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A study commissioned by a union-backed think tank says reports that state and local government employees in Michigan are overpaid compared to workers in the private sector are wrong.

The study is by the Washington D.C. based Economic Policy Institute.

It says college-educated public employees earn 21% less than private sector workers with degrees.

It also found local government workers were compensated at about the same rate as their private sector counterparts.

Jeff Keefe is the Rutgers University management and labor relations professor who conducted the study:

"So the study concludes that state government employees are under-compensated in the state of Michigan, while local government employees are neither over- or under-compensated in the state of Michigan."

The report takes into account education, salaries, and benefits.

Ethan Pollack, with the Economic Policy Institute, says employee compensation is not the biggest factor behind the state’s budget trouble:

 "Michigan isn't significantly different than the deficits you are seeing all across the country…This is not about over-compensation of public sector workers. This is [about] two things. The cyclical deficit is from the recession, and the structural deficit is health care costs."

The Economic Policy Institute says its seven-state study found growing health care costs, and not employee compensation, are the biggest factor in budget deficits.

Photo by Rebecca Williams

At the moment, all royalties from oil and gas development in Michigan go into something called the Natural Resources Trust Fund. The trust fund money is used for improving wildlife habitat and parks and it's used to buy land for conservation.

But at a time when pretty much everything’s up on the chopping block... the future of that trust fund is in question.

State Representative Dave Agema (R) from Grandville has introduced legislation to divert oil and gas royalties away from the Trust Fund.

Under his proposal:

  • 60% of oil and gas royalties would go into the State Transportation Fund
  • 20% would go into the State Aeronautics Fund
  • the remaining 20% would go into the Natural Resources Trust Fund

The NRTF has been around since 1976. It was negotiated as part of a larger deal to allow oil and gas development in Michigan's Pigeon River Country State Forest.

I talked with the Michigan Environmental Council's policy director, James Clift, about this.  He says:

"Every corner of the state has obtained some of this trust fund money, either buying parkland or developing parkland, setting aside public land for hunting and fishing... It’s a very popular program and I think people are going to be very supportive of the way it’s spent currently."

Photo courtesy of www.governorelectricksnyder.com

Public employees are taking issue with Governor Rick Snyder’s citizen’s guide to the state’s finances. They say it presents an incomplete and inaccurate picture of employee compensation in the public and private sectors.

Unions say the data in the guide does not compare similar jobs in the public and private sectors. They point to half a dozen studies that paint a different picture than the Snyder administration’s data.

Nick Ciaramitaro is with the American Federation of State, County, and Municipal Employees:

"Salaries tend to be a little lower, benefits tend to be a little higher in the public sector, but if you look at total compensation, which is what the governor says he wants to look at, we’re very close or a little behind the private sector."

Ciaramitaro also says the data in the guide may not take into account unpaid furlough days taken by state and local workers.

The governor acknowledges the numbers in his guide are a broader overview of compensation trends, but he says he’s open to looking at other data before he presents his first proposed budget later this month: 

"I’m happy to have people react to it whether they agree with it or don’t agree with it because that may bring other data forward that may be worth considering as part of this process. It’s an open  dialogue. This is how you actually set the framework to have the open discussion you’d really like people to have.”

Snyder says that discussion will influence his administration’s budget plans. The governor will present his budget proposal to the Legislature on February 17th.

A brick church
User VanZandt / Flickr- http://j.mp/1SPGCl0

State lawmakers trying to eliminate the Earned Income Tax Credit are hearing from the Catholic Church.

The Michigan Catholic Conference says keeping the credit for the working poor is its top policy goal for this year.

The Conference is the official lobbying arm of the Michigan’s Catholic Dioceses and represents 2.25 million people.

Dave Maluchnik is a spokesperson with the Michigan Catholic Conference.

We have urged members of the House to reconsider their proposal to eliminate the earned income tax credit. There are numerous other groups out there in the state who are very concerned. In fact, there are many protestant organizations, Jewish organizations, that are very interested in protecting this policy.

Lobbying on all sorts of issues will heat up in the coming weeks when Governor Rick Snyder announces his budget priorities for the next fiscal year on February 17th.

Sarah Alvarez - Michigan Radio Newsroom

Pure Michigan

A measure to fully fund the Pure Michigan advertising campaign for the rest of the year appears poised for a vote next week in a state House committee.

Tourism officials and travel-related business owners showed up at the first hearing to support the legislation.

Dan Musser’s family owns the Grand Hotel on Mackinac Island. He says the national ad campaign has helped draw a growing number of out-of-state visitors to the island.

"Our potential is even greater than our success at this point, but if the campaign is not fully funded, we’ve wasted the opportunity for the Pure Michigan brand to reach its full potential. That potential brings tax revenues to the state, supports and creates jobs for Michigan residents."

Musser also says Mackinac Island is splitting the cost of a $1 million nationwide Pure Michigan ad purchase with the state’s tourism agency, Travel Michigan.

The ad will use the Pure Michigan brand to specifically promote Mackinac Island to travelers.

The Henry Ford in Dearborn will also share the costs of national campaign promoting the museum and the Pure Michigan brand.

Travel Michigan says about 30 other resorts and regional tourism offices  are also forming Pure Michigan ad partnerships with the state.

Citizen's Guide to Michigan's Financial Health / Michigan Governor's office

Governor Snyder says he wants you to understand the state's budget crisis. He's rolled out a guide to help you do that.
It's called the "Citizen's Guide to Michigan's Financial Health."
Michigan Radio's Morning Edition Host, Christina Shockley, spoke with Lester Graham this morning.

Graham heads up Michigan Watch, Michigan Radio's investigative unit.
Graham took a look at the Guide and gave us his first impressions. You can listen to the audio here:

Legislators are looking for places to trim the budget as they stare at a $1.8 billion budget hole.

Reducing state employee compensation is on the list.

Michigan Governor Rick Snyder released a report today that says public employees are making more than twice their private sector counterparts.

The Detroit Free Press says the "Citizen’s Guide to Michigan’s Financial Health," may be sending a signal about "one way the new governor expects to address...the budget shortfall." From the Freep:

He said the overall compensation of the average private sector workers fell 13% from 2000-09 while rising 19% for state employees and 13% for local government workers. For state workers, the average annual compensation -- $53,453 in salary, $31,623 in fringes and $13,000 for insurance-- was more than twice that of the private sector, the report said.

The governor was quoted as saying, "I'd be careful about over generalizing on this data but it does show an important trend that needs to be addressed."

Rick Pluta from the Michigan Public Radio Network reports:

Public employee unions and advocates for human services question some of the data used in the report. They also say they’d like to see Snyder’s plans for investing in schools and infrastructure, as well as protecting people hurt by the economy.

Photo courtesy of the Snyder administration

Governor Rick Snyder will speak later today in Lansing to the group Business Leaders for Michigan. He will release an outline of the data he thinks people need to understand the state’s budget crisis. He's expected to talk about his plans to reshape the state’s tax on businesses.

The Snyder administration has been circulating a draft version of a plan to scrap the complex and unpopular Michigan Business Tax in favor of a six-percent corporate income tax.

But the governor cautions his business tax reform plan remains a work in progress:

There’s a lot of speculation going on, and it’s a good dialouge to have out there in the public. I think we’re going to have a great plan based on simple, fair, and efficient.

The governor says he’d like to make paying Michigan’s corporate tax so simple it can all fit onto a single page. He wants it be an overall tax cut on Michigan’s business sector -- though some companies will pay more, some will pay less, and some will pay no business tax at all.

Manufacturers and other businesses say they are withholding judgment until they see how it might affect their bottom lines.

Governor Snyder makes no bones about wanting to get rid of the Michigan Business Tax. Some details of his plan were revealed today.

But by getting rid of the business tax, the state will be left with $1.5 billion tacked onto its existing projected deficit for the next fiscal year.

Today, the Governor spoke to the Michigan Press Association at the Detroit Marriott. In his speech, he addressed how he plans to make up the shortfall.

From the Associated Press:

Gov. Rick Snyder says he wants to include most tax breaks in the budget rather than burying them in the tax code...Snyder says it's imperative to get rid of the Michigan Business Tax, which he considers "a dumb tax." To make up the revenue lost by having a lower corporate income tax, he wants to look at existing tax breaks and get rid of those that aren't moving the state forward. The governor says tax breaks should be included in the budget so they can be debated and weighed on their merits.

The Detroit Free Press reported on Snyder's speech as well. The Governor said that one of the "biggest tasks as the chief executive of the state is to find the elusive “they” in state government." From the Freep:

Snyder said his first days in office were a revelation. “The IT guys were in hooking up my computer and I had a square screen,” he said, explaining that it didn’t make sense because the larger, landscape computer screens are better and less expensive. “They told me ‘It’s been 10 years and they said that’s what we had to do,’” Snyder said the IT guys told him. “Almost on a daily basis, I hear about ‘they’ and they tend to have a different opinion that I have. I need to find out who they are and where they reside.

gophouse.com

Governor Snyder has said he wants to do away with the complex, "job-killing" Michigan Business Tax, and replace it with a more simplified flat tax for businesses in the state.

Library of Congress

The idea of an Earned Income Tax Credit, giving people who have low-income jobs a bit of a tax break, has been around for a while.  In 1975, a Michigan Republican, Gerald Ford, signed the first federal credit into law while he was president.

Lester Graham / Michigan Radio

Republicans at the state Capitol are working to get rid of a tax credit for working poor people.

But people who support the Earned Income Tax Credit say the money helps poor people keep their jobs.

Without the credit they might have to go back on welfare, an they say that would cost the state more money.

Gilda Jacobs, director of the Michigan League for Human Services, says all lawmakers have constituents who claim the credit:

"We have some districts where 18% to 20% of the people are filers of this, and they’re putting multi-millions of dollars back into small businesses. So we kind of need to ask people to see this up-close and personal and to really be open to understanding what this is all about."

Republican House Speaker Jase Bolger says the state cannot afford the Earned Income Tax Credit right now:

“The Earned Income Tax Credit is very new in Michigan. It didn’t exist a couple of years ago. It was added at a time where I believe we couldn’t afford it. So as we look at how we are going to revamp Michigan and how we are going to move forward, we have to evaluate things that we can maybe no longer afford, however we do have to look at that with a broader tax structure, and we have to understand that the best social program is a good-paying job.”

Bolger says eliminating the Earned Income Tax Credit will be part of a large package of reforms that are expected to be introduced soon in the House.

Supporters of the tax credit say they have a lot of work to do to convince lawmakers that getting rid of it would hurt people in their districts.

Photo courtesy of www.votevirg.com

Lansing Mayor Virg Bernero delivered his sixth State of the City address last night. As Michigan Radio's Steve Carmody reports, he had a lot to say about past accomplishments but said next to nothing about the city's projected $15 million dollar budget deficit:

"Look around and see for yourself, it's happening in Lansing," Bernero said. That was the theme of Lansing mayor Virg Bernero's state of the city address.

To that end, Bernero spoke a lot about recent business investment in the capitol city.  He didn't speak directly to Lansing's projected $15 million budget deficit.

He did suggest part of the budget problem can be found across the street from Lansing city hall at the state capitol.

"City budgets across Michigan are on life support.   The loss of property tax values means the loss of property tax revenue.  High unemployment means the loss of income tax revenue.  And the continued failure of state government to manage its own budget problems has cost of tens of millions in state shared revenues," Bernero said.

Bernero also said Lansing needs to work with its neighbors to deal with a variety of regional problems.

Bernero was the Democratic nominee in Michigan's 2010 Gubernatorial race. He lost the race to his Republican opponent Rick Snyder. Snyder delivered his first State of the State address as Governor last Wednesday evening.

The Michigan Senate in Lansing.
Lester Graham / Michigan Radio file photo

The state could be headed toward a two-year budget cycle.

Governor Rick Snyder and many lawmakers say they need to start thinking farther into the future when putting together a budget.

However, creating a two-year budget cycle would require an amendment to the Michigan Constitution. The Legislature would have to put it on the ballot for voters to approve.

State Senator John Proos says that could and should happen, but it will take time. He says in the meantime lawmakers can create a two-year projection:

"That’s something that every year instead of scrambling to fix a budget hole and not really telling the whole story about what our budget will look like out into the future, this will give us the time instead to say our revenue picture and expenditure picture is going to look like X. Once we’ve made that determination, then we can say are we actually getting value for the tax dollars that we’re spending."

Proos is expected to introduce a measure that would amend the constitution to create a two-year budget cycle as well as a part-time Legislature.

Proos says for now it’s important to complete work on the budget by Governor Snyder’s May 31st deadline.

Governor Rick Snyder says he wants to make government finances easier for taxpayers to understand. Snyder says having the public understand the state’s budget troubles is a critical part of solving the problem. Rick Pluta reports:

Governor Snyder recently told local officials his administration is developing a model for explaining the state budget that could be adopted by cities, townships, and villages.

Snyder is a retired computer company CEO and investor with a degree in accounting. He says the idea came to him while he was examining the document that explains how state government spends its money. 

"If you’ve tried to look at it, and I don’t know if you have… I’m an old CPA and there should be a warning label – not made for human consumption," Snyder said.

Snyder says he’d like state aid to local governments to be tied, in part, to how well they explain their finances to their citizens. Cuts to revenue sharing payments are expected to be part of addressing a budget deficit, but Snyder says he’d like to reward local governments that find ways to save money and innovate.

In the world of corporate business, bonuses, perks and cash incentives rule the day. They're used to drive productivity.

Governor Snyder, a former corporate president, is bringing that mentality to Lansing.

Now, he says he wants to reward local governments that find better, cheaper ways to provide services.

Rick Pluta, of the Michigan Public Radio Network, says Snyder's budget proposal will call for cash incentives that encourage cities and townships to innovate.

Rick filed this report saying the Governor's announcement was a small bit of welcome news to local officials bracing for more budget cuts from the state:

Governor Snyder outlined his idea at a drop-by with local government officials meeting in Lansing.

He says local governments provide most of the services that people use, and the state should reward the ones that find ways to consolidate, cut costs, and innovate:

"So it's really to create an environment to say, here's a positive incentive to be the very best...so people first and foremost in Michigan and then people around the country and the world will look at Michigan are going to look and say, these people have their act together, this is the place to be, this is the place to have your kids grow up and succeed."

The governor provided few details.

He says those will wait for his budget proposal next month, and a special address on government reform that he will deliver in March.

I was sifting through the many reports by Gongwer News Service.  Gongwer covers just about everything that happens in and around the Lansing capitol complex.  What caught my eye was an article entitled "State Estimates Tax Expenditures of $33.8 Billion for FY'11." 

I read through the Gongwer story which linked to a 111-page report by the Michigan Department of Treasury.

Lester Graham / Michigan Radio

Senate Bill 1 has been introduced, and you can read it, in its entirety - here you go:

The Michigan business tax act, 2007 PA 36, MCL208.1101 to 208.1601, is repealed.

The bill was introduced by Senator Dave Hildenbrand and comes in advance of Governor Rick Snyder's State of the State address tonight.

Replacing the Michigan Business Tax was one of candidate Snyder's main promises to voters.

Laura Weber of the Michigan Public Radio Network filed a report on Senate Bill 1:

Senator Dave Hildenbrand...says his bill is more aggressive than a similar bill introduced by House Republicans, which only repeals part of the business tax:

"Well we wanted to send a strong message that we want to create a better business climate in this state so our job providers can provide jobs. It’s pretty clear, I think to all of us, that the Michigan Business Tax is an obstacle for employers to good create jobs, expand, for the ability for us to attract job providers to Michigan. So we’ve declared war on the Michigan Business Tax."

Governor Rick Snyder wants to replace the Michigan Business Tax with a flat tax on large businesses. Snyder is expected to talk more about his plans for economic development during his State of the State address tonight.

michigan state capitol
Lester Graham / Michigan Radio

The money the state sends to local governments is called revenue sharing.  But "sharing" might not be quite the right word.  It’s actually a promise, a deal the state made with the towns we live in. 

Summer Minnick is with the Michigan Municipal League.  It represents the interests of the cities, villages and townships to state leaders.  She says decades ago, local governments gave up the power to charge their own sales tax to raise money.

Governor's office

Over the last decade, factories have closed.  People have lost their jobs. Some have had their hours cut.  Some have had their wages cut.  It’s been hard for many Michigan families. 

With so many people hurting, it’s easy to look around and get a little resentful when people who work for the government still have their jobs. 

More than 53,000 state workers --from the people who sweep the floors in the capitol to lawyers in the Attorney General’s office to engineers in the Department of Transportation-- still seem to be doing okay.

Tracy O / Flickr

Lately, you've probably heard or read a Michigan Radio story that includes this number: 1,800,000,000. In case you haven't had your morning coffee yet... that's 1.8 billion. Economic forecasters predict Michigan's budget, for the fiscal year that begins October 1st, is $1.8 billion in the red.

However, later today, that figure could change. That's because economists are meeting today for what's called a "revenue estimating conference" at the state Capitol. The economists will come up with an estimate of just how much money the state can expect to receive through the next fiscal year. As the state's website explains:

The Revenue Estimating Conference held each January is a major part of the budget process. During the conference, national and state economic indicators are used to formulate an accurate prediction of revenue available for appropriation in the upcoming fiscal year. This conference first convened in 1992, pursuant to Act No. 72 of the Public Acts of 1991. The principal participants in the conference are the State Budget Director and the Directors of the Senate and House Fiscal Agencies or their respective designees. Other participants may include the Governor and senior officials from the Department of Treasury.

Photo courtesy of www.governorelectricksnyder.com

Governor Rick Snyder met yesterday with the presidents of the state's universities.  They told the governor they are ready to help improve Michigan's economy. The Associated Press reports:

...Snyder says universities likely will have to sacrifice in the short run, but he wants to invest more in higher education when times get better. Michigan Technological University President Glen Mroz said in a statement that the meeting set a positive tone for the relationship between universities and the new Snyder administration.

Reports say Snyder did not give any specific details on what he plans to do for universities in the state's next budget. Michigan faces a projected $1.8 billion dollar budget deficit for the fiscal year that begins October 1st.

What impact would having part-time Legislators have on Michigan?
Lester Graham / Michigan Radio file photo

The start of the new year often brings in a lot of talk of good will. For those in politics, it's talk of bipartisanship.

In Michigan, that spirit is likely to dissolve quickly as the state faces a $1.8 billion budget deficit in the next fiscal year (the state's next fiscal year will start October 1st, 2011).

Peter Luke on MLive.com highlights the discussion beginning to take shape among the leaders in the state legislature.

Republicans pretty much control everything in Lansing now, and the first item they say they plan to cut are salaries and benefits for state employees.

Jase Bolger, the new Speaker in the State House of Representatives, said state employee benefits are definitely on the table if the state is going to close the enormous budget deficit gap:

"There are significant dollars that need to be saved through our compensation models, not just salaries, but the entire compensation."

In his recent piece on the looming budget deficit, Michigan Radio's Lester Graham points out that slashing state employee salaries and benefits only gets them a small percentage of their overall $1.8 billion dollar goal.

Kalamazoo City Commission
Lindsey Smith / Michigan Radio

Kalamazoo has a new balanced budget in place…with no layoffs, tax increases or cuts to city services. City commissioners unanimously approved the 2011 budget plan Monday night.

Lani Chisnell / Michigan Radio

The state budget amounts to $47-billion.  There’s a predicted shortfall of $1.6-billion in the upcoming fiscal year budget.  But, maybe $1.6-billion out of $47-billion isn't that bad.  Just cut everything by three-and-a-half percent and, Voila!  Everything’s fixed.

It's Wednesday, the day we speak with Michigan Radio's Political Analyst Jack Lessenberry about what's going on in state politics. On tap for today: Michigan gets hit hard by bad news from the census and Governor-elect Rick Snyder says he wants a 2-year budget plan for the state.

The City of Lansing is facing a potential $15 million budget deficit.   City Finance Director Jerry Ambrose says there is a growing chasm between Lansing’s projected spending needs fiscal year 2012 and the city’s projected revenue. FY2012 begins June 30th, 2011.  Ambrose says the city expects to spend $118 million next year delivering city services, but city revenues are only expected to reach $103 million. Ambrose says in a written statement:

The Pure Michigan advertising campaign is getting the money it needs.   Governor Granholm today signed the legislation authorizing funds to pay for ads promoting Michigan tourism.

The Associated Press reports: 

Gov. Jennifer Granholm has as expected signed a bill that will help pay for the Pure Michigan tourism advertising campaign. The bill that Granholm announced signing Wednesday transfers $10 million to the campaign from the state's 21st Century Jobs Fund.  The addition gives Pure Michigan more than $15 million for the current fiscal and will provide enough cash to pay for a winter and spring tourism campaign. The program would have been canceled if the extra money had not been approved. Pure Michigan advocates still are pushing to raise the annual budget for the program to about $30 million.

Steve Chrypinski / Michigan Radio

The incoming governor and new leaders of the legislature know they have a lot of work ahead of them.  The State of Michigan’s finances are a mess.  After a decade of cuts to education, prisons, arts, tourism and everything else, it appears more cuts are coming.  Lester Graham with Michigan Watch reports it’s not clear what the new government leaders are going to do, but they say it begins with some tough decisions about the budget.

Salt trucks
Sarah Hulett / Michigan Radio

Counties all over Michigan are gearing up for another winter plowing season with higher costs and fewer resources.

Wayne County has outfitted about 20 trucks with new side plows that allow crews to make fewer passes to clear snow-covered roads.

Michael Rogers is the Roads Division director for Wayne County. During a demonstration of the equipment, he pointed out an innovation that will save on salt costs. The county has rigged up its trucks to wet the salt as it’s being spread on the roadway.  

You see the salt doesn’t necessarily make it all the way over here, to us. And that’s what you want. You want the salt to get on its intended target, and that’s what it’s doing. Because before the salt would’ve been ten feet back there, and that’s a waste of our resource.

Ten years ago, Wayne County had 726 people working for the Roads Division during the winter months. This year it has a little more than 330.

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