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Financial State of Michigan – 2015

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41st Place Among the States

tia-methodologyYou have probably read the Mackinac Center’s excellent works on Michigan’s government finances, much of which they release through Michigan Capitol Confidential. Top quality analyses, but parochial in the sense that they don’t place Michigan’s government finances in the context of the other American states. An Illinois 501(c)(3) organization, Institute for Truth in Accounting does, and has come up with a useful metric – taxpayer burden – by which you can rank Michigan financial status relative to the other states. No accounting degree necessary.

Suffice it to say, you will not be reading any of Truth in Accounting’s work in Michigan’s nitwit, cheerleading media.

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Conservative News, Cronyism, Democrats, Detroit, Government Incompetence, Michigan, Michigan Politics, Part Time Legislature, Republicans, Taxes

Catch-22

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Bleakley Image aMichael J Talbot ImageAttorney Thomas H. Bleakley (P23892) has to be feeling a lot like Captain John Yossarian, the harried protagonist of Joseph Heller’s great satirical novel Catch-22. Chief Judge Michael J. Talbot of the Michigan Court of Claims dismissed Attorney Bleakley’s Helen Moore et al v. Rick Snyder [16-000153-MM] lawsuit challenging the constitutionality of the Legislature’s passage of the DPS bail out on August 4th, in an order published on August 8th.

The Michigan Court of Claims was moved from the Ingham County Circuit Court to the Michigan Court of Appeals by PA 164 of 2013 to:

MCL 600.6419 Court of claims; exclusive jurisdiction; exceptions; claims less than $1,000.00; powers and jurisdiction; counterclaims; res judicata; setoff, recoupment, or cross declaration; writs of execution or garnishment; judgment as final; no jurisdiction of claim for compensation under MCL 418.101 to 418.941 and MCL 419.101 to 419.104; jurisdiction of circuit court over certain actions and proceedings; “the state or any of its departments or officers” defined.

Section 6419(1)

(a) To hear and determine any claim or demand, statutory or constitutional, liquidated or unliquidated, ex contractu or ex delicto, or any demand for monetary, equitable, or declaratory relief or any demand for an extraordinary writ against the state or any of its departments or officers notwithstanding another law that confers jurisdiction of the case in the circuit court.

But, according to Judge Talbot, not the constitutional claims pleaded in Helen Moore et al v. Rick Snyder

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Conservative News, Cronyism, Detroit, Elections, Government Incompetence, Michigan, Michigan Politics, Part Time Legislature, Rent Seeking, Republicans, Taxes

Quid Pro Quo: How The DPS Bail Out Passed

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Pavlovian Conditioning In Michigan Politics

Money Transfer ImageMichigan’s campaign finance laws were designed to expose quid pro quo donations to legislators and politicians by the individuals and groups having special interests in government actions. A particular goal of campaign finance laws was to prevent politicians from benefiting personally from their votes and actions. In the American Civics version of representative government, politicians are expected to represent their voters exclusively. Selling their votes and actions to the highest bidder creates an unresponsive, alien government in short order. Think Venezuela, Illinois, or Detroit. Where Michigan is now heading.

Political campaigns are expensive today. Consultants and media outlets are the particular beneficiaries of lavish campaign spending and have, in turn, convinced candidates that money is the sine qua non of political success. Today, you are not considered a serious candidate for the lowest rung in the Michigan political firmament – State Representative – unless you have a $ 100,000 campaign war chest.

American politicians and their special interest backers are developing a technique which directs quid pro quo donations right into politicians’ pockets.  This technique is fast becoming a staple of Michigan politics and Michigan’s nitwit media have ignored this ingannation of representative government.

Michigan politicians are now morphing into vending machines that cater to the highest bidders in Lansing and Washington.  This explains the passage of the PA 192 – 197 Detroit Public Schools bail out over the objections of many outraged Michigan voters.

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Conservative News, Cronyism, Democrats, Detroit, Elections, Government Incompetence, Michigan, Michigan Politics, Part Time Legislature, Republicans, Taxes

August 2nd Matters

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The DPS Bail Out Can Be Spiked By Defeating Just One State House RINO

Michigan Capitol Building Image 1The six bills (PA 192 – 197 of 2016) of the Detroit Public School bail out package passed in the Michigan House of Representatives by margins of 55 – 53 to 60 – 48. The same six bills passed in the Michigan Senate by margins of 19 – 18 to 21 – 16. Close votes; over 50% + 1 but nowhere near two-thirds. And these close votes were only obtained after an entirely false narrative of doom and gloom was presented to the Legislature. This is becoming a major issue in the August 2nd primaries which Michigan’s nitwit media are conveniently ignoring.

Attorney Thomas H. Bleakley (P23892) filed a lawsuit (Helen Moore et al v. Rick Snyder, 16-000153-MM) in the Michigan Court of Claims on the 5th of July which alleges that the entire DPS bail out package’s passage was unconstitutional; the claim being it was in fact a collection of local acts according to the Michigan Constitution of 1963.  Local acts require two-thirds legislative vote margins and voter approvals to become law.  The six bills of the DPS bail out package were all passed, in both houses of the Michigan Legislature, under the more liberal 50% + 1 voting rule allowed only for general acts.

The Michigan Constitution of 1963, Article IV, Section 29 states “No local or special act shall take effect until approved two-thirds of the members elected to and serving in each house and by a majority of the electors voting thereon in the district affected….”. Article IV, Section 30 further states that “….two-thirds of the members elected to and serving in each house of the legislature shall be required for the appropriation of public money or property for local or private purposes.”.

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Cronyism, Democrats, Detroit, Elections, Government Incompetence, Michigan, Part Time Legislature, Rent Seeking, Republicans, Taxes

The DPS Bailout – An Alternative History Under Bankruptcy

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A Bankruptcy Postponed Is Not A Bankruptcy Avoided

US Bankruptcy Court ImageThe $ 617 million PA 192 – 197 bail out package signed by Governor Snyder on 21 June (plus the $ 48.7 million emergency down payment earlier this year) will not fix the Detroit Public Schools. The culture of corruption and incompetence long fostered within DPS suggests that the new DPS – same as the old DPS, except for some liabilities – will fail miserably a few years hence in an avalanche of new liabilities. Michigan will then be left to sort out two separate DPS entities with unsustainable liabilities. This could easily occur even before Governor Snyder leaves office in 2019. Karma. Déjà vu all over again.

Governor Snyder secured the Michigan Legislature’s approval of the $ 617 million bailout by regaling them with an entirely false narrative of the aborted 1991 Richmond, CA Unified School District bankruptcy, then implying that the entire $ 3.5 billion in DPS liabilities would fall upon the taxpayers of Michigan. The Michigan Legislature’s Republicans (and our nitwit media) bought Governor Snyder’s tale hook, line, and sinker – then delivered a $ 617 million gift to DPS for its past ill behavior. The Michigan Legislature’s Democrats had the chutzpah to hold out for even more taxpayer paid goodies.

There was another, better option: bankruptcy.

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Conservative News, Cronyism, Democrats, Detroit, Elections, Government Incompetence, Michigan, Michigan Politics, Part Time Legislature

A House Divided – And Its Not Republicans!

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Replacement of Representative Plawecki on the Ballot Reveals Democratic Party Discord, Preparation for a Lame Duck Session?

Julie PlaweckiDuring a week of dramatic racial conflict across the U.S.A, few noticed a more subdued racial conflict which surfaced right here in Michigan. First term Michigan State Representative Julie Plawecki died on June 25th during a hike on Misery Ridge at Smith Rock, Oregon. Representative Plawecki was running unopposed for reelection in the Democratic primary on August 2nd, in Michigan’s 11th State House District. Representative Plawecki’s death occurred after the April 19th Michigan primary election filing deadline, so it is up to the local party to select a replacement Democrat to appear on the November 8th ballot in accordance with PA 116 of 1954.

The ‘local party’ in this particular instance is the Michigan 13th Congressional District Democratic Party (SoS BoE 516418). Representative Conyers represents the 13th Congressional District, even though he hasn’t lived in it since the 2012 redistricting. Even so, Representative Conyers does maintain control over the 13th Congressional District Democratic Party apparatus through his agent Jonathan C. Kinloch. Jonathon C. Kinloch 2Mr. Kinloch, a Detroiter who also resides outside the 11th State House District, is perhaps best known as an Emergency Manager appointed member of the esteemed Detroit Board of Education.

Half of the 11th Michigan House District’s population is in Garden City and Inkster, with the balance in attached pieces of Westland, Dearborn Heights and Livonia. Garden City and Inkster are polar opposites ethnically, but both vote heavily Democratic. The Westland and Dearborn Heights segments of the 11th are somewhere in between Garden City and Inkster, while the small segment of Livonia trends Republican. Hidden in the Census data for this district are substantial South Asian and Arab ethnic communities, but the district’s African-American population fraction is pretty well identified by the Census at about 35%.

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Democrats, Detroit, Government Incompetence, Michigan, Michigan Politics, Part Time Legislature, Republicans, Taxes

The DPS Bailout – Debts & Obligations

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Part II - The Eventual Cost of DPS Liabilities to Michigan Taxpayers and Detroit Schoolchildren

Debt ImageDPS has two types of formal debt: operating and capital. Operating debt is a conversion of present and past annual operating deficits into ‘long-term notes’ sold to the financial markets, as well as more immediate debts owed to the State of Michigan directly. DPS capital debt exists only in the form of bonds which were sold to financial markets to purchase and rehabilitate facilities.  DPS’ formal bonds are identified by Series, which consists of the year issued and a letter suffix when different purpose bonds are issued in a single year.  The financial markets apply a further identifier, CUSIP, which is a unique identifier of municipal bonds by series and their intended dates of redemption.  All of the DPS debt sold to the financial markets has been enrolled in Public Act 92 of 2005, a program designed to reduce interest rates to local school districts in accordance with the 1963 Michigan Constitution’s Article IX, Section 16.  Most DPS debt is effectively secured by a general obligation to pay, which requires Detroit taxpayers to increase taxes and reduce spending should financial difficulties repaying arise.

DPS 2009B Bond StatementDPS pays off its capital debt in annual installments of both interest and principal, before it pays off (or adds to) its operating debt.  Bond interest and principal payments are required by bond terms which – if ignored – would result in immediate default and bankruptcy.  The exact contract terms of DPS debt sold to the financial markets are laid out in official statements which detail all the formal legal and financial features of the bonds.  The official statement is essentially a contract between DPS and its bond purchasers.

DPS’ operating debt payments are somewhat more flexible than capital debt payments because only a portion of operating debt has been converted into formal bonds covered by statements; much of it is separately owed to the Michigan School Loan Revolving Fund. The SSLRF can best be thought of as a State sponsored credit card. School districts tap into it when they are short of cash, and pay off their balance when they are flush.  Operating debt is only converted into formal bonds when Michigan school districts exceed their limits at the SSLRF.  Those limits are not exact, and generally come into play when DPS goes through one of its periodic financial spasms.

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Conservative News, Cronyism, Democrats, Detroit, Government Incompetence, Michigan, Michigan Politics, Part Time Legislature, Republicans

The DPS Bailout – The Bankruptcy Alternative Not Taken

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Part I - No, The Richmond USD Case Did Not Challenge U.S. Bankruptcy Court Authority

Daniel Howes ImageGovernor Snyder browbeat the Michigan Legislature to approve the $ 617 million bailout of Detroit Public Schools which he signed today by regaling them with a parade of horribles which would occur if the bailout was defeated and DPS was forced to file for bankruptcy. Daniel Howes regurgitated Governor Snyder’s compelling tales of impending doom delivered behind closed doors in a Detroit News article, but was any of it true?

Right at the top of Governor Snyder’s parade of horribles was the Federal bankruptcy filing of the Richmond [California] Unified School District on April 19, 1991 . Governor Snyder portrayed the outcome of this action as the U.S. Bankruptcy Court denying the petition and ordering the State of California to financially bail out the district.  From Daniel Howes’ article:

There is scant precedence for school districts filing for bankruptcy, the Snyder administration found. In 1990, according to an administration letter to state Rep. Laura Cox, R-Livonia, the Richmond Unified School District in Northern California filed for bankruptcy because of $42.5 million in debt. The judge ruled the district could not be protected by the court in bankruptcy and ordered the state to provide the district with operating funds.

Nothing could be farther from the truth.

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Conservative News, Cronyism, Detroit, Elections, Government Incompetence, Michigan, Michigan Politics, Opinion, Part Time Legislature, Rent Seeking, Republicans, Taxes

I can’t wait until the rest comes due!

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Gov. Snyder, Sen. Meekhof and Sperker Cotter demonstrating their best use for Michigan Taxpayer dollars.

With that conveniently (and consistently) “overlooked” $3.5-billion in debt, the Mi(a)GOP just handed the Michigan House to the democrats in the fall.

Screwed Image 1

Here’s a not-so-subtle hint.

 

More to follow…

 

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Cronyism, Government Incompetence, Michigan, Michigan Politics, Part Time Legislature, Philosophy

Greasing The Monkeys

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Apparently there is never enough choice choking regulation for some in our legislature.

car-repairWithout written permission to spend less, your auto repair bill will cost you more.

Incredibly, that first line above was a last minute ‘fix’ in HB4344.  Prior to it being added as an amendment by Pete Petallia, there was no wiggle room for any aftermarket part that wasn’t subjected to the extremes set up by the automakers to make their parts competitive. Meaning, if I wanted Miata wheels to replace the factory wheels on my Miata for any reason, I’d have to go through a lengthy process obtaining them EXCLUSIVELY from the manufacturer, creating time/effort hassles noone wants to deal with. The section of HB4344 addressing this:

House Bill No. 4344 as amended May 31, 2016

1  original warranty, or during the first 5 years of the vehicle  manufacturer’s original warranty, whichever is less, the motor  vehicle repair facility shall replace the major component part, and  a person that is an owner or operator of the motor vehicle repair facility shall ensure that the major component part is replaced, with 1 of the following:

(a) A new original equipment manufacturer part.

(b) A used or recycled original equipment manufacturer part.

(c) A part that meets any applicable federal motor vehicle safety standards established under 49 CFR 571, and meets the standards for parts recognized as OEM comparable quality as verified by the Certified Automotive Parts Association, NSFInternational, or another nationally recognized automotive parts testing agency.

(d) A part that does not meet subdivision (a), (b), or (c), if the facility is directed by the owner of the motor vehicle in writing to install that part.]

Michigan Capitol Confidential might be thanked for bringing this up originally.

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