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Summer's End by Larry the Biker
SPECIAL REPORT: Inside the fight over state employee pay
March 18, 2010 – 10:22 am
By John Foren
On one side are those who say state of Michigan employees are getting Cadillac salary and benefits in a junker of an economy and must cough up some of it.
On the other are those who contend the workers are self-sacrificing public servants who have already made more concessions than the fat-cat legislators who are trying to cut them.
Expect the two very opposing views to clash repeatedly in the next couple of weeks before the state Legislature heads into its Easter recess. The largest of the employee unions, UAW Local 6000, is mobilizing state workers to fight off Senate efforts to rescind a 3 percent pay raise set to take effect in October for most state employees. The increase will take effect unless it’s rejected by two-thirds of the House and Senate by April 12.
That raise, part of contracts bargained a couple of years ago, has galvanized a contentious debate over their compensation, how it stacks up with Michigan workers in the private sector as well as public workers in other states.
The equation involves thorny union, political and economic factors. Mix them together and you’ve got something explosive.
“I don’t know in the past several decades whether there’s been a more defining moment for the political parties themselves,” says state Sen. John Gleason, D-Flushing.
State employees are getting it from all sides. Senate Republicans, led by Majority Leader Mike Bishop, are leading the charge to rescind the pay raises. Bishop failed to gain a two-thirds majority in two votes on the measure so far this month but says he's not yet giving up. They say the move would save the state about $50 million.
The state Civil Service Commission has already voted to take back the raise for about 5,000 non-union workers.
Gov. Jennifer Granholm has walked a fine line in the pay debate; her office has said the money is in the budget and was part of a collective bargaining agreement. But, when directly asked about it, Granholm told reporters only that rescinding the increase is a legislative decision.
She’s already in trouble with some of her labor allies over other cost-cutting moves. Granholm backs legislation to push state and school employees to retire early. Its provisions include eliminating state-paid vision and dental coverage for anyone retiring after Oct. 1.
More importantly, Granholm has called for concessions on health insurance from employee unions, along with a plan to bank 26 hours of work time during the fiscal year. Instead of being paid for those hours, they’ll be counted toward the employees’ pension.
Plus, contracts that expire at the end of this year will be extended to Dec. 31, 2011, giving some stability to anxious workers but meaning new terms (and more cuts) will have to be negotiated by the next administration.
Faced with Granholm’s threats of more unpaid furlough days, like those instituted last summer, most unions have agreed to the concessions or are expected to. Results of a vote by Local 6000 members will be released next week. Other units, such as corrections workers, have already gone along with the changes.
“We’re caught in the crosshairs,” says Ray Holman, spokesman and legislative liaison for Local 6000, which covers more than 17,000 state human services, inspection and clerical employees, among others.
Granting Concessions
State employees have already made hundreds of millions of dollars worth of concessions in the past decade, including other health care cuts, combined with only a 1 percent pay raise over the past two years, Holman says.
The lone holdout over concessions is the Michigan State Employees Association, which has refused to reopen its contract and now faces furloughs.
“What’s the sense of having a contract if you have to reopen it every 6 months?” asks Scott Diandra, head of the 5,200-member union, which represents food inspectors, labor and trades employees, among others.
At issue is tens of millions of dollars that the deficit-ridden state simply doesn’t have, say proponents of the cuts.
“We’re not even talking about cutting their pay, we’re talking about not giving them a raise,” says Sabrina Keeley, chief operating officer of Business Leaders for Michigan, among the most vocal groups supporting worker concessions.
“I understand these were negotiated two years ago,” Keeley says. “The world has changed.”
The business group buttressed its intense lobbying effort by just releasing a poll in which three-quarters of 800 Michigan voters said they opposed the 3 percent pay raises.
Keeley warns that voters will react at the polls in November if lawmakers let the pay hikes stand.
“I think it adds to the anger and frustration of the electorate,” she says.
The group has been touting an analysis by East Lansing’s Anderson Economic Group that estimates state workers’ total compensation of $57,788 is 6 percent higher than state employees nationwide. And that figure is $17,000 higher than the average for private sector employees in Michigan, according to the analysis, which used compensation estimates from federal data.
Labor leaders have countered with another study, conducted last year by Charles Ballard of Michigan State University, that shows the state workforce has fallen nearly 20 percent since 2000. They say services are being compromised, and parole agents, counselors, nurses and psychiatrists, among others, are shouldering heavier workloads than ever.
Average annual compensation for state union employees was more like $54,246, based on state Civil Service Commission reports, the study says. While acknowledging that’s higher than the average pay for all workers nationally, the Ballard study notes state employees are much more highly educated than others and their jobs require more technical skills.
A National Trend
It’s no consolation in all this, but virtually every state in the nation is going through the same angst over cutting state workers and, as a result, services to the public.
At least 42 states are eliminating or not filling state jobs, imposing mandatory furloughs or making other reductions, according to a report released March 8 by the Center on Budget and Policy Priorities in Washington D.C.
For instance:
Iowa just imposed an across-the-board 10 percent cut to state agencies, leading to the layoff of nearly 200 state workers.
Arizona closed 11 Department of Motor Vehicle offices.
New Jersey has eliminated 2,000 state positions through early retirements, layoffs, and attrition.
“When you’re talking about these multi-year entrenched budget gaps states are facing, a lot of the easy solutions have been used,” said Todd Haggerty, a policy associate for the National Association of State Legislatures in Denver.
Haggerty says 48 of 50 states have budget gaps, or deficits, and most states aren’t expecting revenues to bounce back until at least 2014.
New Approaches to Government
As a result, he says, many have set up commissions to study new ways to restructure state government.
Some states are trying innovative things to maintain worker morale while still cutting. Utah moved to a four-day work week for state employees, avoiding layoffs and furloughs, while Virginia is encouraging more telecommuting.
“You want people to be motivated and providing services,” says Stacey Mazer, senior staff associate for the National Association of State Budget Officers in Washington.
But, she adds, “I don’t think anyone’s found the silver bullet."
The Fiscal Survey of States, released by Mazer’s group in December, shows Michigan with 49,500 full-time equivalent state positions, comparable or less than other like-sized states.
It also shows, however, how much Michigan’s tax collections have lagged behind others. Income tax revenues are projected to fall an average of 2.5 percent nationally in the 2010 fiscal year but by nearly 12 percent here.
Ohio Blues
One state that’s felt similar pain is Midwestern neighbor Ohio.
The state, which as 58,000 full-time equivalent workers, has received $440 million in concessions from its unions in exchange for a promise of no layoffs. The reductions include increased out-of-pocket health care costs, 10 unpaid furlough days, and a two-year pay freeze.
Workers had little choice but to go along, says Sally Meckling, spokeswoman for the Ohio Civil Service Employees Association, which represents 35,000 state workers. The state had proposed a 6 percent pay cut and shorter work weeks, she says.
“Frankly, we do believe we’ve taken it on the chin because the state government has been cut and cut and cut,” Meckling says. “We have some agencies that have cut by half their operating budget in the course of five years.”
And it’s not over yet, she says.
“We’re looking down the barrel of a $4 billion deficit. It’s a potential disaster.”
There are now a half-dozen bills pending in the Ohio state Legislature to consolidate state government; one would cut one-third of the workforce, Meckling says.
Targeting Employee Costs
Employees are bound to be where government goes when it wants to wield the budget scalpel, says Richard Block, a professor at Michigan State University’s School of Labor & Industrial Relations.
States often are hamstrung from cutting fixed programs such as Medicaid and corrections, and turn to workers because government is such a labor-intensive business, Block says.
But the economic woes are only heightened as employees are cut, along with their incomes and what they can spend, he says. The best case state unions can make is that the economy is helped when their wages are kept high, Block says.
That’s in part the argument from Diandra, of the MSEA.
“This thinking out there about wanting to drag everyone down isn’t going to help the economy,” he says. “If the standard of living was taken down to $7 an hour, is that going to satisfy big business out there?”
Diandra complains the state hasn’t taken a hard look at its own wasteful ways, such as granting millions in tax credits and cozy benefits to lawmakers.
Gleason, who hails from the heavily union Flint area, says state workers often perform difficult and thankless jobs and it’s simply wrong to renege on the pay raise provision in a collective bargaining agreement.
“We as a government promised Michigan families and their students to pay a portion of college and we reneged on that,” Gleason says, referring to scuttled Michigan Promise scholarship program.
“So, now we say, no, we’re not going to fulfill our promise to workers. …Eventually, there’s a concern about trust.”
Gleason’s point is well taken but it’s an unfortunate reality, says state Sen. Tom George, R-Kalamazoo, a Senate Appropriations Committee member who wants the pay raises rescinded.
“He’s right. … Unfortunately, we don’t have the money,” George says. “ … We wouldn’t be considering it except for the exceptional times we’re in. We’re not doing it out of glee."
Business Leaders' new benchmarks suggest Michigan is far from a return to prosperity
March 18, 2010 – 10:19 am
In May, the Center for Michigan will publish the 2010 Michigan Scorecard — a report card on nearly 30 quality of life measures.
This week, Business Leaders for Michigan beat us to the punch — at least as it relates to economic measures — with their 2010 Economic Competitiveness Benchmarking Report.
BLM's key conclusions this year:
Michigan's economic performance has eroded significantly, with GDP growth over the past 18 months (-7.6 %) and June 2009 unemployment (15.2 %) last among all 50 states.
Michigan business climate fundamentals are uncompetitive, although underlying strengths exist. Michigan's cost of doing business is 4 % above the national average, driven by corporate taxes and labor costg which are ranked 48th and 43rd in the nation, respectively.
A strong flow of college students (24 % more than North Carolina in per capita terms) and a high concentration of engineers (first among all states) provide assets for business attraction and expansion.
Michigan's innovation and entrepreneurial environment has not yielded results comparable to leading states, although bright spots exist.
Michigan's quality of life maintains strong fundamentals, but has a very poor perception. Michigan is at or above average in cost of living, health care, and education. However, Michigan's crime rate and quality of life ratings are well behind comparable states' leading cities.
SPECIAL REPORT: If beaten by budget, state's 3 top leaders risk exiting office without legacy
February 4, 2010 – 11:53 am
By Susan J. Demas
Gov. Jennifer Granholm has framed the upcoming budget debate as requiring a "grand bargain" – a painful mix of government reforms and revenues.
That's the only way she believes the state can close an at least $1.7 billion budget gap for fiscal 2011.
But there is a question hanging over budget negotiations: How can you truly bargain if tax increases are taken off the table at the onset?
While Senate Majority Leader Mike Bishop (R-Rochester) hasn't fully closed the door on tax reform, he maintains that there are no votes in his caucus for more revenue. That's the same position he took during the fiscal 2010 budget. He was successful in holding his ground in a rope-a-dope strategy, allowing Democrats to make a series of pitches for complicated revenue increases that fell flat time and again.
In the end, Bishop's all-cuts budget prevailed, although the state did briefly shut down for the second time in three years. Despite an injection of federal stimulus dollars, the state still had to slice more than $1 billion. That's left little of the Recovery Act money in the state's bank account for fiscal 2011, making the next budget an even tougher riddle to solve.
So if there's another stalemate, what kind of legacy will that mean for the three leaders, all of whom are term-limited? Craig Ruff, senior policy fellow with Public Sector Consultants, offers some historical perspective.
"For 50 of the last 60 years, we have had divided government," he notes. "In 50 years, we made it work through a steady progression of different people at the helm of all three branches. We have had unfortunately awful circumstances in the last three years, and there emerged a new crew of people – Andy Dillon, Mike Bishop and Jennifer Granholm – as a result of term limits. But we've had a steady stream of derailed negotiations."
There is a powerful perception in Lansing that Bishop will be even less likely to give the Democrats in this election year.
"It looks like a continuation of last year, unless there’s a subtext I don’t know," said Michigan State University economics professor Charles Ballard. "Republicans seem pretty solid about not giving an inch on taxes."
Bishop has mounted a campaign for attorney general, and the nomination is determined at a party convention by conservative activists. And the Republican Party strategy, both in Michigan and nationally, appears to be stoking the anti-government fury articulated by the Tea Party groups by fighting for spending cuts and against tax increases.
"That's very accurate and very real," said Ruff, a former aide in the administration of Gov. William Milliken. "If he acquiesces to a tax increase, the really rock-ribbed Republicans will just eat him for lunch. He has an uphill fight to begin with – not because of ideology, but because of how hard (his opponent) Bill Schuette is working at the grassroots level."
But Michigan Chamber of Commerce President Rich Studley takes issue with the premise, although he acknowledges that Bishop probably won't back a tax hike.
"I don't think that's fair or accurate," he said. "I don't think that's the feeling in the Senate Republican caucus or the Senate majority leader's office that they're not about to give in to the governor and House Democrats. The feeling in their caucus is that they think about working families and job providers. You can't raise taxes on people who don't have anything left to give."
Dennis Darnoi is Bishop's former chief of staff who now runs the Farmington Hills-based political firm Densar Consulting. He said that Bishop is taking the politics of the AG race into consideration, but that works in concert with his limited-government philosophy.
"I don't think he'll give (Democrats) a revenue increase," Darnoi said. "But if they present him with certain reforms, he'll take that into consideration. Revenue is sort of a non-issue with him. On that issue, I don't think there will be a lot of give and take."
Public mood
Bishop is only reflecting the mood of the public with his anti-tax stance, according to many insiders.
"The revenue simply isn't there. No one has the stomach for new revenue, except perhaps in transportation," said Kelly Rossman-McKinney, a former Democratic legislative aide who’s now CEO of Rossman Public Relations. "I don't see a taxpayer out there who thinks he can afford one more penny."
Rossman-McKinney sees the potential for some "revenue rebalancing" that could include cutting business taxes, but no net tax increase. Studley said that the budget can be balanced through cuts and reforms alone.
"Bishop's message is that we have to live within our means," he said. "That makes sense to Joe and Mary Michigan."
Ruff agrees that leaders can't raise taxes in an election year, "especially when the economy is in a nose dive." But he said that Granholm, Bishop and Dillon are in a box.
"I think of myself as a fiscal conservative, but it just defies all logic to find $1.8 billion in budget cuts," he said.
Doug Roberts, director of MSU's Institute for Public Policy and Social Research, said that it's early, but there already appears to be an impasse on the budget. He threw out a scenario in which leaders split the difference over the deficit with $1 billion in cuts and $1 billion in taxes.
"There aren't the votes for either," said Roberts, who served as treasurer under Gov. John Engler. "There aren't the votes for both. What does that mean? I don't know where we’re heading."
Democratic compromises
Granholm has signaled her willingness to compromise. She came out swinging last week with $450 million in reforms once unthinkable for Democrats, by incentivizing early retirements, watering down benefits and pooling health care.
"If John Engler had proposed the very things Granholm did, I would have had to find a new way home, because certainly people would have been waiting for me," Roberts said. "I really do think Granholm has changed the landscape."
Roberts is optimistic that the governor's proposal could break some of the budget logjam, as lawmakers can vote on the reforms independent of any tax increase she proposes.
"Given what the governor announced, I think there will be some Republican votes," he said.
It should be noted that House Speaker Andy Dillon (D-Redford Township) got the reform ball going last year with his plan to put public employees under a handful of health care plans. And Senate Republicans popped their own 10-point reform plan last month, which included changes to the local bargaining process to encourage consolidation, ending some Medicaid services and a 5 percent pay cut for public employees.
"I don't think what Granholm proposed is philosophically different from what Bishop proposed or what Dillon proposed," said Rossman-McKinney, who served in former Gov. James Blanchard's administration. "Here's the irony: there are no new ideas. Baby steps in this economy won’t get us there. That's where Andy has been going against the grain. He's been saying that for a long time. But the downside of being a visionary is that it takes a while for everyone to put on the same glasses."
Ballard said that the trio needs to dust off a copy of the 2007 report by the governor's Emergency Financial Advisory Panel chaired by Milliken and Blanchard. They need to take a balanced approach to solving the budget, he argued.
"I hope we have some combination of spending restrictions, reforming the way we deliver services and bringing taxes at least into the 20th century, if not the 21st century," Ballard said. "You can avoid a repeat of 2009 if you can get people to back away from their hardened ideological positions and take a flexible, cooperative approach. My view is that the average citizen is a pragmatic moderate, and I don't think that type is terribly represented in Lansing."
Moving up
Bishop isn't the only one aspiring to higher office, as Dillon is exploring a bid for governor. No one knows what Granholm might pursue next year, although she has expressed interest in the U.S. Supreme Court and vowed never to run for office again.
Still, few political observers think the election will be enough incentive to get the budget by the Oct. 1 deadline. Ruff predicts a continuation budget with a 5 to 20 percent cut and "leaving the mess for the new three leaders."
But if the fiscal 2011 budget devolves into chaos again, what will that mean for the triumvirate's legacy?
Studley sees the election as an equal factor for both Bishop and Dillon, but doesn't think it as being overarching.
"Everyone knows that's out there," he said of their candidacies, adding that they cancel each other out.
The two legislative leaders have the most to lose, Studley argues, because Granholm is almost a non-factor.
"In the end, very few people care about what an ineffective lame duck governor says or does with her budget or State of the State," he said. "The burden falls to the speaker and Senate majority leader. An impasse would be damaging to both of them."
Ruff sees landmines for both men in their respective campaigns. The Senate majority leader is faced with a Hobson’s choice, Ruff said – he can't raise taxes and win, but that position could lead to another budget meltdown.
"That won't make him look like a leader, either," Ruff said. "Mike Bishop can't take as a template what Republicans are doing on Capitol Hill – opposing everything. He can't deny that he is in power. He controls the majority of one of the three key chairs of power."
"I've got to believe Andy Dillon is running for governor," Ruff added. "If he stays as speaker and there's continued chaos, he will suffer the same kind of problem Mike Bishop will."
Rossman-McKinney said that if Bishop tries to use another budget debacle to his political advantage, it may not pay off.
"What you do strategically to undermine one party has an impact on your own chances, as well," she said. "I might be in the minority for this opinion, but I can’t imagine politicians not wanting to resolve he budget in a way voters see as responsible in a timely manner."
In the end, an impasse would mean Granholm would go out "on a sour note," Rossman-McKinney said. And Dillon and Bishop could kiss their aspirations for higher office goodbye.
"It would sink them both," she predicted.
If they don't get the budget done, there will be a "huge effect to the negative," Darnoi agreed. "Three out of four years, they failed in their constitutional duty. It will tarnish the reputation of all three leaders."
But Ruff points out that resolving such an untenable budget may not have much political payoff, either.
"All three might have approval ratings in the teens before it's all done," he said.
Looming legacy
It may sound cynical, but is there really anything that Granholm, Bishop and Dillon can do this year to rehabilitate their collective and individual legacies?
After all, the three have worked together since 2007 and have garnered a reputation for chronic infighting and ineffectiveness. Bishop and Granholm have clashed since her days as attorney general, when he as chair of the House Judiciary Committee attempted to strip some of her powers. The governor backed Dillon’s opponent in his first speaker fight, and they've never been on the same page. And although Dillon and Bishop forged an agreement on last year's budget, their relationship became strained after Democrats' attempts died to restore education, local government and health care funding.
There legacy is "one of extraordinary discord and inability to forge meaningful, timely solutions," sums up Rossman-McKinney.
Ruff says that few leaders take the longer view nowadays in making decisions for the state.
"There's a saying, 'What has posterity ever done for me?' by British author Lytton Strachey," he said. "Boy, does that sum it up. Politicians look at how they're judged today, and who cares what historians think in 2030. Especially with term limits, there's an even shorter view."
Darnoi said leaders might be remembered favorably for a few measures, like the Race to the Top education reforms passed in December. But it's the budget messes that likely will linger in the public's mind.
Rossman-McKinney and Studley heap more of the blame on the Democrats. The public relations guru notes that Democrats control two of the three leadership positions and yet have been ineffective at getting a shared agenda through. She also said that the governor's "traditional female style of leadership – one of collaboration – hasn't worked in politics. Not yet."
Studley is particularly critical of Granholm.
"I have worked with two Republican and two Democratic governors," he said. "She is by far and away the most intelligent and the best communicator. But I believe her legacy is already written, and it is one of lost jobs and missed opportunities. If she had been more bold and more decisive in her first term and made reforms, I believe she could have been one of the best governors in Michigan history. But she leaves office as a nice person, but as a governor, basically a failure."
But Roberts sees the trio's struggles as the outgrowth of circumstances beyond their control, particularly with the near-collapse of the auto industry.
"We were being slowly strangled and we were kidding ourselves," he said of the Big Three's loss of market share in previous decades. "Then Michigan got swamped by the financial collapse and foreclosures and then creamed by the autos (in 2007)."
Ruff said whether the leaders have any kind of productive legacy looms as "the question all of Michigan wants answered."
"It's not much, but one might say that in the grim and long economic downturn they have managed to sustain funding for key areas of public needs and wants," he said. "They've scaled things back, raised some taxes and managed to eke by, and maybe that's enough for people in terms of the budget. They are doing less with less. It’s no Mackinac Bridge, though."
Ballard believes that their leadership has weakened the state.
"Their legacy will be of a greatly reduced social safety net," he said.
In the end, Darnoi said that the lack of trust between Granholm, Bishop and Dillon has doomed their relationship and effectiveness.
"It's tempting to blame it on term limits," he said. "There used to be that 'I'll give you something now, and I'll get something back a little later.' But there's no trust whatsoever."
Rossman-McKinney agrees, but said there could be a silver lining to the conflict.
"There's a potential recognition beyond Lansing that term limits don't work. That would be ideal," she said.
But she adds, "Practically speaking, I don't think their legacy will be much more than increased disgust with Lansing."
Susan J. Demas is 2006 Knight Foundation Fellow in nonprofits journalism and a political analyst for Michigan Information & Research Service.
The shared vision of Granholm and Bishop
February 4, 2010 – 11:52 am
Quote of the night from Governor Jennifer Granholm's State of the State Address:
"Let's be candid. The budget process is broken – it's a last-minute, crisis-driven disaster. We must do better… The pundits are already saying you won't agree to a budget in this election year. For Michigan's sake, prove them wrong. It can be done… if you act with urgency, common-sense and courage."
They can get started with some of the meatiest reforms officially proposed in Lansing in years.
Both Gov. Granholm and Senate Majority Leader Mike Bishop have borrowed mightily in recent days from a wide range of outside agitators who've shouted "REFORM" for years. Much to the measured excitement of those business groups, human service groups, the governor's 2007 panel of bipartisan budget experts, the bipartisan Legislative Commission on Government Efficiency, the Center for Michigan, and others, Granholm and Bishop combined have proposed more than three dozen reforms in the past week.
Some of those reform proposals are largely symbolic and don't save much money. Others are logistically complex. But, in total, the Granholm-Bishop plans echo many of the reform ideas long suggested to improve the efficiency, effectiveness, and accountability of government in Michigan.
We stacked the Granholm-Bishop proposals side by side and found five ways for these two legendary adversaries to begin to act with "urgency, common-sense, and courage" on shared priorities.
Yes, they do have shared priorities. We found five key ones….
1. ENDING LIFETIME HEALTH CARE FOR NEWLY RETIRED LEGISLATORS: Granholm and Bishop have almost identical language on this reform in their separate proposals. The Michigan House passed this reform this week on a nearly unanimous vote. Bishop had a wait-and-see reaction. This "Fresh Thoughts" newsletter recently referred to this reform as a "ruse" because it's often threatened in Lansing but never passes and it saves very little money. But it's a start. It's symbolic. And it's exactly what Bishop outlined in his own reform package. So, pass it already.
2. REMOVING BARRIERS TO LOCAL GOVERNMENT COOPERATION: Bishop and Granholm have nearly identical language calling for the end of a longstanding law that severely hampers the ability of local governments to combine services. For example, if two suburbs want to combine police departments, state law dictates the newly merged department must offer the highest levels of pay and benefits previously available at the two individual departments. This provision can effectively kill money-saving mergers and service sharing. The Bishop and Granholm reform proposals have nearly identical language calling for an end to this inefficient law. Still to be hashed out are the complex and costly rules on binding arbitration for local public safety officers — local officials say "Act 312" reforms moving through the Senate don't go nearly far enough to force arbitrators to consider local government's ability to pay before imposing costly settlements on cash-strapped city halls. But removing the highest-pay-and-benefits provision is an important step forward. So, pass it already.
3. COMPETITIVE BIDDING IN SCHOOL SERVICES CONTRACTS: Granholm and Bishop have similar language on the need to competitively bid non-instructional school contracts for such services as busing, food, and custodial work.
4. PUBLIC EMPLOYEE PAY: Bishop proposes cutting all public employee pay across Michigan by 5 percent with a constitutional amendment. That's a complex way to go about change and it imposes the will state government on every local community, school and college. Granholm proposes a 3 percent increase in state employee contributions to the state retirement plans. Both moves are efforts to increase employee cost sharing to help address the state's billion-dollar-plus budget deficit this year. Both moves mirror cost-cutting efforts throughout Michgian's private sector in this decade-long recession. They're coming at the issue from different directions, but Granholm and Bishop are trying to get to the same destination – lower personnel costs. One way to meet in the middle might be to jointly endorse a stand on state employee contract negotiations – state worker contracts are up at the end of this year. Three years ago, the Granholm Administration negotiated three years of pay increases for state workers during the 2007 budget meltdown. New contracts reflecting the state's precarious financial position could ease budget pressure over the next several years.
5. PUBLIC EMPLOYEE BENEFITS: Granholm would require all new state employees to pay 20 percent of their insurance premiums – "commensurate" with the average insurance coverage available in the private sector. Bishop would impose the same 20 percent premium share on all public workers statewide. Again, there's potential for the two leaders to meet in the middle, at least in regard to the current state government workforce.
Of course, the reform proposals in the past two weeks raise as many questions as they answer.
Granholm says her reform package saves $450 million per year. But the budget deficit is north of $1.5 billion. Even if there is another federal gift of $500 million more Obamabucks, where's the other half billion or more going to come from to solve the state budget deficit? The shoe drops next week with the governor's budget address.
The devil's in the detailed financial analysis. The House and Senate fiscal agencies are needed, quickly, to understand the full financial implications of the governor’s early retirement proposal for state government and school employees. Early outs can easily "cost" more than they "save."
But the biggest question of all is political.
We're among the doubtful pundits.
There is nothing in the recent legislative record suggesting Granholm and Bishop can get past their personal and political animus to enact a shared reform agenda in this highly charged election year.
But every reform-minded group in Lansing is going to latch on to their proposals and stoke the fire.
A big shout out to the Bipartisan Freshman Caucus
February 4, 2010 – 11:51 am
In the summer of 2008, Center for Michigan workers traveled the state to give Michigan House of Representatives candidates fresh polling data and reports indicating the public's deep desire for bipartisan cooperation and problem solving in the state capitol.
Some of those candidates took up the message and used it to help win their seats.
Even more came to Lansing in early 2008 in a cooperative mood. Dozens of them came together to form a first-ever bipartisan caucus.
Led by Republican Bill Rogers from Brighton and Democrat Lesia Liss from Warren, the caucus started shyly with a few social mixers and drew fire from hard-bitten commentators who suggested the caucus was hollow.
Quietly, behind the scenes, they started to develop bipartisan policy. Last fall, House Speaker Andy Dillon put them to work on studying long-term K-12 funding solutions.
And, in their own outrage, the freshmen did what freshmen almost never do publicly in the Legislature — they stood up and demanded better accountability from their own caucus leaders. During last fall's most recent state budget debacle, the freshmen, driven by their own outrage at the inability to get things done and their leaders' often-deaf ears, made a blunt reform proposal… Pass a state budget by mid-summer or legislators and the governor don't get paid.
And Wednesday night, the governor endorsed the plan from the bully pulpit…
"A bipartisan group of freshmen in this House of Representatives have called for a constitutional amendment that will require us to complete the budget by July 1. Or else? Dock our pay — yours (legislators) and mine for every day we don't get the job done. I call on you to put that constitutional amendment on the ballot. From here on out, let's make movies in Michigan and let California make the budget dramas."
Keep going, Bipartisan Freshman Caucus.
Get this reform on the ballot.
Force the Legislature to do its job — just as you said you would back there on the campaign trail in the summer of 2008.
GUEST COLUMN: A bipartisan approach to fiscal stability
February 4, 2010 – 11:51 am
By Kevin Prokop and Jim Curran
The State is about to begin its annual budgeting rite when the Governor presents her proposed budget. While the specifics are far from clear, we all expect more gloomy news.
As Co-Chairmen of the Legislative Commission on Governmental Efficiency, which has spent the past 18 months examining the State’s structural issues, we can confirm what the Governor's budget is likely to highlight: the State has a massive structural budget issue, driven by cost pressures, a revenue system that is out-of-step with the economy, and spending priorities reflecting a different era.
Our Commission's recommendations chart a path through these difficult issues and towards real fiscal reform. And, they demonstrate that both Democrats and Republicans can come together to craft common sense solutions to the State’s budget problems.
We achieved consensus in most areas by taking a holistic approach, looking broadly at the root causes of the issues and looking for opportunities to take costs out "throughout the system." We asked hard questions about which units of government should be doing what work and looking for opportunities to achieve savings within – and among – the 1800 local units of government.
Our work focused on ten areas. Some ideas, including recommendations around higher education and corrections, have already been implemented in whole or in part. Other recommendations include:
• Restructuring local government revenue sharing to provide local governments with visibility and certainty while also helping local governments achieve consolidation
• Helping school districts achieve savings by providing “early out” incentives and additional latitude for district consolidation
• Evaluating opportunities to reduce benefits costs for all governmental units by pooling health care plans across levels and units of government
• Conducting a five-year workforce supply and demand forecast to better align the number of state personnel with the expected demand for services.
We also recommended a "pay as you go" budget process to ensure that any new spending commitments can be paid for and long-term fiscal forecasts to illuminate the trajectory of the State’s budget.
Finally, we recommended that the legislature examine the structure of the State's tax system, which reflects an era when the State's economy looked very different. As an example, reducing even a portion of the $35 billion of annual tax credits and loopholes could simultaneously reduce the size of the structural budget deficit and reduce overall corporate, personal income, and or sales tax rates, similar to what Republicans and Democrats at the federal level were able to achieve with the Tax Reform Act of 1986.
Our Commission demonstrated that representatives from both sides of the aisle can find common ground on most of the issues and craft a common sense approach to reform. In short, the path forward exists. It's up to the leaders of the State to find similar common ground and make the tough decisions that will allow our State to once again begin investing in areas that create jobs and bolster the well-being of its residents. It is up to us, as citizens, to reward those leaders who provide such leadership.
Editor's Note: Jim Curran and Kevin Prokop were Co-Chairmen of the Legislative Commission on Governmental Efficiency, a Commission established as part of the 2007 budget process. The Commissioners included representatives appointed by Majority Leader Bishop and Speaker Dillon and the Directors of the House and Senate Fiscal Agencies, among others. The Commission’s full report can be found at http://council.legislature.mi.gov/lcge.html.
Michigan's Next Governor should build a "purple coalition"
February 4, 2010 – 11:50 am
For the past several years, The Center for Michigan has worked to bring people together into coalitions to push for change.
Long before we involved 10,000 people in statewide Community Converations, we launched the "Michigan's Defining Moment Campaign" with the support of nearly 100 bipartisan statewide leaders. We've held a half-dozen big-picture issue conferences statewide in which the participants, and their conclusions have been decidedly bipartisan or nonpartisan. Likewise, the Corrections Reform Coalition we helped launch in 2008 has worked hard to achieve savings in the state prison budget through bipartisan network of business, nonprofit, local government and education groups. Soon, you'll hear us doing the same on early childhood education issues.
Michigan's next governor needs to take that same approach, argues Rick Cole, professor and chairperson of the Department of Advertising, Public Relations and Retailing at Michigan State University and a Center for Michigan steering committee member.
Excerpts from Cole's recent column in Dome Magazine and his advice for Michigan's next governor…
"You need a strategy that harnesses the energy of the state’s leading special interest groups… You need to spend the next 60 days building a campaign to awaken Michigan’s network of established special interest groups to the reality that the only way their interests survive here is if the public interest is served first. You have to get them on a higher road, now."
"To have any chance for success, you are going to have to use this brief campaign period to negotiate a wide-scale agreement among the 75 to 100 key special interest groups in Michigan. Get them to agree to set aside, for the next four years, those wedge issues that divide the center. And get them to agree to avoid raising the incendiary issues that incite the lunatic fringes."
"Use the upcoming campaign to build a purple coalition — the best blend of our red and blue, ticket-splitting state — and make it a permanent coalition to create a future for our state and its children. This should be the first and, arguably, your most significant function as the next governor. And you need to make it clear that without this kind of bipartisan support, you don’t consider the governor’s job to be a job worth taking."
Last chance to lead
January 21, 2010 – 1:27 pm
Within the next few weeks, Michigan's three top leaders: Speaker of House Andy Dillon, Senate Majority Leader Mike Bishop and Governor Jennifer Granholm – have a last-chance opportunity to redeem their roles as leaders of this state.
During their years in power, they have tolerated the fierce and rigid partisanship that has stymied our ability to get our financial house in order.
For seven years now, the state’s financial position has been a steadily worsening mess.
This year – surprise! – the situation is no different: Consensus estimates released last week in Lansing show that for the year starting next Oct. 1, Michigan will face at least a $1.725 billion shortfall, most of it in the General Fund, which funds programs including higher education, prisons and Medicaid.
The rest of the projected deficit is a $425 million hole in the School Aid Fund. If that trend continues — and it is more likely to get worse than better — this means a $268 per pupil cut in school funding. That‘s on top of the $165 per-pupil-cut per Michigan pupil that’s scheduled to take effect year.
Balancing the budget this year will be much tougher than it was last year, when the politicians were able to use more than $1 billion in federal stimulus money to plug the hole. Now, there’s no more than $200 million in stimulus funds remaining.
Something clearly has to be done to address the root of the problem. That means trying to solve the chronic structural state budget deficit that has been at the heart of our annual financial crises, year after year. There are two things that need to be done to make that happen: 1) Adopting reforms in the size, workings and cost of government at all levels. 2) Reforming our crazy-quilt tax system.
The stage is set – and has been for years – for what is needed, what Gov. Granholm rightly calls "a grand bargain." Namely, a mix of structural reforms and wholesale tax reform. The governor's Emergency Financial Advisory Panel (EFAP) – certainly one of the most distinguished advisory groups in recent history – called for this three years ago. Other groups including Business Leaders for Michigan and The Center for Michigan have called for similar steps.
But their proposals have been routinely ignored. By whom?
Disgracefully, by Governor Granholm, who convened the panel. But their sound advice has also been ignored by Speaker Dillon, a Democrat, and Senate Majority Leader Bishop, a Republican.
Over the years, Democrats, including Granholm and Dillon, have argued that the state needs more revenue, now. Reforms, although they might be useful, would have to come afterwards.
Senator Bishop and his Republican chums have argued the reverse: spending cuts first (i.e. reforms), followed (maybe) by taxes.
So we've had stalemate. Yet, it shouldn't take a master's degree to see that the blindingly obvious solution to this standoff is to link structural government to an overhaul of our tax system.
In the sound of silence that so often substitutes for rational thought in Lansing, many Republican and Democratic lawmakers privately say this makes sense. But nobody has been prepared to step forward to say so. Feeling confident they won the budget fight with the Governor and the House last time around by sticking to a cuts-only budget, Republicans clam up when asked about what’s next.
And Democrats, uneasy that this election year seems to be shaping up favoring the GOP, are trying to whistle as they walk by the graveyard. Neither approach is a worthy substitute for leadership.
Granholm, Dillon and Bishop are all smart people. They know perfectly well that making a Grand Bargain is the only way out of Michigan’s repeated financial crises.
But, astonishingly, they have yet to do anything about it.
All three also are well aware that their behavior while in office calls into serious question whether they will be seen as leaving any positive legacy for the time when they were running the state.
Both Dillon and Bishop are running for higher office this year — Dillon for governor; Bishop for attorney general. At some point both are going to have to explain how their records in their current offices should give us any confidence they deserve promotion. They are going to have to do acrobatics to duck taking the blame.
Meanwhile, Granholm faces the risk that her two terms will go down as among the most disappointing in state history.
Ironically, all three say they ran for their present offices because they wanted to help Michigan. Well, now is the time to demonstrate that they remember that, as public officials, their first responsibility lies with helping our state and our citizens.
Too often, they appear to have preferred to follow – or defer to – meaner partisan instincts. They should have been dealing with our state’s long-term problems during all their years in office.
But instead, they – and far too many lawmakers from both parties – have spent their time in office ducking, weaving, kicking the can down the road, spinning, dissembling, blaming others. That is embarrassingly unacceptable, especially at a time like this.
We have no more than two months for them to find their way to a grand bargain before the partisanship-above-all instinct that accompanies an election year completely takes over in Lansing.
Rabbi Hillel, the famous theologian once asked two questions that should be central to any person’s moral code: "If not me, who? If not now, when?" Here's hoping Granholm, Dillon and Bishop will remember that when they look at themselves in the mirror.
Editor's Note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics and a former chairman of the Michigan chapter of the Nature Conservancy. He is also the founder and president of The Center for Michigan, a bipartisan centrist think-and-do tank which is sponsoring Michigan's Defining Moment, a public engagement outreach campaign for citizens. The opinions expressed here are Power's own and do not represent the official views of The Center. He welcomes your comments at ppower@thecenterformichigan.net.
The legislator benefits ruse
January 21, 2010 – 1:26 pm
It made headlines this week when some House members called a press conference to trot out out a bill to eliminate lifetime health care benefits for retired Michigan lawmakers.
This is a ruse.
On at least three counts.
First, this reform doesn't save any money. Taxpayers spend a little bit less than $5 million per year on health care coverage for retired lawmakers. NONE of that would be returned to the taxpayers or redirected to other budget priorities. Why? Because the ban on retired legislators' health care would only apply to future retirees.
Second, this idea is anything but new. Similar proposals have kicked around both chambers of the Legislature for years.
Third, this is hardly a partisan stroke of genius. Both Democrats and Republicans have talked about this reform, and introduced bills for years.
"This is an extravagant perk that is out of touch with the realities Michigan residents face," State Rep. Dian Slavens, D-Canton Township, said at this week's press conference, according to Gongwer.
An little over an hour away from the capitol, retired state Rep. Lorence Wenke, R-Galesburg, now a candidate for state Senate and a beneficiary of the benefits largesse, was saying the same thing to the Kalamazoo Gazette… "Michigan taxpayers cannot afford to foot the bill for my wife and me to have health-care benefits for the rest of our lives simply because I served six years in the legislature."
Enough already.
Slavens and Wenke are both right. The law ought to be changed, even if it will result in little more than a symbolic, good-government gesture.
It shouldn't take more than the blink of an eye to pass this simple reform this year.
But it will.
Despite all the bipartisan outrage, this one will, like so many others, likely get held in committee in anticipation of tie-bars and horse trades in the budget discussion as both sides maneuver for ways to take credit for "cleaning up Lansing."
And that's what makes this week's press conference ring so hollow.
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