Residents Seeing Tax Cut Bonus In Their Utility Bills
Not much but not nothing: About $20 a year
Michigan residents and businesses soon will recognize an estimated $379.5 million in savings on their utility bills as a result of Tax Cuts and Job Act passed by Congress and signed by President Donald Trump in December 2017. The federal tax cut reduced corporate tax rates from 35 percent to 21 percent.
Investor-owned utility companies are among the beneficiaries. Because they are regional monopolies with rates regulated by the Michigan Public Service Commission (MPSC), their customers are entitled to some of the tax savings. The MPSC estimates that business and residential customers of the state’s electricity and natural gas utilities will see an average savings of $1.95 a month.
The MPSC last December ordered 13 Michigan utilities to calculate their savings under the tax law that went into effect on Jan. 1, 2018. The commission then approved approximately $370.8 million in rate cuts for Michigan utility customers over the summer, including an estimated $269.6 million in savings for electric customers of the state’s two largest, Consumers Energy and DTE Electric.
“When regulated utilities have lower costs, those savings get passed along to consumers,” said James M. Hohman, director of fiscal policy at the Mackinac Center for Public Policy. “So one of the benefits of the federal tax cut is lower electric rates, and that will be appreciated by households and businesses.”
According to an MPSC estimate, Michigan utilities will see a $3.7 billion reduction in their current and future long-term tax liability as a result of the tax-law changes. “The Commission’s goal was twofold,” said Commissioner Rachael Eubanks: “Return the maximum amount of rate relief possible to utility ratepayers, and do it in an expeditious manner. We’re proud to have been able to accomplish both,” she said.
With the first round of tax-reform generated customer credits approved last spring, lower rates started appearing in customers’ July bills. While the decrease varies for each utility’s residential customer, the bill of the average Michigander will go down $1.93 a month.
“In January, the MPSC began the process of calculating rate savings for customers of investor-owned electric and gas utilities,” said Nick Assendelft, a spokesman for the public service commission. “In February, it started a three-step process that balanced thoroughness and opportunity for stakeholder input with expediency.”
“Commission staff reviewed the law’s impact on previous rate orders; filed testimony, rebuttals, briefs and reply briefs; and participated in settlement meetings to expedite the process,” he continued. “MPSC staff worked collaboratively with utilities and other stakeholders to complete in just six months the Credit A bill adjustments. They have now launched the second round of Credit B calculations and the Commission anticipates announcing this fall more customer rate relief. That will be followed by a third round of analysis — Calculation C — to capture future, long-term impacts that the lower federal corporate tax will have on customer rates.”
Customers of other investor-owned Michigan utilities are also seeing tax cut credits under the MPSC’s recent order. The credits include $8.6 million for customers of Indiana Michigan Power Co., and approximately $50.3 million divided between customers of Alpena Power Co., DTE Gas Co., Michigan Gas Utilities Corp., Northern States Power, SEMCO Energy Gas Co., and Upper Michigan Energy Resources Corp.
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.
Choice Satisfies Most Parents, Appeals to Most Voters
New surveys highlight favorable experiences, need for more options
Some critics ignore or overlook the fact that Michigan's public charter schools exist to offer families a better option. These critics may not realize these options endure because most of those families prefer what they have found.
A recent Detroit Free Press article depicted the choice movement as represented by a few Detroit parents who decided to leave charter schools to re-enroll their child in the state's largest school district. Not surprisingly, such portrayals cry out for context.
Earlier this year the Mackinac Center sponsored an online survey of more than 1,400 Michigan charter school parents. The questionnaire followed a 2017 phone poll of 800 parents who exercised some form of educational choice, whether in a charter school or in a district other than the one where they live.
According to both surveys, most parents who have selected a different public school than the one assigned to their home address highly rate their child's new school, expect more of their child's educational success and recommend the experience to others. Going into greater depth, the newer report also more clearly highlights the diverse and pressing reasons that drive families to choose a public charter school.
In a state where poor student performance on state tests is clearly documented, it is not surprising that parents are most likely to say weak academics motivated their search for a new school. Yet many Michigan charter parents also placed high priority on other concerns, whether greater flexibility to meet special learning needs or an environment safe from bullying, racism or other campus dangers.
About 70 percent of the parents surveyed said they faced no significant challenges in finding a charter school. Among those who did, the most commonly cited obstacles were finding information on school quality and finding schools with openings. This was especially true for parents who said they weren't able to enroll their child in the charter school that was their first choice.
And where do parents typically turn to find the information they need? Families who end up opting for an online charter rate the cyber school's website as most important, while campus visits take precedence for those at brick-and-mortar campuses.
In Michigan, charter schools represent a major vehicle for greater educational opportunity. But that doesn’t mean they will work out for everyone. While most parents who select a charter school for their child have favorable experiences, about 10 percent expressed enough dissatisfaction to consider switching to a different school this fall.
Most of the families who thought of switching have very few or no alternatives to enrolling in a local district or finding another charter school. Some families sacrifice to pay tuition, if they can afford it. Restrictive language in Michigan's constitution says public funds or credits cannot be used to aid students that attend a private school.
Michigan residents, however, say they want a type of private school choice program that is available in nearly 20 states. In a July survey sponsored by the Mackinac Center, half or more of the state's likely voters strongly favor providing tax credits for scholarship donations that help underwrite private school tuition for low-income or special needs students. Total support exceeds 70 percent.
Nearly 60 percent back a similar plan: state-funded education savings accounts that allow parents to, in the words of the survey, "pay tuition for private schools or online education programs, private tutoring or to save for future college expenses."
Voter support stands even stronger for protecting the educational choices Michigan families already enjoy. Two-thirds favor the concept behind the state's Schools of Choice program, which allows students to enroll in neighboring districts. And for the third consecutive edition of this biennial poll, 55 percent of the state's voters rightly reject the argument that school choice hurts traditional public schools.
Most respondents say Michigan has the right amount of choice, but those who say the state needs more choice are twice the number of those who say it has too much (26 to 12 percent). Notably, 58 percent of Detroiters agree that there is not enough choice in education. That comes from a city where tens of thousands of students already have fled the assigned district, causing some major media outlets to lament the "chaos" of too many options.
If reporters and pundits actually listened to families who have exercised their right to choose, we might begin to have more conversations about how to expand access to effective learning options and less talk of taking those options away.
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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