we were kind of involved with it. There was a crazy leader in Iraq who we didn’t like, but frankly we didn’t like the crazy leader in Iran more so we kind of tolerated the crazy guy in Iraq.

And Michigan went through an endless hailstorm of economic and political events, especially in the early 1980s, that even with all the political change underway now has not been matched.

Oddly, with the legislature having completed the 2011-12 budget so early, there has been a bit of a wonderment at how the legislature adopted a budget so much earlier in 1981 and why it couldn’t do so again for three decades. What did the legislature do right then, some wonder, that it hasn’t been able to do since?

Mr. Snyder provided some of the needed context in his comments. He graduated in 1982, he remembered 1982, he did not want to go back to 1982. Notice, he did not want to go back to 1992, not 2008 or 2009. Those are horrid years today’s youngsters can hope to never repeat.

Just as anyone older than 75 never wants to repeat the 1930s, nobody older than 45 in Michigan wants to repeat that anguishing period of 1979-1983.

No question the short jaunt through the latest economic hell had a piquancy all its own. In the 1980s no one expected major banks to come within a whisper of total collapse. Nor in the 1980s did anyone seriously think General Motors and Chrysler both would go through bankruptcy. The federal government had just saved Chrysler from having to go through bankruptcy, after all.

So the latest bout of economic misery was terror enough. Still, those who actively recall 1979-83 would prefer to never go through that time again.

Yes, the legislature did complete the 1981-82 budget in April 1981. Kind of. When looked at in the totality of that entire time, the budget of 1981-82 being passed and signed into law in April 1981 seems somewhat insignificant. Because in reality, the budget of that year, as was the budget 1979-80, the budget 1980-81 and to a large degree the budget of 1982-83, was a runaway train wreck that kept on going even after it had jumped the tracks.

First some additional context: the recession of 1979-83 was the worst since the Great Depression. The previous worst recession since the Great Depression had happened in 1975, so the economy barely had time to recover and recoup when the next slam hit.

Second, for more than a decade the nation had been struggling to control inflation. For all the whining about “socialism” in the government today, former President Richard Nixon in 1971 simply imposed wage and price controls in an effort to hold prices in check. All through the ’70s there were efforts to keep some type of control on prices, an effort that was essentially blown out of the water with the 1973 Yom Kippur War and OPEC deciding to impose an oil embargo on the U.S. Worried about an inflation rate today of maybe 4 percent to 5 percent? Wake us when it gets to 10.35 percent.

Because 10.35 percent was the rate of inflation for 1981. Worried about interest rates going up from nothing now to, what, maybe 2 percent? Yawn. At year’s end in 1981 the fed had set interest rates at 15.75 percent.

Oh, and does the stock market hovering around 12,000 scare you? It was around 875 in 1981.

Gasoline averaged about $1.25 a gallon. Believe it or not, when adjusted for inflation that may even be higher than the prices we are suffering through now.

In Michigan, of course, the state was worried about what to do to improve the economy. In 1981 the first of major steps to cut business costs was undertaken, an effort that nearly ruptured the state along business and labor lines.

There was also a seemingly never-ending struggle to figure out what to do with property taxes (a fight that would last until Proposal A was adopted in 1994, but that’s for another discussion).

As we think praisingly of the legislature completing the 1981-82 budget in April 1981, one should know that the 1980-81 budget wasn’t finished until after the 1980 election. Yes, indeed, former Governor William Milliken and the legislative leaders could not come to agreement in time for the start of the 1980-81 fiscal year. So the state ran a continuation budget until the election was completed.

That election, of course, led to Ronald Reagan winning the presidency and a whole lotta Republicans winning in the Michigan House, though the House would stay Democratic. Still, there were enough conservative Democrats that the GOP believed it had philosophical control of the chamber. That would play a critical role at year’s end on what would become the most contentious issue.

The 1980 election also saw the state take a second shot at a massive property tax cut that former Shiawassee County Drain Commissioner Bob Tisch had devised. The Supreme Court had ordered the proposal onto the ballot, and state officials campaigned against it. The voters rejected it, but their unhappiness with property taxes was still clear.

So when Mr. Milliken outlined his proposed budget in January 1981, doing so even before all legislative committees were set, the legislative leadership decided in early February they were determined to complete the budget by the Easter break. So they did. This reporter was there. This reporter wrote about it, but candidly, with everything else that overtook that year, this reporter simply forgot about it.

Because right after the budget was adopted, the state held a special election on another property tax proposal in an effort to head off a more dire cut from Mr. Tisch. It was supported by everyone, except the voters. The special proposal was rejected, and Mr. Tisch appeared in the Capitol effectively trying to run the place by fiat. He made it plain he intended to run for governor in 1982 (and in those pre-term-limit days it was still uncertain if Mr. Milliken would run for a fourth term).

So, property taxes were still unsettled. Then Mr. Milliken embarked on a course of trying to improve the state’s business image with a variety of tax and regulatory changes. To get the state out of continuous recession, he argued, the state had to attract and keep new businesses.

The fight eventually crystallized around the cost of Michigan’s workers’ compensation system. Unions pulled out every stop to prevent changes that would cut the cost by cutting some of the benefits. It is not exaggeration to say there were times when people worried that real violence might break out between protestors and sometimes between legislators.

On the cold December night when the House locked itself into the chambers to vote on the changes, the late Rep. Morris Hood (father to the current senator) called for a caucus. Because technically lawmakers could not leave the floor, the only acceptable alternative was to force the press corps out of the pressroom (which then was where the House Democratic caucus room is now). Oh it was a closed caucus, but reporters standing outside could hear Mr. Hood scream in primal anger at what he saw as a betrayal of Democratic values by the legislators about to vote for the changes.

But the changes were enacted, with Republicans stationed in the House to ensure that Democrats did not attempt a procedural move to stop them.

Yes, the budget was adopted early. Still, with property taxes and workers’ comp changes, that it was adopted early didn’t seem such a big deal. Especially when the legislature had to approve an executive order cut of the 1980-81 budget on the last day of the 1980-81 fiscal year.

And then less than two weeks after the 1981-82 fiscal year began, another executive order cut was issued because the new budget, that budget that was passed in April, was already out of whack.

That EO did not fix the state’s budgetary problems, and by March Mr. Milliken (who had decided late in 1981 not to run for re-election) had gone before the state asking for an income tax increase. His call for a permanent tax increase was later amended into a six-month temporary tax increase.

So, we kind of forgot that the budget was adopted in April. Because, let’s see, there was an attempt to recall the entire legislature. It didn’t succeed, by the way, if you had not noticed.

Finally, as backdrop to all this was the horrendous state of the economy. As bad as it was in 2008 and 2009, and it was bad, the things happening in 1981 and 1982 were close to terrifying.

By April 1982 unemployment hit 17 percent in Michigan (its worst in the recent recession was 15.2 percent, horrible but still not quite mind-numbing). By that time estimates showed more than one-third of the people in the state reliant on some sort of public help.

There are the stories about Texas papers brought to Michigan and sold along the streets so people could find jobs there. Mr. Snyder referred to them.

But more indicative of how horrid things had become were the things desperate people did, were allowed to do, to survive.

So it was that the homeless were allowed to sleep in the House gallery during the mornings. They were told to stay in certain areas, told not to bother anyone or ask for money, but they were allowed to sleep a few hours there. After all, the shelters were all full and it seemed a particularly cold winter in 1981 and 1982. So it was not unusual to see maybe as many as six weary men sleeping in the gallery.

Mr. Snyder is right to say the state wants to avoid another year like that. If anything, that year shows that despite every good intention of government, circumstances go beyond what it can predict and prepare for.

It also shows that, yes, budgets can be passed early. It may mean very little in the end if they are or not, but budgets can be passed early.

The 1980s are now part of history. Good years did come back to the state beginning about 1984. There was another recession in 1990-91, though not nearly as bad. Then there were the unbelievably good years of the 1990s before the long slog we hope we are finally freeing ourselves of.

Hope we shall have always, even the homeless have that. If ever we are forced again to allow the homeless to sleep in the legislative chambers, then we may wonder if we have lost hope. If so, will we care about when the budget was passed?

John Lindstrom is publisher of Gongwer News Service. For nearly 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.

School Cuts Kickstart 2012 Campaigns

admin — Fri, 10 Jun 2011 02:47:37 +0000

Columns

Tim Skubick

School Cuts Kickstart 2012 Campaigns

June 10, 2011

The bitter battle for control of the Michigan House is off and running, with school funding at the center of it all.

Most reasonable souls would ask, “Why start now? The next House election is 516 days away.” But just as Rome was not built in a day, GOP control of the House cannot be dismantled in one day, either.

Even before Gov. Rick Snyder signed the new K-12 budget bill, with its cuts to education and strings attached, the Michigan Education Association was laying the groundwork to whisk back control of the House.

It began with a purported $900,000 TV buy that covered the state with the fact that Mr. Snyder and friends were slicing and dicing the K-12 budget.

This is hardly a new theme for the education lobby, which has bellyached for years about being underfunded and Junior’s education hanging in the balance. However, this time the message had a different twist: there was a surplus in the K-12 budget, so the Rs did not have to cut one red cent from school spending and, in fact, could have allocated more money. They did neither.

Instead, as the MEA storyline goes, they shifted the surplus from little kids to bigger kids in the higher education system. The governor diverted $600 million from K-12 and gave it to the four-year universities and two-year community colleges.

Oh my. The howl from Democrats and educators was palpable. They called it illegal and breaking the promise of Proposal A, the 1994 education finance reform adopted by voters.

Republicans, before they voted, were told this was “wrong,” but only a handful listened. In fact, only four Republicans in the House and five in the Senate voted with the Democrats to block the school aid budget bill.

The rest of the GOP? “They drank the Snyder Kool-Aid,” blistered the superintendent of Livonia schools. “I’m disgusted,” Dr. Randy Leipa lamented, and he was not alone.

For months, demonstrators and school advocates protested any cuts to education. The shouting on the Capitol steps and the testimony in legislative committees produced a fat goose egg.

Hence the commercials.

Polling data suggest that citizens are up in arms over these cuts, with over 60 percent contending it’s wrong.

“Folks are angry,” reveals one education insider. “We want to make sure they stay angry,” and the ads will keep it alive.

The last thing the MEA wants is for disgruntled voters to forget which Republicans “stiffed” education. If they forget, the chances of the Democrats regaining control plummet into minus numbers.

The governor and pals claim they used $310 million from a new surplus to buy down the original $470 per pupil cut, which meant there was only a 1.4 percent reduction while every other program took a 10 percent haircut. True, but educators shout that the lawmakers did not have to cut at all.

Republicans know that some of their colleagues are at risk in districts where they won by the hair of their chinny chin chin last time, but there may be an ace up Mr. Snyder’s sleeve.

If the economy continues to rebound, there will be extra cash. So just before the next election, he could pump dollars back into the schools, and suddenly all those vulnerable Republicans will look like champs, not chumps.

And if that happens, the MEA strategy to regain House control could get a failing grade.

Tim Skubick is Michigan’s Senior Capitol correspondent and has anchored the weekly public TV series Off the Record since 1972. He also covers the Capitol and politics for WLNS-TV6 in Lansing.

Tim Skubick Extra Extra…
(A weekly bonus only for Dome readers)

Bikers Want to Go ‘Topless’
Apparently nerds do not ride motorcycles, or at least Gov. Nerd doesn’t.

With a couple hundred bikers on the Capitol lawn the other day for the 44th consecutive year seeking repeal of the helmet law, Gov. Snyder was asked if he would allow his kids to hop on a hog and ride without a brain bucket.

“Sue won’t let me on a motorcycle, let alone let the kids on a motorcycle,” he told the Capitol press corps, referring to his wife.

But don’t conclude that he would veto the helmet repeal law when and if it gets to his desk. He is still on the fence.

On one hand, the governor admits helmets save lives. But on the other, he is not sure what impact the repeal would have on nonbikers regarding insurance and health care costs. Insurers argue the costs will go up.

Not to worry, contends biker Vince Consiglio, who runs the ABATE organization and points to other states that are helmetless. The death rates there, he contends, have not skyrocketed, but the registration of bikes has — with a positive economic pot for those states.

Vinny has plenty of backup among those who surround the governor. The lieutenant governor is on board, as is the attorney general. And the secretary of state is a biker herself.

AAA and other insurance companies are very nervous. They are afraid if this measure passes, eliminating the mandatory seat belt law could be next. And it looks like there are enough votes to pass the repeal this time — with no Gov. Granholm around to veto it.

What will this governor do?

He refuses to tip his hand, even when one scribe asked, “Can we push you as to which way you are leaning?” He shot back, “You can push all you want, but I’m still analyzing the question.”

Varrooom. Varrooom.

Randy Not Helping Rick
Heads are being scratched all over this town as folks wonder why in the heck the Senate GOP leader did what he did.

After all, he is on the governor’s team and the governor wants this one real bad. But there was Sen. Randy Richardville setting up a self-imposed and artificial prerequisite for building that second span between Detroit and Windsor.

The Monroe Republican contends that if he cannot get 14 GOP votes for the bridge, he will not allow a vote on it — which is just a polite way of saying the thing is dead.

Asked about all this, Richardville says the Senate is a co-equal partner with the executive branch.

Yeah, so what?

Well, turns out Mr. R. is getting some pushback from many of his caucus members who are not ready to jump through this Snyder hoop by the end of this month — or the end of the year for that matter.

“Hell no,” lamented one West Michigan GOP senator when asked about backing his governor.

Richardville may be the gov’s Senate lieutenant, but he is beholden to his members first.

This issue has produced some angst for R.R. He was given the “honor” of introducing the bill, but there was some hemming and hawing behind the scenes about the honor of it all. Eventually he did intro it, but then headed to Mackinac Island to announce to the media his 14-vote requirement.

The governor was asked about this move and, per usual, put on his smiley face and noted that he has a “good working relationship with the majority leader.”

So good, perhaps, that Richardville did some freelancing without the governor’s blessing, and now the governor’s uphill battle to scramble together enough votes to build the bridge…well, let’s just say Mr. Richardville has made the climb a little steeper.

New Mood Over Mackinac

admin — Fri, 03 Jun 2011 02:10:09 +0000

Columns

John Lindstrom
Gongwer News Service

New Mood Over Mackinac

June 3, 2011

MACKINAC ISLAND – Stepping briskly from the sunny porch at the Grand Hotel, one of the truly great senior men of Michigan politics smilingly assessed the well-heeled crowd at lunch. “So many new people,” he said, “all full of enthusiasm and all full of…”

Hmmm, full of…how have we put it in the past? Ah, yes, sustainably harvested internal termination. That’s it. “All full of enthusiasm and all full of sustainably harvested internal termination,” said the great old man. Or a word to that effect.

Gosh, good old cynicism. It is the lifeblood of politics and, certainly at these meetings in the past, has flowed as bountifully as martinis from the astonishing ice-sculpted martini-makers.

This year, though, the cynicism seems different. Not gone, certainly, but a sometimes snide exclamation point to a generally upbeat and determined attitude.

Example. During one session, Meijer CEO Mark Murray said, “We spent two years trying to decide if people could smoke in cigar bars. Now we’re dealing with important things.”

Unquestionably there is a different mood on the island this year.

No one denies the state is still in, well, moderately deep…sustainably harvested internal termination. The topics of the seminars still deal with many of the same issues raked over again and again in the past: fixing education, controlling overall business costs, expanding business opportunity and, particularly this year, building a new bridge between Detroit and Windsor.

But in the past the general attitude among the executives munching on shrimp and sipping child-unfriendly drinks was, “What the hell do we do about this?” or “Why the hell can’t government deal with this?” This year the execs ate shrimp and downed fancy Jell-O-shots (no kidding, they really did) and said, “Hey, we can fix this.”

What accounts for the change?

Partly it is an economy that seems to teeter towards recovery instead of calamity. But mostly it is because of Governor Rick Snyder.

In the sunny days of June 2010, Mr. Snyder appeared in the theater at the Grand Hotel as one of seven men wanting to be Michigan’s next governor. He was there for what turned into politely savage debate at the Detroit Regional Chamber meeting there, and that debate clearly left many observers unsettled.

On a partly cloudy day this week, the now-governor appeared in the same theater, dressed much the same way in a French-blue open-necked shirt and dark suit, but this time to the first of what would be several standing ovations.

It would be unkind to call this conference Mr. Snyder’s victory tour, but clearly the crowd on Mackinac Island for the annual conference is Mr. Snyder’s most enthusiastic audience.

Mr. Snyder was elected on the hope, especially of a top business crowd, to make major changes that would save companies money and, theoretically at least, help expand business and hire more people.

Mr. Snyder can certainly show results to cheer the executive’s metrically-beating heart. He and supporters outlined them before the crowd: ending item pricing, barring the state from adopting ergonomic rules stricter than any federal standards, beginning an assault on regulations.

Then, of course, completion of the 2011-12 budget by the end of May, leading to the top crowd pleaser:

Ending the Michigan Business Tax. “The dumbest tax in the U.S. is now dead,” Mr. Snyder said to the expected big applause.

It is Mr. Snyder who accounts for the change in attitude. Several folks have so commented. One state official said, “Obviously they’re happy a business guy is governor. It validates their existence.”

How he accomplished his sales and management job to a largely Republican legislature is also praised, though the legislature isn’t much considered as a factor by this executive crowd.

No one has yet called on Mr. Snyder to skip the Labor Day Mackinac Bridge walk by just walking across the straits from the Island to Mackinaw City, but honestly, one does wonder if someone wouldn’t just want to see him try.

His presence, his being within the executive office, is the sole reason given for the state having a new business friendly attitude, for a change that is destined (they are certain we are destined) for greatness to come.

Stephen Steinour, CEO of Huntington Banks, said, “The stars are aligning under the leadership of our governor.”

And it was around then that the comments of the old Great Man of Michigan politics, of enthusiasm and…yeah, that…came back to mind.

Everyone take a breath. Yes, Mr. Snyder has with the help of the legislature accomplished already an impressive record, though outside the executive-friendly confines of Mackinac Island that record is not as favorably received.

If, in fact, the state will restore itself economically, and everyone so hopes it does, it will, in fact, be less because of what Mr. Snyder and the legislature have done that what the public does with those programs.

The ability of the state to grow depends on what business does, and even more on what the public does, which depends on a variety of unknowable and unpredictable factors. As said earlier, the fates will have their say on Mr. Snyder’s successes.

Mr. Snyder has always acknowledged this and, in effect, did so again while at the Island. In announcing a new program that relies mostly on large Michigan businesses lending more money to small Michigan businesses, or buying more from small Michigan businesses, Mr. Snyder called on Michigan to help Michigan. We cannot control our destinies, but we can help influence the direction we take before destiny finds us.

This point was made plain earlier in the week by a paper published by state demographer Ken Darga.

It is not news that for most of the past decade Michigan was in a one-state recession. From 2002 to late 2007 the U.S. economy was moderately robust, but not in Michigan.

Mr. Darga raised the crucial question: why? Michigan was actually seeing some job growth in late 2001 and early 2002, and then it stopped. Just stopped. And no one has really been able to explain why.

Mr. Darga pointed out what we tend to forget is that in good times and bad, companies both shed jobs and add jobs. In good times they add more jobs than they shed them. In bad times, shed more than add. But it is a dynamic process.

From 2002-2007, Michigan lost jobs. And it essentially stopped adding jobs. This made no sense. None of the attempted explanations have satisfied why for a five-year period Michigan companies slowed to slower than a crawl in terms of adding jobs. During a period when Michigan companies were as profitable as companies all across the U.S. they were not adding jobs. And, as Mr. Darga said in academese, why?

In a way, this paper acts as a type of cynical exclamation point to the hopeful and positive attitude the executives have shown during this meeting.

The state may have changed its business legal structure, it may have changed its tax structure, it may have a former executive running the state speaking the executive’s dialect, and that executive may have encouraged other executives to speak positively and determinedly to improve the state further. But as Mr. Darga has pointed out, as yet unknowable, non-understandable factors may and probably will occur, and what their effect will be on the economy is unknown.

By no means is this meant to discourage the optimism, just to provide a touch of realism as Michigan goes forward. As has been stated, Mr. Snyder knows this, it is a major reason why he is constantly trying to share credit with others and calling on others to make the state’s recovery their mission as well. The gains he has overseen, if gains they are, may succeed and, if they do, it will be partly through expected results and just as partly through unforeseen effects.

So, as the grand old man said, this meeting shows we are full of both enthusiasm and something stinky. Ah, but we may need the stinky stuff to help nurture the enthusiasm to real results. Something to think about over shrimp and high-octane beverages.

John Lindstrom is publisher of Gongwer News Service. For nearly 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.

Michigan’s Top Universities Make Washington a Priority

admin — Fri, 27 May 2011 03:55:30 +0000

Departments

Washington / Michigan

Michigan’s Top Universities Make Washington a Priority

by Sarah Kellogg
May 27, 2011

Being a lobbyist in Washington these days can be a pretty thankless job. This city used to run openly on money and influence as lobbyists sought to win coveted appropriations and policy changes for their clients.

After Republicans took control of the U.S. House in January — and the Tea Party railed against excessive spending and special earmarks — coming to Capitol Hill looking for a federal subsidy, grant or tax break marked you as a political pariah.

Yet the new tone in Washington hasn’t deterred Michigan’s top research universities from keeping their D.C. offices fully operational, allowing them to make near daily pilgrimages to House and Senate offices for lobbying and consultation.

While Michigan’s other public and private universities and colleges have part-time lobbyists who work on their behalf in Washington, only the state’s three top research universities — Michigan State University, the University of Michigan and Wayne State University — have full-time, dedicated staff working Capitol Hill.

“It is very challenging now,” says Michael Waring, director of the Washington office and executive director of federal relations for U-M. “There is a whole new focus on the deficit and cutting spending. We’ve tried to argue that education and research ought to be thought of in a different way. Hopefully, they will be doing strategic cuts and not just across-the-board cuts with a big ax.”

Waring and Cindy Bank, U-M’s assistant director, are the heart of the U-M team in Washington. Bank, like Waring, has represented U-M for many years in the nation’s Capitol, and their partnership has helped U-M secure hundreds of millions in funding annually for research and financial aid.

In fact, U-M has had an exemplary record of winning federal research funding. In FY 2009, U-M received more federal research funding — $636.2 million — than any other U.S. public university, according to the National Science Foundation.

“I think we are recognized as a major treasure in the state,” says Bank of Michigan’s higher education system and its top research universities. “It’s not like we face the same challenges [in lobbying] as other industries.”

Michigan State has an impressive record as well, snagging some $400 million annually in federal funds, and recent changes in the Washington office will likely translate into new opportunities for MSU.

Sarah Walter was named MSU’s associate vice president for governmental affairs in Washington in early 2011. She replaced Mark Burnham, who was promoted to MSU’s vice president for governmental affairs in East Lansing.

Before joining MSU, Walter worked as director of federal relations for research for U-M, just down the hall from the MSU office. Walter shares her D.C. duties with Mary Malaspina, who serves as the Washington office’s assistant director and is responsible for biomedical research, education and tax issues.

“There is an understanding of the concerns of research universities here,” says Walter. “There are a good number of members who understand that education and research are long-term investments.”

MSU has a big stake in one critical long-term investment, the Facility for Rare Isotope Beams (FRIB). The FRIB is funded through the U.S. Department of Energy Office of Science’s Office of Nuclear Physics and will cost about $600 million over a decade to design and build.

“It is basic science, but it has applications in medical and homeland security sectors,” says Walter of the nuclear science research facility. “It’s going to bring jobs to the state and open up a whole new field of research.”

While sparring between MSU and UM often reaches a fever pitch in sports, in Washington the two universities work cooperatively on everything from securing additional funding for Pell Grants to revising federal financial aid rules. “A rising tide raises all boats,” says Waring. “We tend to lock arms and say these are important programs for everyone.”

In fact, all three university offices are conveniently located on South Capitol Avenue, just blocks away from the House office buildings and the Capitol. They share the building with other university lobbying shops, including Harvard’s and Purdue’s.

Wayne State is a vital part of Michigan’s university troika in D.C. Kevin Jefferson serves as WSU’s director of federal affairs. Prior to joining WSU, he served in the Federal Emergency Management Agency and the U.S. Department of Labor. Education lobbying, especially for Wayne State, became all the more difficult in 2011 with the loss of Rep. Carolyn Kilpatrick. The Detroit Democrat was Michigan’s lone representative on the House Appropriations Committee when she was defeated in last November’s election.

Washington offices frequently use social events to spread the news about their universities and to raise the profile of their work. The University of Michigan’s Washington alumni breakfast is a fixture on the congressional social circuit every spring, bringing top U-M leadership out to D.C. to mingle with alumni and the congressional delegation.

And the FRIB was the focus of a cocktail reception for D.C. Spartans in February. MSU President Lou Anna Simon along with Cyclotron Lab Director Konrad Gelbke and FRIB project lead Thomas Glasmacher came to talk about FRIB, describing “what is it, why is it coming to MSU and what are the implications for MSU, Michigan and the nation.”

Despite the changes in attitude in Washington, the city is still built on relationships, many of them sustained over long periods of time. That’s where Waring may have a leg up on his many counterparts.

Early in his D.C. career, Waring worked as press secretary for six years for Rep. Harold “Hal” Rogers of Kentucky, who just happened to become chairman of the House Appropriations Committee in January — a good friend to have, indeed.

Sarah Kellogg covered the Michigan congressional delegation and the federal government as the chief Washington correspondent for Booth Newspapers for 14 years. Before joining the Washington Bureau, Sarah covered state politics and government in the Booth Newspapers Lansing Bureau and directed Lansing coverage for United Press International. She helped launch MIRS’ Capitol Capsule, and served as its first writer and editor. She currently works as a freelance writer and editor for regional and national publications.

Salesman in Chief

admin — Fri, 27 May 2011 02:59:10 +0000

Columns

John Lindstrom
Gongwer News Service

Salesman in Chief

May 27, 2011

For decades the old joke every one knows is that one shouldn’t watch either sausage or law being made.

However, it may be instructive to have watched how the 2011-12 budget was made, because as this is being written the legislature has completed at least its numerical rendering of that document — the earliest a budget has been done in 30 years.

If one wants to be petty, one can point out that the budget is not technically finished until Governor Rick Snyder signs the budget bills, and lawmakers still have to approve the dozens of enacting bills that will allow the proposals behind the numbers to take effect.

That aside, however, the budget for the next fiscal year is done. Done, and four months earlier than the October 1 start of the 2011-12 fiscal year. Now, the legal equivalent of a meteor could crash to earth and scour the whole silly thing clean and force lawmakers to make changes in September, but the chances of that are probably just a bit better than an actual meteor hitting the point of the Capitol dome.

The budget is done and, no doubt about it, it is a splendid managerial achievement.

Or is it? Maybe to look at it from a business standpoint, it is as much one hell of a sales job as it is a managerial accomplishment.

All kinds of policies are, of course, wrapped into that budget. Along the social media sites, mostly opponents wailed over the implications of those policies, and political operatives are eagerly awaiting their chance to either pillory or praise legislators on those changes.

Those social policies are not the issue at hand, however. It is the management and sale of that budget in this time frame that this column is focused on, and, to repeat: it is a splendid managerial and sales achievement.

There are few times in this state’s recent history that one can point to a governor setting out a proposal and a time frame to accomplish it, and then seeing that proposal accomplished relatively intact and meeting the schedule established.

Certainly, when Mr. Snyder proposed the budget in the cold of February 17 and called for it to be done by May 31, virtually no one thought it would, in fact, be done in the rains of May 31. Talk around the Capitol was that lawmakers would still struggle with the document in September.

How could it be done so early, they said. Look at all the tax changes, look at all the spending changes, look at dozens of new legislators who are still sorting out where the restrooms are located, look at how the opponents will line up and scare the willies out of these legislative lambs. No, no, the budget will not be done until September, they said.

Even those willing to be more charitable (this reporter among them) did not think a budget done before July 1 was realistic. If the budget had been done by that date, that, too, would have been a tremendous achievement. Given the tribulations of recent budget years, a budget done by July 1 would have been a marvel to behold.

There were a few people who believed the budget could be done by May 31, chief among them Mr. Snyder and his lieutenants, including Lt. Gov. Brian Calley and Budget Director John Nixon. And be’gosh, they made it happen.

How did they do so? To Mr. Snyder’s supporters, especially those in the business world, the answer is simple: it was all Mr. Snyder. It was his leadership alone that brought this forth. To suggest, as this reporter has done, that there were other elements to the accomplishment raises furious sniffs of disapproval among these supporters. No, they have said, it was only Mr. Snyder who saw this through the opposition and through the timidity of some. And he will now restore the state, they assert.

But that carries the great man theory of history to an unsustainable height. Even Mr. Snyder would not agree with these accolades.

Agree with his policies or not, what Mr. Snyder has done is astonishing and he deserves at least 50 percent of the credit for it being done. That is not an ungenerous award, and he would say so.

He established a clear policy goal, stuck to it until changes were needed, remained on task and focused towards it without variation, did not allow outside factors to unsettle it and, even more astonishingly, did not try to create division and sides in reaching his goal. Thousands protested his proposals, and in other states the thousands that protested similar proposals were denounced as obstructers, whiners, sore losers and little better than thieves. Mr. Snyder said they were playing their part in the democratic process.

Most important, Mr. Snyder convinced others to go along with his proposal. He sold the deal.

So his customers, the legislature, deserve at least 50 percent of the credit just for that. Yes, they did substantial work in drafting the budget, like what they did or not, but the most important thing they did is vote for it.

To take this discussion to its logical extension, in the end the voters who voted for Mr. Snyder and the legislature deserve all the credit for this early budget. Right now the polls may show Mr. Snyder is not a popular chappie, but nothing he did, nothing the legislature did, was possible at first without the voters.

Every intelligent general knows he does not win the battle, his soldiers do. Every intelligent business executive knows that no matter what she does, it is her customers who makes her company successful. Every politician who is not too full of himself and is appropriately deaf to prattling praise knows it is the voters and the legislators who win his successes.

Why? Because the soldiers can lay down their arms. Customers can shop somewhere else. And voters and legislators can still say no.

Mr. Snyder had an enormous advantage in one sense. The voters delivered not only him to the Capitol, they sent a solid Republican legislature along with him. All the complaints that former Governor Jennifer Granholm failed to lead conveniently ignore the fact that she never had a legislature aligned with her. She was fighting a battle with not much of an army at her command.

Again, this does not diminish what Mr. Snyder did, but none of what he did would have happened if he had not had a Republican legislature behind him.

Even then, Mr. Snyder had to do a sales job. He is not as conservative as this legislature. Many of his proposals, chiefly his proposal to tax pensions, ran into what first seemed like insurmountable opposition.

Mr. Snyder was able to sell the deal, however, working in compromises where needed to keep the principles of his proposal intact with enough change to satisfy enough opponents.

Which is why finishing this budget in this time frame is an astonishing sales job. It is also why the legislature, and by extension the voters, deserve as much credit for this budget as Mr. Snyder. Sure, in the end it was a simple task to vote yes on the budget. But there is a very big gamble attached to those votes, and Mr. Snyder has to hope the legislature does not show buyers’ remorse.

Opponents will now attack the budget for its cuts to education and other programs. What effect that will have politically is yet to be seen.

As has been earlier pointed out, Mr. Snyder will also have to hope the fates are kind enough to the state to keep lawmakers from feeling they need to make major changes to the budget as it goes on. He also has to hope that any court challenges that are possibly made to the budget and tax plan go his way. If they don’t, well then, maybe the budget will be redone in September.

As time waits on those factors, Mr. Snyder will continue to sell his other proposals to the legislature and the public.

Doubtless, he could do so by hawking a few sausages as well. His sales technique so far should make it fairly easy.

John Lindstrom is publisher of Gongwer News Service. For nearly 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.

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