GOP Helping Big Spending Public School Lobby

Bills give schools new ways to tax and spend

By Jack McHugh | December 10, 2015

Michigan’s public school establishment is nothing if not persistent when it comes to devising new ways to extract more tax dollars. Two hearty perennials in this area are school “sinking fund” taxes and using local “recreational authority” taxes for school amenities. Both have been advanced in previous legislatures, only to be halted by happenstance or when Republican leaders on either side of the Capitol realized they were on the verge of authorizing property tax hikes for more things.

But both proposals are back and on the move, and this time, Republicans are leading the charge.

In 2001, a House GOP majority passed an open-ended sinking fund bill that MichiganVotes.org described as follows:

Passed 95 to 2 in the House, to allow school districts to levy 5-mill “sinking fund” taxes for a wide range of purposes. Under current law, sinking funds are permanent funds which may only be used to buy land or defray the debt on school construction or major repair projects…The bill potentially allows new tax mills to be used to cover items that might be considered "operating expenses," which is prohibited by the 1994 Proposal A initiative.

That year it was the GOP Senate majority that put the kibosh to the scheme. The Senate again played the firewall in 2007, when Democrats had gained a House majority and took another run at watering down the restrictions on sinking funds. (The 20 House Republicans who voted “yes” that time included many current GOP senators.)

When the bill came around in 2009 it limited the new tax revenue to just school buses and technology. Again, this passed a Democratic-controlled House with 11 Republicans on board, and for a third time the Senate buried the scheme.

Since then, numerous sinking fund bills have been introduced, with new variations to fit the times. Within weeks of a horrific school shooting in Connecticut in 2012, a bill appeared here proposing sinking fund taxes for school security. At least five more bills to expand the use of sinking funds in the name of school security have been introduced since, including the latest, sponsored by Rep. Michael McCready (R-Birmingham) which was the subject of a House Appropriations Committee hearing this week.

Homeowners and others who pay property taxes face a second threat from a bipartisan willingness to accommodate public school spending interests. This one is a “recreational authority” bill that passed the Senate with a 36 to 1 majority (Who Voted "Yes" and Who Voted "No"). Here is how MichiganVotes.org describes it:

Senate Bill 481, introduced by Sen. Darwin Booher (R-Evart), to revise the law that authorizes municipal recreational authorities, by letting school districts enter an authority. The authorities have the power to levy up to one-mill of property tax for swimming pools, recreation centers, public auditoriums, public conference centers, and parks, with the approval of voters in each municipality covered by the school district. The law does not address whether the local tax-funded recreational facilities can be at a school, but it does require them to be open to the public

In effect schools could mount campaigns to get municipal taxpayers to help pay for pools, auditoriums and other luxuries, with apparently nothing prohibiting these from being located on school property.

This proposal also has been around before. It nearly became law in 2009 when both houses passed similar versions of the idea but never did meld them into one.

We may know shortly whether a Republican-controlled Legislature and governor will grant the public school establishment two new long-sought taxing powers.

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.

An $84 Million Tax Break to Pfizer and Not Even a T-Shirt for Ann Arbor

When glamorous 'anchor employers' come seeking gifts

By Tom Gantert | December 10, 2015

In 2007, Ann Arbor’s civic leaders were shocked and near panic because the worldwide pharmaceutical giant Pfizer had decided to close its facilities in that city. Pfizer employed 2,100 people in Ann Arbor, and economists projected a total impact of 6,000 lost jobs over three years. Gov. Jennifer Granholm described the decision as a “punch in the gut.”

Six years earlier, the Ann Arbor City Council had negotiated a 20-year, $84.2 million tax incentive deal with the company to keep its Michigan operations open. During those negotiations, David Canter, a senior vice president for Pfizer, said the City Council appeared to be “anti-business” and implied the company may leave the state if the tax deals were not approved. Pfizer got the deal, and then bolted anyway.

Eight years have passed since the departure, and Ann Arbor has recovered. The city's unemployment rate had been 5.7 percent just before the Pfizer announcement in June 2007. Two years later, in the depths of the nationwide Great Recession, the unemployment rate jumped to 11.2 percent. As the economy has improved, Ann Arbor’s unemployment rate has fallen to 2.8 percent as of October 2015.

So in today’s economy, how important are large “anchor” employers?

“Great question, I really don't know the answer,” said Don Grimes, a University of Michigan economist. “My guess is the big firms are less important, but I need to figure out a way to address the issue. … But, the economy in the city of Ann Arbor, and its suburbs, is doing great.”

Grimes said the eastern part of Washtenaw County is not doing as well as Ann Arbor. Grimes cited Ypsilanti Township as an example, which has an unemployment rate of 5.1 percent.

In June 2007 when Pfizer was still in town, Washtenaw County’s private sector employment was 127,959. In March of 2015, it was 124,901.

“There are places that can withstand, and in fact, thrive after major employers leave,” said James Hohman, the assistant director of fiscal policy for the Mackinac Center for Public Policy. “Landing and retaining these big employers is not as meaningful as it may have been in the past.”

Tom Crawford, Ann Arbor’s city administrator, didn’t respond to an email seeking comment.