Snyder’s 8 Years Get ‘B’ On DC Think Tank’s Fiscal Report Card
Business tax and pension reform helped his grade, gas tax hike did not
As Gov. Rick Snyder nears the end of his eight years in office, a national free-market think tank gives him high marks for his fiscal policy.
The Cato Institute gave Snyder a “B” grade on its 2018 Fiscal Policy Report Card on America’s Governors.
Just five governors received an “A” grade and all five were Republicans. The highest grade received by a Democrat was a “C,” given to Montana Gov. Steve Bullock.
The scores were based on the average of seven measures of how well a governor held the reins on state spending and taxes using a 1-to-100 scale. Snyder finished with a score of 55 which left him as the lowest-scoring “B” grade governor. Bullock’s score was a 54.
Governors received scores in the categories of spending, revenue and tax rates.
Snyder received a 59 in spending, a 56 in revenue, a 50 in tax rates, for the average of 55. The highest scoring governor was New Mexico’s Susana Martinez, who got a 73, while the lowest scoring governor was Washington’s Jay Inslee, who received a 23.
“The governor has pursued important reforms, such as restructuring Detroit’s finances and signing into law right-to-work legislation,” Cato stated in the summary of Snyder. “Snyder has made important tax reforms. He repealed the damaging Michigan Business Tax and replaced it with a less harmful corporate income tax.”
“In 2017, Michigan enacted pension reforms for public school employees, enrolling new hires in a defined contribution plan with the option of a hybrid plan,” Cato’s report stated. “This reform, championed by Snyder, will substantially reduce the system’s future costs.”
Cato also criticized Snyder for increasing taxes, however.
“In 2015, he increased gasoline taxes and vehicle fees to raise more than $500 million a year. Snyder and the legislature pushed through this tax package despite Michigan voters having rejected by an 80–20 margin a sales and gas tax increase for transportation on a May 2015 referendum (Proposal 1). That rejection was ‘the most one-sided loss ever for a proposed amendment to the state constitution of 1963.’ Yet later that year, Snyder and the legislature hiked taxes for transportation anyway.”
Two state economists generally agreed with the B grade given to Snyder.
“I would give Snyder an A-,” said University of Michigan economist Don Grimes. “Along with Cato comments, he arranged state support for the bailout of Detroit. I would never have believed the state legislature would have done that. Only criticism is not enough financial support for higher ed and apprenticeship training. But all in all, a very good governor.”
“The Cato analysis is a good one,” said Gary Wolfram, the William E. Simon Professor in Economics and Public Policy at Hillsdale College, as well as a member of the Mackinac Center Board of Scholars. “The elimination of the Michigan Business Tax was probably the most important thing, as the tax was complicated, costly and very inefficient from an economic standpoint. The imposition of the vehicle fee and the increase in the gasoline tax was actually a much sounder way to fund road improvement than Proposal 1. Cato could have pointed out that Proposal 1 raised the sales tax, altered school financing and local government financing, etc. The DFP [Detroit Free Press] called it ‘likely one of the most complicated and confusing questions ever placed on a Michigan ballot.’ So it was not just a ‘raise taxes to fund roads’ issue.”
The report card notes that Michigan voters will decide whether the state will legalize and tax the recreational use of marijuana. Wolfram expressed doubt about the relevance of that question to Synder’s fiscal record.
“I’m not sure how the recreational marijuana issue has much to do with the governor,” Wolfram said. “The legislation that regulated and taxed medical marijuana, which had become legal under a 2008 initiated law, was definitely a positive both for clarity under the law and for state revenue. Otherwise, I think Cato did a fairly nice job of looking at the Snyder report card.”
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.
Let Markets and Innovation Drive Energy Efficiency
It matters how we get there
Perceptions of how energy can or should be used and generated are changing, and that change is making itself felt in Michigan. While this shift is typically viewed as a move toward clean and efficient energy, it also entails an increasing list of limits on how and when energy will be used. These changes are making the work of the Environmental Policy Initiative at the Mackinac Center ever-more important as a strong voice for balanced energy policy and free-market choices is needed, especially when so many would rather use forced restrictions on energy use and government-mandated efficiency measures.
At its core, improved efficiency is a worthy goal. Doing and accomplishing more with less energy is an essential aspect of bettering human life, reducing costs and improving goods and services. Efficiency improvements have helped to pick humanity up out of the Dark Ages, taken us to space, and have ushered us into the age of cloud computing, smartphones and global interconnectedness. So, someone might reasonably ask, “Who could possibly be opposed to more efficient energy use?”
But there is more to this shifting energy paradigm than just becoming more efficient. It is one thing for people, freely associating in an open market, to demand improved efficiencies from businesses and products. It is another thing entirely for politicians, government bureaucrats or utility executives to mandate that citizens achieve some official vision of efficiency via government rule, law or mandate.
Centrally planned efficiency measures are antithetical to choice and free markets. The logic behind them — often found in government, academia and the environmental movement — is that the average citizen is incapable of choosing wisely, and therefore, this choice must be made for them.
Steven Chu, energy secretary under President Barack Obama, exemplified this attitude at a 2009 energy conference. In an off-stage comment, he stated, “The American public … just like your teenage kids, aren’t acting in a way that they should act. … The American public has to really understand in their core how important this issue is.”
Michigan’s utilities are clearly buying in to many of the same concepts. In June, Consumers Energy submitted its integrated resource plan to the Michigan Public Service Commission, the public agency that oversees energy generation in the state. That plan demonstrated the company’s desire to reduce customer energy use, “to act as a driving force for good and take the lead on what it means to run a clean and lean energy company.” But “taking the lead,” also requires the company to close its nuclear and coal plants while also drastically reducing its use of natural gas plants. That means Consumers Energy plans to “meet about 65 percent of Michigan’s energy needs with renewable energy, energy efficiency and demand response by 2040.”
“Demand response” (in utility-speak) will “benefit the environment by giving [customers] the option to voluntarily reduce their energy use during a few peak times during the year.” In plain English, that means Consumers Energy will automatically cut in half the output of your air conditioning unit — the appliance keeping your family comfortable on hot days — to reduce demand on the electric grid. Of course, Consumers assures customers in their marketing emails that this program will still keep your home comfortable.
But the pressure to implement these programs, where you’re asked to install limiting devices on your air conditioner, is based on the notion that energy users are doing something wrong and they should feel some moral compunction to reduce their energy consumption. Rather than relying on ‘good old American ingenuity’ to build more abundant, more affordable, more clean, and more efficient generation methods, we have too often bought into the notion that we can become a “force for good” by mandating that we do less with less.
With government, special interests, environmental groups, and now, utilities increasing the pressure on households and businesses to use less energy and to have fewer options, it’s essential to remind utility and elected officials that America already leads the world in improved environmental performance and energy efficiency.
In fact, the United States has led the world in reducing greenhouse gas emissions for the past nine years, at the same time as we also led the world in producing natural gas — a fossil fuel. Striving for ever-more efficient means of using and producing energy is a good thing, but only when the freedom to choose those, or other means, remains.
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.
More From CapCon