MLPP Blog: Factually Speaking

Paving the roads on the backs of the working poor

Added May 27th, 2015 by Alicia Guevara Warren | Email This Entry Email This Entry
Alicia Guevara Warren

The House Republican plan to fix Michigan’s roads by eliminating the state Earned Income Tax Credit raises taxes for the second time in five years on workers already struggling to get by on low wages.

Eliminating the EITC to pay for roads amounts to robbing poor Peter to pay Paul. The $117 million saved by eliminating the credit is a drop in the bucket of a $1.2 billion transportation plan, but a huge amount to the 820,000 low-income families raising 1 million Michigan children who use the credit to help pay for the very things that keep them working, like transportation and child care.

Yet, House Bill 4609, eliminating the state EITC, is slated for a committee hearing June 2.

The Michigan EITC is one of the state’s most effective tools for reducing poverty and building economic security. A new League fact sheet finds that eliminating the state EITC will raise taxes on hard-working taxpayers, who already pay a lot in taxes, and at a time when almost one in every four children lives in poverty.

Cutting the state EITC will only undermine our ability to help families move out of poverty and improve child outcomes in both the short- and long-term.

In 2011, lawmakers cut the credit from 20% of the federal EITC to the current level of 6% — a tax hike of $285 million while at the same time giving large, profitable businesses a $1.65 billion tax break. At the full 20%, the EITC can lift more than 20,000 working families above the poverty line and ease hardship for hundreds of thousands more; at the current 6% it lifts about 7,000 working families above poverty.

Eliminating the state EITC also will harm local economies, with families having less money to spend at local businesses.

Paving the roads on the backs of the lowest earners will ensure that they pay even more of their income in taxes, 9.7%, while the top 1% of earners continue to pay much less – just over 5%. It will result in more families living in poverty with fewer resources to make ends meet. And, the repeal of the state EITC will harm our local economy. All while contributing only a drop in the bucket toward a road solution.

Lawmakers should restore the credit for working families and their kids, not repeal it. Call or email members of the House committee today to oppose House Bill 4609.

– Alicia Guevara Warren

 

Graduated Income Tax: Making our system fairer while raising needed funds

Added May 21st, 2015 by Alicia Guevara Warren | Email This Entry Email This Entry
Alicia Guevara Warren

As the issue of “tax fairness” continues to arise and the state faces a significant budget shortfall, perhaps it’s time to seriously consider changing Michigan’s income tax structure. Michigan is one of only eight states with a flat income tax rate, and, because of this structure, low-income taxpayers pay the 9th highest personal income taxes for their group in the country, while the top 1% actually pay at a slightly lower rate than their counterparts in other states. A graduated income tax structure, where those who earn more would pay more, makes the income tax system fairer and generates new funds.

With the recent defeat of Proposal 1, which would have raised funds for roads, schools, and communities while protecting low-income families, the state faces a difficult task of coming up with the funds necessary to make Michigan a thriving place to live, work, and play. According to Rep. Jim Townsend, who has introduced graduated income tax legislation, replacing the current flat tax with a graduated tax rate could raise new revenue, and in a way that makes the income tax structure fairer for low- and middle-income families.

Even with a move to a graduated income tax system, if lawmakers eliminate the state’s Earned Income Tax Credit to help pay for road improvements, Michigan’s bottom earners would experience a tax increase. According to an analysis from the Institute on Taxation and Economic Policy, the tax shift would be more severe for individuals with children, stressing the significant role the state EITC has in assisting low-income working families. A proposed repeal comes after changes in 2011 that reduced the state EITC from 20% to 6% of the federal credit resulting in low-income working families shouldering a tax increase of $275 million. However, the analysis also shows that if the state EITC remains in place and the flat income tax rate is replaced with a graduated system, then low-income workers would experience an overall tax decrease.

However, aside from the politics, a barrier to putting into place a graduated income tax structure is that Michigan’s constitution prohibits such system, and, therefore, would require a two-thirds supermajority vote in the Legislature followed by voter approval. Although, a voter-led petition drive could get around this. The last three times it was on the ballot—most recently in 1976—it failed, but current polling suggests otherwise with over 65% of voters supporting the change.

While Michigan’s income tax structure is somewhat progressive given the state EITC and the Homestead Property tax credit, it is somewhat proportional with those making between $26,000 and $47,000 paying almost the same share of their income in income taxes as those in the top 1% of earners. As income inequality grows and low- and middle-income families experience tax increases from tax restructuring that took place in 2011, moving to a graduated income tax system would make the tax fairer.

– Alicia Guevara Warren

 

Support family homes to get kids out of shelters and group settings

Added May 19th, 2015 by Stacey Range Messina | Email This Entry Email This Entry
Stacey Range Messina

An alarming number of foster kids in Michigan live in group homes and emergency shelters. Nearly half of whom have no clinical need to be there, and far too many are staying well beyond what is legally acceptable, according to today’s Kids Count policy report Every Kid Needs a Family: Giving Children in the Child Welfare System the Best Chance for Success, from the Annie E. Casey Foundation

The reasons? A lack of community services to allow children to stay safely in their homes and an inadequate supply of kin or foster homes. Agencies should be encouraged to provide more services in home and community settings. Family supports shield children from the further trauma of being placed in out-of-home care.

Kin and foster parents also too often lack the necessary support to succeed at making a good home for a traumatized child.

While most foster parents would happily welcome a boost in the $17.23 daily rate, what they really need is support in other ways: better training, respite care, support groups, mentors, timely payments, streamlined application processes for child care subsidies and other assistance programs that are supposed to be automatic for children in foster care.

Recruiting more foster parents won’t help unless there are supports to keep them. Surveys show 40% of families who quit fostering cite lack of support as the primary reason.

My husband and I currently foster an almost 2-year-old boy. We waited 10 weeks for the child care subsidy to kick in for him. In that time we spent $2,250 out of pocket. We will be reimbursed about two-thirds of it but the point is that while my family could afford that, many could not. Last summer, we waited three months to get our first payment from the state. We don’t complain about the cost, we will happily share what we have but we worry about what this means for other foster families or potential foster families.

Families like Mr. and Mrs. G (who asked to remain anonymous to protect her children) took in a sibling group last summer, ages 1, 2, and 3. They were first-time foster parents. The kids were dropped off with few belongings, no diapers, bottles or food, no paperwork, and no Medicaid cards even though all three were sick, the youngest with double pneumonia. The couple had to take the baby to the ER and received the full bill. It took months to get any reimbursement and another six months to receive the $100 clothing allowance per child. The child care subsidy was yet another struggle in a long battle to get support. The G family adopted the three children on Dec. 31 and promptly closed their license.

Another foster parent, Veda Thompkins, has spent the past 30 years fostering youths in Detroit. She knows the system inside and out, yet she still has to fight for every support her kids need. Right now, she’s trying to get help with behavior issues presented by the two 15-year-old boys in her home. One spent five years in residential care; the other was in for seven years.

“They finally just stopped asking me permission to go to the bathroom.”

There are success stories of foster parents who find great support from their agency. But the level of support varies by agency, county and caseworker. Tricia and Eric Bouma have one of those experiences. The Hudsonville couple with four biological children took in a teenage girl last summer. The girl, who was removed from her home in 2011 at age 11 due to neglect, already had been in three foster homes with the longest stay only two months before she spent a year and a half in a group home.

The girl exhibited some behavioral challenges but with support and resources offered through their caseworker and others at Bethany Christian Services in Holland, the Boumas learned to manage the behaviors. The family also accessed a local support group of other foster parents and made use of a clothing closet offering free shoes, clothes and other items to children in foster care. The Boumas, who are adopting the girl, credit their success to the support they received from their agency.

As Veda says: “If you treat foster parents right, they will do great work for these kids.”

– Stacey Range Messina

 

Action needed for 600,000 Michiganians to keep health coverage

Added May 11th, 2015 by Jan Hudson | Email This Entry Email This Entry
Jan Hudson

The Healthy Michigan Plan, Michigan’s Medicaid expansion, has been in the news recently both because of its unprecedented enrollment success, and because for the program to continue, state law requires approval of a new federal waiver. Without the waiver, the Healthy Michigan Plan ends April 30, 2016 under current law and 600,000 Michigan residents lose their healthcare coverage.

The Healthy Michigan Plan law specifies that:

    • The state must apply for a federal waiver by September 1, 2015, to:
      • allow increased total cost sharing for enrollees between 100% ($11,770 for individual or $24,250 family of four) and 138% ($16,243 individual or $33,465 family of four) of the Federal Poverty Level to remain in the Healthy Michigan Plan after 48 cumulative months of enrollment. The current limit is 5% of family income, the state law requires an increase to 7% of family income, with the income-based payment increasing from the current 2% to 3.5% of family income, or
      • allow enrollees to choose a Marketplace plan (less comprehensive coverage and more cost) with federal subsidies after 48 months of cumulative enrollment in Healthy Michigan Plan.
    • The waiver must be approved by December 31, 2015 for the program to continue, not just for this subset of the program, but for all program enrollees.
    • If the waiver is not approved, the program ends on April 30, 2016, TWO FULL YEARS BEFORE ANY HEALTHY MICHIGAN PLAN ENROLLEE COULD EVEN BE IMPACTED BY THE HIGHER COST SHARING.

The required federal waiver mandates cost sharing to increase to 7% of family income, which is above the current federal maximum of 5%. If a federal waiver is approved, enrollees would have the choice of remaining in HMP with higher potential cost sharing, or move to a Marketplace plan with federal subsidies. Due to the cost-sharing reduction opportunities in the HMP, it is possible that enrollees would not reach the 7% of family income.

Cost-sharing reductions of 50% of the income-based payment and 50% of copays are possible for enrollees who complete a Health Risk Assessment and agree to address at least one healthy behavior. Healthy behaviors to be addressed include: physical activity, nutrition, alcohol, tobacco, substance use, mental health issues, and flu vaccination. At this time, it is too early to know how many individuals will reach the current cost-sharing limits, and far too early to predict how many might be impacted by an increase to 7%.

Based on current enrollment, the second waiver likely would impact only a small percentage of total program participants, about 20% at most, as demonstrated by the chart below.

The actual impact of the waiver will be even smaller than 20% of enrollees because all of the individuals with incomes greater than 100% of poverty for this period will not necessarily have income greater than 100% FPL or participate in the program for 48 cumulative months.

While discussions between Department of Health and Human Services and federal officials have begun, very little information is being shared publicly, as options are explored. It is not yet clear if there is a federal waiver option that will meet the requirements of the state law and not violate federal law. Federal officials reportedly are trying to find a solution to maintain coverage for 600,000 low-income individuals.

If there is not a federal waiver solution, state lawmakers have the option of modifying the state law to allow 600,000 of their constituents to maintain their healthcare coverage. It would be a travesty to pull the rug out from under these individuals just at the time when they have begun to take control of their health.

The increased cost sharing will impact a very small portion of the enrollees, while termination of the program will impact about 600,000 residents.

The big question is whether Michigan has the political will to preserve this successful program if a federal solution cannot be found, or will Michigan lawmakers sit idly by and blame the federal government for ending the program when they could act to save it for their constituents.

Now is a good time to start talking with lawmakers to let them know how essential and beneficial this program is – share one of the 600,000 success stories with them.

 – Jan Hudson

Raise the minimum wage–again?

Added May 7th, 2015 by Peter Ruark | Email This Entry Email This Entry
Peter Ruark

There is a bill in Congress to raise the federal minimum wage in five steps to $12 an hour by 2020. We should all support it.

Readers may be thinking “Wait, didn’t Michigan just raise its minimum wage?” Yes, we did. In 2014, Michigan enacted a minimum wage that increases in four steps to $9.25 by 2018. But the federal Raise the Wage Act will help Michigan workers even more.

For one thing, even though Michigan’s wage is higher than the current federal wage, the proposed federal wage would inch higher than the current Michigan wage in mid-2017 and be significantly higher in succeeding years.

Secondly, under the federal bill there would be an annual adjustment after 2020 based on increases in the median wage. (This differs from many past minimum wage proposals that based the annual increase on inflation.) The current federal and Michigan minimum wages do not provide for an annual increase after the final step, and therefore cannot be raised after that time without legislative action. Having an annual increase built into the law ensures that workers’ wages will not erode over time.

Finally, the federal proposal will gradually extend the regular minimum wage to tipped workers by eliminating the tipped minimum wage. This would be a good change because tipped workers sometimes make less than the minimum wage when they do not receive the expected level of tips during a shift. Employers are supposed to make up the differences, but many do not and the requirement is difficult to enforce. Although Michigan’s tipped wage is currently higher than the federal, it still is far below the regular minimum wage.

The Economic Policy Institute estimates that nearly one-third of Michigan workers would benefit from the Raise the Wage Act, 1.034 million directly and another 189,000 indirectly. Contrary to many peoples’ assumptions, 89% of the beneficiaries nationwide would be over 20 years old and 28% would have minor children in the home.

Let’s support raising pay for all minimum wage workers, indexing it to median wages each year, and eliminating the tipped wage that keeps many wait staff and bartenders in poverty. It’s the right thing to do.

– Peter Ruark

 

What does mom want for Mother’s Day? Tax Credits! (and a macaroni necklace, of course)

Added May 5th, 2015 by Gilda Z. Jacobs | Email This Entry Email This Entry
Gilda Z. Jacobs

From the First Tuesday newsletter
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It’s Election Day and working families need you to go vote in support of Proposal 1!

Recent polling does not bode well for its passage, but it all comes down to voter turnout so please don’t put it off another second. If you have voted – and voted “yes” – I thank you. Proposal 1 provides a dedicated funding stream to fix our crumbling roads, restores the Earned Income Tax credit, and protects schools and local communities from funding cuts.

This ballot proposal is our best shot at fixing Michigan’s roads without harming schoolchildren, communities or families with low incomes. If the proposal fails, legislators could make severe cuts to critical programs, including the new third-grade reading initiative, adult education, child care inspectors and more.

The stakes are high. Every day we wait to find a road funding solution, the costs go up for taxpayers.

The EITC is critical for low-wage workers. Proposal 1 offsets the regressive nature of the increased sales and gas taxes and registration fee changes by restoring the credit from the current 6% to 20%. A single mom working full-time at minimum wage (earning $16,626/year) to feed and care for two kids would get an extra $608 in her pocket. That would go a long way in helping her meet basic needs and pay for the very things that allow her to work and improve her family’s situation, such as child care and transportation.

That would make a wonderful Mother’s Day gift.

So let’s show moms we care and value their work this Mother’s Day by giving them a tax credit. But don’t forget the macaroni necklace and flowers, too.

– Gilda Z. Jacobs

 

Older student aid closer to becoming reality

Added May 1st, 2015 by Peter Ruark | Email This Entry Email This Entry
Peter Ruark

In April, both the Senate and House Appropriations Committees approved Gov. Snyder’s recommendation to reinstate the Part-Time Independent Student Grant that helps students over age 30 attend a community college. Funding for this grant was subsequently approved by the full House on April 29, while the full Senate has not yet voted on its appropriations bills.

Michigan suspended the PTISG after 2009, leaving these students without any state financial aid. This aid is important, as many people at that age have jobs and families and are often tight on income.

There are some differences between the budget bills as passed, and what Michigan had before. In the current versions, students can use the grant only at a Michigan community college, whereas students previously could use it at a university. The current bills also have new wording giving priority to individuals who successfully completed at least one postsecondary class in the past but did not get a degree.

Another difference is in the amount of funding that each bill gives to the grant. The Senate funds it at $6 million, the level proposed by the governor. This is an increase over what Michigan had been spending on the PTISG and another grant serving adult learners (approximately $4.5 million combined total) before both programs were suspended. If the governor’s proposal is adopted, it would enable Michigan to provide aid to more students and/or provide a higher award.

The House funds the PTISG at less than half that amount, $2.9 million, which still is an improvement over the past several years when it received no funding. The difference between the House and Senate funding levels will be resolved in conference committee.

The Michigan League for Public Policy is pleased that the PTISG is included in the bills that will be taken up by both chambers, and prefers the Senate version that provides more money. Helping more adult learners get a postsecondary credential leading to skilled work is good for families, businesses and communities.

 – Peter Ruark

Voting yes on Proposal 1 is voting to improve our communities

Added April 29th, 2015 by Alicia Guevara Warren | Email This Entry Email This Entry
Alicia Guevara Warren

We all agree that we need better roads in Michigan, but we don’t agree on how we pay for them. With the various strains on the state budget, including a shortfall due to outstanding business tax credits and an increasingly overreliance on federal funds, it’s hard to imagine a proposal that fixes our roads, invests in our schools and local communities, and protects Michigan’s lowest earners.

Vote yes on Proposal 1 to once and for all guarantee funding for safer roads

Proposal 1 meets these objectives while any “Plan B” likely would increase road funding at the detriment of our schools, communities and vulnerable families.

Next Tuesday, voters will decide whether to back Proposal 1, a comprehensive, bipartisan plan or to take a chance with the new Legislature. There is a lot of frustration surrounding Proposal 1 for several reasons. Some people say “it’s too complicated” or “the Legislature punted the issue.” Yes, it is complicated and for good reason: A long-term, structural fix to fund our roads into the future has a lot of moving pieces that must be addressed. It can’t be simple.

But no, legislators did not punt the issue. They devised this plan that must be approved by voters. Raising Michigan’s sales tax requires a ballot proposal.

While Proposal 1 may not be perfect—no policy is—this is pretty good, and quite possibly, the best solution to all of our problems. Proposal 1 contains many benefits:

    • It removes the sales tax from gas purchases while increasing the gas tax to ensure that all of our taxes paid on gas go to support the roads.
    • It changes our flat tax rate to one based on the wholesale cost of gas helping it keep up with inflation so that the tax doesn’t lose its purchasing power and making funds more stable in the long-run.
    • Eliminating the sales tax on gas, which primarily supports schools and communities, means the sales tax must be increased to prevent cuts to schools and local governments.
    • Increasing the sales tax has the potential to hit the lowest earners the most; therefore, with the passage of Proposal 1, the state’s Earned Income Tax Credit would significantly increase from 6% to 20% to help offset the sales tax increase.

The Legislature has given the public a voice in deciding how to fund improvements to our quickly deteriorating and unsafe roads. We cannot sacrifice the possible for the perfect. Every day we wait to find a road funding solution, the costs go up for taxpayers.

Support for Proposal 1 is support for better roads, better schools, and better local communities to create a state where people will want to live, work, and play.

– Alicia Guevara Warren

 

 

Lawmakers: Plant a pinwheel then fund programs protecting kids from abuse and neglect

Added April 23rd, 2015 by Stacey Range Messina | Email This Entry Email This Entry
Stacey Range Messina

Today’s Michigan Prevention Awareness Day rally at the Capitol holds special meaning for me this year. After years of writing about children who had been abused or neglected, and then about needed policy reforms, my husband and I last year decided to dive into the trenches. We wanted to make a difference in another way, even if in the life of only one child. So we became foster parents.

After taking all the classes, converting my home office into a nursery, passing background checks and physicals, and completing a million forms, we were licensed in April 2014. Our first call came in June to take in not one, but two babies who had been severely neglected. The twin girls were 3 months old but weighed only four pounds each – the same they weighed when their parents took them home from the hospital at three weeks old. But then, they didn’t feed them enough.

Doctors and nurses at the University of Michigan’s C.S. Mott Children’s Hospital said it was the worst case of child starvation they had ever seen. The girls’ eyes bulged from heads twice the size of their bone-thin bodies. Their skin hung. Even the preemie diapers slipped where they had no bottoms to hold them up.

After proving that I could correctly mix formula and promising to feed them every two to three hours around-the-clock, the babies were released into my care. My husband and I, along with our 6-year-old daughter, spent the next six weeks fattening the babies. When they left for a new foster home closer to their parents, they each weighed in at 10 pounds. They were exactly what you would expect from 5-month-old babies: fat, happy and giggling.

We had accomplished our goal by making a difference in their lives and are now on to a new child. And yet, there are so many more children who need help.

There were 33,807 confirmed victims of child abuse and neglect in Michigan in 2013. Those are actual children, not just numbers. That’s enough to fill 1,300 classrooms with 26 students in each. And the number of confirmed victims has increased in each of the past eight years. The rate of confirmed victims rose by almost one-third between 2006 and 2013, according to Kids Count in Michigan, from 11.4 victims per 1,000 kids to 14.9 victims per 1,000. Nearly one in every 10 children lives in a household investigated for abuse and neglect.

Meanwhile, funding for prevention services has been cut from $57 million in 2006 to $42 million in 2014. These services are provided at the community-level with crisis intervention, family education, and more. They prevent out-of-home placements and help families learn coping and parenting skills. Budget year 2014 data for Families First Michigan, which served 2,381 families at imminent risk for having at least one child removed due to abuse or neglect, shows that 75% of these families avoided removal in the 12 months after completing the program. Nearly 90% of those continued to avoid Child Protective Services involvement in the following year.

Poverty and neglect are tightly interwoven, and compounding the situation are the cuts our Legislature and governor have made to other programs that are critical to struggling families, including food assistance, cash assistance, the child care subsidy and the Earned Income Tax Credit.

It is clear that these services protect children from abuse and neglect, and yet we cut them. It’s no surprise then that the rate of abuse and neglect is rising.

Maltreatment has life-long effects. Children who are abused or neglected face increased risks of developmental delays, mental health and substance abuse problems, criminal behavior, job loss and early death. They also are more likely to become a perpetrator of maltreatment with their own children.

If Michigan truly cares about giving kids the best shot at life then we must do more to prevent child abuse and neglect. April as Child Abuse Prevention Month is an opportune time to renew this commitment. Policymakers and advocates today will celebrate the seventh annual Michigan Prevention Awareness Day with a rally at the Capitol and planting blue pinwheels on the lawn to show support for prevention programs. A real sign of support would be more funding for prevention programs that are proven to keep kids safe and their families together.

The twins’ parents continue to make progress and hope to get their girls back soon. Despite their mistakes, they truly cared and wanted to do their best for their girls – their first and only children –but they didn’t know how. They were overwhelmed and stressed and suffered other issues as well. They needed help and support. Perhaps that help could have come from these prevention programs and their girls would not have suffered and their family might not have been in turmoil the past year.

– Stacey Range Messina

 

Undocumented immigrants: Reform increases their tax contributions

Added April 20th, 2015 by Alicia Guevara Warren | Email This Entry Email This Entry
Alicia Guevara Warren

Editor’s note: The original blog post and ITEP report incorrectly stated the effective tax rate for the top 1% of earners in Michigan. We apologize for this error, which has been corrected.

Undocumented immigrants already contribute a significant amount to our state’s tax system. Under President Obama’s 2012 and 2014 executive actions, the amount will increase and could be even more with comprehensive reform.

According to a new 50-state study, “Undocumented Immigrants’ State and Local Tax Contributions” by the Institute on Taxation and Economic Policy, the 100,000 undocumented immigrants living in Michigan contribute $86 million in state and local taxes. With the president’s executive actions, ITEP estimates that this will increase by $10.86 million when it is fully implemented to allow temporary reprieve to youth who have resided in the country for at least five years and parents of U.S. citizens or legal residents. If comprehensive reform were undertaken granting lawful permanent residence to all undocumented immigrants in Michigan, the gain would be about $26.4 million. (more…)

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