A 2009 study co-written by Michigan State University economist Charles Ballard reports that the state saved $3.7 billion in wage, pension and health care expenditures and that Michigan state employee wage growth was close to zero between 2001 and 2008. But James Hohman, fiscal policy analyst for the Mackinac Center for Public Policy, said the data does not back Ballard’s figures.
The Detroit News reported on Jan. 3 about Gov. Snyder’s plans to “target” public employee pay and benefits as part of an effort to balance the state budget. The newspaper began by noting that the Mackinac Center’s work on the subject has been influential in driving debate in the direction of where the new governor is going. Ballard’s figure was presented as evidence that not all policy analysts agree that this is a worthwhile direction.
Hohman calls the Ballard study incomplete and inaccurate.
According to the Michigan Department of Civil Service, the state spent $3.9 billion on employee pay and benefits in 2001 and $4.7 billion in 2008. That’s an $800 million increase despite there being an 18 percent drop in the state work force. There were 62,057 full-time state of Michigan employees in 2001 and 50,799 full-time employees in 2008.
So how did compensation increase $800 million with about 11,200 fewer state employees?
The average employee costs much more now than in 2001, despite any concessions, Hohman said.
The average cost of a state employee was $63,474 per year in 2001. By 2008, this had gone to $93,039. That’s an increase of 46.5 percent over the seven years and more than $15,000 per employee above the rate of inflation.
“It tells me that the state is not addressing the reason why government costs so much - salary and benefits,” Hohman said.
This past spring, a 3 percent pay hike was approved for state employees. The total additional cost to taxpayers for this fiscal year is estimated to be $77 million.
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.
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MichiganVotes.org Jan. 14 Weekly Roll Call Report
The House and Senate met this week to elect officers and adopt rules, but took no votes on legislation. Because there were no votes, this report instead contains several newly introduced bills of interest.
House Joint Resolution C (Extend term limits)
Introduced by Rep. Sharon Tyler (R), to place before voters in the next general election a Constitutional amendment to revise the term limits on legislators. Currently, representatives may only serve three terms of two-years each, and senators may only serve two terms of four-years each. The bill would allow legislators to mix-and-match these House and Senate terms in any combination for a total of not more than 14 years in the legislature. The measure is cosponsored by Reps. Greg MacMaster, Peter MacGregor, Al Pscholka, Matt Lori, Kevin Cotter, Kenneth Kurtz, Mike Shirkey, Mike Callton, Ken Yonker, Gail Haines, Hugh D. Crawford, Kurt Damrow, and Wayne A. Schmidt, all Republicans. Referred to committee, no further action at this time.
House Bill 4001 (Repeal Business Tax surcharge)
Introduced by Rep. Kurt Heise (R), to repeal the 21.99 percent Michigan Business Tax surcharge imposed on businesses as part of a $1.4 billion tax hike passed in 2007. Referred to committee, no further action at this time.
House Bill 4003 (Ban “stealth" unionization of independent contractors)
Introduced by Rep. Paul Opsommer (R) on January 13, 2011, to establish that a person whose private employment compensation comes from a direct or indirect government subsidy is not considered a government employee, and so is not subject be being inducted into a government employee union. This would apply to the home day care providers who are the subject of a Mackinac Center lawsuit. Referred to committee, no further action at this time.
House Bill 4008 (Allow helmetless motorcycle operation)
Introduced by Rep. Richard LeBlanc (D), to repeal the mandatory motorcycle helmet requirement for a motorcycle operator who purchases extra insurance with $20,000 personal injury coverage. Referred to committee, no further action at this time.
2011 House Bill 4009 (Repeal concealed pistol “gun-free zone” provision)
Introduced by Rep. Richard LeBlanc (D), to repeal the “gun-free zone” provision of the concealed pistol permit law, which prohibits those who have received a permit after meeting the background check and training requirements, from carrying a pistol in schools, day care facilities, sports stadiums or arenas, bars, bar/restaurants, places of worship, college dorms and classrooms, hospitals, casinos, entertainment facilities that hold more than 2,500, and courts. Referred to committee, no further action at this time.
House Bill 4019 (Eliminate charter school cap)
Introduced by Rep. Tom McMillin (R), to eliminate the cap on the number of charter schools chartered by state universities. The current cap is 150 schools. Referred to committee, no further action at this time.
House Bill 4020 (Create government loan guarantee program for some businesses)
Introduced by Rep. Mark Ouimet (R), to authorize state loan guarantees for new bank loans of up to $750,000 to small businesses (less than 250 employees and $6 million in gross sales). Referred to committee, no further action at this time.
House Bill 4035 (Authorize state government debt for "light rail" projects)
Introduced by Rep. Wayne Schmidt (R) on January 13, 2011, to authorize up to $100 million in state borrowing and additional debt (“selling bonds”) to build a new “fixed-guideway transit” system and other rail projects. Referred to committee, no further action at this time.
House Bill 4050 (Ban health care “individual mandate”)
Introduced by Rep. Tom McMillin (R), to place in statute a prohibition on any state law or agency rule that would directly or indirectly “compel any person, employer, or health care provider to participate in any health care system.” Unlike recent proposals that would place this in the Constitution, a majority of the legislature could amend or repeal this statutory ban with the governor’s signature. However, also unlike a constitutional amendment, a two-thirds vote of both the House and Senate is not required to place this prohibition in law. Referred to committee, no further action at this time.
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.
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