Windmillin'

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Where politics and faith dance in the shadow of the windmill.

The Cuts Come or Borrowing from our Future

As expected, the State House passed the budget slicing $430 per pupil from the schools. There is a continuing point of mystification here, namely how the economic gains from education are to be realized at the same time resources are being stripped from the schools. This has been a persistent problem for the Governor from at least the National Governor’s Conference and Michael Porter’s presentation.

It’s spelled out there: for a highly productive economy, budget cuts are part, but so too is education. Much of the difficulty has been the conviction that a streamlined system for doing business in the state, the support of entrepreneurs and the like must come at the expense of budget. At the very least this has been a ham-handed approach that renders all problems fiscal. Perhaps. But the real trick is that as a state we must do both: create the business-friendly environment but also develop a workforce prepared for the future. Porter summarizes it this slide:

Seven Issues for improving productivity

But if education is so important, what’s going on?

One part bluntly, is the renegotiation of the salary/benefit package in education. However, given that talent can move, to other states or out of the profession, there is a limited capacity here for significant costs savings. So the result is a degrading of the schools and their offering, a move more tolerated by poorer less powerful districts, than there better-off, high expectation neighbors.

While some legislators are perhaps willing to consideration of such long-term degradation, Snyder clearly is not.

Thus, at its base, the Snyder proposal is less a budget than an elaborate borrowing from our future. The quality education that will make a difference will require additional resources, especially as we begin to think in terms of a p-20 process. Although the measure looks like a cut, in the mid-term it is better understood as a cost shifting. The risk is that as a state we go so long that we do damage to the state’s reputation (and so its economic competitiveness), along with putting ourselves in an even greater educational deficit, particularly in our urban areas.

The improved state of the auto economy certainly seems to promise that this slashing need not be long-lasting. And frankly, there is considerable political gains to be had here, slashing the budget now, and then becoming the hero of education in another year or two, just before re-election.

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Filed under: Education Policy, Michigan, , ,

Rough Road

On the road to Michigan’s future, the ride for the poor is about to become a little rougher. Not to mention quite a bit more muddled.

The Governor’s proposal to eliminate Michigan’s EITC appears to make an initial sort of sense.  After all, in its monetary sense, the program simply represents one of the larger claims on the state budget. So if you are looking for money, this is one of the pots one goes to. No question about it. Moreover, the existing federal program maintains many of the desirable policy goals, so while State cuts the  budget affect the generosity, that does not mean the working poor are thereby abandoned or unrewarded.

So what does that extra $432 (on average) do for the working poor? According to research it goes for such things as childcare, the payment of a past due utility bill, or setting up a “rainy day” fund — a thin cushion, in other words, against the shocks of life.

Welfare by another name?

Some believe that cushion should not be there at all. Dan Calabrese figures that with the robust job market being what it is, the working poor should just go and get another job. Others are more judicious. Take Gary Wolfram and the Mackinac Center: the MiEITC is an income transfer pure and simple.  Scraping this a little more we can also see that framed this way, their approach comes close to the basic push them back to misery. However minimalist approaches breed their own externalities. And it’s not as if the EITC were a pure grant at all.

Some of this Conservative Confusion lies in misunderstanding the  tax code itself. As David Waymire points out,  the poor are subject to a cluster of regressive taxes, from millage to sales tax in addition to the federal, state and FICA payroll taxes. The money for these taxes comes directly out of an already stretched household budgets.

Even though MiEITC gets counted in federal Maintenance of Effort for welfare programming (this being Wolfram’s point), its real benefit and the questions for the Snyder administration lie elsewhere.

Read the rest of this entry »

Filed under: Michigan, , , , , , ,

Dying. Really?

All the hoopla of the Newsweek article listing Grand Rapids as a “dying city” certainly stirred up a discussion.  And most of it off track.

A great deal of the defense turned on the vitality of the downtown shows. From Rob Bliss to Art Prize, how could this not be an alive, happening place?  However, if staging a great party were a sign of health, New Orleans would be in the pink of things. But of course, it’s not.

Rather the commotion touches one of the key questions before any metro region: do all parts share in the prosperity, in the distribution of various social goods? Looking past the events and the Rob Bliss adventures, another story may be unfolding,  in effect are we looking at a Potemkin village that hides a creeping collapse?

That skeptical question is important.  After all, the City is different from the County, the neighborhoods  different from downtown. A metro area may thrive while  individual municipalities or neighborhoods suffer. , e.g. one need only travel west down the 28th Street corridor in to see something that indeed looks like collapse, from the vacant stores, the empty lots to the plans for urban redevelopment to look at all the vacant stores and sense the collapse. Yet even here, Wyoming itself has not yet suffered a collapse, even if its northern neighborhoods do appear on the decline.

However to understand if Grand Rapids is in decline we need to confront both the metrics and the rhetoric.

Fear of a black (planet)

The language of decline does not simply refer to a set of metrics, but participates in a narrative urban dysfunction. To speak of decline we do not mean declining fortunes or opportunities — from a middle class perspective, we can always escape — rather, the object is that of the increase in a certain kind of community: the urban poor, the urban minority poor.  In Eugene Robinson’s words, these are the Abandoned, this (growing) urban underclass. The narrative carries with it an inevitable racial cast; while Sioux City may decline, Buffalo dies. In the narrative of the urban poor, the dying city is to be blamed (e.g. too many social services, too much social dysfunction), or ignored, and certainly separated from, even if that means crossing a municipal boundary or moving to the townships.

The dying city narrative at its best is one of condescension that barely masks a despair underneath.

Should Grand Rapids be considered in this narrative or not?  The condition of the city will not be found by press release, but by data.  Read the rest of this entry »

Filed under: Economy, , , , , , , , ,

Mixed Time Lines

Of all that can be said about the proposed budget of Governor Snyder (and there certainly is lots), the question of time perhaps exposes the conflict best.  The cuts envisioned by the Governor are largely immediate; the hits to the schools will be felt in the classroom this fall if not sooner. By contrast the benefits of tax cuts for business would seem to have a longer time frame, 18 – 36 months, before their impact is felt. And therein lies the risk for the Governor’s proposal.

Talk of sacrifice is always best when the sacrifice and the benefit are closely linked.  The farther apart the links, the more difficult the sacrifice.

For the GOP, two risks immediately come to mind.  The primary one is the gamble that the substantial hits to cities and schools will not be crippling, that the economy sufficiently rebounds to add to the State budget and walk back these cuts. That’s the core of “shared sacrifice:” we put up with the admittedly constrained budget for the moment, trusting that it will be undone.  The obvious danger is that the cuts may themselves be too deep, that they end up stripping too much from communities and so crippling them in the regional competition for new employers.

There is also a second risk to the policy, this by way of human nature.  Will the businesses who benefit from the tax cut, those who have been saying that taxes stop them from hiring, begin adding employees? If the employment does not pick up as the advocates would have it, then what? Here there is a fixed time line: 18 months, or September 2012. A tax cut that doesn’t deliver on added employment will be a heavier burden for incumbents in an already contentious 2012 cycle. And no, you can’t redistrict yourself out of this.

Crains also points to the other great risk of the mixed time lines: perhaps the longer term economic theory doesn’t work well enough. Low tax rates may not be a sufficient competitive advantage.  There is more to making the state economically competitive than this.  What else must be put into place remains the unspoken question. Here the administration and its Party can probably finesse the next election, but not 2014.

Of course, in a rational world, revenue enhancements would end up being part of the package, too.  And they may very well be, but almost certainly not this budget cycle. For now, there is the immediate pain of loss of public goods, whether the offsetting economic expansion will be sufficient let alone evenly shared is far less certain.

Filed under: Michigan, , ,

Making them Pay

Last  week Thursday, The Grand Rapids Press reported Senator Patty Birkholz (R-Saugatuck) is producing a bill to make inefficient school districts pay.  Big time.  Those districts that spent more than 28 percent of their total budget on “non-instruction support services” (aka administrative) costs would lose  5 percent of their state aid.

By her own admission this is a work in progress.

“We know there are some questions about what is included. My thought was, ‘Let’s put it out there and get the discussion started.’ I consider this in flux.”

The senator proposes several rationales for the measure: it is a way to force schools to target spending towards students and not staff; it is a way for a cash strapped state to find more ways to save money; and oh yes, it is a carrot to encourage consolidation. Given  the Republican-led State Senate  insistence on making cuts in the education budget, this measure is at the least ironic.  The presumed problem of the state budget rests not at the State Legislature, but at the profligacy of the school districts.

Oh, if only it were that simple.

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Filed under: Horace Mann, , ,

Don’t Go There, Ahnold!

Friday’s Los Angeles Times brings news that the California legislature casting its fiscal eye on the various designated funds in the state. A little fund-raiding in order to keep up with GOP no-new-tax theology. Sure sounds familiar. In fact we could give it a name:

Engleritis.

Like other CEOs of the time, Engler and the GOP tapped the funds in our state. Apply a little actuarial grease and legerdemain voilá, free money. Except that as we know, it wasn’t free. In fact, it illustrated the same phenomena we have seen in the mortgage bust — you just go ahead and borrow from the capital side (in housing, that’s your home equity), all to support your spending habit.

And like the mortgage crisis, we now face the bill. The anti-tax theology enshrined by the Engler machine and its high priests in Midland has fueled a decade of budget tricks and gimmicks, and was the prime driver for last year’s budget meltdown. The fund raids of the 90s only set up an expectation of free money, and so eroded the fiscal responsibility that once was the hallmark of both parties.

Our current crop of Republican representatives, and representative wannabes shows them still acolytes of this theology: Linda Steil, Tom Pearce, Dan Tietema, Justin Amash, and of course Dave Hildenbrand. Collectively they are a vote for more of the same gridlock. As long as they worship at the altar of Midland, they will fail to provide the leadership their (Republican) constituents deserve — and the leadership that could be an effective dialogue partner for the Democrats.

So Ahnold? No! This is that first hit of crack. The pain of acting like an adult is real, the penalty for getting addicted is a continued drain on your state. Trust us. We’ve been there.

Filed under: Michigan, , , ,

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