Michigans painful transition to a new economy:

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Michigan League for Human Services
Meeting basic needs during an economic crisis
What stands in our way?

1115 South Pennsylvania Avenue, Suite 202,
Lansing, MI 48912-1658 ? [phone]
Fax [phone] ? Web site
http//www.MiLHS.org A United Way Agency
2
Voices of Michigan

• Weve gone from living the American dream to
  wondering where it all went, said Michelle, 39.
  Were down to just one car and the stuff we have
  in Lock Store

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Whats happening in the economy?

• Michigan in longest period of job loss
• 535,000 jobs gone
• Big 3 losing market share

Sources Report of the Emergency Financial
Advisory Panel Michigan Department of Labor and
Economic Growth, Labor Market Information
Michigan Department of Treasury.
4
Unemployment history
Unemployment Rate in Michigan, 1976-2010
(2008-2010 Est.)
Sources U.S. Bureau of Labor Statistics Revenue
Estimating Conference January 9, 2009
Chart prepared by the Michigan League for Human
Services
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Unemployment in Detroit

• November 2008
• Detroit area10
• Michigan 9.6
• U.S. 6.7
• Source Michigans Employment Snapshot Michigan
  Labor Market Information, Department of Labor and
  Economic Growth
  

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Breadwinners cant support families in four out
of six top Michigan jobs
Poverty Threshold 21,027
Retail Cashiers Office Clerks Registered Food
Prep/ Waiters Salespersons Nurses Fast Food
Waitresses
Workers
Note Four of six occupations with the highest
employment in May 2007 will not lift a family of
four out of poverty Source U.S. Department of
Labor, State Occupational Employment and Wage
Estimates
7
Education Attainment, Persons Aged 25 to 54 (2005)
Source U.S. Census Bureau American Community
Survey, as compiled by the Working Poor Families
Project
8
Michigans income declines
Source Data obtained from the American
Community Survey and tabulated by the Coalition
for Human Needs Chart by the Michigan League for
Human Services
9
Senior voices

• Ive always worked two jobs. Ive been in
  construction for 55 years. I had a farm and there
  were times I had a milk route, too. I never
  thought Id be in this position. Never thought
  Id have to go for help, Lawrence, 75.

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Nearly a half-million children in poverty
Children in Poverty in Michigan Counties Ages
0-17, 2005 Source U.S. Census, Small Ar
ea Income and Poverty Estimates, (SAIPE) 2005
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The impact on our future

• Childhood poverty impacts us all -- lost
  productivity, higher crime and a population with
  poorer health
  
• Poor children sicker than wealthier children with
  same health conditions
  
• Low-income youths drop out of high school at four
  times the rate of high-income peers
  
• Source Childrens Development Fund A Call to
  End Child Poverty

12
Kids Count in Michigan

• Michigan ranked 27th among all states
• Latest report finds 40 percent jump in poverty
  between 2000 and 2007
  
• Nearly one in four kids under age 5 in poverty
• 14 percent jump in abuse and neglect between 2000
  and 2007

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Kids in Detroit area

• Detroit has highest infant mortality rate among
  the countrys 50 largest cities (Kids Count)
  
• Wayne County 80 out of 83 counties for child
  poverty
  
• County comes in last for 4th and 7th graders
  meeting reading standards

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More families slide into poverty

• 25 percent jump in Michigans family poverty rate
  2001-07
  
• 26 percent of working families are low-income

Source U.S. Census Bureau and 2008 Working Poor
Families report
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Poverty in Detroit area

• 2007
• Michigan 14 (11 2002)
• Wayne 20.7 (15.6 2002)
• Detroit 33.8 (23.3 2002)
• Source U.S. Census Bureau, American Community
  Survey

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Bigger bite of income goes to housing
Percentage of Households Spending 30 Percent or
More of Their Income on Housing Costs
Source MLHS Changing Face of Poverty
17
Food Assistance Record high
Food Assistance Caseload Since 2001
Source Michigan Department of Human Services
Prepared by the Michigan League for Human Services
18
Cash assistance declining
FIP Caseload Since 2001
Source Michigan Department of Human Services
Prepared by the Michigan League for Human Services
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Number Unemployed, Food Assistance Cases and FIP
Cases Since 2001
Source U.S. Bureau of Labor Statistics and
Michigan Department of Human Services
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Public assistance trends Wayne County

• Cash assistance 35,000 families (-15.5)
• Food stamps 170,000 families (up 6.6)
• Medicaid 260,000 people (up 6.3)
• (3rd quarter 2008 v. 3rd quarter 2007)
• Source Economic Security Bulletin Dec. 2008, MLHS

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Voices of the unemployed

• In the past 10 years, Ive been laid off a
  number of times but never this long, said Mike,
  60, an auto parts designer who turned to food
  stamps and Medicaid to make ends meet after
  exhausting his unemployment benefits.

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Health care costsshifting to workers

• Employer-sponsored coverage declining
• Higher cost-sharing for workers
• Underinsurance rising dramatically

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Safety net Can it hold?

• Medicaid/MIChild stepped in to cover very low
  income families, elderly, and disabled
  
• Safety net stretched too thin
• Medicaid recipients may have coverage but no
  access

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Two Michigans

• Growing gap between rich and poor

Between the mid-1980s and the mid-2000s,
inflation-adjusted income of Michigans richest
households grew five times faster than that of
low-income households. Source Pulling Apart
A State-by-State Analysis of Income Trends, by
the Center on Budget and Policy Priorities and
the Economic Policy Institute. Chart prepared by
Michigan League for Human Services
25
Why are things so bad?

• State budget trouble beginning in 2000
• Structural deficit remains cost of programs
  rising faster than revenue
  
• Tax increase fix in 2007 is temporary

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Total revenue by sourceFY2008-09 (43 billion)
Source House Fiscal Agency, June 2008
27
GF/GP revenue by sourceFY2008-09 (8.9 billion)
Source House Fiscal Agency, June 2008
28
School Aid Fund revenue by sourceFY2008-09
(13.3 billion)
Source House Fiscal Agency, June 2008
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MI State Government Employment FY1990
ActualFY2007 Estimate
66,791
Total Employment All Departments
52,860
52,969
-20.8
36,645
Total Employment Excluding the Department of
Corrections
-30.8
Source Department of Civil Service Average
Annual Staffing Report and Senate Fiscal Agency
Est. Prepared by the Michigan League for Human Se
rvices
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The 2007 Budget Crisis
The three-headed monster FY 2007 deficit of 90
0 million Single Business Tax scheduled to expir
e (1.2 billion)
FY 2008 deficit of 1.75 billion
A Deficit of Nearly 4 Billion!
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What would nearly 4 billion in cuts mean?
Cutting all funding for higher education AND all
mental health services or Eliminating all health
care programs for seniors and children living in
poverty AND releasing all 51,000 prisoners or
Cutting 2,000 in per pupil aid to public schools
(nearly one-fourth)
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What did lawmakers do?
FY2007 budget balanced with more one-time fixes
and borrowing (tobacco settlement )
Michigan Business Tax (MBT) replaces the SBT
revenue neutral FY2008 budget deal Partial
state shutdown averted continuation budget
Temporary income tax increase (3.9 to 4.35)
Sales tax expanded to some services, then
repealed Temporary MBT surcharge enacted
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Immediate collision course

• More job losses
• State budget revenues affected by Wall Street
  meltdown
  
• Push is on to eliminate the surcharge on the
  Michigan Business Tax
  

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Michigan's Projected School Aid and General Fund
Structural Deficit(FY2008 - FY2018)
Prepared by Michigan League for Human Services
35
Priority shift
Percentage Changes in General Fund Spending as a
Share of Michigan's Economy (1985 vs. 2009).
Calculations by Michigan League for Human Services
36
Disinvestment in future

• Michigan is one of only four states that spends
  more on corrections than higher education

37
Michigan has high incarceration rate
Incarceration (rate per 100,000)
Michigan rate is 44 above other Great Lakes
States
Data Sources American Correctional Association,
U.S. Department of Justice, State Government
websites, JFA Institute Public Safety, Public
Spending Forecasting Americas Prison Population
2007-2011 Calculations by Michigan League for Hum
an Services
38
Michigan spends too muchon prisons
Cost per inmate
Michigan rate is 11 above other Great Lakes
States
Data Sources American Correctional Association,
U.S. Department of Justice, State Government
websites, JFA Institute Public Safety, Public
Spending Forecasting Americas Prison Population
2007-2011 Calculations by Michigan League for Hum
an Services
39
The rising cost of tax loopholes
Estimated Michigan Tax Revenues Tax Revenue
Loopholes
(in Billions)
Data Sources Michigan Department of Treasury
Executive Budget Appendix on Tax Credits,
Deductions and Exemptions FY2005 - FY2008 and
Department of Management and Budget Comprehensive
Annual Financial Reports. Calculations by
Michigan League for Human Services
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Tax revenue NOT!
Only 45 percent of potential state revenue
was collected in 2008
Total Potential Tax Revenues 57.9 Billion
Data Sources Michigan Department of Treasury
Executive Budget Appendix on Tax Credits,
Deductions and Exemptions FY2005 - FY2008 and
Department of Management and Budget Comprehensive
Annual Financial Reports. Calculations by
Michigan League for Human Services
41
Adjust beer wine taxesfor inflation
The beer tax hasnt been raised since 1962. An
increase of 2 cents per can would generate about
43 million
The wine tax hasnt been increased since 1981.
Double the per-gallon tax to 1.02 to produce
about 8 million
Source Michigan League for Human Services,
Keeping the Lights on in Michigan, Jan 2009
42
Michigan leads country in tax breaks for seniors
(U.S. median .64)
-2.0 -1.0 0.0 1.0
2.0 3.0
Data Source How Much Preference Effective
Personal Income Tax Rates for the Elderly, April
2002, by Barbara Edwards and Sally Wallace,
Fiscal Research Center, Georgia State University.
Prepared by MLHS.
Reduction in effective income tax rate for seniors
43
Michigans outdated tax structure misses sales
tax on services
Michigan taxes only 26 of 164 identified
services, ranking it 38th in the country. Other
Midwest states tax 51 services on average.
Sources Federation of Tax Administrators and the
US. Census Bureau Prepared by Michigan League for
Human Services
44
Growth in inflation adjusted U.S. median income
74
57
30
28
Source ? Prepared by Michigan League for Human S
ervices.
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What you can do right after lunch

• Write/call your policymakers
• Structural deficit alarm
• Prisons vs. education
• Vulnerable children and the elderly poor

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Who to talk to

• How to find the people who represent you in
  Lansing and Washington
  
• www.Congress.org

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More info about us

• WWW.MiLHS.org
• Sign up for First Tuesday newsletter
• Join the League (or donate!)

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Michigan League for Human Services
The Michigan League for Human Services is a
state-level policy organization focused on the
needs of Michigans low-income families and
individuals. The Leagues activities include
research, analysis, public education and
advocacy. The League was founded in 1912 and is
a private, nonprofit charitable organization.
1115 South Pennsylvania Avenue, Suite 202,
Lansing, MI 48912-1658 ? [phone]
Fax [phone] ? Web site
http//www.MiLHS.org A United Way Agency