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.
7 Comments
Insurance for retirees should model the government owned car companies insurance polies.
All retirement pension programs should require a minimum of 24 years in service.
All pensions of all state employees need to be revisited and they should be eliminated with typical pension plans being offered by the friends and families of elected officials businesses.
Great observations! For anything to happen this year . . . for Michigan . . . there must be compromise between the House, Senate, and the Governor. Those compromises must include reforms, revenue, and, unfortunately, some pretty drastic reductions. I am willing to compromise on some things I don’t really like in the reform area, but feel we must have commitment for new revenue to fill some of the deficit gap.
Why does Granholm not include all public employess in the 20% premiums on health care?
It’s this timid crap that will keep
Michigan the Mississippi of the Midwest.
Local government is already cutting staffing levels, requiring employees to contribute toward health insurance premiums, and cutting pay. The State should start with cutting benefits to the legislature. I understand they don’t think it’s “legal” to cut wages and benefits to elected officials. Seems like they are in a position to change that.
Recovery is just around the corner BUT only if the Governor gets out of the way with her Progressive ideas. The best way to recovery is for the government to drastically reduce taxes and shrink intrusive government. The Governor should get her meddling self and her government out of the way and let the private sector do what it does best—create productive jobs. Every dollar extorted in taxes is a dollar that reduces the capital available for commerce. When are the political parties and academia in the state going to admit that taxation and regulation destroy private sector jobs. The private sector cannot employ someone with money that is extorted from it by the government. Government jobs are not productive work. Bureaucracies absorb capital they do not create it.
PS Mrs. G. Earth warming and green jobs are now passe. Green jobs are a fraud. Earth warming is a fraud or haven’t any of your aides told you about the recent activity on the web exposing the liars in academia who’ve been pushing the big lie about climate change.
Ronald, I would challenge your number and your wisdom. The state has “drastically reduced taxes and shrunk government.” The state’s effective tax rate — total income divided by total state taxes — has dropped from 9.55 percent in 2000 to 6.9 percent in 2010…a 26 percent cut. We have cut state employment by 10000 persons…about 18 percent. The state budget supported by state taxes has increased 2.4 percent this decade; personal income by 12.7 percent — in other words, state spending has increased far, far less than the ability of the people of Michigan to pay for it.
We have made these decisions to cut taxes, possibly under the (now proven) mistaken belief that doing so by itself would improve our economy. In reality, of course, state taxes are a relatively small part of any businesses overall expense. And they pay for key elements a successful society needs — especially in the knowledge economy. “Every dollar extorted in taxes is a dollar that reduces the capital available for commerce,” you rail. But of course, if done wisely — and sometimes it is — a dollar “extorted” in taxes helps prepare a future worker through education, provides a judge for when the business needs to settle a dispute, paves a road for a business to use, provides sewer systems, ensures food is safe for consumption, helps keep children from being abused by their parents, makes sure a cop comes by to keep the bad guys away, provides a prison for the bad guys, prevents polluters from pouring toxins in your water, provides wise health care to the poor so they don’t end up getting expensive health care in an emergency room that ends up raising insurance for businesses…
I think you get the picture. A society without taxes and regulation looks much like Somalia…no government, no police, no taxes, pirates on every corner and two guns in every home…and no successful businesses, either, other than recycling handguns and burying people.
“Government jobs are not productive work.” Do you include the military in that. Thanks for insulting our hard WORKING men in uniform. Firefighters. Police. Teachers. Researchers in universities finding the next cancer breakthrough. Police. The guy who put the sewer in where you live. Not productive? I am a small business owner myself, have never worked in government, but my dad was in the military for most of his life, and he seemed to think putting his life on the line was productive…but I would be interested in seeing some public service workers weigh in on you post.
Why are we going after peoples pockets. Reducing the pay 5% or 3%, paying 20% more in health premiums, wage freeze for 3 years is just plain stupid. This is a cut in pay of 30% or more over all.Did this stuff work at GM no they went bankrupt because they did not invest in the future, remove idiot/arrogant management or look at ways to diversify their company. So you would put people who pay taxes in a lower bracket which would accomplish less revenues. Well done. One of the reasons we accepted a position here was because the medical insurance was very good. We had two other offers three years ago now I wish we would have taken one of the others in different states. The legislature needs to put together some sort of mass state investment project to generate jobs. Deficits go away if people can pay taxes. Here is a couple of ideas,Technology Parks at all Universities to generate new businesses, Rail with feeder lines that connects all regions to major cities and tourist attractions, utilities moving underground to have less outages during unfavorable weather, update the infrastructure. Better roads so our state is more attractive to new business.
Slash/burn with no investments is not working. I have lived in 5 other states and I think Michigan is one of the worst legislatures I have ever seen. Get rid of term limits that is what voting is for. Why do we allow our state to be in a recession for 10 years?