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Michigan Truth Squad

A project of
the Center for Michigan.

Technical foul on Dem ad slamming Snyder

Who Democratic Governors Association
What “The Difference,” a television ad promoting Mark Schauer for governor.
The call Technical Foul

Produced by the Democratic Governors Association, the 30-second ad introduces Mark Schauer, a former state lawmaker and member of Congress from mid-Michigan, to voters statewide. Schauer is a Democratic candidate for governor this year.

He is shown climbing out of a Jeep Grand Cherokee (built at Chrysler’s Jefferson North plant in Detroit). A school classroom is briefly shown as Schauer says that his dad was a science teacher and his mom a nurse. He then talks about how he was in charge of an early childhood education program in Battle Creek and how he pushed for lower interest rates on student loans.

Statements under review:

“We need to stop Gov. Snyder’s cuts to school funding… Let’s tell Governor Snyder, cutting school funding is no way to build a strong economy.”

There is enough gray area on this subject that Snyder can accurately claim education funding is up, while Democrat gubernatorial candidate Mark Schauer can just as accurately claim school funding is down.

Snyder claimed in his State of the State address, though not in the Super Bowl ad, that K-12 spending had increased by $660 per student since he took office. That number reflects total appropriations, which have indeed risen from $12.98 billion in fiscal year 2011 to $13.36 billion appropriated for the current fiscal year, while the number of students has declined.

A lot of that increase has gone toward teacher pension liabilities, which is funding that is not flowing into classrooms. The state’s basic per pupil foundation allowance is down since Snyder took office, from $7,316 in 2010-11 to $7,076 in 2013-14.

(For a detailed breakdown on the school funding debate, see former director of the Michigan House Fiscal Agency Mitch Bean’s analysis)

Under the old Michigan Business Tax, about $600 million had been earmarked for the School Aid Fund. But the new corporate income tax, which took effect in 2012, eliminated that earmark. Business tax revenue now goes to the general fund.

In addition, about $400 million a year from the School Aid Fund is being used differently than in the past – to pay for community colleges and state universities – instead of for K-12 purposes.

“He used that money to give tax breaks to businesses, even if they send jobs overseas.”

In the television ad, Schauer claims that Snyder took the money from schools and gave it to businesses in the form of a tax cut, even to those that sent jobs overseas.

Snyder and the Legislature replaced the complex Michigan Business Tax with a 6 percent corporate income tax that cut business taxes by $1.7 billion.

The biggest beneficiaries of the tax cut were, generally, smaller companies, including “S” corporations, sole proprietorships and limited liability companies that are exempt from the new corporate income tax. Larger corporations, specifically C-corporations, pay the new tax. Those corporations would arguably do the bulk of overseas business, still continue to pay the new corporate income tax. The ad offered no documentation or explanation for the claim that the state tax reform specifically resulted in tax cuts to Michigan corporations that sent jobs overseas. For background on the tax changes, this analysis from the Plante and Moran accounting firm is one of many available resources.

The call Technical Foul

The ad makes a strong implication – that Gov. Snyder gave tax cuts specifically to Michigan firms that send jobs overseas. The ad provides no documentation for that claim. And, in actuality, state business tax changes actually benefitted smaller firms more than the kinds of large corporations more likely to engage in international business.

6 comments from Bridge readers.Add mine!

  1. Michael Rogers

    “And, in actuality, state business tax changes actually benefited smaller firms more than the kinds of large corporations more likely to engage in international business.” Kudos for pointing out the truth about business tax reform — that it mostly helps small, family-owned small businesses that are filling thousands of jobs across the state.

  2. Mike S

    By the definitions that were laid out, this ad should have been marked as a Regular Foul or even a Flagrant foul. “A statement that distorts or incorrectly states a fact. It’s one thing to point out differences between records. It’s another for a public official to present false information”. To say Snyder cut over a billion from education but the fact is that he has increased funding. that makes the DGA a flagrant foul, there are no gray areas the facts are clear.

  3. Barb

    Not really Mike S! If you read Mitch Bean’s analysis, there really has been hurting going on in education; it’s pretty clearly been flat funding with increasing expectations and costs.
    Some even claim in real dollars, back to ’90s levels. It is truly a “call”, and in terms of what students receive, a clear decline.

    I find Gov. Snyder pretty deceptive on things like Right to Work as well, when that snuck through after feigning such disinterest in it. Shortly after, the rules for recall were also quietly changed so he wouldn’t have the Gov. Walker situation occur. It is now close to impossible to recall a MI Gov. You need to line-up the new candidate, get an uncommon amt. of names in a shorter period of time etc. etc. I don’t see Gov. Snyder as a forthright “nerd” at all, just a typical businessman, and you can’t run certain entities like businesses,— schools and mental health are two such entities. The only way to reform is through long-term focus and protecting education from the ongoing politicization of MI legislators, who yo-yo schools’ efforts all over the place.

  4. Abbie Hoffman

    Your foul call:
    ‘The ad makes a strong implication – that Gov. Snyder gave tax cuts specifically to Michigan firms that send jobs overseas.’

    That’s not at all what the ad said. It says ‘businesses, even if they send jobs overseas.’ To me ‘even if’ is the opposite of ‘specifically’

    Sorry, bad call.

  5. Jeffrey Miller

    The new corporate tax as you call it put a huge hole in the budget that was filled be education and too many other cuts and taxes!

  6. J. Strate

    It’s important to examine the truth of the claims about state funding for education. Although it’s true that no school district can run their schools without money (including especially state funding), it’s not likely that small variations in state funding from year to year have much if anything to do with the academic performance of students. Indeed, if there’s any relationship between per pupil spending and academic performance, it’s likely very weak. Is there any way of getting elected public officials to focus on outcomes (educational performance) rather than inputs (state funding for education)? I doubt it, since the numbers there don’t look so good.

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