More savings are possible to avoid raising state taxes

Sunday, January 28, 2007

The Detroit News

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Carlos Osorio / Associated Press

Michigan's incarcerations rate far exceeds the average of other Great Lakes states. See full image

Right now, the state is careening toward a tax increase. Objections are met with the rejoinder, "what should be cut?" But that assumes state government is operating at maximum efficiency now, and there is no choice but to either raise taxes or eliminate vital services.

Similarly, local governments are pressuring the state to raise taxes so more revenue-sharing can be redistributed to them, or asking for changes in laws that would allow them to raise more taxes locally.

But after a lot of talk last term about "reinventing government" and "thinking outside of the box" from Gov. Jennifer Granholm, not a lot has happened to fundamentally change the structure of government in this state or reduce barriers to savings.

So here are just a few ideas to consider before passing a tax increase:

Prisons: Michigan continues to have a higher incarceration rate than its neighbors. In 2005, the last year for which state comparisons are available, Michigan's prisoners per 100,000 of population, at 489, was the highest in the Great Lakes. It exceeded the Midwest average by more than 100 prisoners. A state Corrections Department spokesman notes that if Michigan had the same incarceration rate as the average of the Great Lakes states, the state could save as much as $500 million annually on prison beds.

Michigan also spends about $190 million in medical care for prisoners. A huge proportion of that skews toward chronically ill or geriatric prisoners. Wouldn't the wisest course be to commute their sentences and place them in facilities where Medicaid or Medicare would up pick their costs?

Intermediate school districts: Michigan maintains 57 intermediate school districts. Both the Citizens Research Council of Michigan and the Mackinac Center for Public Policy have noted that the tasks for which they were created back in the 1950s have largely evaporated. Eliminating them would not wipe out all of their costs.

But they could be consolidated, or their services contracted out to private firms. A few years ago, the Mackinac Center totaled the cost of intermediate school districts at more than $800 million. Just tweaking some of their responsibilities, the center estimates, could save $32 million.

Civil Rights Department: Michigan maintains a separate Civil Rights Department with around 130 employees and a budget of more than $12 million to investigate and combat discrimination. Yet a host of federal agencies, including the federal Equal Employment Opportunity Commission, exist to do the same thing.

Medicaid: The state spends more than $4 billion on Medicaid. The Heritage Foundation notes that Florida and South Carolina are experimenting with voucher systems to impose market discipline on the programs.

Why not try something like that here? Or at the least, be more aggressive in trying to recover Medicaid costs from the estates of recipients, which could yield tens of millions of dollars.

These are just a few ideas for saving money if the governor were truly willing to "think outside the box" before raising taxes.