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Looming financial disasters for Michigan

Mar 6, 2018

Our legislators in Lansing have just enacted a tax cut that will be relatively meaningless for most, great for the rich, but which will leave our cash-strapped state with less revenue.

That wasn’t much of a concern for our lawmakers, all of whom will be gone within a few years, thanks to term limits. It ought to be more of a concern for citizens who have to worry about their kids’ educations, or dodge potholes the size of Lake St. Clair. We also know that our neglected infrastructure is fast falling apart, something we try hard to ignore.

But there are two other ticking time bombs on the horizon that may blow new holes in our tattered budgets. The first was sharply highlighted yesterday. As is now well known, the state five years ago turned management of unemployment compensation to a computer called MIDAS, short for Michigan Integrated Data Automated System. The Snyder administration was so impressed with MIDAS they didn’t monitor what it was doing.

Not, that is, till it was discovered that MIDAS had run amok, falsely accusing some 37,000 people of committing unemployment insurance fraud, slapping them with huge penalties, garnishing wages, making their lives hell and causing some to lose their homes.

The state has agreed to pay back money it improperly seized, but hasn’t done much to make the victims whole. Lawsuits have been filed in state courts that were dismissed because an appeals court panel ruled the statute of limitations had run out.

But defendants have appealed to the Michigan Supreme Court. Meanwhile, the state got a major blow yesterday, when a federal judge ruled that a separate suit against the firms that managed MIDAS and against the state employees overseeing this could proceed.

U.S. District Judge David Lawson rejected a request from the state to dismiss the case.

There will now be a trial and appeals, but in the end the state is liable to have to pay many millions, especially if those wronged eventually prevail in the state courts. The governor and the attorney general would be well advised to start figuring out how to craft a settlement.

The injustice of what was done to these folks is beyond dispute, and there comes a point when doing justice and sensibly managing the state’s losses is the most prudent thing to do. Then, there’s the other elephant in the room – the more than 200 women who have sued Michigan State University after being sexually abused by physician Larry Nassar.

MSU is claiming to be exempt from such lawsuits as a governmental entity, but if that doesn’t hold up, they are probably looking at damages in the hundreds of millions.

Michigan State has to realize that letting any of these cases go to trial would be an all-time public relations disaster. State is going to have to figure out how to settle these cases, and the only two options are likely to be A) horribly expensive and be B) ruinous. Some legislators have vowed that state government won’t foot the bill for any of this, but of course it will, one way or another.

These are two ticking time bombs bequeathed us by the policy failures of the past. The longer our leaders put off coming up with a plan, the worse off Michigan is going to be.

Jack Lessenberry is Michigan Radio’s Senior Political Analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.