It is counterintuitive, but many businesses actually want to be regulated. Regulation can raise the cost to upstarts entering a particular field and provide businesses with the opportunity to influence — if not write — the actual legislation under which they will operate. A good example of this involves beer and wine wholesaling, which in many states involves a government mandate that forces suppliers of alcohol to grant exclusive territorial monopolies for their products to wholesalers. Recently, wholesalers have expended a great deal of effort to strengthen with federal laws their protected status in the states.

It should not surprise even the most casual observers that special interests of every size and sort often descend on capitols of government in search of favors. To facilitate access to lawmakers, these groups often make large campaign contributions to individual legislator.

Often the favor seekers want special treatment under the tax code, or to see protectionist barriers — such as tariffs — hiked to thwart international competitors. Another arena is that of business regulations. Few have mastered the art of winning regulatory privileges for themselves more than beer and wine wholesalers.

U.S. House of Representatives' Bill 1161 — the Community Alcohol Regulatory and Effectiveness Act — would help ultimately protect the local monopolies for wholesalers by making it harder to challenge state restrictions on competition. Capitol Confidential covered this story last month after noting the legislation was supported by the Michigan Beer and Wine Wholesalers Association.

What makes this story all the more topical today is the release on July 12 of a study detailing some $82 million in state and federal “campaign contributions and federal lobbying” from 2006 through 2010. A press release accompanying the report, which was published by the Specialty Wine Retailers Association, argues that the lobbying effort was coming “in advance of a push to pass federal legislation protecting alcohol wholesaler industry (HR 1161).” It also questions the convenient timing of campaign contributions to lawmakers that came hard on the heels of their public support for the precursor to HR 1161. That was House Resolution 5034, which did not make it out of committee but was later reborn as HR 1161.

According to the study, online political newspaper Politico.com wrote in December 2010: “As beer and wine wholesalers were looking for co-sponsors for their top legislative priority this Congress, they opened their checkbooks wide — giving at least $1.3 million in campaign cash to House lawmakers who signed on to the bill. In all at least 32 House members were given wholesaler contributions within a month of signing on to the legislation — including at least 10 lawmakers who were given contributions within a day of co-sponsoring the bill.”

The study also noted that Michigan’s own Rep. John Conyers received the largest contribution from the group, $66,699, in 2010. Rep. Conyers just happened to be Chairman of the House Judiciary Committee, which took testimony on H.R. 5034. Of the 150 co-sponsors of this 2010 legislation, five were from Michigan, including John Dingell, Dale Kildee, Gary Peters, Candice Miller and possible presidential candidate Thad McCotter.

The effort to federalize monopoly protections by wholesalers and for wholesalers may be a function of fear that state lawmakers will try to dismantle the privileges won for themselves over the years. Right here in Michigan, Gov. Rick Snyder has created an advisory committee on liquor control designed to review existing rules in the hope of making the system more efficient and responsive. That could mean weakening the protected status of existing beer and wine wholesalers, something of which they likely want no part.

The fact is, the very history of alcohol control is a history of aggressive lobbying for special favors by powerful interests, including exclusivity on the sale of popular products. In his paper “Michigan’s Liquor Distribution Systems: An Historical Review and Analysis,” John Taylor, now a Wayne State associate professor of supply chain management, explains that retail pharmacists were allowed to sell medicinal liquor during Prohibition and that this may have given them — through their Michigan Drug Trade group — a lobbying head start after Prohibition ended.

According to Taylor, “state druggists made repeated efforts to promote a plan of exclusive package sales through druggists.” While they did not technically win exclusivity, the first 600 agents designated to distribute liquor for the state were all druggists. It strains credulity to suggest the results of this lobbying were not effective.

The world has changed a lot since the 1930s when the druggists were pushing legislators to grant them exclusive rights. Today, the beer and wine wholesalers are the established and well-heeled interests looking to protect — if not tighten — their rein on exclusive sales territories and other government-granted advantages. The Michigan Beer and Wine Wholesalers themselves report raising $234,230 in 2011 for their Political Action Committee alone, and this comes after their lobbying expenditures doubled from 2009 to 2010, according to the Center for Michigan and the Campaign Finance Network.

All of these lobbying efforts may be perfectly legal, but that doesn’t mean they are beneficial to other businesses or consumers. Indeed, they very likely sap the economic well-being of many businesses and people for the sake of a few. Everyone is economically self-interested to some degree, but not everyone has the money and power to protect themselves from the rigors of a truly competitive marketplace.

We live in the information age, but much of that information can be misinformation. Case in point, if Joe or Jane Q. Citizen were to rely on school district websites for facts about the state K-12 budget, chances are they'd end up misinformed, misdirected and mystified.

For starters, many school district websites are only referencing the K-12 budget as Gov. Rick Snyder presented it in February. This is misleading, because the level of cuts in the budget that was actually enacted was less than what the governor proposed.

On Feb. 17, Gov. Snyder proposed a $470 per-pupil cut to the state's primary school funding mechanism, which is called the foundation allowance. But by the time the budget was passed and signed into law, the Legislature had changed it considerably. In the final version of the budget, the cut to K-12 schools was $270 per pupil.

Even the seemingly straightforward $270 figure is contentious. That's because $170 of that $270 represented last year's one-time federal stimulus money. Considering those stimulus dollars as if they were a permanent part of the state's funding picture is highly questionable to say the least. If the $170 is left out of the equation, the K-12 cut was actually $100 per pupil.

Regardless of whether that $170 is included or not, the budget Gov. Snyder ultimately signed into law was not the one he initially proposed. However, based on a Capitol Confidential sampling, most school district websites that address the state K-12 funding issue make reference only to the governor's February proposal.

Typically on these websites the link is labeled “state school funding crisis,” or something along those lines. Viewers who click on the link are taken to a page that either displays Gov. Snyder's proposal or, (more often) displays a letter, usually dated in March or April, from the local superintendent to state officials. In these letters the details of the governor's original proposal are laid out.

Conspicuously absent from these websites is the fact that Gov. Snyder's original proposal was not the one the Legislature passed. One reason this sends up red flags is that, arguably, the governor's original proposal would provide better propaganda fodder for those opposed to the cuts than the less stringent cuts that were enacted.

“You'd think they'd at least show how the budget actually turned out — not just how it looked in the beginning phase,” said Rep Frank Foster, R-Pellston. “To me, it paints a picture of disinformation. Factual information is best if it's current. If it isn't up to date, it's not accurate information.”

Linda Wacyk, spokesperson for the Michigan Association of School Administrators (MASA), acknowledged that the older information might be misleading. However, she also said there could be simple explanations for why the sites hadn't been updated.

“We certainly wouldn't encourage districts to be using dated information,” Wycyk said. “We send out the latest information to them on a regular basis. That said, however, a lot of these districts are probably so busy trying to figure out how to do their budgets that they don't have time to spend worrying about their websites.”

“In fact, some of those districts, such as Lansing, have probably had to lay off the people who usually work on their websites,” Wycyk added.

Dealing with less money than was previously available is always tough. But in reality, this year's K-12 budget cuts represent only a minute portion of what is actually spent on Michigan schools. According to the latest U.S. Census Bureau numbers, Michigan public schools received substantially more money per pupil when taking into account total funding.

When Gov. Snyder and Republican legislators claimed they cut school funding by “just” 1.4 percent, they based that figure on the $7,316 per-pupil foundation allowance the state provided for schools last year. However, the governor and the Republican lawmakers probably should have compared their cuts to the $11,987 per-pupil totals that schools in Michigan receive when local dollars are factored in. Using that figure, the cuts only amounted to 0.83 percent.

Wide use of the scary-sounding $470 per-pupil cut that was proposed but didn't pass is only one of the questionable ways in which facts about the budget seem to be misrepresented. It appears that some school districts are tallying up expenses and cost increases and claiming they are part of the state cuts.

State lawmakers were asked if they felt they were having to dispel misinformation from their constituents before they could even start to explain their positions on the K-12 budget.

“Yes, it's horrible” said House Education Committee Chair Paul Scott, R-Grand Blanc. “I guess I sort of expected it from the MEA (Michigan Education Association), but it's kind of a double whammy when this brand of disinformation and talking points are put out by the administrators.”

“In my district a number of administrators have used some really souped-up numbers when explaining the state budget impact on their own budgets,” Scott added. “They toss in their retirement costs and other things that have nothing to do with the state budget and add them in as if they were state cuts. But you know, when you get away from the people close to the associations and the schools it's different. Most of the ordinary people out there that I talk to know what's been happening in this state. The average person tends to be supportive of what we've done.”

Rep. Jeff Farington, R-Utica, said he wasn't surprised to hear that many school district websites were just presenting Snyder's proposal and not mentioning the actual changes made by the Legislature.

“This is being done on purpose,” Farrington said. “It's a campaign.”

“It's not just about the budget,” Farrington continued. “There's a disinformation campaign about the Emergency Manager legislation and the other reforms. Recently the unions were trying to claim that we (the lawmakers) didn't include ourselves in the 80/20 health care reforms. That's just not true.”

Foster said that just because someone was misinformed doesn't mean they've necessarily closed their mind.

“I can tell that some of the people I have conversations with in my district are just repeating the MEA (Michigan Education Association) script.” Foster said. “But a lot depends on how much the person you talk with is engaged with the issue. I find that some of the people who have misinformation are still willing to listen; the others are just lost.”

In response to the lawmakers' accusations of a disinformation campaign, Wycyk said that school administrators have simply been trying to tell their side of the story.

“Telling half a story is just as bad as telling an outdated story,” Wycyk said. “If you limit the story to just the foundation grant, you're only telling half of what's really happening. Administrators are trying to tell the whole story about everything their districts are dealing with.”

Readers should note that many school district websites viewed by Capitol Confidential included no complaints or references to the state budget at all. These sites simply presented straightforward school news about Kindergarten registration, physical exams for athletes, upcoming events and so on.

In his initial proposal, Gov. Snyder wanted to shift $900 million from the School Aid Fund to support community colleges. In the end this shift was reduced by $310 million. Obviously school district websites that are only reporting Snyder's original $470 per pupil cut proposal do not reflect this change in the shift either.

Some of the school websites Capitol Confidential viewed do present the state budget situation in an up-to-date fashion that reflects the changes the Legislature made to the Snyder proposal. However, even these school districts have their own ways of calculating the impact of the state budget cuts.

Capitol Confidential will look at that angle in an upcoming article.