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CRC Column

The right to criticize government is also an obligation to know what you are talking about. 
-Lent Upson, 1st Executive Director of CRC  


For over 90 years, the objective of the Citizens Research Council of Michigan has been to provide factual, unbiased independent information on significant issues concerning state and local government organization and finance. CRC believes that the use of this information by policymakers will lead to sound, rational public policy in Michigan.

 

CRC's Blog

Check out the latest posts on the Citizens Research Council of Michigan blog, CRC Column:

 

 

IN THE NEWS

CRC Releases Analysis of Proposal 15-1: Sales and Motor Fuel Tax Increases Related to Transportation Funding

March 19, 2015 - The Citizens Research Council of Michigan has released its analysis of Proposal 15-1, which will appear on the statewide ballot at a special election on May 5, 2015. The proposal has the dual objective of increasing state funding for transportation repair and maintenance and modifying the taxation of motor fuels to guarantee that all taxes paid at the pump are directed to transportation purposes. If approved by voters, the proposal would change Michigan's tax structure to generate additional revenue for transportation infrastructure improvements as well as address the funding displacement to public schools and local governments caused by removing motor fuels from the base of the sales tax. The CRC analysis provides voters with an accessible and objective explanation of the issues surrounding the proposal and its ramifications for Michigan residents.

A complex package of laws were enacted to restructure various state taxes with the primary objective of raising taxes to finance increased transportation funding. Those laws will not take effect unless voters approve a ballot proposal which increases the maximum authorized sales tax rate from 6 percent to 7 percent. The proposed sales tax increase is related to the goal of guaranteeing that all taxes paid at the pump are directed to transportation purposes. They will be used to address the funding displacement to schools and local governments that is created because sales tax revenues are constitutionally dedicated to funding these programs.

 

View CRC's Webinar to Discuss Proposal 15-1:
Sales and Motor Fuel Tax Increases Related to Transportation Funding

The state motor fuel and motor vehicle registration tax increases that will provide funding for transportation are contained in state laws that are "tie-barred" to the May vote on adoption of the constitutional amendment.

"Because of the 'tie-barred' legislation, the vote on Proposal 15-1, effectively serves as a public referendum on the entire transportation package, both the constitutional amendment as well as the laws passed by the legislature," said CRC Senior Research Associate Craig Thiel. "The idea of enacting laws by "tie-barring" their enactment to adoption of a constitutional amendment is very uncommon and last occurred with Proposal A of 1994. Because of this, voters are being asked to understand and weigh in on a very complex plan that normally would be the sole province of the state legislature."

The law changes tie-barred to Proposal 15-1 will raise over $1.3 billion in additional annual tax revenue for transportation improvements and over $700 million in new sales tax revenue that will benefit schools, local governments, and other areas of the state budget.

"Recent reports have suggested the state needs anywhere from $1.2 billion to $2.0 billion per year to get the roads back into good condition," said CRC's Director of State Affairs Bob Schneider. "So, this $1.3 billion is a significant step. Further, the new motor fuel tax rates are tied to inflation. Those inflationary increases could help revenues keep pace with the cost of maintaining the highway system -- which fixes a fundamental revenue problem with our current fixed per-gallon motor fuel taxes."

The effect of those tax increases on individual taxpayers will depend on a couple of independent variables. At current pump prices ($2.40 per gallon), CRC estimates that motorists will pay just over 10 cents more per gallon in total taxes under the proposed motor fuel taxing scheme. Higher pump prices will lessen the effect on fuel purchasers. Additionally, with the one percentage point increase in the sales tax rate (from 6% to 7%), consumers will have to pay higher sales taxes on the purchases of taxable goods and services. The effect of that tax increase will depend on the purchasing habits of individual taxpayers.

CRC's report is available at no cost Here.

 

IN THE NEWS

CRC Report Looks at the Use of Immediate Effect for State Laws and Suggests Reforms

March 12, 2015 - The 2015-16 legislative session is underway and the Michigan legislature is again up to the standard practice of granting immediate effect to almost every law enacted. A new Citizens Research Council of Michigan (CRC) report examines this practice in context of the provision of the 1963 Constitution for the effective date of state laws. CRC’s analysis identifies the need for reform – either of the Constitution to reflect legislative practice or of legislative practice to reflect the Constitution.

"The original intent behind the immediate effect provision in our Constitution was for immediate effect to be the exception, as opposed to the standard practice," said Craig Thiel. "However, legislative practice over the years has made immediate effect more of the rule than the exception." The CRC report found that from 2000 through 2014, the legislature granted immediate effect to 94 percent of the laws it passed. Going back to the adoption of the Constitution, nearly 90 percent of all laws received immediate effect.

The CRC report suggests that they should consider either proposing a constitutional amendment so that the effective date provisions reflect longstanding legislative practice or honor the spirit of the Constitution by treating immediate effect as an exception rather than the rule in the law making process.

The report highlights some of the reasons why the legislature has relied so heavily on immediate effect for the effective date of laws, including the shift to the full-time legislature following the adoption of the 1963 Constitution, advances in communication technology, and practical and political considerations. The report also points out some of the concerns raised with the current legislative practice, specifically the complicating effects on the referendum process whereby citizens are able to have a direct say in a law.

"While the reasons for the legislature's expanded use of immediate effect may be meritorious and make sense," said Craig Thiel, "CRC believes that Michigan citizens served by the state constitution should be able to read the document and understand the process of government lawmaking. The wording, along with the framers intent, is for immediate effect to serve as the exception. If the wording is obsolete, as legislative practice would suggest, change the wording."

CRC's report is available at no cost on the Citizens Research Council's website, www.crcmich.org.

 

IN THE NEWS

CRC Report Lays Path for Reforming Statutory State Revenue Sharing

February 18, 2015, Introduction of the Governor's budget proposal last week once again draws attention to a long-standing program of distributing state funding to local governments. Michigan's state revenue sharing program has provided a decreasing amount of assistance to lcoal governments over the last decade. Not only does the law fail to provide a method to distribute funds, but policymakers have been diverting funding from state revenue sharing to balance the state's budget. A new Citizens Research Council of Michigan report, Reforming Statutory State Revenue Sharing, describes the role of the revenue sharing program and provides alternatives that would provide a better foundation for the future distribution of revenue sharing dollars.

"If the fiscal health of Michigan's local governments is a priority, state policymakers should find a way to fund statutory state revenue sharing," said CRC president Eric Lupher. "The state is only as strong as its weakest local governments. For that reason, it is a smart investment to fund those units that provide the services that keep Michigan's residents safe and that host the economic activity upon which state taxes are levied."

The report, prepared at the request of the House Appropriations Subcommittee on General Government, provides different paths that state policymakers could take for distributing revenues.

One path attempts to equalize the fiscal capacity of local governments by distributing state funds based on differences in their tax bases and by recognizing the varying demand for local services.

A second path suggests that the state identify the different sectors of the economy that require the greatest levels of local government services and prioritize assistance to local governments that host economic activities within those sectors.

A third alternative would transition the program from an unrestricted revenue sharing program, that allows local governments to decide how to use the funding, to a restricted revenue sharing program that funds the local government services for which the state has the greatest interest, namely public safety.

"The funding cuts since 2001 have cut about two-thirds of the local governments out of the statutory state revenue sharing program," Mr. Lupher added. "While unfortunate for those local units that have foregone the revenues, the circumstances provide an opportunity to minimize the 'winners' and 'losers' while rebuilding the program."

The full report, funded through a grant from the W.K. Kellogg Foundation, is available at no cost on the Citizens Research Council of Michigan website at www.crcmich.org.

 

 

 

 

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Recent Publications

Statewide Ballot Issue: Proposal 15-1
Sales and Motor Fuel Tax Increases Related to Transportation Funding

Use of Immediate Effect in Michigan

Reforming Statutory State Revenue Sharing

Managing School District Finances in an Era of Declining Enrollment

Policy Options to Support Children From Birth to Age Three

Making Sense of K-12 Funding

Statewide Ballot Issues: Proposals 2014-1 & 2014-2   Wolf Hunting

Addressing Michigan's Obesity Problem

 

 

 

 

 

 

 

 

Last Updated March 19, 2015