Rent Seeking

Bureaucratic Capture In The Flint Water Fiasco, An Echo Of Proposal 1

Snyder's Email Dump Is Most Notable for What It Doesn't Show: Management

Snyder Steudle Image 1Governor Snyder went way out on a political limb supporting Proposal 2015-01. By the time this limb broke off at the polls on May 5th, his only remaining allies were MDoT, MITA, and Michigan’s nitwit media.

MDoT’s Director, Kirk T. Steudle, P.E. received lavish, flattering coverage in our nitwit media throughout the road funding proposal campaign. The Transportation Asset Management Council, an MDoT tool, packaged an avalanche of lies in glossy pamphlets for public consumption. An entirely fictitious Washington think tank, TRIP, used inside MDoT information to issue even more incredulous lies. Governor Snyder parroted these titillating lies thoughout his Proposal 1 media campaign. He was entirely comfortable promoting the agenda of his ‘technical experts’.

Pre SB 571 campaign finance law allowed us to watch MITA spend $ 5.4 million supporting this turkey, more than half the total spent by Safe Roads Yes! The Michigan Infrastructure and Transporatation Association is ostensibly a bunch of independent, competitive contractors. Somehow a fractious bunch of competitors planned and executed a well coordinated – if entirely devious – political campaign.

How did they coordinate?

How did this presage the Flint water fiasco?

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Headlee Evasion Caused Flint’s Water Quality Fiasco

Water Has A Very Special Attribute In Southeast Michigan

Water is Money Image 6You probably think the water which comes out of the taps in your house is for drinking and washing. You would be wrong. Michigan drinking water is first and foremost a mechanism for Michigan politicians to evade limits imposed upon them by the Headlee Amendment. You probably think Michigan water systems have quality as their top concern. You would be wrong. Michigan water departments are directed to maximize revenue by their political masters. These unfortunate facts are the genesis of Flint’s sorry water quality.

Michigan’s lefties and the ignorati in our media have fabricated a popular history of the Flint water situation which begins with Governor Snyder and his emergency managers on 25 April 2014, the date Flint started drawing its drinking water from the Flint River. Craven emergency managers appointed by Governor Snyder plotted to poison Flint residents to save a few bucks. The truth is rather different.

The history of this calamity actually begins in 1978, when the Headlee Amendment to Michigan’s Constitution was passed by outraged Michigan voters.

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Hey, wait a minute…why are we doing this again?!?

If you are gullible enough to buy into Gov. Snyder’s, along with the Michigan GOP’s (working behind the scenes, of course), hype surrounding the “saving” of Detroit through a massive Michigan Taxpayer bailout via the “Grand Bargain“, a little more than a year later you would think things were humming along wonderfully and everything in The D was just swell.

Well, let me be among the first to smash those rose-colored glasses they have been distributing to the masses, knock that cup of Kool Aid in your hands to the ground and show everyone why it all is about to come crashing down…hard…again.

{Continued after the fold}

*** Quick Note: I’ve received a few messages asking me why I referred to EX-Detroit Federation of Teachers President as being “recently reinstated“.

There is an upcoming “hearing” with the American Federation of Teachers next week to consider the matter of his reinstatement. I’ve been told that hearing is nothing really more than a formality at this point, but that he is not currently officially back in his old position.

It should also be noted that the size, scope and frequency of these “sickouts” are next to impossible to orchestrate and coordinate without significant union involvement. So take Steve Conn’s “official” status with the DFT for what you will.***

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Gordie Howe Bridge On A Slow Roll to Oblivion

Canadian Economic Collapse and Extravagant Liberal Party Campaign Promises Doom Governor Snyder's Bridge

The estimated cost of constructing the NITC DRIC Gordie Howe Bridge between Detroit and Windsor has now more than tripled since the Canada agreed to fund the entire cost back in June 2012. Its total cost, including interest payments, is now over four times the 2012 estimate. The recent, sharp collapse in the value of the Loonie – the Canadian currency – is being blamed. But it appears that deliberate lying cost underestimation in 2012 and project creep over the last 30 months play a much bigger role in the eyepopping new cost estimates.USDCAD

Financial markets trade the U.S. Dollar and the Canadian Dollar back and forth as ‘USDCAD‘, which is the equal value ratio of Loonies per greenback. The higher USDCAD is, the weaker the Loonie. USDCAD is now quoted around 1.40 (1.4 Loonies per greenback). The Loonie was 37% stronger back in June 2012 when Governor Snyder and then Canadian Prime Minister Harper worked out their agreement; USDCAD was then about 1.02.

Direct construction costs are now estimated to be C$ 2 billion ($ 1.43 billion USD) higher than the C$ 973 million ($ 950 million USD) estimate touted back in 2012. A 37% increase due to currency adjustments would be only $ 360 million (USD), so we know the 2012 deliberate lie underestimation was in the vicinity of $ 1.64 billion (USD). Additionally, the collapse of the Loonie now requires the establishment of a C$ 1.5 billion ($ 1.07 billion USD) reserve to offset the expected rise in Canadian dollar denominated bond interest rates. The Canadian government bond yield curve has doubled at its short end since the middle of September 2015 in response to the collapse of the Loonie. The Gordie Howe Bridge will be financed at those higher Canadian bond interest rates. The total Canadian government cost estimate is now C$ 4.8 billion ($ 3.43 billion USD).Snyder Harper Image

Harper’s Conservative government was defeated in October of last year after NDP voters abandoned their own party for the elysian promises of Justin Trudeau and his Liberal Party. Virtually the same promises our Dear Leader made in 2008 – ‘Hope and Change’ recycled for a northern audience. Harsh reality is already wrecking the promises Trudeau made to win the October election, so will the Canadian government continue to throw money at an unneeded bridge?

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Vultures Over Michigan

Senate Joint Resolution M: Paying for Michigan's Role in the Flint Water Disaster with Roads Funding?

Vulture Image 1Four Republican Michigan State Senators introduced Senate Joint Resolution M on December 15th to abrogate the just enacted PA 179 (HB 4370) deal which will eventually apply $ 600 million from State General Fund to roads repairs.  SJR M replaces this funding by raising the Michigan sales tax from 6% to 7%. The four Republican Senators are:

Ken Horn, District 32
Rick Jones, District 24
Darwin Booher, District 35
Mike Green, District 31

Senator Ken Horn

Senator Ken Horn

All four of these Republican Senators voted for every bill in the PA 174 – 180 road funding deal on November 3rd. But now, less than two months later, they want a different – all tax – funding arrangement for additional road work. Legislators’ remorse? Maybe not. Or perhaps remorse over a different situation?

First term Senator Horn was interviewed by Jake Neher of Michigan Radio on Senate Joint Resolution M:

Horn thinks the current plan relies too heavily on shifting money from other areas of the budget – especially with some big expenses on the horizon.
“That has me a little bit nervous,” he said. “If we tie our hands with $600 million out of the general fund, how do we ever manage new expenses?”

What “big….new expenses” cropped up in Senator Horn’s mind over the last 60 days?

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Fast and Loose in the Michigan Senate

Switch Subsidy Bill Passage Was A Senate Rules Violation

David Knezek ImageIn their slobbering rush to deliver tax breaks for one very specific data center last Thursday, the Michigan Senate violated its own rules regarding the consideration of appropriations bills. The Knezek amendment to SB 616, S-1:

Enacting section 1. The legislature shall annually appropriate sufficient funds from the state general fund to the state school aid fund created in section 11 of article IX of the state constitution of 1963 to fully compensate for any loss of revenue to the state school aid fund resulting from the enactment of this amendatory act.

converted SB 616 into an appropriations bill according to the definition in Michigan’s 1963 Constitution, in its Article IV, Section 31.

Michigan Senate Rule 3.602 requires:

“Any bill requiring an appropriation to carry out its intended purpose shall be considered an appropriation bill (See Constitution Article IV, Section 31). Appropriations bills, when reported back to the Senate favorably by a committee other than the Committee on Appropriations, shall, together with amendments proposed by that committee, be referred to the Committee on Appropriations for consideration.

Michael Kowall Image 2Senator Kowall moved a suspension of the Senate Rules after the noon recess on Thursday to bring nine bills on to Third Reading, including SB 616. From Senate Journal 106, page 1910: “be placed on their immediate passage at the head of the Third Reading of the Bills calendar.” was his motion. Senate Journal 106 indicates that his request was passed by a majority. This allowed final action and passage on SB 616 in the Senate that day.

Reading the record, it would appear that Senator Kowall was suspending Rule 3.207 to consider SB 616 and the eight other bills which had been placed on to ‘General Orders’ that morning for final passage under ‘Third Reading’, out of normal order. Senate Rule 3.207 requires a one day delay between the ‘Second Reading’ (‘General Orders’), and the ‘Third Reading’ (‘Final Action’). Suspending this prescribed one day delay is a common practice when time is of the essence.

Senator Kowall had already moved that morning, before recess, to place SB 616 and the same eight other bills then under ‘Committee Reports’ (‘First Reading’) under ‘General Orders’ (‘Second Reading’), so they could be on that day’s calendar. Also out of normal order, but again a common practice when time is of the essence.

But did either of Senator Kowall’s two suspension motions suspend Michigan Senate Rule 3.602?

Is Michigan Senate Rule 3.602 a fundamental rule as defined by Mason’s Manual of Legislative Procedure? Mason’s is the underlying body of rules adopted by the Michigan Senate when their own rules are mute on an issue.  Fundamental rules cannot be suspended according to Mason’s and all the other accepted bodies of parliamentary rules.

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Lie of the Month: “We’re talking about introducing an entirely new industry to Michigan”

Pandora's Box Has Been Opened

Pandoras Box Image 2Actually, no. There are at least 28 third party data centers already up and operating in Michigan. The House Fiscal Agency thinks there are 40, but didn’t specify them. None of these 28+ existing data centers required the tax breaks just reported out of the Michigan House Committee on Tax Policy to get up and running.  But Switch SuperNAP does? Why?

The promoters of Switch SuperNAP’s tax break package launched their campaign back in November with a heavy emphasis on the ‘new industry’ angle. This whopper seems to have been originated by Switch’s spokesman Roger Martin:

“It is a tough issue,” Switch spokesman Roger Martin said. “There’s no question about it. We’re talking about introducing an entirely new industry to Michigan, something that is the future of this country and of this world. It’s a good, vigorous debate.”

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Another Deceitful Michigan Tax Scam Exposed

Desperate Local Politicians Seek to Preserve Surreptitious Business Activities Tax

Tax Image 1Less noticed during this year’s roads tax furore, a roiling commercial property tax dispute has exposed a widespread, sub rosa business activities tax hidden in commercial real property taxes. A hidden tax you have been paying with every purchase at big box chain retailers who occupy stores they themselves own. Big box retailers have been exposing and successfully challenging this corrupt assessing practice through the Michigan Tax Tribunal and local units of government are howling over the loss of their ill gotten revenue.  Michael B. Shapiro of Honigman, Miller has been leading the charge against these bloated assessments.

Local units of government are demanding the Michigan Legislature overturn long standing real estate valuation principles and the Michigan court rulings which hold that assessed true cash value (i.e. fair market value) for tax purposes be based upon what a property would be sold for at arm’s length. They want true cash value to effectively incorporate the retail success of current owner-occupants. This artificially jacks up the property’s true cash value, its taxes, and the prices you pay at the store. Remember that businesses don’t pay taxes, customers of those businesses – in this case you – do.

Michigan’s nitwit media have deceitfully relabeled traditional true cash value assessment the ‘Dark Stores Loophole’. Local government organizations are screaming about lost revenues.  Even MoveOn.org is right in there with a petition to support their favorite spenders.  This is a devious effort to stampede our state’s legislators into codifying creative assessment methods solely intended to extract surreptitious revenues from shoppers. A follow on to the more blatant ‘Amazon Tax’ campaign of 2014. The State of Michigan got into your pocket last year, now it is your local government’s turn.

The term ‘Dark Stores Loophole’ was created to suggest that vacant big box stores have lower, fire sale values when compared to occupied stores. True enough, but we are discussing assessments used to determine real estate, i.e. property, taxes. Not taxes on business activity. The two creative assessment methods used most often to loot shoppers are ‘construction cost‘ and ‘imputed lease‘ calculations. Each might be valid under some very limited circumstances, but both are entirely invalid when assessing big box retailers.

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The City Of Perpetual Gifting

Detroit Public Schools continues the fiscal drain on Michigan Taxpayers.

mich-holeThe gravity exerted by SE Michigan is nothing short of incredible.

Bailouts of Arts, Pensions, Water systems, and of course the cherry on the sundae, school debt.  From today’s Cap-Con, Summarized here:

“Various bailout plans are currently under discussion in Lansing as an alternative to entering federal bankruptcy court. One plan pitched by Gov. Rick Snyder comes with a $710 million price tag.”

Don’t make any plans with that mattress money folks.

 

 

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Switch SuperNAP Michigan Data Center: Chaos in the Offing

A Few Details Michigan's Legislators Might Want to Consider

Steelcase Pyramid Image 3
Michigan’s nitwit media have been gushing over the announcement last Thursday that Switch, LLC will purchase the erstwhile Steelcase Pyramid southwest of Grand Rapids and convert the site into one of their state-of-the-art SuperNAP cloud computing data centers. The ‘information economy’ has been touted as Michigan’s future by no less than Michael Dell. He was in Detroit to address the Economic Club after his company purchased EMC Corporation, another major data center operator with three facilities in Michigan, in a blow out $ 67 billion buyout. Switch SuperNAP promoters, notably The Right Place, Incorporated, are touting 1,000 new jobs in Gaines Township, but this should be regarded wth the same skepticism as any other MEDC clone employment prediction. No one has said anything about financing, but there is good reason to believe that Michigan will be asked to ‘participate’ here as well.

Steelcase vacated their distinctive Corporate Development Center in 2012 and sold it to to Norman Properties in May. Norman Properties, in turn, has agreed to sell this property to Switch LLC, pending the approval of State tax breaks. Those tax breaks have been introduced in the Michigan House by Representatives VerHeulin, Yonker, and Schor. Identical tax break legislation has been introduced in the Senate by Senators Hildenbrand, Schuitmaker, and MacGregor. These legislators are targeting quick passage in the legislative session which convenes after their Thanksgiving break. They might want to consider a few details before they lunge further forward.

This being RightMI, you might think this post is about those tax breaks. You would be wrong. There is actually a critical flaw in this project which will injure Consumer’s Energy electricity customers all across West Michigan. A couple of other issues exist as well, but they pale in comparison to the electricity consumption of this project.  Those tax breaks are a lost cause in American politics today – not even worth protesting.

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