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    Who are the NERD fund donors Mr Snyder?

    Raise the curtain.

    Rescue MI by capping government-class benefit costs


    By leondrolet, Section News
    Posted on Fri Jun 19, 2009 at 07:04:07 PM EST
    Tags: taxes, michigan budget, constitutional amendment, Leon Drolet (all tags)

    Friends,

    Today, the Detroit Free Press website posted an editorial that I wrote which proposes to cap government employee benefit costs and use the savings to dramatically cut taxes.

    The Free Press editorial is HERE.

    Below is the full editorial:

    Michigan's government class - school, state and local government employees - is proving far more immune to our state's economic decline than private sector citizens. In fact, recent statistics demonstrate that most government employees are prospering compared to Michigan's long-suffering private sector workers.

    According the U.S. Bureau of Labor Statistics, the average government worker now makes $25.97 in wages and also receives lavish health care, retirement and time-off benefits worth an additional $13.53 per hour. Private-sector workers in the Midwest earn an average wage of $18.83 with benefits worth $8.09 per hour. The discrepancies remain even when private sector workers are compared to government employees performing similar jobs (government managers vs. private sector managers, private service worker vs. government service worker, etc.).

    But there's even more good news for government employees.

    In addition to higher pay and much more generous benefits, job security for the government class is ever so much greater than for the average citizen. Civil service rules and union contracts make layoffs rare for government employees. In fact, while Michigan lost 147,000 goods-producing jobs and 153,000 service industry jobs last year, our state's government sector actually grew by 3,000 new government workers.

    Michigan's increasingly impoverished taxpayers aren't the only losers as government class benefits and wages grow. Services that government provides to citizens are slipping. Money spent on the platinum-clad health and retirement benefits of bureaucrats is not available for Medicaid provider reimbursements or food for senior meals-on-wheels programs.

    Sadly for its members, the government class gravy train can't go on forever. As property values and the economy continue to fall, our state and local governments face significant declines in tax revenues. Because the generous pay and benefits of government employees are contractually locked in, elected officials eventually must choose between raising taxes on citizens or finally laying off government workers.

    Raising taxes contributes to what could be called the "Detroitification" of Michigan - a vicious cycle of hollowing out the private sector to prop up an unsustainable government establishment. The alternative is to finally lay off some public sector employees, which means fewer teachers, firefighters, police and other service providers.

    But what if Michigan governments could balance their budgets and significantly cut taxes without laying off any government workers or reducing any services? Impossible? In fact, there may be a way.

    If the state constitution were amended to cap the cost of government employee benefits at the same level as the average benefits earned by full-time private sector citizens, taxpayers would save billions of dollars.

    Michigan has 411,000 school, state and local government employees, according to the U.S. Census Bureau. These employees (which include elected officials) are among the highest-paid in the nation, and also average $4.05 more per hour in benefit costs than comparable full-time private sector employees. Capping their benefit costs at the private sector level would save over $8,000 for each government employee and full-time politician, for a total annual savings of over $3.4 billion.  This huge savings could be achieved without diminishing government services or laying off a single government employee.

    Enacting a state constitutional amendment to cap government employee and elected official benefit costs could turn Michigan around by making significant tax cuts possible without painful service reductions. Government workers would still enjoy higher pay and job security, but they would have benefits comparable to those in the private sector.

    What could Michigan do with an extra $3.4 billion? We could completely eliminate the entire Michigan Business Tax, which generates $2.3 billion. Also, the state's personal income tax could be cut by 20 percent for every Michigan family and individual.

    No business tax on job providers and a substantial income tax cut for all citizens, all with no service cuts? Talk about an economic game changer! Imagine the billboards on the state border: "Job providers - come to Michigan, one of just four states with no general business tax!"

    It's long-past time to cap a lucrative government class benefit system that is as unsupportable as it is unfair to Michigan taxpayers. There's only one question remaining about this proposal: What are we waiting for?

    Leon Drolet
    Michigan Taxpayers Alliance
    www.mitaxpayer.org

    < The Boston Tea Party and The Big Three | The Weekend in the Sphere >


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    Display: Sort:
    HB4275 (none / 0) (#1)
    by Tom McMillin on Fri Jun 19, 2009 at 10:42:21 PM EST
    HB4275 which is a bill I submitted earlier this year would require the 50,000 state employees to co-pay at least as much as the average of all 50 states' employees pay, which i estimate would save several hundred million dollars per year.  Currently, MI's state employees pay about 5% of their benefits, while nationally, state employees pay 23%.  I initially wanted to make the requirement equal to the average of the big 3, but during the bill writing process it appeared it was difficult to tie the state employees' pay to information from private contracts and plans...so the best answer was utilizing public employees' plans.  
    see page 18 of this link: http://www.detroitrenaissance.com/files/DetRen_Final091708.pdf
    HB4275 is located here:
    http://www.legislature.mi.gov/documents/2009-2010/billintroduced/House/pdf/2009-HIB-4275.pdf

    • correction by Tom McMillin, 06/19/2009 11:19:47 PM EST (none / 0)
    Leon's Made Up Numbers (none / 0) (#3)
    by stevenstmason on Sat Jun 20, 2009 at 02:27:35 AM EST
    Wow, Leon gets to make up this garbage and gets it printed in the Free Press? What a job!

    His numbers are completely bogus and a little simple math shows how. There are around 1200 Townships in Michigan. Each of those Townships has a board, most are 5 members, some are 7 members. Just to be conservative, let's say that there are 6,000 Township Board members (5 x 1200). According to Leon, his proposal will save the state $48 million dollars (6000 board members x $8,000)by capping the benefits of these elected officials. The only problem with these "savings" is that they don't exist. Many Township Board members get no benefits and most of those that do get nowhere near the kind of benefit package that would result in a savings anywhere near $8,000.

    Leon's problem is that his solution is based on an assumption that is wrong. He believes that every elected official and government employee is pulling down an overly generous benefits package that will save the state $8,000 per employee if it was capped at private sector levels. But the simple fact is that most government officials and employees don't enjoy those levels of benefits. Leon's claim that he can achieve the equivalent of $8,000 in savings per 411,000 elected officials and employees is simply untrue. He can't achieve those kinds of savings and his claim that it would allow the Business Tax to be eliminated and the Income Tax to be reduced is equally unfounded.

    Did you EVEN read Mr. Drolet's post? (none / 0) (#4)
    by KG One on Sat Jun 20, 2009 at 07:30:08 AM EST
    Or are you just spouting pablum to get a response?

    For the sake of argument (I'm in a very forgiving mood this am) let's just say that you saw his name, then TOTALLY missed this sentence, the one that looked like:

    "Michigan's government class - school, state and local government employees - is proving far more immune to our state's economic decline than private sector citizens. In fact, recent statistics demonstrate that most government employees are prospering compared to Michigan's long-suffering private sector workers."

    Elected officials aren't the only people whose salaries and wages we are paying.

    My take on his plan: I like his proposal. I don't see it having a snowball's chance of getting implemented. Sorry, but the political will just isn't there in Lansing today. Lansing and "saving money" have never been words that I've used very often in sentences.

    But I like his proposal nonetheless.

    Next...

    The 411,000 non-federal government employees (none / 0) (#9)
    by leondrolet on Tue Jun 23, 2009 at 07:17:57 AM EST
    are employees whose PRIMARY OCCUPATION is their government job. So the only township officials included in that figure are full-time township employees.

    Look, Stevie, if you have a beef with the Bureau of Labor Statistics reporting of the average benefits costs for the government class or for the citizen class, please let them know. The Bureau is required to collect the information monthly and report it to the federal government, and have been doing it for decades.

    Or maybe you don't trust the U.S. Census Bureau? They are the ones reporting the 411,000 Michigan residents who claim a non-federal government job as their primary occupation.

    Do you have a problem with the PREMISE of my proposal? The premise being that the benefits enjoyed by full-time government sector employees should cost about as much as the benefits earned by full-time private sector citizens?

    I mean, even if my proposal were adopted, these government class workers would still enjoy higher pay and job security that other citizens. Only their bennies would be equalized. Is that OK with you?

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