State budget fellow Marc McKenna sat down with Marc Jordan and Helen Freeman for an interview on November 14, 2008. Ms. Freeman is chief of staff for Senator Valde Garcia (R-Howell); Mr. Jordan is special assistant to Senator Garcia. We discussed lobbying at the state and federal levels, earmarking at both levels, and budget deficits in Michigan. .
Can you give me an example of the lobbying process?
JORDAN: Sure. Take the Michigan 21st Century Jobs Fund, for example. The Fund was created in 2005 to foster economic growth in Michigan. The Fund invests in four areas: life sciences, alternative energy, advanced automotive/manufacturing, and homeland security. Well, Senator Garcia, what he has done, was take $10 million from the Fund to create a Defense Contract Coordination Center (DC3), housed within the Michigan Economic Development Corporation (MEDC). The DC3 is charged with helping Michigan companies go to the Department of Defense (DOD) and procure contracts. The MEDC hired a retired general, Bradley Mark Lott, to lead the DC3. General Lott worked at the Pentagon, on the other side of the equation, to help draw down these contracts for the DOD.
There may be a contract that's floating out there for technology for sniffing out IEDs [improvised explosive devices] or something, so DOD would put out a RFP [request for proposal] and ask for companies who can do that work, who can create that kind of technology, to apply for a DOD contract. Well, we have companies right here in Michigan that can do things like that. The problem is that there is a lot of red tape, there are a lot of hoops to jump through in order to get to those contracts.
We wanted to create a defense center with people that knew the process, and that could help Michigan companies better compete with companies from other states for the contracts. Through General Lott's defense center, we're able to take Michigan companies, hold their hand, and walk them through the contracting process. It has been very successful; last year we brought over $300 million in defense contracts to Michigan. This year, we have almost doubled that amount.
You have worked as a lobbyist in both Washington and Lansing. How does the lobbying process differ at the state and federal levels? Is it easier to gain access to elected officials in Lansing?
JORDAN: First and foremost, state legislators are much more accessible than their counterparts in Washington. It is based on population: a state legislator, representing far fewer people than a member of Congress, is more accessible. There are fewer people whispering into state legislators' ears.
Part of lobbying is who you know, and what relationships you have built over the course of time. Take me for example: I worked for a decade for former Governor John Engler. Throughout that time, I built relationships. I knew Mike Rogers before he was a Congressman, while he was a state legislator; and a lot of his staff members are former Engler people. It is easier for me to gain access to Rogers in Washington because of the relationships I have established.
Of course, while I worked in Washington, there were a lot of elected officials from other states that I didn't know. Lobbying them was just beating on their doors, scheduling meetings with them, and so forth. As a lobbyist you work a lot with staffers, and build relationships with Congressional staff.
At the federal level, lobbyists are prohibited from "wining and dining" elected officials. Are there similar restrictions in Michigan aimed at curtailing the influence of lobbyists on state legislators?
JORDAN: Yes, but the restrictions are not as severe. The Secretary of State publishes a Lobbyable Public Officials List, which is just what it sounds like: a list of public officials that may be lobbied. Lobbyists may take public officials to lunch, provided the cost of that lunch does not exceed ~$50, but the lobbyist must report the expenditure.
Are legislative aides on that list? In other words, if a lobbyist takes a state senator's legislative staff out to lunch, does the lobbyist have to file expenditure reports?
JORDAN: No. And to me, from a policy perspective, that is a fallacy; because from my lobbying experience, much of the heavy lifting is done by staff members.
In the presidential campaign, Senator John McCain complained often about earmarking in Washington. An earmark, as I understand it, is a provision in an appropriations bill that specifies spending priorities to a very limited number of individuals or entities. Earmarks have been derided as wasteful spending. Is earmarking a problem?
JORDAN: The whole crusade for earmark reform is misguided. Congress has the power of the purse. It is Congress' responsibility to divvy up and allocate the purse. Take the U.S. Department of Education, for example. Say they have a $50 billion budget. Today, Congress has the power to divvy up the $50 billion and "earmark" it for specific DOE programs. If you eliminate earmarks, DOE will still have $50 billion, but DOE bureaucrats will decide how to spend it, not Congress. Lobbyists will simply shift their attention from Congress to DOE bureaucrats.
Are there earmarks at the state level?
JORDAN: Not very many. We are under such a tight budget that the Legislature does not fund many earmarks; we are struggling to pay for the existing programs. At the federal level, they have much more discretionary spending in their budget.
Of the earmarks that do get through in Michigan, why are they so vaguely awarded?
FREEMAN: Earmarks are vague so you have to dig to find out where it is allocated. You define an alligator in an area where there can be no other alligators. The Michigan International Speedway, for example, would not be identified as such. It might be defined as "a motorsports facility, with a two-mile oval racetrack, and a seating capacity of no fewer than 132,000." If you want to know what the vague text refers to, you just call up the sponsor of the bill and ask. They cannot lie; they will tell you.
The Citizens Research Council of Michigan projected substantial budget shortfalls by 2017 in the state's General Fund ($6 billion), K-12 School Aid Fund ($3.6 billion), and Transportation Fund ($417 million). What is causing these persistent structural budget deficits in Michigan?
FREEMAN: Michigan is a big manufacturing state, and the manufacturing industry is weathering a nasty storm right now. We led the herd in having budget problems, and we have done a lot to fix it, but not enough. We are a big union state, and unfortunately that stops a lot of the progress.
Schools are yelling they don't have enough money. You know why? They have to pay prevailing wage, which is the average union wage in the area. For example, voters in Grand Rapids agreed to pay $17 million to build a high school. Construction companies bid for the contract, and the company that won the contract employed nonunion construction workers. Arguing it should not be forced to pay its workers prevailing wage, the company filed a lawsuit. The judge ruled in favor of the company, but his decision was reversed by an appeals court: the company had to pay its workers prevailing wage. Taxpayers paid for the contract, and the additional $1 million in wages.
So we have unions forcing taxpayers to maintain artificially high wages?
FREEMAN: Yes. If you don't want to eliminate prevailing wage outright, you should take the wage of every contractor in the area; the mean average of every wage should be the prevailing wage. Prevailing wage should not be the average union wage.
Prevailing wage is also a problem for our roads. MDOT [Michigan Department of Transportation] doesn't have enough money to repair our roads, because it has to pay road workers prevailing wage. Eliminating prevailing wage would upset the unions, so we cannot do that. How do we fix the roads without getting rid of prevailing wage? We raised vehicle registration fees. While people are out there counting their nickels and dimes, we are raising fees, and creating excessive driver-responsibility fees. If you are pulled over by the police, and you fail to produce proof of insurance, you are liable for a $500 driver-responsibility fee, even if your car is insured. It's actually a $1,000 fee: $500 paid annually for two years. These fees are excessive.
Because we have people here that are indebted to unions, and we are such a huge manufacturing state, we have extra battles to fight to fix our budgets. There are things we can do, but our hands get shackled, because we are a big union state.
Thanks for the interview.