10x25MM

Metallurgical engineer, troublemaker....

February Michigan Unemployment 5.9% – Really?

Philadelphia Federal Reserve Bank Questions BLS State Level Employment Data Revisions

Philadelphia Fed Website 2015-04-06

Kurt Weiss at the Michigan Department of Technology, Management, and Budget (DTMB) reported on March 25th that Michigan’s February 2015 seasonally adjusted unemployment rate dropped to 5.9% from January’s 6.3% figure. This was followed on April 2nd by the DTMB release of non seasonal adjusted employment data for February 2015. This quite large one month drop is great news for Michigan workers, if it indeed reflects our labor market. But does it?

Twelve Month Discrepancies Between Seasonally Adjusted and Unadjusted Data Differentials

The DTMB Michigan non seasonally adjusted (NSA) employment report for February 2015, at the bottom of page 6, showed that Michigan’s civilian labor force declined by 33,000 workers over the twelve preceding months. But the seasonally adjusted (SA) employment report for February 2015 at the top of page 2 showed that Michigan’s civilian labor force increased by 7,000 workers over the same twelve months. The growth of Michiganders employed over the same twelve month period also shows a 5,000 worker NSA/SA discrepancy: 101,000 not seasonally adjusted versus 96,000 seasonally adjusted. And the shrinkage of Michigan’s unemployed worker population over the same twelve month period shows a 46,000 worker NSA/SA discrepancy: 134,000 not seasonally adjusted versus 88,000 seasonally adjusted.

Valid seasonal corrections should produce twelve month differentials which agree with comparable item non seasonally adjusted differentials over the same twelve month period. Here we have a 0.85% discrepancy in Michigan’s total civilian labor force, a 0.1% discrepancy in civilian employment over the same twelve month period, and a 12.5% discrepancy in the shrinkage of Michigan’s unemployed worker population over the same twelve month period.

How did this happen?

The DTMB turns its employment data over to the U.S. Department of Labor’s Bureau of Labor Statistics for X-13ARIMA-SEAT seasonal adjustment. BLS also adjusts underlying data periodically for changes in the Michigan population estimates of the U.S. Census. The two (SA and NSA) February 2015 DTMB employment reports both reflect substantial BLS revisions undertaken in early 2015. A note at the top of page 2 in the DTMB February 2015 SA employment report:

Note: The data in this release reflects recently revised historical estimates. Seasonally adjusted labor force estimates for 1976-2014 for Michigan and 1990-2014 for the Detroit-Warren-Dearborn MSA were revised. Previous published data should be replaced with this new series. In addition, seasonally adjusted payroll job data was revised for 2010-2014. For newly revised data, please contact DTMB at 313-456-3090.

The DTMB February 2015 NSA employment report bears a similar note on its first page noting that it was also subjected to substantial revisions.

So Michigan’s employment data has been subjected to substantial revisions at BLS which produce seasonal adjustments that do not cross check against comparable item non seasonally adjusted data over the most recent 12 month period.

You Betcha! (16)Nuh Uh.(0)

MLive Endorses Proposal 1 – Epic Math Fail or Outright Mendacity?

Journalists Bravely Display Their Mathematical Deficit, or......?

fuzzymath
The MLive Media Group Editorial Board endorsed Proposal 2015-01 this morning. The endorsement was no real surprise, given the blizzard of slanted reporting MLive has been posting on Proposal 1 over the last 30 days. The real surprise here was the shoddy math cited in the endorsement:

If you currently pay $100 per month in sales tax, which is the average for median income households in Michigan, you’ll pay an extra $1 per month. Because the sales tax is regressive — it falls disproportionately on the poor — Proposal 1 evens the playing field by expanding the Earned Income Tax Credit, which was cut in 2011.

The fuel tax changes will result in an additional 2 to 10 cents per gallon, depending on gas prices. Some of these costs will surely be offset by reduced damage to vehicles as the roads are improved.

Governor Snyder’s FY 2015 Executive Budget projects that Michigan’s current 6% sales tax will collect $ 7.89 billion in FY 2015 on $ 131.5 billion in taxable products. This is $ 797 per year, per Michigan resident. The U.S. Census says that the average Michigan household is composed of 2.53 persons. Thus the current 6% sales tax is projected to collect $ 2,016 per household in FY 2015, or $ 168 per household, per month.  Not $ 100 per month.

Looking at FY 2015 as if Proposal 2015-01 was in effect, the 7% sales tax would collect $ 8.5 billion on $ 121 billion in taxable products. Keep in mind that road fuel will no longer be subject to the sales tax, so we have to back out S 10.2 billion in formerly taxable fuel sales on just over 4 billion gallons in road fuel. This is $ 855 per year, per person. Thus the proposed 7 % sales tax would collect $ 2,165 per household in FY 2015, or $ 180 per household, per month.

So the difference is $ 12 per month, per Michigan household. Not MLive’s $ 1 per month fantasy factoid.

You Betcha! (19)Nuh Uh.(0)

The Disaster That is Proposal 1

Sales Tax Retention on Off-Road Fuel Will Trigger Pandemonium in Michigan's Fuel Distribution Network

ORFUTU-nerd-RM

Part II

As Proposal 2015-01 stands now, ORV operators, snowmobilers, boaters, lawn mowers, generator users, and others purchasing non road use fuels from gas stations will be in violation of PA 167 of 1933, the Michigan sales tax act. The way PA 167 of 1933 is worded, compliance is primarily the responsibility the fuel retailer. However those who, for whatever reason, escape paying the sales tax become liable for the Michigan use tax under PA 94 of 1937. This includes tourists who trailer in fueled boats from out of state. The ‘Amazon tax’ returns with a vengeance in a new guise.

Barring further convoluted legislative action, on October 1st Michigan gas stations will have to collect the 7% sales tax on gasoline and diesel fuel sold for any purpose other than propelling a vehicle “used to operate a motor vehicle on the public roads or highways of this state”. Seems simple enough given the electronic calculation capabilities of most modern gas pumps, right? Just push a button and the sales price increases by 7%.

Wrong.

You Betcha! (25)Nuh Uh.(1)

The Disaster That is Proposal 1

Sales Tax Retention on Off-Road Fuel Will Trigger Pandemonium in Michigan's Fuel Distribution Network

tall-sign
Part I

Let’s walk through the numbers and consequences of the most disastrous aspect of Proposal 2015-01: the retention of the sales tax on fuels used almost everywhere but on the roads. Most disastrous because this will be enshrined in our Constitution if Proposal 2015-01 passes. No act of our Legislature or sleight of hand by our Governor can correct the Michigan Constitution if Proposal 2015-01 passes. They can only decide to impose astronomical costs on the petroleum distribution network, create a lot of new criminals, spawn a black market in fuels, forego sales tax revenues, or some combination thereof. The Michigan Constitution gets its first intractable dilemma.

HCJR UU contains the actual language amending the Michigan Constitution. Sales and use tax rates go from 6% to 7%, and the sales tax is no longer permitted on “gasoline or diesel fuel used to operate a motor vehicle on the public roads or highways of this state”. So the plain language of HCJR UU authorizes continued sales tax collection on all gasoline and diesel oil which is not used to operate a motor vehicle on the public roads or highways of this state, at the new 7% rate.

This 7% ‘ORV’ fuel sales tax will be over and above the motor vehicle fuel tax, which continues to be applied to recreational off-road vehicle and marine fuels as a ‘privilege tax’ under PA 451 of 1994. To make things even more confusing for fuel suppliers and consumers, there will be a third category of fuel subject to the sales tax, but not the motor vehicle or privilege tax: fuel used industrially, for construction, for farming, for lawn care, generators, and other miscellaneous purposes.

Less noticed, the 7% sales tax is also authorized on fuels other than gasoline and diesel oil used to operate vehicles on the public roads or highways of this state. This is quite a surprise since PA 468 of 2014, the motor vehicles fuels tax law of the road tax package, goes to great lengths to bring alternate transportation fuels such as liquid or compressed natural gas and lighter alternative petroleum products (LPG, propane, etc.) into the general road fuels tax regimen. This is significant; the U.S. Energy Information Agency estimates that these alternate transportation fuels currently account for about 6% of ground vehicle propulsion on the public roads in 2009 and their usage is increasing sharply. The sales tax liability on these ‘green fuels’ will put them at a serious economic disadvantage to gasoline and diesel fuel. But this did not deter the Sierra Club and their fellow environmental wackos from endorsing Proposal 2015-01. David Holtz and the Michigan Sierra Club board would appear to have a ‘Common Core’ reading comprehension level.

You Betcha! (28)Nuh Uh.(0)

$ 70 Million More Down the Drain Every Year

Michigan Triples Down On The Most Abused Federal Program

Flushing-Money

The U.S. Government Accountability Office released its FY 2014 estimates of improper payments made by the Federal Government in testimony before the U.S. Senate’s Committee on Homeland Security and Government Affairs on Monday. The Improper Payments Information Act of 2002 and the Improper Payments Elimination and Recovery Act of 2010 require Federal Executive Branch agencies to estimate the levels of improper payments in all Federal programs. The GAO assembles this data and reports the levels of improper payments, along with recommendations to minimize such improper payments.

At the Federal level, all improper payments amounted to about $ 125 billion dollars in FY 2014. Even by casual Federal accounting standards this is breathtaking.  Three cents of every Federal Government dollar spent. Going through the GAO’s estimates by program, the Earned Income Tax Credit is at the top of the list by percentage of improper payments: 27.2 % of all EITC payments are improper. The GAO estimated FY 2014 improper EITC payments by the Federal Government alone amounted to $ 17.7 billion dollars. Other Federal programs burned more dollars, but none had the percentage rate of improper payments that the EITC has. Not even close.

The most obscure element of the tax increase package which Michigan voters will be asked to approve on May 5th is Senate Bill 847 of 2014. This bill is a $ 260 million annual increase in the State of Michigan’s version of the EITC. The EITC will increase from its current 6 %, to 20 %, of the Federal EITC credit allowed under Section 32 of the Internal Revenue Code. Currently, the Michigan EITC pays out about $ 80 million from the Michigan Treasury every year at the 6 % rate.

You Betcha! (18)Nuh Uh.(0)

Where’s The Bridge?

Questionable MDoT Database Compromises Auditor General's Bridge Inspection Performance Audit

Jefferson Rouge BridgeThe Michigan Office of the Auditor General released its overdue performance audit of MDoT’s Bridge Inspection Program Friday afternoon, just in time to miss last week’s news cycle. Weekend news reports focused on bridge inspection frequency, but there is a more fundamental question which should be answered first: Are the MDoT bridge records which were audited complete and correct?  Even remotely so?

The Federal Highway Administration collects bridge data from the State DoT’s and other sources to create and maintain the National Bridge Inventory. It is supposed to list all American bridges which have roads running across them or below them, along with ownership, identifiers, and condition data. Condition data is given as a number from 0 (failed) through 9 (good beyond current standards). These numbers then get converted into the descriptors you read in the press, such as ‘structurally deficient’, poor, good, etc.

The MOAG performance audit is replete with statistics derived from MDoT’s bridge inventory database which show – no surprise – that some of Michigan’s bridges are in poor shape. You can see MOAG’s statistics as of April 30th, 2014 in the audit or go to a searchable database of individual bridge data across the entire country, as of 2012, brought to us by Alexander Svirsky of MassRoads.com.

A first pass at the MOAG bridge inspection audit involved looking at the worst condition category of bridges, those rated 0 or 1 for failed or imminent failure. Going through the Wayne County owned bridge summary on Page 51 of the new MOAG audit, I was heartened to see that Wayne County has no condition category 0 or 1 bridges. But there are at least two zero condition category major bridges in Wayne County across the Rouge River, so let’s say I am experiencing a little cognitive dissonance just now.

You Betcha! (25)Nuh Uh.(1)

Many Michigan Shooters A Week Away From Becoming Felons

Michigan Law Enforces Obama's Latest 'Pen and Phone' Gun Control With Draconian Penalties

BATFE M855 GreenTip

It turns out that the stealth U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives proposal to prohibit the most popular cartridge used by civilians in the AR-15, America’s most popular civilian rifle, will be enforced by draconian penalties in Michigan law. This prohibition will affect all owners of .223 Remington caliber rifles, not just the AR-15. BATFE has indicated that they are withdrawing a ‘sporting purpose’ exemption for the standard issue U.S. Military 5.56x45mm NATO (.223 Remington) cartridge, claiming that it is armor piercing handgun ammunition under the 1986 Law Enforcement Officer Protection Act.

Michigan legislators cloned LEOPA in 1990 with one important distinction. The Michigan statutory language actually prohibits any use of prohibited ammunition. From MCL 750.224c:

(1) Except as provided in subsection (2), a person shall not manufacture, distribute, sell, or use armor piercing ammunition in this state. A person who willfully violates this section is guilty of a felony, punishable by imprisonment for not more than 4 years, or by a fine of not more than $2,000.00, or both.

‘Use’ includes loading a rifle magazine with prohibited ammunition or even firing it in a single shot rifle. The Federal LEOPTA at least allows gun owners to use up stocks of ammunition on hand when a cartridge is prohibited. A bunch of Michiganders are about to become felons if BATFE gets its way thanks to another triumph of legislative draftsmanship by our Legislature. Violating MCL 750.224c is a four year felony, a rude surprise to someone owning M855 ammunition. Perfectly legal one day, a felon the next. The joy of multilevel government regulation.

You Betcha! (21)Nuh Uh.(0)

Michigan Roads – How Bad?

paser-1You are about to be buried in pseudostatistics and factoids purporting to demonstrate just how bad Michigan roads are. We have already demonstrated that the TRIP vehicle maintenance factoids fabricated by a devious road contractors’ business league are a complete fraud.

Now State of Michigan government entities are unleashing a wave of propaganda intended to drive your vote on Proposal 2015-01. Two State of Michigan government entities have prepared campaign flyers on behalf of Proposal 15-1 using Michigander’s tax dollars: MDoT and the Transportation Asset Research Council (TAMC).

Both MDoT and TAMC have spent years preparing slick pamphlets decrying the sad condition of Michigan’s roads, citing PAvement Surface Evaluation and Rating (PASER) data collected by TAMC with MDoT and local road agency help. These pamphlets claim that 30 – 40 % of Michigan roads are in poor condition. But are they really?

You Betcha! (23)Nuh Uh.(1)

Pavlov’s Politicians

Reflex Conditioning Drives Uncontrolled Government Spending

Pavlovs PoliticianThe brilliant, Nobel Prize winning physiologist Ivan Petrovitch Pavlov demonstrated that you could condition a dog to salivate by sounding a metronome. All he had to do was sound the metronome when putting out food for his dogs. It did not take long for his dogs to associate the sound of the metronome with food.  Then he no longer even had to put food out to get the dogs to salivate; he only had to sound the metronome.

Today, inferior rank politicians have been conditioned to salivate when a financial grant is offered by superior rank politicians. The only problem with these grants of largess is that they always come with caveats, and usually require matching funds. These restrictions are a deliberate – and successful – effort to frustrate all efforts to manage government expenditures.

You Betcha! (15)Nuh Uh.(1)

Michigan Political Math: $ 1.2 Billion = $ 1.08 Billion

Mass Transit Skims $ 120 Million from Proposal 2015-01 Road Work Funds

Train Wreck ImageEver hear of the Michigan Comprehensive Transportation Fund? Ten cents of every Michigan fuel tax dollar gets diverted to this mass transportation slush fund.  It is only just behind the sales tax as a diversion of your current fuel tax dollars from Michigan’s roads.

All motor vehicle fuel taxes collected in the State of Michigan are first deposited into the Michigan Transportation Fund. Then MCL 247.660 (1)(f) (Public Act 51 of 1951) dictates that 10% of the funds deposited in the Michigan Transportation Fund be immediately transferred to the Comprehensive Transportation Fund. The amended version of MCL 247.660 you are being offered in Proposal 2015-01 has the very same section (1)(f), making the same 10% immediate diversion.

So the $ 1.2 billion that Proposal 2015-01 supporters are promising you for road work is actually only $ 1.08 billion.  Kirk T. Steudle, P.E. gets a whole new stash to maintain and expand his stable of rotting train cars, $ 120 million that cannot be spent on the roads by law.  $ 120 million that gets skimmed from the $ 1.2 billion you are being promised for the roads.  And no, it is not skimmed from the $ 800 million that Proposal 2015-01 dedicates to the Democratic base.

Now you now know how Michigan political math works in the age of Common Core.  Pay $ 2 billion for roads, get $ 1 billion in road work.

You Betcha! (22)Nuh Uh.(1)