Net Costs of Michigan's 25 by 25 Ballot Proposal (Prop 3)

 

Analysis of Proposal 5: “2/3” ballot proposal and Michigan’s tax limitations

 

Review of Kentucky's Economic Development Incentives

Kentucky’s Legislative Research Commission (LRC) retained Anderson Economic Group (AEG) to study the efficiency, effectiveness, oversight, and reporting requirements of Kentucky’s economic development incentive programs. The purpose of this report was to provide in-depth information on these programs to help policymakers make informed decisions about them in the future.

This project reviewed many aspects of Kentucky’s incentive programs. Notable components include a review the purpose and main requirements of incentives, comparisons to 13 peer states chosen by the Kentucky Cabinet for Economic Development (CED), evaluation of incentive cost and effectiveness, and a review of incentive program reporting requirements and practice in Kentucky and peer states.

We estimated the number of jobs created and maintained by firms in Kentucky receiving incentives for each year between 2001 and 2010. We also estimated the cost of these incentives to the state. We completed these analyses using data provided by the CED, the Kentucky Tourism, Arts and Heritage Cabinet (TAHC), and the Department of Revenue. We were able to compare information firms reported to the CED and data maintained by the U.S. Bureau of Labor Statistics (BLS) in order to independently verify employment at firms receiving incentives.

Our analysis found the following. First, businesses that received Kentucky incentives reported creating 55,173 jobs between 2001 and 2010. This resulted in 33,000 “maintained” jobs per year. We also found no systematic over-reporting by businesses to the CED by verifying self-reported data from the businesses with BLS data. Second, the “gross cost” to the Commonwealth of Kentucky was $140 million in 2010 and averaged $3,330 per job per year between 2001 and 2010. In our effectiveness analysis, we found that approximately 35% of all jobs reported would need to have been directly caused by the incentives for the incentives to be more effective than a broad-based tax reduction. Third, we compared Kentucky to its peer states and found several areas where Kentucky lagged. Our recommendations include ways for Kentucky to improve incentive reporting and evaluation, and ways to encourage growth in knowledge-based industries.

Building a New Bridge in Detroit: A Study Evaluating the Options

The purpose of this paper is to compare the NITC and DIBC propos­als, identifying the key factors affecting policy makers, investors, and taxpayers. To date, public discourse about the options has been hampered due to lack information about the proposals, including project viability, financing, and taxpayer risk.

The Consultants at Anderson Economic Group have completed this study independently in order to provide an unbiased source of information on the topic.

Fermilab Economic Impact

 

Impact of Proposed “PIP Choice” Law in Michigan

Each state in the U.S. requires licensed drivers to purchase a minimum amount of auto insurance to protect themselves and other drivers in the case of an auto accident. If a driver becomes injured from an accident, they often must sue the at-fault driver’s insurance company to collect damages, which can be a lengthy and costly process. In no-fault states, such as Michigan, the right to sue other drivers is limited because the injured party’s own insurance company pays for damages. No-fault states require drivers to purchase a minimum amount of personal injury protection (PIP), which covers medical expenses and lost wages resulting from an auto accident.

Each state varies in the amount of PIP coverage they require drivers to purchase, ranging from $3,000 to over $50,000. However, if a driver incurs costs beyond the amount of coverage purchased, he or she must pay out-of-pocket for these additional expenses. Currently, Michigan is the only state that requires each driver to purchase lifetime PIP coverage, which provides benefits to pay for reasonable and necessary treatments related to an auto accident. This report discusses how proposed legislation to change the minimum amount of coverage required by each driver would impact Michigan.

Automation Alley's Technology Industry Report: 2011 Edition

With the Great Recession officially in the rear-view mirror, growth and economic advancement are at the top of the agenda for policy and business leaders. Planning for and pursuing such growth and advancement requires taking stock of current conditions, which is what this report does for the technology sector in Southeast Michigan.

This report provides a careful assessment of employment and industry data for the technology sector in Southeast Michigan. The data offer benchmarks of the size and nature of the region’s
technology sector relative to other metropolitan areas across the United States. These data provide measures that can be reviewed over time to assess the evolution of the technology sector in the region. They also illustrate opportunities for economic growth and advancement in Metro Detroit today.

The technology sector of the economy can be viewed as consisting of businesses that have a technical orientation and workers who have technical occupations. The businesses together form an industry, while the workers together form a workforce. Data from the U.S. Census Bureau and the Bureau of Labor Statistics are used in this study to assess both the industry and workforce components of the technology sector. Measures of the sector across metropolitan areas are also included to provide context to the data for Greater Detroit.

Michigan Unplugged? The Case for Shared Investment in Regional Transmission Projects

Electricity transmission facilities are major investments. They have traditionally been funded by local utilities, with costs allocated across the local users. Improving the grid, however, requires more than a patchwork of locally planned and funded improvements. In the Midwest and other areas of the country, states, utilities, and other stakeholders have agreed to pursue a regional approach to plan and build a more robust grid. As a result, many new transmission projects are now designed to benefit large geographic areas.

Midwest Independent Transmission System Operator, Inc. (MISO)—an independent, non-for-profit corporation of grid stakeholders in the Midwest—is responsible for managing and planning this region’s grid. In early 2009, MISO began developing a new cost allocation method to be used specifically for regionally beneficial transmission projects. The approved cost allocation method assigns costs based on load (actual use of electricity), and applies only to a new category of projects called “Multi-Value Projects” (MVPs).

The MISO cost allocation for MVPs, which FERC found to be consistent with the “beneficiary pays” cost allocation principle, is now being challenged by parties that feel it does not assign costs in a way that is commensurate with benefits.

In this report, we assess whether or not the MVP cost allocation methodology is consistent with the legal principle that costs should be “at least roughly commensurate with benefits.” We also consider whether there is any evidence that the approved methodology places an unfair cost burden on Lower Michigan. Finally, we assess the risks and consequences that stem from modifying the structure of the already adopted cost allocation.

The URC's Support for Information and Communication Technology in Michigan

The University Research Corridor (URC) is an alliance of Michigan’s three largest academic institutions: Michigan State University, the University of Michigan, and Wayne State University. The purpose of this alliance is to accelerate economic growth in Michigan by educating students, attracting talented workers, supporting innovation, and facilitating the transfer of technology to the private sector.

This report is part of a series of special topic reports that began in 2007 and are released by the URC in early summer of each year. The purpose of each report is to highlight the URC’s contributions to a specific industry important to Michigan’s economy. This year’s report focuses on how the URC is shaping Michigan’s Information and Communication Technology industry (ICT) through its educational programs, research, and support for entrepreneurs.

We begin this report by developing a rigorous, comprehensive definition of the information and communication technology industry. This industry consists of the study, design, development, implementation, and management of information systems. It focuses on communication technologies, including the Internet, wireless networks, cell phones, and computer-based information systems.

Blue Cross Blue Shield of Michigan's Downtown Consolidations

Blue Cross and Blue Shield of Michigan (BCBSM), a major provider of health insurance plans to businesses, government units and private individuals in the state of Michigan, and its subsidiary, Accident Fund Insurance Company of America (AFICA) are in the process of relocating and consolidating workers in Lansing, Grand Rapids, and Detroit and their suburbs to downtown locations in those cities. In addition to consolidating its existing workers, AFICA will add over 500 new workers to its Lansing-area work force. In all, BCBSM and AFICA will have moved workers from nine suburban and urban worksites to five urban worksites, investing significantly in constructing and renovating the new sites. These relocations are part of Blue Cross’s desire to contribute to enhancing the vitality of Michigan’s urban cores.

BCBSM has retained Anderson Economic Group, LLC (AEG) to assess the effects of these three downtown consolidations of workers. In this report we discuss the benefits that these plans will have in terms of both quantitative economic measures, such as employment, earnings, and tax revenue, and the important signaling, cultural, and place-making effects of having a large, stable employer in these cities’ downtowns.