Mike Cox for Governor 2010

Putting Michigan Back to Work

The First Steps

Section 12: Reforming Government and Cutting Spending

Free the Creative and Entrepreneurial Spirit of Michigan

Michigan has lost over 900,000 jobs over the past nine years. Across the nation, we are perceived as a high-tax, big-spending state stuck with its head firmly in the past. Whatever our State budget deficits are in 2009 and 2010, we must reform spending. For decades the profits of the Big 3 and wages of Big 3 employees fed the wages and benefits of all public sector employees in Michigan. Now that the Big 3 and their workers have gone through revolutionary changes - and sacrifices - it is only right that State government and public sector employees share in those sacrifices and similarly make revolutionary changes in the way government operates. Budget reform is not just a matter of accounting, it is reform that can empower and give hope to our citizens, grow jobs, and send a message to the rest of the country that Michigan is open for business in the 21st Century.

Leadership Matters: With Well Over $2 Billion in Ideas, Michigan Does Not Suffer from a Deficit of Ideas To Restructure Government - We Currently Suffer From a Leadership Deficit To Enact Ideas

From the Center For Michigan created by Phil Power, a former Democratic candidate for the United States Senate, to the libertarian Mackinac Center for Public Policy to business oriented Detroit Renaissance to the non-partisan Citizens Research Council, there is a plethora of ideas to fix Michigan's structural deficit.

All these organizations have proposed ideas that would save Michigan over $2 billion annually and are not even exhaustive. For instance, other possible ideas not on their lists include freezing or eliminating the State Earned Income Tax Credit (EITC)-- a state program that started in 2008 that duplicates a long standing federal program (saving anywhere from $180 million to $315 million annually); eliminating - as many other states do - welfare for able-bodied adults after 48 months for a yearly savings of $50 million; freeze state employee raises (saving $60 million in 2009 and $180 million in 2010); equalizing day care payments (saving $27 million); $20 million to $70 million could be saved by creating Health Savings Accounts (HSA) for the 19-20 year olds and caretaker relatives optional populations or eliminating coverage; and millions more in selected early outs and reduction in state employees. And there are many more ideas - if a Governor is truly interested in revolutionary change.

Leadership Matters II: From Mayor Giuliani to Alan Mullally

Aside from the variety of budgetary reforms listed here, the value of leadership in restructuring Michigan cannot be underestimated in terms of ideas and management. The ability of a Governor to get in office and identify departmental reform and subsequent savings can yield untold benefits. For instance, Mike Cox took over an office with a flat organizational chart of 40 divisions which reported to one supervisor. Cox changed it into a nimble organization with 20 less divisions which is more cost effective, and as a result the office is still providing stellar service to the People of Michigan even though the amount of employees has dropped by almost 20% from ten years ago while caseloads have jumped 9% in the past 3 years.

(24) Let's Put all State Spending Online

In February of 2008, Mike Cox made history by putting the Department of Attorney General's spending on-line. Cox is a great believer in the old adage, 'sunshine is the best antiseptic in a democracy'. By going to www.michigan.gov/ag and clicking on the button, "Track Your Taxes", any Michigan citizen can see how the Department of Attorney General spends its money. Contracts, rent, office supplies, salaries - you name it - are all there open for inspection. This year Cox posted all consumer protection settlements entered into since his administration began in 2003, over 8,000 pages.

While Cox has set the example for transparency, only the Secretary of State's office has followed suit. Governor Granholm who controls the other 16 departments and over $43 billion in spending refuses to show us - the taxpayers of Michigan - how she and her directors are spending YOUR money. With today's technology, you can listen to half of a hit song on I-Tunes before you decide whether to buy the song or not; yet after giving Governor Granholm over $43 billion this past year, we are unable to see how state government spends our money.

As Michigan's next governor, Mike Cox will put all state government spending on line to prevent corruption, waste, inefficiency, and to give every taxpayer the ability to watch over the shoulder of government as his or her dollars are spent. It is telling to note that even the federal government currently offers details on more than $613 billion of its budget online at usaspending.gov. This website was created as a result of a bipartisan effort by Senator John McCain and Senator Barack Obama in 2006.

States across the country are embracing transparency. A great example is the State of Missouri website, www.mapyourtaxes.mo.gov. Fifteen other states have their state budgets online. Michigan needs to follow suit. Let's put the State of Michigan budget online.

(36) Office of Medicaid Inspector General: Saving $80 Million

Medicaid costs the State of Michigan $9.9 billion this year and is growing. National studies estimate that Medicaid fraud and waste may range from 3% to 10% in any state. As Attorney General, Mike Cox has collected a record $162 million in Medicaid fraud. Currently most of these recoveries occur as a result of "tips" as opposed to referrals from the Department of Community Health or regular audits by Community Health. Invariably, it is hard for a bureaucracy like the Department of Community Health to audit itself. As a result, very few cases are referred for investigation or prosecution. States such as New York and Texas have created an office of Medicaid inspector general to increase fraud recoveries and break the cycle of bureaucratic sluggishness in departments like the Department of Community Health.

Based upon the experience of New York and Texas, states can expect to increase Medicaid recoveries once they adopt an office of Medicaid inspector general by 400%. If Michigan were to create an inspector general, we could expect to collect at least $80 million more per year. Mike Cox will create an Office of Medicaid Inspector General to save Michigan taxpayers - and Medicaid patients - $80 million annually. By transferring existing auditors in the Department of Community Health to a Medicaid Inspector General's office, Michigan will intensify efforts and create more successful collection of fraudulent funds.

In this section…

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62. State Employee Health Care: Saving $269 Million If All State Employees Pay and Receive the National Average

Michigan state employees have better health care benefits than most other state employees and most other residents in Michigan. All across Michigan, workers in the private sector have been making sacrifices which include changes in their health care coverage; it is only fair that state employees and state government share in those sacrifices. Cutting the size of state government is essential.

Currently, Michigan state employees pay either 5 or 10% towards their health premiums, well below the national average for public employees. Getting Michigan state employees to pay the national average will help right-size Michigan government while saving the State close to $269 million annually.

63. Require Benchmarking of Pension and Health Care Benefits Provided to Public Sector Employees

It is a central tenet of any representative democracy that government is formed to serve the governed. When those in government service receive benefits and wages above the average of those who pay their salaries -- the taxpayer -- that tenet is undermined and threatened. After the difficult restructuring of Michigan's private sector over the past 10 years, it is fitting that we closely examine public sector wages and benefits. Mike Cox will push to require all units of government to uniformly report the levels of health and retirement benefits offered to their employees and benchmark those benefits against national averages. This reporting will provide accountability and a transparent database to assist governments at all levels to set wage and compensation at appropriate levels while instilling in taxpayers more confidence in state government.

64. Medicaid Optional Services: Review $1 Billion that Michigan Spends Above and Beyond Federal Government Requirements

Without a doubt, the Medicaid budget is an important piece of the safety net to catch those who are struggling. At the same time, we must recognize Michigan provides optional services (i.e. programs that other states don't provide) that are not required and must -- in a time of great change -- be reviewed for effectiveness. After all, while Medicaid is important, we must remember that the best social welfare program is a job; the best job training program is a job; and still, by and large, the best way to get health insurance is a job.

65. Renegotiate All State Contracts: Follow Example of the Big 3 in Restructuring Costs to Achieve up to $2 Billion In Savings

Michigan's state government will spend over $43 billion this year, up by over $4 billion since the Granholm-Cherry administration began. Of that $43 billion, the state Department of Management and Budget manages over 1,100 contracts worth more than $21.8 billion with vendors for goods, services and property leases.

Mike Cox believes that Michigan's political leaders need to follow the lead of GM, Ford and Chrysler in restructuring government. As these companies have struggled with declining revenues and rising costs, they have aggressively worked with their suppliers and vendors to cut out nonessentials and renegotiate contracts to reflect today's economic reality.

Earlier this year, Governor Granholm issued a directive that set a goal of reducing state contracts by 5% to 10%. This goal has not been reached. Mike Cox will lead state government to go beyond "goals" and achieve a 10% reduction. Renegotiating contracts to reduce costs by 10% will save the state over $2 billion! Quite candidly, the state needs to go deeper than 10%. Not all the savings will accrue to the General Fund, but this is one of many effective tools Mike Cox will use to restructure state government to create a new Michigan that competes and is successful.

66. Amend the Urban Cooperation Act: Allow Local Government the Ability to Serve Their Citizens with Fewer Tax Dollars

Taxpayers demand that their government leaders spend tax dollars wisely, but Michigan state laws actually get in the way of exploring ways to do business more efficiently. The bipartisan, well-respected Center for Michigan, has identified the need to reform Michigan's Urban Cooperation Act as a key component to any government reform effort. Right now, the Urban Cooperation Act prevents voluntary consolidation of services between communities and school districts by building in higher costs. The law actually acts contrary to the interests of taxpayers.

Mike Cox will move to amend the Urban Cooperation Act and then review all areas of state law to ensure provisions that discourage voluntary arrangements to save taxpayer money are identified and changed.

67. Offer State Bulk Purchasing Contract to Local Units of Government to Benefit from Volume Purchasing

The state of Michigan offers a bulk purchasing contract that local units can access for potential savings. Many local units don't know the bulk purchasing power exists, and that has to change. Some local units choose not to participate, but that is hopefully for cost-effective reasons. Michigan should push greater use of its state's bulk contract.