The Detroit News. May 16, 2020.
Use relief funds for recovery alone
As the federal government spends astronomical sums to combat the effect of economic slowdowns due to the pandemic, Congress needs to make sure that these funds are targeted as narrowly as possible.
House Democrats have presented their latest stimulus package, which has a jaw-dropping $3 trillion price tag. It seems to be a Democratic wish list, and Senate Majority Leader Mitch McConnell, R-Kentucky, has said he’s not planning to take up the measure, given the burden it would add to an already massive deficit.
Among the provisions in the 1,815-page bill is a $1 trillion bailout for states and localities. Those funds are largely unrestricted, meaning they are untied to COVID-19 efforts.
That could be a problem.
One fear is that states and local governments will use the money to bail out struggling pension funds — a preexisting condition that has plagued many Michigan municipalities. That shouldn’t be allowed to happen. So says a May 8 letter to Congress signed by 24 think tanks, including the Mackinac Center, urging lawmakers to strip funds unrelated to COVID-19 relief.
“Relief efforts should primarily be about providing relief, not covering over profligate states’ self-inflicted fiscal harms,” the letter reads.
As an example, the letter points to state senators from Illinois who have asked Congress for $10 billion to address their state employee pension systems — which is $100 billion in the hole.
Michigan localities are no stranger to pension debt. In 2019, Michigan’s 100 largest municipalities had racked up more than $5.5 billion combined in unfunded pension liabilities, according to a study from the Mackinac Center.
James Hohman, director of fiscal policy at the Mackinac Center, said in an email that while most of our local governments’ costs are wrapped up in personnel, meaning federal relief funds would naturally go toward promised pension benefits, it’s possible city managers would try to unload some of their debt.
“Some managers may make extra payments to pay down existing pension debts with extra money from the federal government, but likely only if the federal government provides relief funds worth more than their revenue losses,” Hohman wrote.
He also noted that local governments will be less affected by COVID-19, since their revenue is based largely on property taxes, which are more stable than income or sales taxes.
States and local governments should certainly get a handle on their pensions, but giving them federal tax dollars from other states — all while adding to the federal debt — is the same stripe of bad thinking that got them into their current fix in the first place.
As noted by the Heritage Foundation, other problematic spending measures included in the stimulus package are: the blanket $10,000 forgiveness to student loans; the extension of unemployment bonuses through January 2021, a misguided measure that could actually incentivize joblessness; and an unnecessary $25 billion bailout of the United States Postal Service.
Economic stimulus is needed while we get businesses back online, but COVID-19 relief funds must be focused entirely on recovery efforts.
The Mining Journal (Marquette). May 14, 2020.
Possible funding cuts to schools unacceptable
School budgets are challenging even in stress-free times, but these aren’t stress-free times.
And businesses and individuals aren’t the only ones facing financial difficulties because of the COVID-19 crisis and the related closures and shutdowns.
Michigan Sen. Wayne Schmidt, a Republican who chairs the Senate’s education budget subcommittee, warned Tuesday of a possible 25% cut in state funding for K-12 schools because of the pandemic.
About 40% of the $14 billion in state revenues for the school aid fund comes from state tax collections.
Per-pupil funding is around $8,000 per student in Michigan. That might sound like a lot, but sometimes it doesn’t go far enough.
So, dropping that amount by about a quarter would be devastating.
According to The Associated Press, the state is receiving $3 billion in federal assistance to combat COVID-19, but it can’t use the money to offset revenue lost because of the economic downturn.
Perhaps that should change. Even Gov. Gretchen Whitmer, we have read, is urging for flexibility.
It should be noted that the Democratic-led U.S. House on Tuesday unveiled a coronavirus relief belief of over $3 trillion that includes $500 billion for states to help prevent layoffs of public workers, cuts to services or tax hikes.
What would a 25% cut mean to schools?
It might be hard to pinpoint exactly where cuts would come in districts, but we strongly suspect layoffs and program cuts would result.
This is unacceptable. Although many districts are adapting to the distance learning that has been in place for weeks because of the pandemic, face-to-face education, in most instances, is the best, and to cut schools’ budgets would be devastating.
For instance, fewer teachers might mean more students would be crammed into classrooms, should buildings reopen in the fall for traditional learning. If social distancing protocols are still in effect, having more populated classes would make following those protocols difficult, if not impossible.
All this economic uncertainty probably will make school district staff’s jobs of creating a balanced budget this summer even harder.
If the coronavirus problem continues, how will that carry into the regular school year? Will distance learning have to continue?
We believe the federal government should make flexibility in coronavirus relief a top priority, with restrictions loosened on how federal pandemic funds can be spent.
Schools need every penny they can get.
The Alpena News. May 16, 2020.
When will high-water cycle reverse itself?
The latest figures from the U.S. Army Corps of Engineers pegged Lake Huron at 13.4 inches higher than it was at this time last year. What that means is that, in April, Lake Huron was three inches higher than the previous record-high, set in 1986.
And, according to an agency spokesperson, “all of the lakes are either in their period of seasonal rise or are reaching their peak, as we continue into the late spring and summer.”
We all know those high water levels, and the erosion that those levels cause to the shore, are taking a toll.
In an interesting news release this month, the County Road Association of Michigan estimated current damages done to the county road infrastructure from high water at $37.4 million through April. The figure only represents damage to county roads and will only continue to rise through the rest of the year.
As one tabulates the financial impact caused from the water, keep in mind that the County Road Association’s estimate is but just one segment of the economic chaos that is being created. Travel along the region’s shoreline and you will quickly see examples of erosion damage created by the water everywhere.
The good news is that we all understand Great Lakes water levels are cyclical.
We wonder, though: How much of a beating can our shoreline sustain until the cycle starts to reverse itself?