Commentary

SEIU Under Investigation over Prop 4

'Dues Skim' took $35 million from Medicaid recipients

The Detroit News reported that the State Bureau of Elections began a formal investigation of the Service Employees International Union regarding its financing of a ballot proposal last year.

Proposal 4, which would have locked into the state constitution the skimming of millions of dollars each year from the caretakers of disabled people, was defeated by 14 percentage points.

Chad Livengood in The News reported:

The complaint focuses on a group called Citizens for Affordable Quality Home Care and an East Lansing company called Home Care First Inc. Citizens for Affordable Quality Home Care sponsored the ballot proposal. In campaign finance reports, the group claimed almost all of its donations came from Home Care First.

The Freedom Fund alleges Home Care First was set up in March 2012 to pour $9.3 million into the ballot campaign and initially hide the SEIU’s involvement.

After months of putting money into a campaign committee, records show, Home Care First formed its own ballot committee a week before the Nov. 6 election and reported all of its money came from SEIU.

Michigan Capitol Confidential's Jack Spencer filed 70 stories documenting the dues skim from the beginning, including articles on the groups the SEIU set up to continue the money flow.

When the scheme finally ended, Spencer summarized what happened: "In an effort to increase dues paying members, the SEIU targeted the Medicaid checks of Michigan's home-based caregivers. A forced unionization, in 2005, was used to force the caregivers into the SEIU. Key elements of the scheme included a dummy employer, a stealth by-mail election, and avoiding any media attention."

This started with the help of officials employed in the administration of former Gov. Jennifer Granholm, and continued with the help of Sen. Roger Kahn, R-Saginaw. Over the lifetime of the scheme, the SEIU took nearly $35 million from people taking care of the sick and elderly in Michigan.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

Analysis: Incorrect Population Figures Means State Has Overpaid Detroit For Past Decade

City gets more than its fair amount of revenue sharing

One of the common complaints about the state’s management of Detroit’s insolvency is that the situation was preventable if only the state had provided more money.

But Detroit already gets more state assistance than every other municipality in Michigan, and indeed, it receives the majority of state discretionary payment. This is neither justified nor fair to the rest of state taxpayers.

Michigan redistributes state tax money to local governments through its revenue sharing programs. The state constitution guarantees that a portion of the state’s sales tax revenue goes to local governments and this payment is distributed based solely on population.

The state interpreted the population measure to be determined by the decennial census. So from 2001 to 2009, when Detroit was shedding a substantial portion of its population, the state was still paying the city as if it had nearly 1 million people. Reflecting the substantial outflow of people out of the city would have meant that the city would’ve received $86.4 million less in constitutional revenue sharing.

The state’s other revenue sharing program is optional and determined by state statute and approved through the budget. That is, state policymakers are free to alter the terms of the payments however they see fit. Regardless of how policymakers have sliced this pie, however, Detroit received the majority of funding.

In the recently passed budget, Michigan will transfer $235.8 million to cities, villages and townships in this program. Detroit receives 58 percent of this money, despite the city containing less than 10 percent of the state population.

This is not to say that the number of people living in a city should be the sole determinant of the state’s revenue sharing payments. But it does show that Michigan is doing an awful lot to support the city.

The state’s optional revenue sharing programs have been decreasing over the decade. The optional payments to cities, villages and townships fell from $651 million in fiscal 2002 to $236 million planned for fiscal 2014. While these payments are down, Detroit gets a larger proportion of it, increasing from 42 percent in 2002 to 58 percent now.

So while budgetary pressures from the state’s decline have meant fewer payments to the city, it still receives more state money than every other local government. The state has also tried to protect Detroit from its decline more than other governments.

Detroit has a lot of problems. But it’s simply unfair to level the blame on state policymakers that continue to give the city advantages that are not offered to others. The fact that Detroit — and a handful of Michigan’s more than 2,400 local units of government — are broaching insolvency shows that it has less to do with state support and more to do with how local officials operate the city.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.