Stricter Rules Proposed For Taxpayer Funded Bridge Cards
Bill would end cash withdrawals, make direct payments for some living expenses and add photos of recipients to cards
In an effort to stop abuse of Michigan's food stamps debit card program, State Rep. Tom McMillin, R-Rochester Hills, wants state Bridge Cards to have photos and no longer allow recipients to take cash withdrawals from them.
Rep. McMillin introduced House Bill 5536 earlier this week with 12 co-sponsors. He said the technology is available to have the state make direct payments from the Bridge Card to landlords, utilities and child care providers while restricting food and clothing purchases to the basics.
He said those measures as well as a photo identification on the card would greatly reduce fraud and abuse and "ensures the taxpayer funded assistance is going to help out — not (be used) for filet mignon or designer clothes. It also makes sure taxpayer money isn't going for illegal drugs and other illegal or inappropriate expenditures."
There are an estimated 85,000 people in Michigan on Bridge Cards.
Last year, Gov. Rick Snyder signed legislation that required the Department of Human Services to check incarceration records and deactivate the Bridge Cards of people who are in prison. The legislation also requires the state to routinely check and see if recipients are on the U.S. Social Security Death Index database. Both practices were already part of DHS policy.
State Sen. Rick Jones, R-Grand Ledge, was involved in trying to end abuse of Bridge Cards in the past. Jones introduced legislation in 2013 after reports that Bridge Cards were being used at liquor stores, horse racing tracks and strip clubs. A state investigation last year found that a casino in Michigan took in $87,000 from Bridge Cards.
Sen. Jones said he would be supportive of the bill, but doesn't think the federal government would allow it.
"Do I agree with it? Yes. But DHS would have to call the feds and see if they would sign off on it. From my conversations in the past, they wouldn't," Sen. Jones said. "The problem is the feds won't allow most of that. The feds have to agree to it. They supply most of the money. Unless something is changed, they won't allow pictures on the card."
Robert McCann, spokesman for the Senate Democrats, would not answer as to whether Senate Democrats would support these Bridge Card reform measures. He did ask if there would also be a call for greater accountability for the "untold millions of dollars that MEDC hands out to corporations as well."
Rep. McMillin is running for Congress to succeed retiring Congressman Mike Rogers in the 8th District.
(Editor's note: Robert McCann, spokesman for Senate Democrats, responded to questions after the original story was published. His comments have been added above.)
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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Small Business Owner: An Increased Minimum Wage Hurts Everyone
By Kevin Kelly
The ballot proposal that would raise Michigan's minimum wage to $10.10 per hour has raised a number of concerns for small business owners in Michigan.
This would increase the wage by 36 percent for non-tipped employees and 280 percent for tipped employees. The magnitude of this increase will have a dramatic impact on the restaurant industry.
I would venture to say few industries, if any, in Michigan are capable of absorbing this percentage increase in costs when labor already represents 30 to 35 percent of every dollar spent by the consumer.
Research indicates that today 1 in 4 restaurants fail in the first year and 60 percent within three years. That failure rate likely will increase significantly with this proposal. Furthermore, future investments in this industry will be curtailed as investors/business owners will find more profitable ways to spend their time and capital.
The coalition behind this proposal suggests that this increase be passed on to the consumer in terms of higher prices, and in part be absorbed by the business owner via lower margins. What they fail to realize is that the return on investment for the business owners in this industry is only about 3 percent. Consequently, further reduction in the margins will make this industry even less attractive for investors/business owners.
And passing this major increase in cost on to the consumer in terms of higher prices is just not practical. The cost increase will be compounded as the restaurant suppliers will also increase their prices to the restaurant. This would necessitate an even higher cost pass through to the consumer.
At a time when the Michigan economy is still struggling and consumers are by necessity very price conscious, I doubt most businesses will be able to pass on a significant price increase and survive.
A recent survey in Michigan found that 75 percent of consumers believe that small businesses will have the hardest time adjusting to price increases resulting from this minimum wage increase proposal. They stated that if approved, they will tip less than they do today. That's bad for local restaurants and servers.
Restaurant employees initially may applaud this wage increase, but I believe the reality will be either no change or even a reduction in their disposable income. The great majority of these employees today earn $15 to $20 per hour — the mandated increase to $10.10 will mean they receive fewer tips while paying higher FICA, state, and federal taxes on their new minimum wage. Restaurants also will be more likely to shift away from having tipped employees.
If approved as proposed, a greater number of businesses will fail and those that survive will need to change their business model. The cost structure will have to be greatly reduced, which generally means fewer employees. All in all nobody wins.
As in all business, cost increases are a way of life and a reasonable increase to the minimum wage could be managed by most businesses. However, a lower tipped minimum wage is essential if the restaurant industry is going to prosper and continue to provide employment opportunities for these entry-level employees.
The current proposal eliminates the tipped exception and increases Michigan's minimum wage to the highest in the nation. That will harm business owners, employees and consumers.
Kevin Kelly is the owner of Blackthorn Pub in Holly.
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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