Net Metering Decision Raises Hackles of Solar Supporters

'Avoided cost' rate will impact Michigan’s interest in residential solar

An April 18, 2018 ruling by the Michigan Public Service Commission – the state government body that oversees Michigan’s electricity and telecommunications services – is adding to tensions in the debate over rates for net metering. Deciding how much money people with solar panels on their home or business will receive for the electricity they generate and sell to a utility — a practice known as “net metering” — touches on several lightning rod issues. Among those issues are electricity rates, competition in electricity markets, subsidies for renewable energy and the notion that renewable energy could make a difference in climate change in some substantive way. Add to all that the reality that, whatever it rules, the MPSC has the authority to substantially affect the trajectory of residential solar industry in Michigan – growth, flatline or contraction.

This MPSC decision hasn’t come about in a vacuum. Section 6a(14) of the state’s new electricity law – Public Act 341 – required them to do this. The act mandated that, by April 2018, the MPSC had to set a new compensation rate for customers taking part in the distributed generation program. It says the rate must be “just and reasonable to the electric consumer of the electric utility and in the public interest,” and cannot “discriminate against qualifying cogeneration and small power production facilities.”

Stay Engaged

Receive our weekly emails!

When people install solar panels on the roof of their home or business, they are able to sell electricity that they do not use back to the utility, effectively spinning their electric meter backward and reducing their monthly electricity bill. So far, the utility has paid those customers the same rate it charges every other retail customer. But that practice will change under the MPSC ruling.

And so it should; a utility pays too much when it is forced to pay retail prices for the excess electricity generated by people with solar panels. In the normal course of business, utilities incur infrastructure and overhead costs, which they pass on to their customers as part of the normal monthly utility bill. But when solar panel owners are paid retail rates for the electricity their panels produce, they don’t contribute to meeting those infrastructure costs. In fact, they add to them, and the majority of utility customers who don’t have solar panels must make up the difference.

Having other utility customers cover that cost has been the norm up to now. But rather than making utilities pay new solar customers the retail rate for their surplus electricity, the MPSC ruling abandons the traditional net metering payment in favor of an “inflow/outflow” billing method. That is, inflows – electricity purchased by the customer from the utility – are charged the normal retail electricity rate, and outflows – electricity that flows from the customer’s solar panels to the utility grid – are priced at the utility’s “avoided cost” rate. That rate is defined as “how much a utility would have to pay to produce the energy itself, and is the sum of capacity and energy costs.” This rate is far less than the retail rate.

Advocates of net metering argue that distributed generation, whereby some individuals generate their own electricity with solar panels, wind, etc., benefits everyone by diversifying and strengthening the electrical grid. They worry that this ruling will effectively raise the costs of installing solar by reducing net metering payments, and that could discourage new solar installations. That may be true, but a far more effective means of diversifying Michigan’s electric grid would be to remove the arbitrary 10 percent cap on the state’s electricity choice market and encourage open competition in electricity generation.

Additionally, it is true that targeted subsidies and paying above-market rates for electricity from solar panels will help a tiny segment of utility customers. As an aside, those customers being helped tend to be the ones who can already afford to buy a residential solar setup, or who are able to qualify for a solar lease. But, we should all recognize that help is a short-term, targeted gain for some that will cost the entire system more than it benefits.

Michigan’s government needs to take a consistent stance that it will not support subsidies or special favors for any energy producers. If people want to use distributed generation options such as residential solar for economic or environmental reasons, they are welcome to do so. They just don’t need government payments or prodding to help them along.

Michigan has already erred by forcing residents to endure the higher costs and less reliable service that comes from having government-protected monopoly utilities as the only real option to provide our electricity. Doubling down on expensive, subsidized, and government-mandated options that charge above-market net metering rates only reinforces that mistake. Benefiting a tiny minority of electricity customers by shifting the already high costs of electricity onto the rest of the population is not good policy.

In this case, the MPSC’s ruling to pay the avoided cost rate to distributed generation owners is the right decision.

Related Articles:

Back To The Future With Renewable Energy Puffery

Solar Makes 1/676th the Electricity As Coal In Michigan

2016 Michigan Energy Roundup: Renewable Energy

2016 Michigan Energy Roundup: Legislature Writes Obama Utility Scheme Into Michigan Law

Extreme Cold Highlights Our Need for Better Energy Options

Medicaid Work Requirements, Alien Driver's Licenses, Dead Voters and More

April 20, 2018 MichiganVotes weekly roll call report

Senate Bill 897, Require able-bodied Medicaid recipients to work: Passed 26 to 11 in the Senate

To require state welfare officials to seek permission from federal welfare officials for requiring able-bodied recipients of Medicaid health coverage to work at least 29 hours a week, or be in school, job-training or volunteer work. The bill authorizes exceptions for a parent with children under age six, individuals getting disability benefits, a disabled person's caretaker, and more, including temporary emergencies and "life-changing events." It would also require beneficiaries to verify compliance each month and verify family income changes within 10 days.

Stay Engaged

Receive our weekly emails!

House Bill 5012, Restrict election recounts when outcome isn't close: Passed 27 to 8 in the Senate

To make more rigorous the definition of “aggrieved candidate” in the law that authorizes recounts of elections where the vote margin isn't close. The bill reflects court rulings after the 2016 Green Party presidential candidate (reportedly with the assistance of Democratic Party operatives) orchestrated a statewide recount, even though this candidate received less than 2 percent of the Michigan vote.

Senate Bill 290, Increase election recount fee in votes that aren't close: Passed 93 to 16 in the House

To increase the deposit that a candidate must make to get an election recount, to $250 per precinct if the winner’s vote margin was more than 5 percent or 75 votes, whichever is greater. If the recount does not change the outcome the candidate loses the deposit. The bill reflects court rulings after the 2016 Green Party presidential candidate's 2016 recount activities referenced in the preceding bill.

House Bill 5646, Check voter lists against Social Security death lists: Passed 35 to 0 in the Senate

To require the Secretary of State to check the statewide qualified voter file against the U.S. Social Security Administration's death master file on a monthly basis. Also, to enroll the state in multistate voter registration verification programs, to the extent these do not require a new law to be passed or pushed.

House Bill 5669, Define which IDs are good for voting: Passed 27 to 8 in the Senate

To place in statute a definition of “identification for election purposes,” including a list of specific forms of personal identification that meet the criteria.

House Bill 5321, Prohibit giving permits to sterilize game animals: Passed 69 to 40 in the House

To prohibit the Department of Natural Resources from issuing permits to sterilize game animals as a way to reduce overpopulation. Also, to allow the Natural Resources Commission to establish special deer management zones adjacent to urban areas where more deer licenses (tags) could be issued.

House Bill 4115, Increase nonprofit sales tax exemption: Passed 76 to 33 in the House

To exempt from sales tax the retail sales of a nonprofit organization that has less than $25,000 in aggregate annual retail sales during a year, rather than $5,000 under current law. Under current law if a group exceeds this threshold then all of its sales are taxable, and the bill would change this to exempt the first $10,000 in sales for groups that don't exceed the new cap.

House Bill 5687, Require resident alien’s driver's license to expire with visa: Passed 96 to 13 in the House

To require that a driver's license issued to a resident alien must have an expiration no later than the date on which the individual’s presence in the in the U.S. becomes unlawful.

SOURCE:, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit

Related Articles:

Ban Pit Bull Bans, Licensure Mandates for Foresters and Shampooers, More

Emotional Support Animals, License Mandates and More License Mandates

Constitutional Amendments on Parents' Rights, State University Boards, More

Passing Bicycles, Peppier Pepper Spray, High School Internship Credit, More

MSU Sex Crime Lawsuits, Online Voter Registration, Dead Voters, More

Free-Range Michigan?

New Utah law recognizes independence for parents and children

The state of Utah became the first in the nation to pass a “free-range kids” law. Looking to push back against norms and policies that are overprotective of children to the extreme, the state passed a law that explicitly permits parents to let their kids play at the park, walk to school and participate in other unsupervised activities.

The New York Times and the Reason Foundation cite cases where parents have been prosecuted for letting their children do things that would have been commonplace just a generation ago. For instance, Danielle Meitiv of Maryland and her husband were charged with child neglect for letting their six-year-old and 10-year-old walk home from a nearby park by themselves. Adrian Crook, a parent who allowed his four children, all between the ages of seven and 11, to ride a city bus by themselves, got in trouble with Canada’s version of child protective services. A California father was convicted of child endangerment because he made his eight-year-old son walk a mile home as a punishment for not doing his homework.

Stay Engaged

Receive our weekly emails!

According to the Times, “The bill specifies what constitutes child neglect in the state, and what does not. Under the law, neglect does not include ‘permitting a child, whose basic needs are met and who is of sufficient age and maturity to avoid harm or unreasonable risk of harm, to engage in independent activities’ such as going to and from school by walking, running or bicycling, going to nearby stores or recreational facilities and playing outside.”

Legislators in other states have introduced similar bills, but that hasn’t happened here in Michigan. The Great Lake State seems to have a fairly sensible law about leaving children unattended in a vehicles — it’s illegal if they are under six and the risk of harm is “unreasonable,” taking into account the length of time and weather conditions. And the state only recommends children not be left home alone prior to age 11, with no legal overkill.

But in many other areas, state statutes are silent. A free-range law would codify reasonable limits on what parents could allow their children to do, while preventing local government or state agencies from being overly restrictive on parents.

There has been some pushback on this idea. John Lindstrom, the publisher of Gongwer, makes the point that there have been very few incidents in Michigan of this type of overreach. That’s true. But he also says that “there are good reasons why parents are hyper-protective of their children” — citing “news reports of child abductions, school shootings, random crazies wandering the world, terrorism, dread diseases. …” He adds, “More crime naturally leads parents to worry more about their kids.”

Many parents will always be drawn to overprotect their kids (I can attest as the parent of three young ones). But the free-range movement is a response to a legitimate concern that societal norms have gone too far in that overprotective direction, sometimes led by overzealous government authorities. In nearly every way, kids today are measurably safer than ever. Overall crime has been decreasing for decades and the murder rate is half its 1980 level and back to what it was in the 1950s. Bicycling injuries and deaths are way down, forcible rape has dropped by 20 percent over the last three decades. In most ways, children’s direct exposure to violence and crime is on the decline.

This reality matters because over-protection can harm kids. It’s not surprising to see childhood obesity rates triple since the 1970s — the portion of children who live within a mile of their school and walk to that school dropped from 89 percent to 35 percent. A national survey finds that children today are half as likely as their parents to play outside. The obesity problem is more complicated than that, obviously, but it’s certainly harder to instill children with the habit of regular physical activity when they need to be under direct adult supervision at all times.

Eventually, children must gain independence and learn how to make their own decisions on the path to becoming successful adults. There will never be a single right way to do that; all kids are different. But society must choose how much discretion to grant parents as they guide their children toward adulthood. Historically, parents have had a lot more discretion than they do today, and the movement to protect these parental rights — and push back when government busybodies go too far — should be encouraged.

More Competition Among Liquor Stores on the Way – For Now

Judge upholds ruling that gets rid of arbitrary ‘half-mile rule’

It’s competition that makes products better and less expensive, creating value in the meantime. And a recent judicial ruling has held that Michigan liquor stores aren’t exempt from it.

For 40 years, the state’s Liquor Control Commission has imposed a “half-mile rule” that required liquor stores to be at least that far from each other. Last year, the commission evaluated the rule and found it did nothing to promote health and safety and was simply there to limit competition. Members of the commission voted to get rid of it.

In response, liquor stores pushed legislation to reinstate the rule and filed a lawsuit to stop its repeal. The stores argued that they put money into their stores with the expectation that competition would be limited. Michigan Court of Claims Judge Stephen Borrello dismissed the lawsuit, writing, “There is no property right to be free from increased competition.”

The state Senate passed a bill last year reinstating the previous rule and limiting competition. The bill has not had a vote in the House.

It should be noted that this issue has nothing to do with more or fewer liquor stores overall — the number of licenses the state hands out is determined by an entirely different set of rules and procedures. But the promoters of limiting competition argue that current liquor stores should be protected and that eliminating the rule will result in alcohol stores popping up all over the place. In fact, though, studies suggest that higher concentration of alcohol stores is linked to lower overall consumption and less drunk driving.

Stay Engaged

Receive our weekly emails!

So far, the Michigan House and specifically the Regulatory Reform Committee have refused to artificially limit competition for liquor stores. They should continue to do so.

Related Articles:

Beer Glut: The Overregulation of Alcohol in Michigan

Licensing Lobbyists Say Rolling Back Interior Designer Rules Will Cost Lives

Snyder’s Veto of Aftermarket Auto Parts Bill a Win for Consumers

Consumers Don’t Need a Law to Limit Competition

How to Strike a Balance on Short-Term Rentals

Arbitrary Michigan Licensing Laws: Auto Mechanic vs. Makeup Artist

Esthetician requires far more mandatory hours and much higher fees

Occupational licenses are pitched as a necessity to protect the health and safety of citizens. But they rarely perform their function, and the state has no requirement that policymakers evaluate new and existing licenses. That’s why education, testing and fee mandates for different professions are so arbitrary.

Michigan Capitol Confidential recently featured a story bearing this out. Donna Williams is a makeup artist who trained in California and has worked on film and theater productions in both California and her home state of Michigan. She can legally work in a limited capacity on makeup for arts productions, but when she explored doing so in other areas, she discovered she needs an esthetician license. To get legal permission to make money by doing something millions do every day in Michigan — applying makeup — she needs to graduate from a 400-hour course, pass practical and written tests and pay $200 to the state.

Does that barrier to work make sense? It’s doubtful. Consider that to become a certified auto mechanic in Michigan, a person doesn’t have to take any required number of mandatory training hours, just pass a $6 test (in each repair category the mechanic wants to work in) and pay the state $25.

Williams is thinking of leaving Michigan to find somewhere easier to make a living. If she does, she will follow the path already taken by thousands of others. The research shows that Michigan’s overbearing occupational licensing laws results in more than $10 billion ($10,000,000,000!) in higher prices and at least 125,000 fewer jobs every year. A separate new study finds that licensing laws result in less economic mobility – in other words, it makes it harder for low-income people to move up. The state should set up an independent review process that would cut back on licensing regulations.

Stay Engaged

Receive our weekly emails!

Related Articles:

License to (Not) Work: Mackinac Center Releases New Study on Occupational Licensing

It’s Time To Review and Repeal Occupational Licensing Laws

Vet Saves Dog's Life, Family is Happy – State Sanctions Him

An Opening for Michigan Licensing Reform

State Reforms of Occupational Licensing

Three Criminal Justice Proposals before the Michigan House this Week

Here are a handful of bills that are being considered in or advanced out of committee

The House Corrections Appropriations Subcommittee calls for the 11th prison closure in 12 years.

The House Corrections Appropriations Subcommittee passed a budget for the next fiscal year, and it calls for another Michigan prison to close. The West Shoreline Correctional Facility in Muskegon Heights was shuttered in recent weeks, and the Pugsley Correctional Facility in the Upper Peninsula was shut down in late 2016. The subcommittee’s budget proposal calls for the Michigan Department of Corrections to close another facility. It does not specify which facility that should be, but it expects the move will save the state more than $16 million annually. The Corrections Department reports that it has closed or consolidated 26 facilities since 2005 at a savings of nearly $400 million. Michigan’s prison population is down to approximately 40,000 from its all-time high of more than 51,000 in 2007, a change that reflects a bipartisan reform effort in corrections and criminal justice.

Stay Engaged

Receive our weekly emails!

Prison food service, once privatized, will be performed by state workers.

The Corrections Subcommittee also adjusted the 2018-19 corrections budget to account for Gov. Rick Snyder’s decision to discontinue privatized prison food service. Prison food service was outsourced five years ago, but the private contractors have faced continuous complaints and problems. The revised budget will provide more than $70 million for the state to hire 352 food service workers.

Advocates of reforming parole are making their fourth attempt in as many years.

Critics of Michigan’s parole process say that too many prisoners are being held past their earliest possible release date. Convicts are sentenced to a range of prison time — one aggravated assault convict received a sentence of 13 months to 20 years, for example. The maximum prison sentence for a crime is set in statute, and judges set minimum sentences in each case by using sentencing guidelines. Prisoners who serve their minimum sentence generally become eligible for parole, but their actual release is at the discretion of the parole board, which may hold them until they have served their entire maximum sentence.

One bill would “establish that the state’s rules for granting parole must be based on ‘objective’ factors, not just ‘substantial and compelling’ ones, and may not deny parole on the basis of ‘subjective reasons such as a lack of insight, insufficient remorse, or an inadequate parole plan.’” The proposal contains objective factors that may be used to justify a parole denial.

The bill, which was introduced in January, passed the House Law and Justice Committee this week and was returned to the House with the recommendation that it pass. This bill is a more modest version of a reform attempted in the past. That proposal was for “presumptive parole,” which would automatically parole prisoners who had served their minimum sentence unless there was a “substantial and compelling” reason to incarcerate them longer.

Related Articles:

Bipartisanship on Criminal Justice Reform Continues to Grow

Senate Proposes Broad Criminal Justice Reforms

Some Proposals for Criminal Justice Reform in the Legislature

Sweeping Criminal Justice Reforms For Michigan

Wasting No Time on Criminal Justice Reform

Ban Pit Bull Bans, Licensure Mandates for Foresters and Shampooers, More

April 13, 2018 MichiganVotes weekly roll call report

Senate Bill 741, Ban local dog regulations based on breed: Passed 22 to 13 in the Senate

To prohibit a local government from enacting or enforcing an ordinance or rule that regulates dogs based upon their breed or perceived breed, including pit bulls.

House Bill 5001, Impose licensure mandate on professional foresters: Passed 32 to 2 in the Senate

Stay Engaged

Receive our weekly emails!

To impose a new licensure mandate on professional foresters (styled by the bill as registration), with a $200 fee, regulations, education and experience requirements and more. The bill would create a state board comprised of officials and individuals currently in this or related businesses, which would devise specific rules, requirements and restrictions. This is related to a recent small forestland property tax break law that requires owners to engage the services of a forester to apply for the special tax treatment.

Senate Bill 751, Revise details of government's permission to give shampoos: Passed 37 to 0 in the Senate

To very slightly relax some of the extensive and detailed licensure restrictions imposed on cosmetology students before they can give a shampoo and blow-dry in a cosmetology establishment, subject to specified limits and conditions. One of these would be that a licensed cosmetologist be present during the act of student shampooing. Student-cosmetologists would still be prohibited from performing other cosmetology services until they get their license from the state, which requires 1,500 hours of training or apprenticeship.

House Bill 5438, Define withholding drugs as human trafficking “coercion”: Passed 37 to 0 in the Senate

To expand the definition of coercion in a law addressing human trafficking, so it includes “controlling or facilitating access to controlled substances for no legitimate medical purpose.”

House Bill 4891, Define parent eavesdropping on child as legal: Passed 105 to 3 in the House

To add a parental exception to a law that defines eavesdropping that is not otherwise prohibited by law. The bill would permit eavesdropping by a parent or guardian who listens in on the private conversations of a child who is a minor.

SOURCE:, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit

Related Articles:

Medicaid Work Requirements, Alien Driver's Licenses, Dead Voters and More

Emotional Support Animals, License Mandates and More License Mandates

Constitutional Amendments on Parents' Rights, State University Boards, More

Passing Bicycles, Peppier Pepper Spray, High School Internship Credit, More

MSU Sex Crime Lawsuits, Online Voter Registration, Dead Voters, More

Strong Link Between Cigarette Tax and Illegal Smuggling Rates

The negative and unintended consequences of excise taxes

Cigarette taxes are a popular way for governments to raise revenue and attempt to thwart the purported sin of smoking. The excise or “sin” taxes imposed on packs of cigarettes by different states create tax — and thus price — differentials between jurisdictions.

People looking to save or even make a buck sometimes exploit those differentials by shopping across a state border or by organizing large, illegal shipments of cigarettes from low-tax areas to higher taxed ones. This tax evasion and avoidance — what we lump together under the term “smuggling” — is rampant in many states. Lawmakers should consider this fact when looking to impose higher excise taxes on cigarettes, for there are often very negative and unintended consequences for doing so.

Each year, we update previous estimates of cigarette smuggling rates in most American states. Our most recent research is now complete through 2016. We find that from 2015 to 2016, none of the top five smuggling states for inbound traffic changed positions. Nevada, the biggest mover in our annual ranking, leapt 35 places to number six in the nation.

Stay Engaged

Receive our weekly emails!

New York tops the list of smuggled smokes again in our state rankings. Nearly 56 percent of all cigarettes consumed in the Empire State are smuggled. It is not hard to see why. The state’s excise tax of $4.35 per pack is tied for the highest in the nation and New York City piles on an additional $1.50 tax. The high excise tax rates and short distance to low-tax Virginia (state tax: 30 cents a pack) make it a prime location for illicit traffickers.

In fact, last January New York City’s law department announced a joint lawsuit with the Bronx district attorney against North Carolina business owners who helped shuttle $500,000 per week in untaxed cigarettes and counterfeit tax stamps to New York state, presumably for resale. That is just one illicit operation. We estimate that New York State lost $1.5 billion in excise tax revenue to smuggling in 2016.

Just this last Friday, April 6, an alleged smuggler was arrested while moving 7,750 packs of cigarettes from Virginia into Pennsylvania. There is a good chance the smokes were bound for New York. One published story indicates that this is the third such bust in the Lehigh Valley area of Pennsylvania alone in the past month.

Rounding out the top five states for cigarette smuggling are Arizona (44 percent); Washington (43 percent); New Mexico (41 percent) and Minnesota (35 percent). Sixth-place Nevada’s 2016 smuggling rate is almost 28 percent of total consumption. We do not expect Nevada to retain its high ranking in the coming year. In 2017 its neighbor, California, hiked taxes by $2.00 per pack and that increase is not yet factored into our estimates. It is likely that the California tax hike will reduce tax smuggling into Nevada.

At the opposite end of our smuggling spectrum, there are source states. The state with the highest outbound cigarette smuggling is New Hampshire, at a whopping 86 percent. That is, for every 100 smokes consumed in the Live Free or Die State, another 86 are smuggled out. This is not a function of New Hampshire having a particularly low tax rate ($1.78 per pack), but of having one that is just relatively lower than that of its neighbors. Idaho (25 percent), Wyoming (22 percent), Delaware (21 percent) and West Virginia (20 percent) round out the top five.

Our study is not the only one of its kind. In 2016 we published a review of existing literature produced by university academics, think tank scholars, consultants and one trade association. More than 20 studies referenced smuggling rates in U.S. states individually, some local units of government and Canadian provinces. Most concluded that cigarette smuggling was a significant issue. One 2015 study by the National Research Council was titled, “Understanding the U.S. Illicit Tobacco Market: Characteristics, Policy Context, and Lessons from International Experiences.” It presented a national average ranging between 8.5 percent and 21 percent.

Our statistical model is designed to compare legal sales of cigarettes with each state’s smoking rates. The difference between what is legally bought and what is expected to be bought given the known smoking rates must be explained. We believe that the difference is represented by smuggling activity.

There are two major types of smuggling: “casual” and “commercial.” Casual smuggling involves individuals crossing a legal jurisdiction or perhaps shopping on the internet to save a buck. The cigarettes they purchase are most often for personal consumption. The commercial aspects are often organized operations involving large shipments across great distances. One shipment discovered in New Jersey and bound for California actually originated in China. A California man pleaded guilty in 2013 to that scheme. Stories such as this illustrate the lucrative nature of the illicit trade in cigarettes.

In 2016 the top states for casual smuggling were, in order, New York, Washington, Minnesota, Nevada and Montana. The top commercial smuggling states were Vermont, Connecticut, New York, New Jersey and Rhode Island.

In addition to making total, as well as casual and commercial, estimates of smuggling, we can run “what if” scenarios based on proposals to raise or cut a state excise tax rate on cigarettes. Three recent tax hike discussions — in Oklahoma, Kansas and Montana — have given us the opportunity to do so.

In Oklahoma, state lawmakers recently hiked excise taxes on cigarettes by $1.00 per pack. Our statistical model estimates that smuggling there will leap from near zero — just 1.53 percent of total consumption — to 12.6 percent. An increase of 11 percentage points may not sound like much, but it represents an eightfold increase in cigarettes smuggled, from 3.8 million packs to 30.6 million packs. At $2.03 per pack, Oklahoma will be surrounded by states with a lower excise tax, including Missouri, which taxes cigarettes at 17 cents per pack.

Montana policymakers are — as of this writing — discussing a $2.00 per-pack increase in the state’s excise tax. Our model estimates that if the increase is adopted, smuggling would increase from an already high portion of 22.5 percent of total consumption to 46 percent. This rate would place the state second in the nation for smuggled smokes, behind New York.

Kansas lawmakers considered a 116-percent increase in the state cigarette excise tax that would have raised it to $2.79 per pack, up from $1.29. Our model estimates that, all other things equal, the smuggling rate would jump to 44 percent of total consumption. Such a leap would mean that 60 million packs of cigarettes would be consumed without excise taxes accruing to the state. Kansas is already surrounded by lower-taxed states.

Tax evasion and avoidance is not the only negative consequence of high excise taxes on cigarettes. We have also reported cases of theft — from retailers, wholesalers and from truckers. Police have been threatened with violence and have even been co-opted by the corrupting influence of easy smuggling dollars. One police officer in Maryland used his county cruiser to escort a shipment of smokes to their destination before he was caught. He was sentenced to prison in 2012.

Remarkably, all of these unintended consequences — and others we haven’t mentioned — have decades-old parallels in the era of alcohol Prohibition. Cigarettes are still legal today, but excise taxes on them are so high in many states that smokers suffer what we call “prohibition by price.” That is, the tax-induced price of cigarettes is so high they are effectively beyond the reach of consumers. With a strong preference for the habit, many smokers turn to the illicit market. Even when smokers continue to pay full freight, there remains a criminal element — like Al Capone’s Chicago gang — willing to take brazen risks for big profits. Many people today may not realize they’ve bought untaxed cigarettes smuggled in from some distant state or shore.

Some states are probably relying too heavily on high cigarette excise taxes for revenue and the purported health benefits. New York state appears to be a smuggler’s paradise. The same states that made the top five in the past are in the top five again, though other states appear to want a promotion into that rarified smuggling air and have gunned for higher excise taxes.

Any state looking to raise its cigarette excise taxes should be acutely aware of the myriad unintended consequences and the unreliable revenue stream these taxes provide. States such as New York, with prohibitively high cigarette excise taxes, would be better off considering lowering their excise taxes to stem the tide of illicit activity created by their outlier status.

Related Articles:

High Cigarette Taxes Lead to More Smuggling

Indiana Could See Cigarette Smuggling Leap with Excise Tax Increase

On Cigarette Tax Evasion, I Told You So

Updated Research Highlights Impact of Cigarette Tax Evasion

Wyoming Lights Up a Tax Hike

New Law Removes Obstacles to Classroom

SB 727 should help alleviate teacher shortage outcry

School districts and unions have complained vigorously in recent years of a teacher shortage. The claim is overblown, but it still makes sense for the state to remove needless restrictions on talented people who want to teach in public schools.

Lawmakers took a big step towards filling the state’s classrooms with qualified teachers by removing a couple key obstacles that would keep potential educators away. Gov. Rick Snyder recently signed into law Senate Bill 727, a measure that smooths the way to hire hundreds more teachers starting as early as this fall.

Most public school teachers enter the profession by completing a state-endorsed, four-year college degree program. For years, Michigan has allowed for alternative certification, but very few have entered the classroom through that streamlined path. Research has consistently shown that alternative certification programs generally produce classroom instructors who are just as capable as those who follow the traditional route.

Some teachers all across the state are educating students without these official state designations – in private schools, homeschools, at colleges and universities and through programs like Teach for America. There is no evidence that these educators are less effective in the classroom than teachers who are trained via the conventional method.

In August 2017 the Michigan Department of Education approved Teachers of Tomorrow to provide alternative certification via its online training program. The organization has certified thousands of teachers in other states, mostly adults with other professional experience who seek to switch careers. Roughly half their trainees are racial minorities.

Stay Engaged

Receive our weekly emails!

Within a couple months of approval, Teachers of Tomorrow attracted 837 Michigan applicants — including many noncertified public school employees and individuals with master’s degrees. But most of them ran into a giant piece of red tape on their way to securing a classroom job.

To secure certification, Michigan law required teachers to pass a basic skills test. For nontraditional, career-switching applicants, that meant having to sit with high school students and take the SAT before receiving a permanent teaching certificate. The extra obstacle was delaying, and possibly deterring, many potential teachers.

Senate Education Committee Chair Phil Pavlov, R-St. Clair Township, shepherded through SB 727, which ended the basic skills test requirement. Not all of the now 1,353 Teachers of Tomorrow applicants will complete the course and make the cut, but hundreds more eager and qualified teachers should be available for Michigan to hire this fall as a result of the new law. A significant share of them should be equipped to teach in the sought-after STEM subjects or bilingual education.

Another legislative change could lead to an even greater number of prepared teaching candidates for Michigan schools in the future. SB 727 ends the requirement that an alternative certification program must be approved in other states first, instead allowing it to be “modeled after a program that has a proven record.” This lowers the hurdle for new programs while preserving a standard of quality.

When talk of a teacher shortage likely re-emerges later this year, it will be important to remember that state leaders have taken a simple but important step to expand the supply of public school teachers.

Related Articles:

Education Officials Avoid Obvious Solutions

Assessing Michigan’s Alleged Teacher Shortage

Detroit Can Fill Teacher Shortages

Novi Community Schools Received 952 Applicants For One Teaching Job

Despite Claims, There Is No Teacher Shortage in Michigan

Rural School Makes Fast Rise

Akron-Fairgrove among most improved on Mackinac report card

In 2014 the Michigan Department of Education identified rural Akron-Fairgrove Elementary in the state's Thumb region as a struggling "Focus School." With outside help and community support, the school quickly turned around. Within two years, Akron-Fairgrove shed the "Focus School" designation and was being lauded by the state for beating the odds, but it wasn't resting on its laurels.

The recognition and attitude are mirrored in the results of the Mackinac Center's new Elementary and Middle School Context and Performance (CAP) Report Card, which adjusts the previous three years of state M-STEP testing data to account for the challenges associated with poverty.

Three out of five Akron-Fairgrove Elementary students are eligible for free lunch subsidies due to low family income. Yet out of more than 2,000 schools statewide, the school showed the third-greatest CAP Score improvement from the previous five-year period. (The two most-improved schools are a pair of former Detroit district schools converted to charter status under nonprofit management.)

Akron-Fairgrove Elementary's giant step up moved it into the top 1 percent of CAP Scores for all schools statewide. Only one of the 534 rural schools across the state (Brown Elementary in Byron Center) rated higher, and that, only narrowly. Our findings about Akron-Fairgrove are not an outlier, either. The school earned a nearly perfect score on the Michigan Department of Education's School Index, the state's new official rating system. The school also has been nominated by the state to become a U.S. Blue Ribbon School.

Stay Engaged

Receive our weekly emails!

Akron-Fairgrove Elementary rests off the beaten path in northern Tuscola County. The school district encompasses its small namesake villages and acres of windswept farmland, touching on a small corner of Saginaw Bay. Fewer than 300 students are enrolled in grades kindergarten through 12, half of them in the elementary school.

School leaders attribute the remarkable progress to assistance from the MI Excel Resource Center. The center's facilitator, Sarah Watson, helped the school reconfigure systems, leading to better teaching strategies. Akron-Fairgrove adapted its curriculum to focus more deeply on fewer key concepts and standards. "We stopped placing blame, and started asking hard questions," said Superintendent Diane Foster.

Careful attention to results on periodic math and language arts tests also led to a greater focus on individual student needs. A private staff room was turned into a "data wall" with color-coded sticky notes attached to each student's name to show who is meeting standards in math and language arts and who needs additional help. The school launched "Power Hours" for each grade; during that time, classroom aides take the data and give students individual attention.

"If a student is struggling, that's a challenge to our staff. They say they're going to figure this out. They will turn the Rubik's cube until they find the right combination," Foster said. "They're not going to take ‘No’ for an answer."

After losing both the Focus School label and the grant money for their facilitator, Foster and her team didn't claim victory and move on. Instead, they maintained the sense of urgency to help students achieve more.

"Akron-Fairgrove has the most humble, hardworking, and tenacious leadership that I have ever had the opportunity to serve," said Watson. "It is evident in the willingness of the staff to do whatever it takes to make the necessary changes for their students."

Continuing to aim higher, the school earned the highest scores in Tuscola County on seven of eight 2017 M-STEP tests, despite serving a higher share of low-income students than most other county schools. According to Principal Rebecca Crosby, the changes have caught the attention of their neighbors. "Not long ago people used to say to us, 'When are you closing down?'" she said. "They're not saying that anymore."

The rural school district still loses more resident students to Schools of Choice than it gains from nonresidents who enroll. But that trend is turning around. The number of children transferring into the district has nearly tripled over three years – going from 12 to 34 – while the number transferring out has dropped by a similar amount. One family drove 40 minutes to drop off their child each day.

Crosby notes that five of the elementary school's nine teachers are new to the staff in 2017-18, an unusually high turnover that’s tied to various individual circumstances. But the faculty's focus on improving academics has remained strong.

Akron-Fairgrove has drawn back educators who demonstrate a true investment in the community. Crosby and several staff members and their spouses are Akron-Fairgrove alumni, and the children are all recognized by name. A stranger is quickly recognized on campus. "It's definitely family here," Crosby said. "It makes a difference when people really trust you with their kids."

Community support for the schools has been crucial. Local businesses and churches have helped underwrite a program that offers free backpacks and school supplies to students. Strong relationships and open communication also have helped the district move to a faculty-designed, balanced calendar with a shorter summer vacation and more breaks throughout the rest of the year. More frequent breaks help keep students focused when they are at school, and as a result, student discipline has become less of a problem. Crosby observed that families have not complained and that all staff want to keep the schedule.

"We're flying now," said Foster. "We're in a good place as a district, and students are going to be the beneficiaries."

Related Articles:

Detroit Charters Far Outperform Traditional Schools

How to Revamp Michigan’s School Rating System

Hamtramck Academy Tops Mackinac Report Card

Dearborn Schools Rise to the Top

The Michigan Context and Performance Report Card: Public Elementary and Middle Schools, 2017