MLHS Blog: Factually Speaking


Happy tax day!

Added April 4th, 2012 by Gilda Z. Jacobs
Gilda Z. Jacobs
From the League’s First Tuesday newsletter. Sign up here.

On a recent day, I woke up, showered, and got ready to take my little dog, Jake, for his morning walk.

It was a snowy day (Yes! It does snow in Michigan), and I was grateful that the snow had already been removed from the streets and sidewalks. Jake appreciated it, too. As I reached the next block, I spotted emergency vehicles outside a home. I found out later that firefighters quickly put out a neighbor’s kitchen fire. After breakfast, I downed my daily vitamins with a glass of tap water.

Next I started my morning commute — 75 minutes to Lansing — pausing at the end of my street where the elementary school, public library and public recreation center are located.

I love my neighborhood for many reasons but the biggest is that my two daughters were able to spend charmed childhoods riding their bikes in safety to those buildings.

Why do I bring this all up? Public services. The water I showered with, the clear streets, the emergency vehicles, the treated water that downed my vitamins, my highway commute and the sense of community offered by the school, library and recreation center — all are made possible through public structures. We come together for the common good to make our lives workable and enjoyable.

I bring this up during April because April 17 is Tax Day. Our taxes are due and many will vilify the tax filing day or April 14th’s so-called “Tax Freedom Day.” What those protestors forget about is why we pay taxes–for our health, safety, education and the freedoms we all enjoy as part of the American Dream.

We work on tax policy all year at the League, trying to make sure revenues are adequate for the services we all need and to make sure that the tax system is equitable. We have a long way to go and there is much disagreement.

But one area we can all agree is that we need clean drinking water, we need to know fire trucks will come when called and we need safe highways. These are all possible through tax dollars. So as we near April 17, please pause to appreciate those firefighters, police officers and teachers you know and all the services we enjoy all year.

Happy Tax Day!

– Gilda Z. Jacobs

Gas tax, not sales tax, needs change

Added March 30th, 2012 by Joanne Bump
Joanne Bump

This week the Senate passed and the House considered Senate Bill 351, which redirects a portion of sales tax revenues to pay for roads.

Using the sales tax for roads isn’t good tax policy. The sales tax is supposed to be a broad-based tax used to generate revenue for a wide range of public services. Diverting it for roads means more unnecessary cuts for the rest of our public structures – like schools, health care and public safety.

The state should modernize the gasoline tax instead of redirecting funds from the sales tax. The sales tax is very different from the gasoline excise tax, which is a narrow “user-fee” style tax designed to raise money for transportation. It’s the gas excise tax – not the sales tax – that should be reformed. It’s no surprise that financing hasn’t kept up with inflation when the tax rate has not been raised from the 19-cent per gallon gas tax for 14 years and the 15-cent per gallon diesel tax for 27 years.

While Michigan’s gas taxes remain flat, the cost of paving roads and building bridges has increased. The governor has said that $1.4 billion is needed to fix roads. If those taxes had simply kept up, revenues would be generating $563 million more a year for transportation costs, according to a report from the Institute on Taxation and Economic Policy.

The reluctance to increase gas taxes means that transportation costs are outstripping our ability to pay for them. By delaying fuel tax reform long enough, funds have finally run out and the state doesn’t have transportation funds for the federal match. Gov. Snyder’s budget addressed this with a one-time allocation of $119 million General Fund but the Senate reportedly removed all but $23 million in General Fund.

Instead, SB 351 earmarks $135 million of the sales tax to the State Trunkline Fund. It earmarks 18% of the 4% of the 6% sales tax collected on motor fuel sales. (Two cents of the six-cent sales tax are earmarked for the School Aid Fund.) Unlike a one-year appropriation, this bill alters the revenue distribution for years to come. Given this trend, what is to prevent the Legislature from diverting even a larger share of the sales tax for road repair next year?

A poorly designed transportation financing system is what led to the deficit and $135 million isn’t enough to close the gap. Isn’t it better to develop an equitable way to fund roads? Why not restructure state gas taxes so that their rates rise automatically with the cost of transportation? To help consumers, the state should create a targeted tax credit to offset the disproportionate effects of a higher gas tax on low-income families’ budgets.

– Joanne Bump

Happy 2nd birthday, Affordable Care Act!

Added March 23rd, 2012 by Jan Hudson
Jan Hudson

Today marks the second anniversary of the Affordable Care Act.

The ACA, though just a “toddler,” has accomplished untold good in providing medical care and health security for Michiganians. But, the best is yet to come in 2014, when major provisions  will be implemented, including the new competitive healthcare coverage marketplace (called the exchange) where individuals/families will compare and purchase quality individual health plans, or apply for the expanded Medicaid program as well as the subsidies that make healthcare coverage more affordable.

Provisions already implemented that provide key benefits and protections are:

• No denials for children with pre-existing conditions. This provision provides peace of mind for parents who have children with asthma or other pre-existing conditions for which insurance companies previously denied coverage altogether or for that specific condition. 
• The young adults under age 26 can remain on their parents’ employer-sponsored coverage even if they are not a student or an IRS tax dependent.  This policy has reduced the number of uninsured young adults by 2.5 million nationwide.  Nearly 58,000 Michigan young adults have gained coverage.
• Insurance companies must spend at least 80 percent of premiums on medical care/quality improvements or provide rebates.  Michigan Consumers for Healthcare, with the League and other partners fought to ensure that rebates will be paid in Michigan according to the law.  The first rebates are expected in August 2012, providing 2.5 million Michiganians better value for their premium dollars. 
• Medicare Part D improvements for those who reach the “donut hole” provide cash rebates of $250 to nearly 91,000 Michiganians in 2010; 50 percent discounts for brand-name drugs staring in 2011. Discounts were provided to more than 84,000 Michiganians, saving Medicare beneficiaries nearly $49 million.
• Coverage of preventive services with no cost sharing under Medicare and private coverage. In 2011 in Michigan, more than 1.1 million individuals with Medicare and more than 1.8 million individuals with private coverage benefited.

 Provisions to come in 2014 include:

• Protections for adults from denials or surcharges for pre-existing conditions, such as asthma, diabetes, cancer, or C-section, providing more security and control over one’s coverage. Women can no longer be charged more for the same coverage provided to men. Maternity benefits must be included in private policies; nationally only 13 percent currently provide maternity coverage.
• Medicaid will be expanded to cover roughly 500,000 uninsured Michiganians those with income up to 133 percent of poverty ($29,327 for a family of  four). Individuals/families must simply meet the income requirement.
• Families will no longer have to fear that the loss or a change of jobs will result in becoming uninsured. Coverage options as well as possible subsidies (incomes less than $88,000 for family of four) will be available through the new healthcare coverage marketplace, the exchange.

But there are threats to our newly gained health security. The Supreme Court will soon rule on the constitutionality of several provisions of the ACA.  Challenges were dismissed by 19 courts. Oral arguments begin Monday with a decision in late June.  It is essential that the justices understand that the law is currently helping millions of Americans with millions more to benefit in 2014.

You can show your support and protect your health care rights by signing on to Families USA’s “People’s Amicus Brief.”

So, happy birthday to the ACA. We’re looking forward to continued progress on implementing the ACA and to its 3rd birthday.

– Jan Hudson
 

It’s about all of us

Added March 15th, 2012 by Anika Fassia
Anika Fassia

If your neighbors are struggling, you will feel it, see it in your back yard.

If your family members are struggling, you will feel it, see it at the dinner table.

If your school is struggling, you will feel it, see it on your child’s face.

You get my point. Our fate as community members is linked. We do not live in two separate economies, our economy is interdependent. When communities face hardship, it has a ripple effect. Broad economic prosperity looks and feels good because not only do we enjoy a quality life, so does everyone else around us.

Unfortunately, communities of color have historically faced structural barriers to broad economic prosperity compared to their white counterparts. Past and present policy decisions systematically created these structural inequities, putting the entire economy at risk. It’s too easy to disassociate, assume that there is nothing that can be done around the vast inequities we see, read about, and hear across the state and all over the nation.

Yet, the opposite is true—there is something that can be done. The state budget can level the playing field and create equitable access to opportunity for all Michigan residents. Recent budget cuts, however, have done the opposite.

Targeted policies and programs can increase or decrease racial equity. No one has to be left at the bottom because the economy is not a zero sum game, where if someone wins, another must lose. Everyone can win. Everyone can have equitable access to public structures including a quality education, affordable health care and living wage job opportunities. Equity means providing opportunity that meets people where they are, versus equality, which implies everyone receives the same opportunities the same way.

As noted in the League’s new paper, How the Budget Can Create Economic Opportunity, targeted policy changes to advance equity in the state are imperative to a successful economy. In Michigan, almost a quarter of the state’s population is a person of color. The rate is higher for children, with children of color making up over 31 percent of all children in Michigan. Over the last 10 years, the population of children of Asian descent grew by more than 29 percent and Hispanic and Latino children close to 40 percent. The population of white children declined by more than 14 percent.

Unfortunately, communities of color are disproportionately represented in areas of educational attainment, the uninsuredinfant mortality rateswealth gaps and unemployment  across economic status.

Take for example:
• In 2010, more than half of African American children under the age of 5 lived in poverty compared with 19.4 percent of white children.
• The infant mortality rate among African American infants is almost triple that of white infants, 15.5 deaths per 1,000 live births compared with 5.4 deaths.
• Children of color make up 31 percent of all children in Michigan, yet accounted for more than 44 percent of children in the foster care system in 2010.
• In 2011, 92 percent of African American fourth-graders in Michigan were not considered proficient in reading compared with 63 percent of white fourth-graders and 52 percent of Asian fourth-graders.
• Michigan currently ranks 2nd highest in African American unemployment among the 50 states.

Yet programs that reduced poverty, offered preventative and reproductive health care, supported children, and provided job training faced budget cuts in FY 12:

• The state Earned Income Tax Credit, an annual refundable credit, was reduced by 70 percent, on average a $294 per family loss for working families. Almost 800,000 families receive this credit every year.
• The Healthy Michigan Fund, which provides several preventive programs, including reproductive health care was cut by $5.9 million.
• The annual back-to-school clothing allowance, providing children with new clothing at the start of the school year, was cut by $10 million.
• Per pupil funding was cut by $300, following a $170 cut in FY 11, for a total reduction of $470 over the two-year period in the FY 12 School Aid Budget.
• JET Plus, a program intended to provide specialized training programs and subsidized employment opportunities, was eliminated and employment and training for participants receiving cash assistance was reduced by $4.8 million in the Department of Human Services FY 12 budget.

Reducing income inequities, health disparities, and closing racial gaps in graduation and achievement all benefit the state by creating a stronger, healthier, more educated workforce, supporting the next generation of leaders—who are increasingly people of color. 

This was best said by the words of Martin Luther King Jr.: “All men are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly affects all indirectly.”

– Anika Fassia

Imagine

Added March 13th, 2012 by Jane Zehnder-Merrell
Jane Zehnder-Merrell

Wouldn’t it be great if all the children in Michigan lived in communities with great schools, quality medical care and safe outdoor places to play? 

Unfortunately one of every seven of the state’s children doesn’t.

They live in communities where almost one-third of the population subsists on income below the poverty level ($17,000 for a family of three and $22,000 for a family of four), according to an analysis by the KIDS COUNT project at the Annie E. Casey Foundation. 

Even if their own family has income above the poverty level, children living in such areas are more likely to suffer from harmful stress and severe behavioral and emotional problems than children overall. Living in a community where so many people lack income to cover their basic needs has a ripple effect on the quality of life for everyone there.

Over the last decade, as unemployment persisted and poverty encompassed more state residents, more Michigan children found themselves in such communities. Between 2000 and 2006-10, the number of children affected jumped by 124,000—a number equal to the entire population of first graders in the state. Overall 341,000 children in the state lived in high-poverty areas.

Among the Great Lakes states Michigan has the largest percentage of children living in high-poverty communities—nearly triple that of Minnesota (5%).  In fact, among the 50 states Michigan ranks 44th (with No. 1 being the best or lowest rate) on this indicator, and the state rate (14%) is well above the national average (11%).

Even more troubling, two of every three Detroit children live in such areas. Among the 50 largest cities in the nation, Detroit has the largest percentage of children living in high-poverty neighborhoods; its percentage of children affected (67%) is 10 percentage points above the next worst city, Cleveland (57%). Roughly 146,000 Detroit children are growing up in areas of concentrated poverty.

But concentrated poverty in Michigan does not occur only in Detroit and Wayne County. Eight other counties had at least 20 percent of their children living in high-poverty communities—and half of those counties were in northern Michigan and the Upper Peninsula.

So what are state and local policymakers doing to address this issue? Certainly Gov. Rick Snyder’s proposal to promote regional transportation in southeast Michigan would provide more opportunities for employment and education to those in areas of concentrated poverty. In Fiscal Year 2012, however, state policymakers have intensified economic insecurity for many low-income families by making substantial cuts to work supports such as the child care subsidy and the Earned Income Tax Credit at the same time as Michigan families struggle with eroding wages and job opportunities and rising costs for transportation and rental housing.

The Casey report recommends a number of approaches to address concentrated poverty. Among them:

– Promoting mixed-income communities combining physical revitalization with human capital development
– Leveraging anchor institutions, such as hospitals and universities, to provide employment for area residents
– Advancing federal and state policies that support work, asset building and employment
– Connecting neighborhood improvements to citywide and regional efforts
– Increasing access to affordable housing in low-poverty communities.

Shouldn’t all children have the opportunity to live in a supportive community with adequate resources? Should place dictate fate in a democratic state?  If we believe in equal opportunity for all children, why are we not having serious conversations about the growing numbers of children living in concentrated poverty and the strategies to address the issue? If we need an educated workforce for our economic recovery, why is it not a priority that more children in the state have what they need to become successful learners, earners and citizens?

– Jane Zehnder-Merrell
          
      

Targeting the poor for being, well, poor

Added March 8th, 2012 by Melissa K. Smith
Melissa K. Smith

Michigan is looking to join the national movement focused on targeting the poor for being, well, poor. 

The state currently has introduced two bills, HB 5223 and SB 904, that seek to implement a drug testing policy for recipients of cash assistance, known as the Family Independence Program. This is despite Michigan’s failure to successfully implement a similar program in 1999, which was shut down by the federal court because it violated the constitutional rights of applicants and recipients who have a privacy interest that is protected under the Fourth Amendment

While government assistance roles have increased due to the bad economy and lack of jobs, states are actively trying to make it as difficult as possible for those in need to get some help.  The fact that the state wants to specifically target recipients of the FIP program seems counter-intuitive to the stated goal of the program, which is “to help maintain and strengthen family life for children and the parents or other caretakers with whom they are living, and to help the family achieve the maximum possible self-sufficiency and personal independence.”   The Legislature should not forget that 70 percent of the FIP caseload is children

A new paper published by the League, Drug Testing: A Solution Looking for a Problem, analyzes the different arguments that are being put forward to support the need for drug testing cash assistance recipients and finds the claimed reasons for the policy are mostly unfounded and based in prejudice, not fact.

Studies rarely find significantly greater substance abuse among recipients than that of the general population. In fact, 66 percent of those with drug dependence or who abused alcohol were employed.  Additionally, drug use has not been shown to be a major barrier to employment for recipients of cash assistance and there is very little difference in employment and earnings between those who test positive for drugs and those who test negative.

The cost of drug testing, whether suspicionless or suspicion-based, is very expensive.  The U.S. Department of Health and Human Services analyzed the cost of drug tests among 12 states that had a drug screening program and found that the costs for these policies varied between $92,487 and $20 million. Most notable is the fact that not one of the state estimates for the cost of a drug screening program showed a net savings.

Many of those who support the program equate drug-testing cash assistance recipients with employer-based drug-testing as a condition for a job; this is a clear misunderstanding of the law.  Simply put, the government is not an employer in this situation, and the government is subject to the protections inherent in the constitution.  Drug testing is an invasion of privacy that is protected under the Fourth Amendment, and there must be probable cause for the government to invade your privacy.  Employers from whom someone is seeking work are not subject to the probable cause provisions of the constitution.  We do not have tiered citizenship in the United States; every citizen is afforded the same protections under the law. Drug testing policies try to put families seeking temporary assistance in the same category as convicts, non-citizens and children, who do have limits on constitutional protections.

The Michigan Legislature appropriated $12 billion to more than 30,000 vendors in FY12, yet the only people targeted for drug testing are families that make less than $814 a month for a family of three and are seeking some temporary help to get by.  The FY12 state appropriation to the Family Independence Program was $340 million, less than 3 percent of the total amount expended to vendors through private contracts. 

Families on cash assistance face many barriers to finding long-term employment and permanently getting off of government assistance.  The families that are most in need are the ones that the state should be most committed to helping, and not just throwing them off of the program because their barriers are too hard to overcome. 

Some states have developed policies where, if substance abuse is identified as a barrier to employment for a family, substance abuse treatment is included as part of the family self-sufficiency plan that identifies the multiple barriers that face families in becoming independent. In other words, these states are committed to helping families, regardless of the barriers, and are willing to support the citizens of their state through the hard times, and do not randomly target families for being poor or needing help and taking away the only support a family might have. 

– Melissa K. Smith

Starting the performance funding conversation

Added March 1st, 2012 by Peter Ruark
Peter Ruark

The governor’s office has released its Executive Budget for Higher Education. This budget is for four-year universities and does not include community colleges. This year it contains something new: performance funding.

There is an infusion of $36.2 million in new money (equal to 3 percent of the university operations budget) for funding based on four performance metrics:

  • Degree completion (three-year average growth FY 09-11)
  • Number of critical skills area degree completions (three-year average number FY 09-11)
  • Pell Grant students (three-year average number FY 08-10)
  • Tuition restraint (increase FY 12-13).

The League is primarily interested in the third and fourth metric, which address educational accessibility for low-income individuals. Too often, college costs are prohibitive for low-wage and underemployed workers needing to acquire skills to succeed in the job market.

A business group, Business Leaders for Michigan, which is composed of CEOs of 80 companies in Michigan, has responded with its own recommendations for performance metrics.  It recommends doing the following, in addition to the governor’s recommendations:

  • Benchmark Michigan’s universities against national peers
  • Measure and reward a university’s absolute level of achievement as well as progress
  • Add metrics that further encourage quality outcomes, such as graduation rate and retention rate
  • Weight the degrees and completions metric for advanced degrees
  • Add a metric that incentivizes increasing economic impact (i.e. total research and development expenditures)
  • Address affordability and tuition in a manner that does not risk driving down quality and outcomes, for example by:
    -Adding a metric that motivates universities to control administrative overhead
    -Changing the metric from an absolute tuition increase benchmark to one that compares Michigan universities to their most affordable peer institutions in other states

Many of the recommendations from the governor and business leaders point in a positive direction in regard to low-income students. Keeping tuition costs down is, of course, a very important component of accessibility; the Pell Grant metric is a good way to ensure that low-income students are recruited and helped to succeed; and the retention rate metric encourages intervention with students who are having difficulty with coursework.

The proposed measures, however, do not specifically address one group of students that is becoming more prominent: low-skill individuals already in the workforce, many of whom are supporting families. Encouraging postsecondary institutions to help such workers get marketable credentials makes good economic sense. When they become economically self-sufficient, they spend more of their money at local businesses, pay more in Michigan taxes and are less likely to need public assistance.

These performance metrics have been recommended for the four-year universities; none of them except the critical skills degree completion metric have been recommended in the community college budget. This is odd, since community colleges tend to have a higher percentage of both low-income students and older low-skill workers.

Overall, performance funding proposals are a good start to the conversation. Now the conversation needs to expand to include metrics for both four-year and community colleges that help low-income workers and students.

 – Peter Ruark

 

No fallout? Ask this family

Added February 28th, 2012 by Judy Putnam
Judy Putnam

Marilyn is an 81-year-old from the Detroit metro area. She grew up in the Depression and is quick with such aphorisms as: “You learn to watch your pennies and the dollars take care of themselves.”

She’s a self-described shut-in living on Social Security – and splitting that check with a granddaughter recently cut from cash assistance known as the Family Independence Program.

Marilyn, who doesn’t want her full name used because she lives alone and fears for her safety, called the League office last week, upset by comments made by Department of Human Services Director Maura Corrigan.  Corrigan said at a hearing that there had been no fallout from cutting 15,000 families from cash assistance and thousands more from food assistance. But Marilyn says the cuts are causing desperation in her family.

“The working poor should not really have been cut off from the public money, taxpayer money. They are at least trying. The ones we don’t hear about are the ones who are working and not making enough to pay all the bills,” Marilyn said.

Indeed, many of those on cash assistance do work but don’t make enough to pay the bills.

Marilyn’s granddaughter is one of those who was cut from assistance because she reached the lifetime limit. Marilyn says her granddaughter is a good mom, helping her kids (ages 8, 5 and 2) with homework, swapping babysitting with a friend and trying to make it on $2.85 an hour plus tips from a part-time job at a hotdog stand. The $600 a month in cash assistance she received paid the bulk of her $700 a month rent. The kids have two different fathers – neither is employed.

Now that the granddaughter’s family is without cash assistance, Marilyn has been splitting her Social Security check to cover the granddaughter’s rent. She’s not sure how much longer that will last.

After the cuts were announced last fall, DHS announced a short-term rental assistance program to cover three months of rent. It was later expanded to six months.

Ironically, Marilyn’s granddaughter didn’t apply, Marilyn says, because she couldn’t take time off work to go to the office to fill out the paperwork.

Also, she said help from DHS has been inconsistent. “She gets a different caseworker every time she calls,’’ the grandmother said.

Marilyn spent a long career selling mops. She said she worked hard and paid taxes her entire life.

“I’ve never asked for a favor. Now I’m asking for a favor. Find some way to put a roof over my granddaughter’s head,’’ she said.

– Judy Putnam

1.25 million lose employer-sponsored health care

Added February 24th, 2012 by Judy Putnam
Judy Putnam

In Michigan, there were 1.25 million fewer people with employer-sponsored health care in 2010 than there were at the start of the decade. That’s a startling loss — it represents one out of every eight people in our state and about the equivalent of everyone in Oakland County.

The new report from the Economic Policy Institute finds that employer-sponsored health insurance in Michigan declined dramatically between 2000-2001 and 2009-2010. Only California had bigger losses with 1.5 million losing coverage.

It’s not news that Michigan has had a tough economy. Many people are out of work for long periods of time and many want full-time jobs but can only find part-time work. The cumulative impact, however, is astonishing and shows why Michigan needs to push ahead with implementation of the Affordable Care Act.

Senate Bill 693 will implement a Michigan-based health exchange, an online marketplace for individuals and small businesses to purchase affordable health insurance. It has passed the Senate but is on hold in the House.

The report, A decade of declines in employer-sponsored health insurance coverage, also found:

• Michigan dropped from 77 percent of its population covered by employer-sponsored health insurance to 64 percent, the third-largest drop (13 percent) among the states over the decade. Only Indiana (13.6 percent) and South Carolina (13.3 percent) had bigger losses.

• Michigan is still better than average with 64 percent of the under-65 population covered by employer-sponsored insurance compared with 59 percent nationwide. But 14 states have a bigger share of their population enjoying employer-sponsored insurance.

• Michigan ranked 6th in the country for employer-sponsored health insurance in 2000-2001 but 15th in 2009-2010.

– Judy Putnam

 

One reward Michigan can do without

Added February 17th, 2012 by Karen Holcomb-Merrill
Karen Holcomb-Merrill

New rankings about state “business tax climates” by The Tax Foundation have been touted here in Michigan recently. The official rankings will be released this summer, but projections are that Michigan will move from 18th to 12th. Sounds like something to celebrate, right? Not so fast.

The primary reason Michigan is moving up in the rankings? Tax proposals passed last year that slash business taxes 83 percent, while increasing taxes on individuals by 23 percent. As noted in the League’s recent report, 51 percent of individuals will pay more in taxes after fiscal year 2012. Low-income people will be hit the hardest.

While The Tax Foundation may laud the business tax cuts in Michigan, there is no evidence at all that they will create more jobs or stimulate economic activity — two things we need here in the Mitten state.

What we do know, however, is that because of the tax cuts to businesses, there is less money in the state budget for things that businesses and their employees value. Those are things like strong schools, good roads, public safety and a skilled workforce.

Overall, The Tax Foundation seems to reward states that have low business taxes and, in turn,  a disinvestment in important public structures that actually benefit businesses and a growing economy.

I think this is one “reward” that Michigan can do without.

Who’s No. 1 on the list, you ask? The state that is held up as the example of a great business climate? The state of Wyoming. A state with no Fortune 500 companies.

– Karen Holcomb-Merrill

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