Thursday, January 31, 2008

Michigan's 4-year long recession is "news" to Ferndale DDA

In a recent Woodward Talk article, PSD tax put on hold, Ferndale DDA Executive Director Cristina Sheppard-Decius said that both the organized opposition to a new business tax and the "recent" economic news persuaded the DDA to postpone requesting the city council for the tax increase:
Sheppard-Decius said that recent news reports about the declining US economy, coupled with Michigan's recent economic struggles, were also at the root of the DDA's decision.

"The economy has been very shaky on a national level, not just on a local level," she said. "Right now might not be the best time."

"In six months to a year, we might have a better picture of where the economy is at."
But her lip service to the economy is unbelievable. She still thinks the tax was opposed because of a communication problem and lack of detail:
"We were able to glean that we needed to get out to the business owners and go into more detail with them about the PSD tax. We plan to hold focus groups where we can be much more thorough on this issue."
In the DDA's opinion, all those restless business owners just didn't have enough information, or weren't paying attention. But it's more likely the DDA's director isn't paying attention.

A Wednesday (1/30/2008) Detroit News editorial reported:
Michigan remained in its one-state recession for its fourth consecutive year in 2007, as overall jobs declined by 1.8 percent, the jobless rate increased by four-tenths of a percentage point and the exodus of population accelerated, according to Comerica Inc. Chief Economist Dana Johnson.
The DDA should spend less time reading Main Street fairy tales and more time reading the editorial pages.

Or maybe Comerica's Chief Economist, Dana Johnson, should spend more time reading the Woodward Talk. While Sheppard-Decius believes Ferndale's economic condition may improve enough "In six months to a year" to re-evaluate the business tax, Johnson believes,
"In the near term, however," Johnson writes. "Personal income in Michigan will take another hit that will ripple throughout the state's economy."
Certainly, predictions of a 6-12 month turn-around in Michigan's economy will be news to Johnson and Michigan's Governor, Jennifer Granholm.

Economists seem resigned to the fact Michigan has been in a recession since 2003. Most people in Michigan, especially the 147,000 that have lost their jobs since 2000 and the 90,000 that left the state in 2007 were already aware of our recession. Obviously, none of them works or volunteers at the DDA because the DDA has been working obliviously toward the PSD expansion and its attendant tax since 2005:
But for Shepard-Decius, it has been disheartening to see the PSD tax shelved after two years of planning. "It's very disappointing for those who worked hard on it," she said. "We're a little bit deflated."
It's hard to feel sympathy for a group laboring in the bliss of tax-funded ignorance. It's not difficult to understand how that lack of sympathy can turn to animosity when she ignores what was "at the root of the DDA's decision" and plans to proceed with a 2-mill levy "in a month or so."

I'm uncertain any number of focus groups can correct that kind of willful disregard of the economy and contempt for business owners who in Sheppard-Decius' opinion are getting a "free-ride."

Monday, January 28, 2008

Municipal insult to state injury

A Detroit News editorial today reported that, ".. in the minds of 605 of the country's chief executives... Michigan was rated the third worst state to do business in."
"Overall, the message CEOs are sending is that over-taxed and over-regulated states are not conducive to the health of their businesses," said Ed Kopko, chief executive and publisher of the Chief Executive Group. Some leaders argue taxes and regulations don't matter much, but the executives who create jobs and locate factories disagree.
So if the state is viewed as over-taxing and over-regulating, how many more taxes and regulations should municipalities add? To be fair, they may need some new taxes to support essential government services for relocating businesses, like police, fire, and infrastructure improvements. But discretionary services with weak value propositions (like the DDA's desire for alley improvements, more flowers, more banners, and listing businesses in a directory) should be eliminated. And that includes taxes and regulations that already exist but if eliminated, might make Ferndale more attractive to business.

Honestly, I don't know how much time Ferndale leaders spend trying to attract out-of-state businesses to Ferndale. It is more likely Ferndale competes with other Michigan cities for businesses that have already come to reluctant terms with state and local governments' business-as-usual.

Quicken Loans' move from Livonia to Detroit was good for Detroit but not for Livonia. Compuware's move was another example of stealing from Peter to pay Paul, or stealing from Farmington Hills to pay Detroit. Like deck chairs on the Titanic, Quicken and Compuware were just moving around Michigan, but Pfizer and Volkswagon chose lifeboats outside the state--which is the ultimate measure of CEOs' estimation of Michigan's seaworthiness.

Lately, many people may have less respect for CEOs (Enron, Tyco, etc.) than they did 15 years ago, but ultimately CEOs, small business owners, and entrepreneurs are the ones that create jobs--not government. Perhaps if government focused more on getting out of businesses' way by repealing taxes and laws that are both burdensome and nuisances we might discover that less government begets more jobs.

Even without more jobs, less government may be its own reward.

Friday, January 25, 2008

Is capitalism or taxes a better cure for poverty?

In June 2007, I wrote an article (Hold on to your wallets) about Microsoft Chairman, Bill Gates', Harvard commencement address in which he appealed to the graduates to strive for "creative capitalism." In it he suggested capitalism creates inequities between nations with free-market economies and those that don't.

I thought that was the point of capitalism, to provide the opportunities for individuals to capitalize on their ideas, build multi-billion dollar companies that employ hundreds of thousands of people world-wide, and create complimentary businesses (consultants, engineers, etc.) that employ millions more, that government can't do itself and without taxpayer expense.

Lawrence Kudrow caught up with Mr. Gates at the World Economic Forum in Switzerland where Gates has changed the title of his mantra to "kinder capitalism."

Lawrence Kudrow writes (Capitalism doesn't work, Mr. Gates?):
Gates says he has witnessed steep income and cultural inequities in his travels around the world, in particular to Africa. But for this he should blame the absence of capitalist principles, not capitalism itself. Even the most compassionate corporate executives are not going to bring prosperity to impoverished countries with statist economies. Until Africa's nations undertake the market-oriented reforms that have boosted China and the other Asian Tigers -- like South Korea and Taiwan -- they will continue to rank at the bottom of the world prosperity scale.
Give the whole article a read. I think Mr. Kudrow (and the late Milton Friedman) have a better idea to lift Africa's, Cuba's, and other countries' economies, standard of living, and fight more poverty than increased federal income taxes ever could.

Thursday, January 17, 2008

How to read Ann Coulter

Many people have a hard time reading Ann Coulter's articles, regardless which topic she writes about. The leather-skirt-wearing, long-haired blonde, will-someone-feed-me-a-Twinkie conservative writer's opinions are sometimes hard to discern between the humor, historical citations, and acerbic criticisms of all people and events. Her style is both offensive and endearing, but which it is depends heavily on the reader's palate.

Her most recent column, The Elephant in the Room, is no different. Between her disparaging remarks on McCain, Huckabee, Iowa and New Hampshire voters, Democrats, Republicans, the New York Times, Frank Rich, Giuliani, Bill Clinton, (did I leave anybody out?) oh, yea--Billy Carter, Ann Coulter makes an interesting observation; Mitt Romney must be the Republican's best candidate (as in, the most Republican of the field) because Democrats are working so hard to discredit him.

Now, the fun part about reading this article is looking at it from the other point of view. Which Democrat(s) are Republicans working so hard to discredit, and does that suggest those Democratic candidates Republicans are worked into a froth over are the best standard-bearers for liberals?

Unless the entire Democratic establishment is attempting some kind of reverse-psychology, Democrat's tacit approval of McCain and Huckabee should make conservatives wonder about both candidates true conservative credentials.

In March 2007, I wrote Accrediting your Adversary to warn against talking more about your opponent than yourself. In the same way Voldemort marked Harry Potter as his equal (to his own demise) candidates from one party often boost the popularity (and power) of candidates in the other. The more Republicans talked about Clinton and Obama the more credible they became. Ann Coulter's suggesting the more Democrats beat-up on Mitt Romney the more credible he becomes. Even if Republicans don't recognize Romney's conservative credentials, the Democrats do.

This is, of course, how contemporary politics work. Each party seems more concerned with defeating their enemy than they are what's best for The United States of America, and they'll make all kinds of promises to voters, even at the country's expense, if it means winning. A victory for either party means an injury to the other--and well run, efficient, constitutional government be damned. Job losses, budget deficits, national debt, oil dependence, education, and creeping socialism are simply collateral damage on the home-war front.

Instead of a quad-annual game of capture-the-flag, it would be fun to recapture America.

Friday, January 11, 2008

A leadership vacuum in Ferndale

Nature abhors a vacuum. Suck the air from one end of a tube and fuel will rush in the other from the gas tank your siphoning from.

The Downtown Development Authority (DDA) is trying to suck money from businesses in and around downtown Ferndale and no one from either the city council or the Ferndale Chamber of Commerce has taken a definitive position against the new tax, leaving many businesses without an advocate, and since businesses can't vote, they're left without representation.

The DDA is going to get a mouthful of something, but for now it's not what they'd hoped for.

At a city council meeting in early December my wife, Tiffani Gagne, encouraged council not to approve new taxes on downtown businesses. She listed a dozen recently shuttered shops and reminded council our current economy is hard enough on businesses without a new tax, and recommended incoming councilwomen Kate Baker should abstain from voting on the issue because her connections to the DDA risked an appearance of impropriety.

What she abhors she hurries to fill

Also attending that day were Ferndale businessmen AJ O'Niell, from AJ's Cafe and Nature Nook's Daryl DePottey. Both told Tiffani that if she were to form an opposition group to the tax she had their support. By December 21 Tiffani had joined with Ferndale Friends publisher, Stephanie Loveless, shared what they'd heard from businesses and decided to work together to help them out.

The domain was registered, and posters designed and ordered the next day. They were printed by Christmas Eve. On 12/26 Tiffani and Stephanie started visiting businesses along the Nine Mile and Woodward corridors inside the PSD, talking to businesses, distributing posters, collecting names, email addresses, and donations. was running by the 27th.

Coincidentally, that's when the DDA's discussion forum started seeing its first comments (parking and the PSD) in over a year (maybe longer--I stopped at 12/2006).

Are you sure that's the gas tank?

On January 10th, 33 business owners and residents led by Linda Robbins (House of Chants), Keith Premier (Contempo Home), and Wyll Lewis (American Pop!) met at AJ's Cafe. Among other objectives their first is to defeat the new PSD tax. Like the posters say, they can't afford it. Many are struggling mightily just to make rent and have already cut-back on expenses--including staff. Some have already made plans to close in 2008.

Robbins, Premier, and Lewis also distributed surveys for a new organization they created called The Ferndale Asssociation of Businesses (FAB) and already reserved the internet domain They hope to do a better job communicating with, representing and promoting the interests of downtown businesses than either the DDA for Chamber of Commerce has done so far.

So what is the Ferndale Chamber of Commerce's position on the PSD tax?

According to a December 9 article in The Mirror:
Ferndale Chamber of Commerce President Mailè Ilac Boeder said the chamber, which represents 300 businesses in the area, opted not to take a position on a proposed PSD tax.

"We will tell our members what is going on with the PSD and when there are meetings about it," she said. "We couldn't come up with a fair consensus that would represent all of our members."
As far as I know, it wasn't until this week the Chamber decided to inform their members about the PSD. They've scheduled three one-hour seminars on January 16 for Chamber members and business owners, presented by the DDA. No word yet on whether they'll invite anyone from the No-PSD-Tax! or FAB groups to either keep the DDA honest or present an alternate opinion.

I find it odd that of all the businesses Stephanie and Tiffani have visited, very few are in favor of the new tax. Finding a majority opinion among the store owners directly affected hasn't been difficult. If the chamber's leadership isn't prepared to take a position on a new local business tax, it casts doubt on their ability or willingness to take a position on any ordinance or legislation affecting business owners, whether it be a PSD tax, a 6% state service tax, or raising the county's sales tax to 7%.

To paraphrase 1992 presidential candidate Ross Perot, "That giant sucking sound you hear is leadership going south."

Can you hear me now?

As far as the 2008 city council goes, only newly elected mayor Craig Covey has made statements opposing the PSD tax as initially proposed by the DDA last June. Detroit Free Press reporter Bill Laitner quoted Mr. Covey, "To throw a new tax burden on our businesses in these tenuous economic times, I think, is ill-advised."

As ill advised as it is, I'd prefer a stronger statement than was reported in the Daily Tribune by Mike McConell:
"I would like to see the principal shopping district grow slowly,” he said, suggesting that the current tax proposal may be too aggressive. “I’m very reluctant to enact tax increases on a local level when the Michigan economy is in a multi-year recession.”
As non-resolute as that sounds, it stands out in marked contrast to comments from councilpersons Galloway and Baker who favor raising taxes.

Newly-elected and youngest councilwoman Kate Baker, whose professional experience is four years of fund raising for The Henry Ford, believes the DDA knows best how to spend business' money for their survival in these tough times than the business owners.

From the December 9 Mirror article by Megan Pennefather:
Kate Baker, who was elected to council in November and will take her seat at the table in January, volunteers with the DDA. "Investment will pay off as the economy starts to turn around," she said. "Ferndale will be ahead of the curve."
And what are those keep-your-head-above-water-to-ride-out-the-storm investment ideas? According to the Free Press:
"This would provide matching funds for state and federal grants" to provide things like better pedestrian crosswalks, she said.
That will certainly increase tire sales for Chris Lynch at Wetmore's. They get lots of pedestrian walk-in traffic from downtown.

The Woodward Talk caught councilman Scott Galloway on a good day:
Galloway argued that the proposed levies are merely "a drop in the bucket."

"These people are under the assumption that all taxes are bad, as if they don't give them anything in return," he said. "Consistent landscaping, promotions -- you can't get those things for free."
That comes from a councilman who thinks spending $30,000 to be the first city with a 30'-tall Woodward Tombstone is also "a drop in the bucket."

With those fiscal chops Galloway would be in good company in either Lansing or Washington. Especially with the likes of Illinois Republican Senator Everett Dirkson, "A billion here, a billion there, pretty soon it adds up to real money."

Councilpersons Gumbleton and Lennon have either not been interviewed by the press or have refused to make any comments on the issue.

Even though I don't agree with Galloway and Baker, I respect their and Craig Covey having positions on the issue. It would be good to hear more debate.

Winners and Losers

The DDA has nothing to lose. Their budget either increases $184,000 or it stays the same. If the PSD wins 200 businesses in the expanded PSD district will pay higher taxes and get little in return.

The Chamber's decision to stay on the sidelines in this debate is surprising. Their retreat has created an opportunity for FAB to take a leadership role the Chamber should have. I'm unsure Ferndale's business community can support two separate business organizations, but at least one of them intends to support businesses in this fight.

If you want to try the siphoning experiment at home I recommend starting with an aquarium. Leave political vacuums to the professionals.

Tuesday, January 08, 2008

Huckabee vows birthright citizenship case

I just noticed a news item from the Washing Post announcing Republican Presidential Candidate Mike Huckabee vows to defy birthright citizenship.
"Mike Huckabee wants to amend the Constitution to prevent children born in the U.S. to illegal aliens from automatically becoming American citizens.."
I wrote about this briefly in May 2006, citing a short Q&A piece published by the Federalist Society:
The second interesting point is the presumption their children are US citizens based on the citizenship clause of the 14th amendment. Perhaps incorrectly interpreted for over a century:
The Citizenship Clause of the 14th Amendment actually has two components: 1) “All persons born or naturalized in the United States,” and 2) “and subject to the jurisdiction thereof, . . . are citizens of the United States and of the State wherein they reside.” The claim of birthright citizenship is particularly troubling in the context of illegal immigrants, for it permits those who have not followed our law, who have not adopted the United States as their own country and sworn their allegiance to it, to nevertheless demand that the United States confer the privilege of citizenship upon their children (and derivatively upon them as well). The original intent of the 14th Amendment was to mandate that those born on U.S. soil and who were subject to the full and complete, allegiance-owing, can-be-prosecuted-for treason jurisdiction of the United States, would be citizens.
The Washing Post story went on to say:
The former Arkansas governor thinks the case against U.S. Border Patrol agents Ignacio Ramos and Jose Alonso Compean was railroaded, Mr. Gilchrist said. Ramos and Compean are serving lengthy prison sentences for shooting a fleeing drug-smuggling suspect in the buttocks.

"I would make it my first act as president to pardon agents Ramos and Compean," Mr. Gilchrist said Mr. Huckabee told him. "I regret that they have spent yet another Christmas locked up in a windowless cell like animals and unable to be free and with their families."
I'm not thrilled with his comments on capitalism, but these are at least some good starting points for an immigration policy.

Monday, January 07, 2008

Comparisons to Birmingham aren't fair -- to Birmingham

Note: This article has been cross-posted to, a website supporting the efforts of my wife, Tiffani Gagne and local publisher Stephanie Loveless to defeat the $0.35/square-foot tax on Ferndale businesses. Please visit for more information.

In reporting on the campaign against Ferndale PSD tax, Mirror reporter Megan Pennefather spoke to DDA Executive Director, Cristina Sheppard-Decius:
Sheppard-Decius said everyone is entitled to their own opinions, but that she's disappointed neither Gagne nor Loveless met with her to discuss the issue before starting the campaign.

"The information they may be putting out there is inaccurate," she said. "And I hope businesses will do their due diligence" and research the issue. "My hope is that people will make a decision based on information, not on hearsay."
It's not Tif and Steffie's fault the $350,000 isn't correct. That number came from the DDA's presentation to council in June, 2007. But the DDA's budget also includes millages and sponsorships that bring their revenue up to $503,700. I agree with Cristina that not disclosing 30% of the DDA's income to city council is "inaccurate," but that was the DDA's error--not Tif and Steffie's.

What Cristina doesn't appreciate is the information Tiffani Gagne and Steffanie Loveless are sharing comes from information published earlier by the DDA, presentations the DDA gave to city council, but subsequently removed from their website.

So what information might Tiffani and Stephanie be sharing that's inaccurate? Maybe it was when the DDA compared their current $350,000 budget to Birmginham's, Rochester's, and Royal Oak's $600,000, $1.25 million, and $2 million budgets respectively.

The DDA compared Ferndale's $350,000 to Birmingham's $600,000. But the more-accurate numbers are $503,700 and $1 million, because according to Birmingham PSD's executive director John Heiney, Birmingham receives $800,000 from their PSD tax and another $200,000 in sponsorships.

That may seem worse but Birmingham's revenue is spread across 600 businesses to Ferndale's current 200. In other words, Ferndale's raises $2518 for each of its businesses ($503,700/200) compared to Birmingham's paltry $1667 ($1 million/600).

And that's without Ferndale's onerous PSD tax!

The real irony comes when we include the new PSD tax. According to the latest information from Ferndale, the PSD tax proposal will double its size to 400 business and raise an additional $284,689.

That's a good thing, isn't it?

Let's look at the numbers again. Ferndale's new total revenue will be $684,269 (see table below) but will now be responsible for 400 businesses. On a per-business basis Ferndale's revenue actually drops to $1710--33% less than before the PSD tax!

Ferndale DDA Ferndale DDA w/ PSD Birmingham
# businesses 200 400 600
TIF $347,700 $347,700 $0
PSD $0 $284,869 $800,000
Millages $75,503 $0 $0
Sponsorships $80,500 $51,700 $200,000
Total Revenue $503,703 $684,269 $1,000,000
Revenue/Business $2,519 $1,711 $1,667

On the revenue side of the argument, some bean counters may actually say that collecting less money from more business is a good thing. On its face even I would say that's an example of broadening a tax base. But there are at least two problems with that perspective.

First, "broadening its tax base" is meant to describe what happens when new businesses open, existing businesses grow, and property values increase. The tax base grows because the downtown economy has grown--not its boundaries. By drawing new lines around 200 additional businesses the DDA has artificially broadened its tax base.

Second, at the DDA's own admission it is not proposing an equal distribution of the funds, but is planning to spend more of its money downtown than anywhere else. Alley improvements are for Nine Nile--not behind Wetmore's or Minser's Collision. Sidewalk snow removal and power washing are for downtown sidewalks, not those outside Elliot Saw Works or Detroit Comics.

That's not a broadening of the tax base, it's a redistribution of money--taking from non-downtown businesses to spend on the downtown. But even downtown stores like House of Chants, American Pop!, Dollar Castle and Via Nove oppose the new tax. In addition to being against higher taxes for themselves they realize many of their neighboring businesses are struggling under Michigan's single-state recession and that higher taxes may push their neighbors over the edge. Being surrounded by empty storefronts isn't good for downtowns or residents.