What Is Going On Here?

Governor Snyder is attempting to resuscitate his reputation by benevolently raising your taxes.

Our ace Governor is not going quietly into the night as his governorship slides into the twilight zone. He launched two tax proposals last week which he touted as environmental initiatives. Neither raises enough funds to even remotely achieve his stated environmental objectives, unless the taxes he proposed skyrocket in the future. Both proposals are actually designed to expand our hopelessly inept (and periodically corrupt) bureaucracy. The environmental angle is just eyewash to sell higher taxes to the gullible. And those tax rates he proposes will skyrocket – bet on it.

First up is an increase in the current landfill tipping tax from $ 0.36 per ton to $ 4.75 per ton. Snyder claims this tax increase will raise $ 79 million for recycling programs. It won’t. The incremental revenue will be something less than $ 70.7 million, because 769,000 tons of solid waste from other states with lower tipping taxes will no longer be land filled in Michigan (pdf). Michigan landfills will suffer a 4.5% volume drop, which will be consequential. They will either curtail operations (read: lay off workers), cut workers’ wages or raises, and/or adjust tipping fees. Local units of government, which also collect revenue from their landfills, will suffer revenue losses as well. Environmentalists will applaud, but the trash is just being diverted to different land fills. There is no environmental benefit to playing musical chairs with garbage.

Governor Snyder implies in his press release that his proposed tipping tax increase will diminish Michigan’s solid waste imports from his Canadian buddies; the ones who are building his bridge. It won’t. Ontario landfill tipping fees start at $ 75 CAD per metric ton ($ 55 USD per short ton). Comparable Michigan landfill tipping fees are in the low $ 30 USD range. Snyder would have to raise the Michigan tipping tax by $ 25 USD, not the $ 4.39 he proposes, to materially reduce Canadian solid waste exports to Michigan. Keep in mind that the Canadians will ignore their transportation costs; they need to feed tolls to that fancy new bridge as cross border truck traffic otherwise declines.  Our Canadian neighbors didn’t pay for the Gordie Howe Bridge out of the goodness of their hearts.  It was cheaper politically than opening land fills.

A tipping tax which would actually impact Canadian trash exports would wipe out Michigan land fills and their workers. And all of our solid waste would be exported to other states, making Michigan many new friends across the Midwest. Yet tipping tax proponents will imply that the tipping tax increase will curtail Canadian trash exports to Michigan.

It won’t.

Even if the Governor was to go whole hog with his tipping tax rate, his Canadian buddies would beat him like a red headed step child. Canadian politicians have no qualms about ruthlessly raising taxes on their prostrate subjects, and would simply jack up their tipping taxes until they achieve their desired end. They would also stop accepting Michigan’s hazardous and toxic waste. Michigan’s manufacturing industry would collapse within weeks. Michigan exports most of its nastiest waste to Canada, the unspoken counterpoise for Michigan accepting a lot of Canada’s solid waste. No, Governor Snyder won’t pick a dumpster fight with his Canadian buddies.  We are stuck receiving Canadian trash unless and until President Trump kills off NAFTA.

Governor Snyder’s proposed landfill tax revenues will be spent through a variety of state grants, including:

Remediate and Redevelop Existing and Future Contaminated Sites ($45 million)
Clean up 300 sites annually, across all 83 counties
Address emerging contaminants (PFAS, vapor intrusion)

Solid Waste Management ($9 million)
Enhance solid waste planning for local governments.

Recycling Grants to triple Michigan’s Recycling Rate ($15 million)
Provide recycling grants to local entities for recycling infrastructure, market development and education

Water Quality Monitoring Grants ($5 million)
Monitor beaches to keep them clean.
Reduce phosphorus in Lake Erie.
Remove contamination in rivers, lakes and streams.

State Park Infrastructure ($5 million)
Address critical infrastructure needs to serve the parks system’s 27 million visitors annually.

Since when has any ‘contaminated site’ been cleaned up for $ 150,000? Just the preliminary legal and planning processes for cleaning up ‘contaminated sites’ run into the millions. Solid waste planning for local governments? Wasn’t that what Rizzo got convicted for in Macomb County? The other three goals also overwhelm the funds raised by the landfill tipping tax increase. And doesn’t the MNRTF cover state park infrastructure? It probably would if it wasn’t being poured into urban renewal projects well beyond the intent of the MNRTF.

Municipal recycling just died across the United States because the Chinese have stopped accepting this ill disguised garbage.  Fifteen million in new money annually won’t revive it, but it will generously fund pointless discussion groups and conferences among politicians, bureaucrats, and special interests.

Next up is the Governor’s proposed plan to implement an ‘affordable assessment’ on public water utilities. Starts out at $ 1 per year, per customer of every public water utility with more than 1,000 customers. Increments $ 1 per year annually until the assessment reaches $ 5 per year, per customer. But you don’t really think it will be capped at $ 5 per year, do you? Or that the increment will be held to $ 1 per year? We are talking a virgin territory for State taxation here, although local units of government have been milking water for revenue for over 40 years.

From our government’s perspective, water taxes in Michigan are the next best thing to property taxesFailure to pay them creates a lien on your real property, leading to foreclosure.

Exhibit 1 is the Detroit storm water fee which started at a reasonable $ 5 per acre, per month in 1980 and is now an unconstitutional monster in excess of $ 750 per acre, per month. The late U.S. District Court Judge John Feikens thought this storm water fee would be used to reduce DW&SD environmental violations. Idiot. It funded corruption and promoted blight across the City of Detroit. Most commercial properties in Detroit pay more in storm water fees than property taxes these days.  All those MCL 123.162 liens laid waste to Detroit’s commercial real estate stock.  Detroit’s desolation wasn’t some random misfortune; it was carefully crafted by the very best government minds of the Milliken era.

Governor Snyder’s ‘affordable assessment’ is also going to be handed out annually as grants. From the Governor’s press release:

State Capital Investment Program ($75 million)
Provide grants for local infrastructure improvements (such as lead service line replacement)
Provide low-interest and forgivable loans for other local capital improvements

Emergency Infrastructure Failure Fund ($10 million)
Provide grants for communities and systems in financial need with emerging water or sewer failures.

Integrated Asset Management ($25 million)
Fund asset management plans for drinking water wastewater and storm water systems
Support local data collection, materials inventory, and training needs

All commendable goals, but…..  Say a water utility needs to do something that is grant eligible under the Governor’s plan. Wouldn’t it be far more efficient for them to just raise their own water rates, rather than cycling the money through Lansing and then back?  Indeed, but short circuiting the Governor’s process wouldn’t drive government spending (and employment, and contracting) ever higher. Nor would it create sinecures for grant writers and grant approvers, the foot soldiers of a modern government bureaucracy.  ‘Spend it or lose it’ pots of grant money also trigger a lot of government spending at the end of a budget cycle, but without much to show for it. Inefficiency writ large.

The Governor’s water tax will also allow water utilities to redirect the money they currently spend for the very same grant eligible purposes to underfunded pensions and OPEBs (and in some locales, graft la Kilpatrick, Ferguson, and Marrocco). The Michigan Lottery scam reiterated. Wages, pensions, and benefits will increase until the grant money is fully consumed. Contractors will enjoy less scrutiny under ‘spend it or lose it’ rules. But few tangible incremental environmental improvements will occur.

Grant making is a wonderful way to grow government, but it isn’t very effective or efficient in achieving objectives. It creates new levels of government – the administrative state. The pay and benefits those bureaucrats draw are overhead which is skimmed right off the top of every government activity they supposedly promote. Less bang for the buck. But it does evade the Headlee Amendments’ requirement that local units of government have to ask voters for permission to raise taxes, at least until the state government hits its revenue limits.  Local units of government much prefer to avoid Headlee votes when embarking on white elephant projects.  But grants spent on the very same dubious projects are portrayed as free money in prominent press releases chock full of photos of smiling politicians.

Governor Snyder is attempting to resuscitate his reputation by benevolently raising your taxes. The Flint water fiasco is the preeminent event of the Snyder governorship. It killed his Presidential aspirations and left him with the third lowest approval rating among all U.S. Governors. The second sentence of every history covering the Snyder era in Michigan will introduce the reader to the Flint water fiasco. This has to weigh heavily on his mind. It wasn’t the rosy outcome he expected from his grand entrance into politics.

The problem here is that the Governor cannot reinvent history, no matter how much he raises our taxes.

You Betcha! (11)Nuh Uh.(0)

  2 comments for “What Is Going On Here?

  1. KG One
    February 4, 2018 at 10:18 pm

    Going back to his tried and true playbook, I see.

    No, not the one that if Slick Rick were a Real Republican would be using since before beginning his term as Governor, instead of using the party as a stage prop/mechanism for getting elected.

    I mean the one cranked out by that wacky duo of Fred & Karl almost two centuries ago (and hasn't been able to work anywhere for any appreciable length of time since then).

    You Betcha! (4)Nuh Uh.(0)
  2. Sue Schwartz
    February 5, 2018 at 1:15 pm

    I can splain it: Early onset dementia.

    You Betcha! (2)Nuh Uh.(0)

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