Racial and Ethnic Makeup of School Choice Programs

. August 1, 2014

Connecticut Voices for Children, a statewide advocacy organization, issued a report last April examining the racial and ethnic makeup of the state’s magnet, charter, public, and technical schools.  The report, Choice Watch: Diversity and Access in Connecticut’s School Choice Programs, found that:

  • Bridgeport’s, Hartford’s, New Haven’s, and Stamford’s magnet schools tend to be more racially and ethnically integrated than the cities’ other public schools. By contrast, Bridgeport’s and Hartford’s technical schools are slightly more segregated than their public schools (New Haven and Stamford have no technical schools), while their charter schools are more racially and ethnically segregated than the local public schools in all four cities.
 
  • The four cities’ school choice programs are typically more integrated by socioeconomic status than the local public schools, reflecting the fact that these programs are less likely to enroll low-income students. Charter schools in Stamford and New Haven prove the exception to this rule, with Stamford charter schools less and New Haven schools comparably integrated.
  • Emerging bilingual students are underrepresented in every choice program in each of the four cities.
  • Students with disabilities are underrepresented in every choice program in the large cities, with the exception of Stamford’s charter schools, where they are overrepresented.

Identity Thieves Targeting Children

Identity theft is using, without permission, a person’s name, Social Security or credit card number, or other personally identifying information to commit fraud, theft, or other crimes.

This crime is happening to children with increasing frequency, according to a June 2014 State Legislatures magazine article. The article attributes this trend to the fact that:
  1. most children do not have credit histories,
  2. children’s Social Security numbers are not flagged in fraud prevention databases,
  3. it often takes years for children to discover that their personal information has been stolen, and
  4. the information about foster care children is more easily compromised by family members and available to more people.
State legislators are addressing these problems by strengthening criminal penalties, requiring credit reports for children in the foster care system, and allowing parents and guardians to request consumer report security freezes on behalf of their children, the article stated.
 
Identify theft is a national problem. All states have identity or impersonation laws, and those in 29 states require thieves to reimburse victims. Citing a Bureau of Justice Statistics survey, the article states that in 2012 identity theft resulted in over $14 billion dollars in losses, exceeding those attributed to burglary, theft, and motor vehicle theft combined. 

State Constitutional Rights to Hunt and Fish

. July 31, 2014

According to the National Conference of State Legislatures, 17 states have constitutional language expressly guaranteeing the right to hunt and fish. Two other states, California and Rhode Island, constitutionally protect the right to fish. Of the states that protect both hunting and fishing rights, only Vermont established the right when its constitution was first drafted. The other states amended their constitutions to include the rights, starting with Alabama in 1996. Mississippi will vote on a similar amendment this year. 

A Wall Street Journal (subscription required) article attributed these efforts in part to a growing number of hunters seeking to insulate hunting and fishing rights from calls by animal rights organizations to prohibit certain hunting practices. (There is evidence that, nationally the number of hunters increased by 9% between 2006 and 2011.) In prior decades, hunting license sales declined, likely do to such things as urbanization, less land available for hunting, and an increase in efforts to protect wildlife. 

Hot Report: Connecticut's Business Tax Structure

OLR Report 2014-R-0201 provides an overview of Connecticut's business tax structure.

Businesses operating in Connecticut must pay various state and local taxes on the income they generate (e.g., corporation and personal income taxes); property they own, use, or transfer (e.g., property and conveyance taxes); goods and services they purchase (e.g., sales and motor fuels excise taxes); and people they employ (e.g., unemployment insurance tax).  Certain business entities, known as pass-through entities, must also pay a business entity tax to operate in the state.  Specified businesses must pay taxes on the earnings generated from certain business activities (e.g., distributing, refining, or importing certain petroleum products or providing certain utility services). 
For purposes of this report, we have excluded certain taxes businesses collect from people purchasing goods and services and remit to the state (e.g., excise taxes on tobacco and alcohol sales, admissions and dues taxes, and room occupancy taxes) and other taxes that apply to or affect specific types of businesses (e.g., hospital net patient revenue tax and dry cleaning tax).
For more information, read the full report.

Are Interest Rates Too Low for Some Homeowners?

An article from the Associated Press describes how low interest rates are preventing some people from selling their homes.  According to data from CoreLogic cited in the article, more than one-third of homes with mortgages have interest rates below 4%.  These homeowners got “the deal of the century” according to Glen Kelman, CEO of real estate brokerage Redfin.  But they may be experiencing “rate lock in,” where they choose not to sell because purchasing a new home with a mortgage at higher interest rate, even one that costs the same as the old one, will result in higher monthly payments.

The article states that the combination of lower supply and higher prices is limiting the housing recovery.  CoreLogic’s chief economist Mark Fleming estimates that 3.6 million homeowners are unlikely to sell this year because of the “rate lock in” effect. Also, 40% of homeowners do not have enough equity to sell their homes, either because their mortgages are higher than their home’s value or their equity is not enough to pay the sale costs and a down payment on a new home.  Partly due to this limited supply, CoreLogic states that prices rose 8.8% nationwide.

The article states that while higher prices are expected this year, which would help homeowners create equity and allow more homeowners to become sellers, mortgage rates are also expected to rise and this could increase the “lock in” effect.

Fast Tracking Medicaid Eligibility

. July 30, 2014

To receive food stamps (now known as Supplemental Nutrition Assistance Program (SNAP) benefits), applicants generally must show that their income is below a certain threshold and that they meet other basic criteria. Determining eligibility for Medicaid, on the other hand, is typically more complicated, except for newly eligible Medicaid populations in states that opted to expand Medicaid under the Affordable Care Act. Because the Medicaid expansion is largely based on income, people who are newly eligible for Medicaid often need little more than the information required for a SNAP application. Because the income threshold is similar, many of those eligible for SNAP are also eligible for Medicaid, as shown in the graphic below.

Snap Households with Members Eligible for Medicaid (in states that have expanded Medicaid).
Source: Governing.com
This situation may result in duplicative application review processes. Under normal program rules, a SNAP recipient would have to apply to Medicaid to get benefits from both programs, requiring program staff to verify much of the same information twice and make two separate eligibility determinations.

According to an article on Governing.com, five states have used Medicaid waivers to allow SNAP recipients to skip part of or most of the Medicaid application. These states — West Virginia, Oregon, Arkansas, California and Illinois — expressed different reasons for wanting the waiver, including convenience, consumer confusion in the face of changing health laws, and fear of technical glitches in health exchange websites.

Waivers allow states to test new or existing ways to deliver and pay for health care services in Medicaid. When the federal Centers for Medicare and Medicaid Services approves a waiver, states can adjust regular Medicaid rules as agreed upon in the waiver.

“Economic Gardening”—A Different Approach to Economic Development

A recent Governing article discusses the growth and potential of the concept of “economic gardening”— a “grow from within” economic development tactic that targets existing companies with potential for growth and offers them critical strategic support customized to meet their needs.

According to the article, this tactic got its first tryout in Littleton, Colorado in the late 1980s. The city had just lost Martin Marietta, a major missile manufacturer, which had laid off 7,800 people in a year and a half. Instead of attempting to draw another large company to the area, a group of small business owners and city officials tried a new strategy based on a theory that companies that employ between 10 to 100 people and have annual revenues of $1 million or more have the best potential for growing an economy. Nationally, these businesses, called “stage 2” businesses, make up only 10% of the business population, but create 35% of jobs and grow the middle class workforce.

Littleton identified these stage 2 companies and gave them resources tailored to meet their specific needs. The results:

Over the next 25 years, Littleton’s population increased by one-quarter, but the number of jobs tripled and the city’s sales tax revenue went from $6 million to $21 million
.
The city’s business director told Governing, “When Martin Marietta was there, we were a rocket town. Now that the economy is so diverse, there is no one industry that could fail and bring down Littleton like it could 25 years ago.”

Littleton’s success has since spawned the National Center for Economic Gardening, which helps states set up their own economic gardening program, such as the Advance Maryland program launched in 2013. According to Governing, economic gardening is catching on because the targeted nature of its assistance requires less of an investment to make an impact (Advance Maryland is spending roughly $5,000 per business), and it is therefore more politically popular than large, expensive tax credits. It also reduces the need for “economic hunting,” or luring large companies from other states. More information on economic gardening, along with tools and programs for those interested, is available here.

Measuring Income Versus Wealth

. July 29, 2014

Income and wealth can be touchy subjects, especially when couched in terms of disparities or inequalities. But that doesn’t stop economists, like France’s Thomas Piketty, from measuring income and wealth and speculating how they affect society. 

Source:
http://ccattache.com/america-owns-worlds-wealth/
Time is what sets Piketty’s analysis apart from other studies on this topic. ”The distribution of wealth is one of today’s most widely discussed and controversial issues. But what do we really know about its evolution over the long term?,” Piketty asks in the introduction to Capital in the Twenty-First Century (2014).

What did his analysis reveal? That wealth is growing a lot faster than income. What are the consequences of this trend? Here’s how Bloomberg Businessweek’s Megan McArdle summed it up:
 …[Piketty] details a dire possible future that looks a lot like the past—which is to say, a world in which inheritance trumps almost every other possible way of making money. There’s a reason that characters in Victorian novels spend so much time scheming to marry heiresses, murdering inconvenient older brothers, and ingratiating themselves with rich uncles. It’s more profitable than working.    
"Piketty in Cambridge 3 crop" by Sue Gardner.
Licensed under Creative Commons
Attribution-Share Alike 3.0
via Wikimedia Commons
Not surprisingly, not everyone agrees with Piketty. But his 700-page book is on the best seller list, and booksellers last May were scrambling to keep up with the demand. (Which may explain why Piketty’s book was the featured story in the May 29th Bloomberg Businessweek edition.) Why is this economics text selling? Because it seems to strike a nerve. According to McArdle, the book:
is a perfect stand-in for collective anxiety about the fate of the middles class, from Occupy Wall Street’s concern that the 1 percent are leaving the rest of us to an increasingly impoverished future, to the growing worry on the right that inequality springs from and is creating a vicious cycle of economic instability and cultural breakdown among two-thirds of the American population who lack a college diploma.
The book speaks to today’s fears even though it addresses future trends. McArdle believes it speaks to “a society that used to offer broad security, stability, and opportunity to the top 75 percent of households but is now increasingly divided into an educated elite and a low-skilled workforce for whom work is uncertain and not very well paying.” McArdle adds, “this doesn’t just make it harder to sustain the iconic single-family home on a nice lot; it makes it harder to form stable families and communities.”

Hot Report: Connecticut's Barber and Hairdresser Licensure Requirements

OLR Report 2014-R-0199 answers the questions: What are Connecticut’s licensure requirements for barbers and hairdressers, including applicants currently licensed in other states?  Does the state offer apprenticeship programs for these professions?

Connecticut has regulated barbers and hairdressers since 1949. Currently, the Department of Public Health (DPH) issues one license to barbers and another to hairdressers and cosmeticians. Separate laws govern each license category (CGS Chapter 386 for barbers; CGS Chapter 387 for hairdressers and cosmeticians). But, the law allows licensed hairdressers to work in barbershops and, conversely, licensed barbers to work in hairdressing shops (CGS § 20-248).

The law establishes similar application requirements for both licenses. Applicants for both must pay a $100 fee and pass a DPH-prescribed exam. Additionally:
  1. barbers must complete (a) the eighth grade or pass an equivalency exam and (b) at least 1,000 hours of approved coursework and
  2. hairdressers must complete (a) the ninth grade or pass an equivalency exam and (b) at least 1,500 hours of approved coursework (PA 14-231).
The law generally allows a person licensed as a barber or hairdresser in another state or U.S. territory or possession to become licensed in Connecticut by endorsement (i.e., without examination) if the other jurisdiction required an exam, education, and training for a license.  The fee for licensure by endorsement in Connecticut is $100 for barber applicants and $50 for hairdresser applicants. Hairdresser applicants trained in other countries must show that they have similar training to Connecticut’s requirements and pass an exam.
 
Currently, the state does not offer apprenticeship programs for barbers or hairdressers.  In 2013, the legislature passed a bill (Special Act 13-12) requiring the Connecticut State Apprenticeship Council, in consultation with the DPH commissioner, to study the feasibility of establishing a barbershop apprenticeship program within the Labor Department. We contacted the council regarding the status of this report, but did not receive a response.  
 
For more information, read the full report.

Blood Test May Help With Early Alzheimer’s Disease Diagnosis

According to a recent Washington Post article, a new study identified 10 blood proteins that predict, with 87% accuracy, whether a person experiencing early signs of memory loss will develop Alzheimer’s disease within one year. Alzheimer’s, which has no cure, is the fourth leading cause of death in adults.

Researchers from King’s College London and Proteome (a British company) analyzed blood samples from 1,148 people: 476 with Alzheimer’s disease, 220 with mild cognitive impairment (MCI), and 452 without dementia. According to the article, the researchers found that 16 of the 26 blood proteins previously linked to Alzheimer’s were strongly tied to brain shrinkage in people with MCI or Alzheimer’s. They then found 10 of these 16 proteins could predict whether early memory loss would progress to Alzheimer’s within one year.

Senior study author, Simon Lovestone, notes, “Many of our drug trials fail because by the time patients are given the drugs, the brain has already been severely affected.” Researchers hope that the development of such a blood test would help identify Alzheimer’s disease in patients sooner, allowing them to obtain treatment to prevent disease progression.

The article notes that the early identification of Alzheimer’s often raises questions regarding stigma and identity. Some people may not want to know that they have it, given that there is no cure. Conversely, early identification may provide people with time to complete estate planning and “enjoy life to the fullest before losing cognitive function.”

Innovative New App Takes the Mystery Out of Zoning Maps

. July 28, 2014

The folks at TechRepublic.com recently profiled ZoningCheck, a new app launched on July 17 that is designed to make it easier for entrepreneurs to find properties on which to locate their businesses.  Users choose a city, business type, and potential location and the app displays where the business use is permitted or prohibited.

Currently, the app is limited to a small group of California municipalities, but it’s being offered for free to the first 50 cities that sign on through the end of 2015.

The app is meant to streamline the process entrepreneurs must follow to open a business and simultaneously “open up” zoning codes to make them “clear and unambiguous.”  As such, it has both “civic and commercial value.”

As one of the app’s creators noted, “I’m excited about how making a zoning computable could lead to rethinking how we do zoning, calculate it, and measure it.  That’s in the future.  Now, we’re just trying to make this easier for people to use.”

Recognition for Bridgeport Fuel Cell Plant

After recently visiting the new 15 megawatt fuel cell power plant in Bridgeport, Slate.com’s Daniel Gross suggests that the plant offers a more efficient, reliable, and cleaner alternative to importing electricity into American cities.  Unlike solar installations or wind turbines, which need much more space and the right environmental conditions to generate any significant power, a fuel cell plant is relatively small and can be located more easily in a city.  In turn, the plant’s location within a city reduces the need to transmit the power over long distances, which reduces the risk of power disruptions due to falling trees and other hazards and also reduces the amount of electricity lost during transmission.  Also, plants that run on natural gas, like Bridgeport’s, produce about 60% fewer emissions than coal-powered plants. 

U.S. Sentencing Commission Votes to Allow Retroactive Reduction in Drug Sentences

. July 25, 2014

This month, the U.S. Sentencing Commission voted unanimously to make its proposed amendment to the federal drug trafficking sentencing guidelines retroactive.  According to the press release announcing the vote, this would allow about 46,000 current federal inmates to apply to a judge for a sentence reduction, beginning November 2015.  Eligible offenders could have their sentences reduced by an average of 25 months or 18.8% of the total sentence.

Congress has until November, 1, 2014 to reject the proposed changes to the sentencing guidelines.  According to the press release, the delayed effective date for the retroactive reductions (until the following November), among other things, will:

allow judges more time to consider whether each eligible offender is an appropriate candidate for a sentence reduction and will give the government adequate time to object to sentence reductions when prosecutors believe public safety may be at risk.
This Washington Post article discusses the proposal.

Local Produce for WIC Recipients

Over the summer and through the early fall, shoppers can turn to farmers’ markets throughout the state for fresh, local fruit and vegetables. Several markets participate in the Women, Infants, and Children (WIC) Farmers’ Market Nutrition Program (FMNP). (WIC is a federal program that provides supplemental nutrition assistance to pregnant and post-partum women and their children up to their fifth birthday.) 

According to the Department of Agriculture, eligible WIC recipients receive $15 in checks (five checks for $3 each) per market season to use at FMNP authorized farmers’ markets.  The department recently posted on its website an updated list of farmers’ markets around the state, including 106 that are FMNP authorized.

Fireworks-related Injuries Increased in 2013

. July 24, 2014

According to a new report by the Consumer Product Safety Commission (CPSC), the estimated number of injuries related to fireworks use increased nationally from 8,700 in 2012 to 11,400 in 2013. The number of injuries reported last year is also the highest occurrence of such injuries between 1998 and 2013 (see inset Table 1, reproduced from page 10 of the CPSC’s report, which presents the estimated number of non-occupational fireworks-related injuries treated in hospital emergency departments).

Sixty-five percent of the injuries occurring last year took place during the 30 days surrounding July 4. Over 40% of the injuries resulted from sparklers and rockets. Eight deaths also occurred in 2013 from fireworks use.

According to a press release summarizing the report’s findings, the fireworks injuries were often due to device malfunction or improper use such as ignition while holding the device. All of the deaths reported in 2013 resulted from using banned, professional, or home-manufactured devices.

Although the CPSC press release provides safety steps for consumers who use fireworks, Connecticut law generally prohibits selling or using fireworks without a permit. Sparklers and fountains may be used by people aged 16 or older. Violators of the law are guilty of a class C misdemeanor, punishable by up to a $500 fine, three months in jail, or both (CGS § 29-357).

Hot Report: Regulating Noise Generated by Outdoor Entertainment

OLR Report 2014-R-0196 answers the question Does the law authorize municipalities to regulate noise generated by outdoor entertainment (e.g., concerts)?

The Office of Legislative Research is not authorized to give legal opinions, and this report should not be construed as such.

State law does not explicitly authorize municipalities to regulate noise generated by outdoor entertainment, but the power to do so is implied in the statutes granting municipalities (1) their general municipal and zoning powers and (2) the authority to adopt noise ordinances (CGS §§ 7-148, 8-2, and 22a-73). Regulations and ordinances typically include (1) restrictions on when and where such entertainment may occur and (2) general limits on noise levels.

By law, municipalities’ (1) legislative bodies may adopt ordinances to, among other things, regulate public amusements and performances and prevent disturbing noises and (2) zoning commissions may adopt regulations specifying land uses that are suitable for an area’s character. In several cases, Connecticut’s courts have upheld, as a legitimate exercise of these general municipal and zoning powers, regulations and ordinances restricting outdoor entertainment that generates loud noises.

Additionally, the law authorizes municipalities to regulate noise by adopting a noise ordinance approved by the Department of Energy and Environmental Protection (DEEP) (CGS § 22a-73). According to DEEP, at least 75 municipalities have noise ordinances. Unless specifically exempted (e.g., by a permit or by the ordinance itself), outdoor entertainment noise is subject to the limits in these ordinances.
For more information, read the full report.

CDC Advisory Committee Recommends Nasal Spray Flu Vaccine Instead of Vaccine Shot for Young Children

As reported in Time, the CDC’s Advisory Committee on Immunization Practices (ACIP) voted in late June to recommend that children age 2 to 8 receive a nasal spray flu vaccine rather than a vaccine shot.

ACIP’s press release states that the recommendation “is based on a review of available studies that suggests the nasal spray flu vaccine can provide better protection [against the flu] than the flu shot in this age group.” ACIP also recommends that the flu shot be given if the nasal spray is not immediately available, to avoid missing or delaying vaccination opportunities. 

Unlike the flu shot, the nasal spray is made from a live, weakened flu virus. According to the Time article, “[s]tudies have shown the spray can lead to a stronger immune response in children who have not had the flu before, but the same may not hold true for adults.”

The article notes that there is some disagreement with the panel’s recommendation. For example, the American Academy of Pediatrics does not think one vaccine type for children should be preferred over another, because both are effective. The group also cites the concern that the nasal spray typically costs more than the flu shot.

Vote-by-Mail Elections Popping Up

. July 23, 2014

In 2013, Colorado became the third state to switch to statewide vote-by-mail elections.  Oregon and Washington are the other two, according to the National Conference of State Legislatures’ (NCSL) elections newsletter, The Canvass. In vote-by-mail, or all-mail, elections, states automatically mail a ballot to every registered voter and do not operate traditional in-person polling places.

Though Colorado, Oregon, and Washington are the only states that allow for vote-by-mail elections statewide, at least 22 others allow them in certain jurisdictions or under certain circumstances.  For example, in Idaho, a district can use vote-by-mail if it has 125 or fewer registered voters. Hawaii allows for vote-by-mail in local and special elections.

The article concludes by identifying and explaining three main issues state legislators should think about in contemplating vote-by-mail elections: (1) costs, (2) turnout, and (3) security. It also suggests that further research about vote-by-mail is needed as voters are looking for more convenient ways to participate in elections.  In 2012, it reports that almost one-third of all voters cast their ballot before Election Day (either by absentee or vote-by-mail)—nearly double the rate from the 2000 election.

Tennessee Protects People Who Free Children Trapped in Vehicles from Liability

Bystanders who break into a locked vehicle to rescue children in danger of heatstroke are immune from liability under a Tennessee law enacted this year.


The law, which took effect July 1, 2014, protects anyone who forcibly enters a motor vehicle to remove a child locked or trapped inside if the person reasonably believes that the child is in imminent danger.

The rescuer must: 
  • have alerted the local police or fire department, or called 911, before breaking into the vehicle; 
  • place a notice on the windshield with his or her contact information, the reason he or she broke in, the location of the child, and that he or she has notified the authorities; and
  • must stay with the child in a reasonably close, safe location until police, fire, or emergency responders arrive. 
The Nashville Tennessean reports that 28 children died of heatstroke in vehicles in that state since 1990.

Number of Federal Civil Rights Court Cases Remains High

. July 22, 2014

According to research from the federal Judicial Branch, 35,307 civil rights cases were filed in federal courts in 2013.  This represents a 27% increase over the last two decades, but a decline from the high of 43,278 cases filed in 1997.  The research shows that filings began to increase after the federal Civil Rights Act of 1964 became law.  They increased more dramatically after the federal Civil Rights Act of 1991 became law, reached a high in 1997, and have declined some since then.

The highest percentage of 2013 claims (38%) relate to employment.

For more information, see:

• an infographic on case filings: http://news.uscourts.gov/over-two-decades-civil-rights-cases-rise-27-percent
• data on all types of federal court filings over time:  http://www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2013/appendices/C02ASep13.pdf

Timely Report: Heatstroke Deaths of Children Left in Vehicles

OLR Report 2014-R-0202 answers the questions: What are the laws and associated penalties in New York and the New England states for leaving a child in a vehicle who dies from resulting heatstroke? How many children in those states died from heatstroke in the past five years after being left unattended in vehicles? Is there a correlation between these occurrences and the penalty associated with it?

Of the New England states and New York, only Connecticut specifically criminalizes, in certain circumstances, the act of leaving a child in a vehicle unattended. The other states do not specifically criminalize this behavior. But every state, including Connecticut, has laws under which, depending on the circumstances, someone may be charged when a child dies after being left in a hot vehicle. These include murder, manslaughter, and risk on injury to a minor statutes. In Connecticut, the penalties for these crimes range from a class C felony (punishable by one to 10 years in prison, a fine of up to $10,000 , or both) for risk of injury to a minor to life in prison without the possibility of parole for murder with special circumstances.

Although Rhode Island does not specifically criminalize leaving a child in a hot vehicle unattended, it authorizes police officers to issue verbal warnings in such circumstances. Also, Massachusetts is currently considering a bill that would subject a person to a fine for such an act.

From 2009-2013, there have been a total of six reported child deaths in New York and New England resulting from the child being left unattended in a hot vehicle. None of the deaths occurred in Connecticut. (One child is suspected to have died in Connecticut under these circumstances in July 2014 but the death is still under investigation.) We were unable to draw a correlation based on the limited data between the severity of the penalty and the incidences of these deaths.


For more information, read the full report.

Do Higher Education Tax Benefits Support The Families Who Need It Most?

The Corporation for Enterprise Development (CFED) doesn’t think so, according to its May 2014 report Upside Down: Higher Education Tax Spending. The report offers illustrations of federal tax spending programs for higher education, explanations of how they fall short of meeting the neediest populations’ needs, and possible remedies for these shortfalls.

The report shows that spending through the tax code for higher education is roughly equal to the primary sources of federal support for special education (IDEA), K-12 (Title 1-A), and Pre-K (Head Start) combined.  From another perspective, the amount is larger than the discretionary budgets of nine cabinet-level departments.

CFED also shows how higher education tax spending focuses support on high-income households by examining four credits: the Lifetime Learning Credit, American Opportunity Tax Credit, Student Loan Deduction, and Deduction for Higher Education Expenses.  None of these credits pass their “simple test of equity and efficiency”: the bottom 40% of households (those making less than $70,000 annually) do not receive as much aid as the top 40% (those making more than $100,000).  In fact, three out of the four credits benefit the top 40% of households more than all other households combined.

The report concludes with suggestions for Congress to adjust spending so that the neediest families may benefit from these expenditures.

Michigan: The Turnaround State (But Who or What Turned it Around?)

. July 21, 2014

Michigan was already in a deep economic hole when the 2009 recession hit, adding another 400,000 plus lost jobs to the over 400,000 the state had already lost. Unemployment reached 14% that year and personal income dropped to 87% of the national average, tough numbers for the nation’s industrial powerhouse. But things have started turning around, with unemployment dropping to just under 9% and per capita income growing by 3.5%, inching its way to the national average. Housing sales, building permits, and population statistics are also up.

But this good news has triggered a political debate about who caused the turnaround and how, according to Suzanne Weiss in the May 2014 State Legislatures. Legislative minority Democrats point to the federal bailout of General Motors and Chrysler and Ford’s amazing turnaround (the company mortgaged almost all of its assets to stay in business). Majority Republicans cite a host of 2011 initiatives including a flat 6% corporate income tax (that’s expected to reduce business taxes by about $1.8 billion a year) and a 10-year phase-out of personal property taxes.

Who’s right? Well, we’re not going to jump into this debate, but we would like to suggest that both sides consider University of Michigan professor Scott E. Page’s ideas about complexity, a discipline that draws ideas, concepts, and tools from many other disciplines, including mathematics and economics. Complexity science helps us understand how our choices interact with those of others to create unexpected and unintended outcomes.

While the debate continues, a group of Michigan business leaders put forward a plan in 2009 (updated in 2014) recommending that the state concentrate resources on five assets, in addition to the automotive industry, that could create the most jobs and strengthen the economy:

  1. Play up Michigan’s top ranking with respect to engineers per capita and concentrated technical talent.
  2. Invest in the state’s transportation infrastructure, including the Port of Detroit, one of two U.S. deep water ports that can handle the largest container ships.
  3. Capitalize on Michigan’s leadership in university- and industry-based innovation by making higher education more affordable and strengthening university-business partnerships, among other things. 
  4. Maximize the state’s natural resources by attracting more tourists and boosting agricultural production and exports. 
  5. Capitalize on Michigan’s unique combination of bioscience majors, high quality medical research facilities, and other related assets to make the state an incubation hub for startup pharmaceutical businesses. 

F-35 Cleared for Flight

As reported on CNN.com, the F-35 fleet has been cleared for limited flights following the grounding order after a plane’s engine caught fire in June. After investigations and inspections from the Air Force, the plane’s manufacturer (Lockheed Martin), and the engine’s manufacturer (Pratt & Whitney), the F-35 program has been returned to flying status.

The F-35 is the most expensive weapons program in U.S. history with nearly $400 billion already spent and an estimated cost of $135 million per plane.

The article notes that the program has had many overruns and delays, with the engine fire being the most recent. It has also suffered, among other things, software and scheduling setbacks. An analyst states that the glitches now get resolved much faster compared to 18 to 24 months ago.

Hefty Tax Bill for Potato Salad Guy

. July 18, 2014

By now, you have heard about Zack Danger Brown’s Kickstarter campaign for potato salad.  Brown posted the campaign with an initial goal of raising $10 to make his first potato salad, but as of July 17 at 11:35 am, his potato salad project has received $50,740 in pledges from 6,182 donors. 

As the website explains, funds raised on Kickstarter are generally considered taxable.  So Scott Eastman at the Tax Foundation calculated the tax bill Brown can expect to pay on his potato salad project.  Eastman’s calculations work out to a tax bill of just over $21,000 based on $70,912 in donations (the total amount of pledges as of July 9, 2014, which has since decreased as noted above).  That’s an effective tax rate of 32%. 

Income and Taxes Paid by Zach Danger Brown
The Potato Salad Maker From Kickstarter
Source: Tax Foundation Estimates
As of 2:28pm, Wednesday, July 9, 2014
Income
Total Income
$70,912
Income Minus Expenses and 5% Finders Fee
$65,912
Taxable Income
$51,105.47
Taxes
Federal Income
$8,632.22
State Income
$1,712.00
City Income
$1,510.20
Payroll Tax Burden
$9,313.07
Total Tax Burden
$21,167.49
Effective Tax Rate
32.11%
After Tax Income Less Expenses
$44,744.51

Source: Tax Foundation, “$21,000 Tax Bill Just for Some Potato Salad,” July 9, 2014.

Protecting Children from Identity Theft

A June 11, 2014 OLReporter entry summarized eight tips to protect young adults from identity theft, as provided by the Department of Consumer Protection’s May edition of Consumer Watch. Adults are not the only people at risk of identity theft, however.

According to a recent U.S. News and World Report article, a 2011 study found that about 10% of children are identity theft victims before their 18th birthday.  The article attributed targeting children for identity theft to reasons such as children’s Social Security numbers having clean credit files and the credit reports are less likely to be monitored. To help protect a child’s credit from fraud, the article advises parents to (1) learn the signs that indicate a credit history has been compromised, (2) check their children’s credit reports, and (3) consider whether to freeze a child’s credit.

The National Conference of State Legislatures reports in its June 2014 State Legislatures magazine that each state has a law on identity theft or impersonation. Twenty-nine states have restitution provisions requiring identity thieves to reimburse victims.

Massachusetts Casino Repeal Referendum

. July 17, 2014

Massachusetts’ Supreme Judicial Court recently ruled that a casino repeal measure can appear on the November ballot.  The Court unanimously ruled that the state attorney general made a mistake when she ruled the repeal measure was an unconstitutional taking of the casino developers’ implied contract rights without just compensation.

Casino developers, in an attempt to secure casino licensing, have paid the state’s $400,000 application fee and millions in developing their bids.

According to a Boston Globe poll, 52% of likely voters favored keeping the 2011 gambling law that authorized casinos, while 41% favored repeal.

Hot Report: Marijuana Legalization for Non-Medical Purposes

OLR Report 2014-R-0191 answers the questions: Which states have legalized marijuana for non-medical purposes? What are the concerns about such legalization and how were they addressed? What effect has legalization had on crime in these states?

In November 2012, voters in Colorado and Washington approved ballot initiatives that generally legalized the possession of small amounts of marijuana for non-medical purposes by adults age 21 and older in those states. They became the first two states to allow marijuana use for non-medical purposes. Both states regulate marijuana in a manner similar to alcohol.

The stated purposes of the Colorado measure include the efficient use of law enforcement resources, public revenue enhancement, and individual freedom. The stated intent of the Washington measure includes allowing law enforcement resources to focus on violent and property crimes, generating new tax revenue, and shifting marijuana away from illegal organizations into a tightly regulated system such as that which regulates alcohol.

Media reports suggest that concerns about marijuana legalization for non-medical purposes include (1) the drug’s continuing illegal status under federal law; (2) public health risks, such as the possibility of increased marijuana use overall and increased access by children; and (3) public safety concerns, such as maintaining security at the facilities that grow and sell marijuana.

Colorado and Washington attempted to address some of those concerns through their laws or implementing regulations. For example, both states require businesses to be licensed to grow marijuana, manufacture marijuana-infused products, or sell marijuana or such products at retail. Both states’ laws and regulations have various provisions aimed at reducing minors’ access to marijuana or exposure to marijuana advertising. Both states address recordkeeping and security issues and require testing of samples of marijuana and marijuana products. Washington’s initiative requires the state’s nonpartisan public policy institute to conduct cost-benefit evaluations of the initiative’s implementation.

The first retail marijuana stores in Colorado opened in January 2014, and the first such stores were expected to open in Washington July 8, 2014. It is too soon to evaluate the impact of the laws on crime or how well the states have addressed concerns surrounding marijuana legalization for non-medical purposes.

While marijuana remains a Schedule I controlled substance under federal law, the U.S. Department of Justice (DOJ) announced in August 2013 that it would not challenge the Colorado or Washington laws as long as the states maintain strict regulatory control over marijuana.
For more information, read the full report.

Study Finds Almost 18% of High School Seniors Smoke Hookah

According to a recent Time.com article, a study recently published in Pediatrics found almost one out of five high school seniors smoke hookahs (i.e., water pipes used to smoke specially made flavored tobacco).

Researchers at New York University surveyed 15,000 high school seniors at 130 public and private high schools across the country. According to the article, researchers focused on a sample of 5,540 students, inquiring about their hookah use between 2010 and 2012. 

Researchers found that students of higher socioeconomic status were more likely to use hookah. According to study author Joseph Palamar, “Surprisingly, students with more educated parents or higher personal income are at high risk for use.”

The researchers acknowledged that smoking hookah generally occurs less frequently than cigarettes, but expressed concerns about “hookah pens,” which make smoking hookah easier. Similar to e-cigarettes, these devices are suspected to attract “curious” consumers, including non-cigarette smokers.

The State of Black-Owned Banks after the Financial Crisis

. July 16, 2014

The banking industry received significant attention during and after the 2008 financial crisis.  The condition of black-owned banks (BOB) in the wake of the crisis is described in a Summer 2014 Community and Banking article. (The journal is published by the Federal Reserve Bank of Boston.)

According to the article, BOBs are predominately located in communities that other banks might view as unprofitable.  These communities are areas where more than half the residents live below the poverty line and where poverty rates are almost twice the national average, suggesting that BOBs primarily serve the capital needs of low-income customers, while creating jobs and providing job training opportunities in these areas.  

Citing national statistics from the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), the article indicates that from 2000 to 2011 there was a sharp decline in the total number of BOBs with only a slight decrease in the total number of branches.  During this same period, the geographic area served by BOBs expanded (measured by the number of unique ZIP codes of account holders) and the average deposits per branch and per bank increased significantly.  Specifically, the statistics show that from 2000 to 2011 the:

  • number of BOBs declined from 51 to 33 (35.3%),
  • number of branches decreased from 163 to 159 (2.5%),
  • number of ZIP codes served expanded from 142 to 150 (5.6%), and
  • average deposits grew to over $10 million per branch office (40.9%) and slightly less than $180 million per bank (159.8%)
These trends suggest that there may have been some consolidation, with a smaller number of BOBs serving a larger number of customers. The consolidation may also have been fueled by the cost advantages of operating on a larger scale and tighter federal bank regulations.  

New Orleans Closes Last Neighborhood Public School, Goes All in with Charter Schools

This fall, the charter school experiment will reach a new plateau as New Orleans become the first city to close the last of its traditional public schools and convert them to public charter schools, the Washington Post reports.

The Post looked back over the history of charter schools, observing

"It has been two decades since the first public charter school opened in Minnesota, conceived as a laboratory where innovations could be tested before their introduction into public schools. Now, 42 states encourage charters as an alternative to conventional schools, and enrollment has been growing, particularly in cities."


But like so much in public education, charter schools are controversial. In New Orleans, the controversy concerns (1) losing the sense of community that comes with a neighborhood school, (2) racial equality, and (3) turning over school management to independent operators who seem less accountable to parents and students, the Post reports.

On the other hand, some charters have shown marked improvement in student performance. According to the Post,

"By most indicators, school quality and academic progress have improved in Katrina’s aftermath, although it’s difficult to make direct comparisons because the student population changed drastically after the hurricane [Katrina], with thousands of students not returning."