Welcome back to OTR.

Our guest, Rachel Crow- Hercher, is leading a petition drive to tax the rich to pay for schools.

Our lead story.

GM reinvesting billions back into Michigan on the OTR panel Simon Schuster, Lauren Gibbons, Jonathan Oosting, and guest anchor Chuck Stokes sit in with the panel as they get inside out.

Off the Record.

Production of Off the Record is made possible in par by Bellwether public Relations, a full servic strategic communications agency partnering with clients through public relations, digital marketing and issue advocacy.

Learn more at bellwetherpr.com And now this edition of off the record with Tim Skubick.

And welcome to Off the Record.

I'm Chuck Stokes filling in for Tim Skubick.

another busy newsweek in the state of Michigan led by General Motors and automotive industry.

And then, of course, continued debate in the legislature this time, particularly on the Hous side, over the education budget and back and forth on that.

So let's start with GM, Jonathan.

$4 billion shifting from Mexico back into the United States.

Is that good news?

Yeah, I mean, it's more investment in Michigan, specifically the Orion Township plant is going to get some more money to shift.

It is celebrated news for supporters of President Donald Trump who suggest this is evidence that his tariffs are working to encourage, you know, on shoring of production.

But it also signals a really big shift in EVs.

I mean, the Orion Township plant, let's go back three years.

Three years ago Governor Gretchen Whitmer joined GM to announce a huge $7 billion investment to retool Orion Townshi for EV production and to invest in an electric battery batter plant here in the Lansing area three years later.

Neither of those are actually happening.

Orion Township is now going to be producing gas powered trucks, SUV's and GM already divested of its interest in the batter plant and sold its shares to LG.

So it's a radical shift, an acknowledgment.

The CFO of the company acknowledged the tariffs were a factor, but also just lowe demand for EVs than anticipated.

Yeah, to m this is just a sign of the times in the Trump administration and certainly tariffs, no sign of them going away anytime soon.

And as Jonathan just mentioned, EVs.

There's been a significant shif away from them after the build up of so many years and it just demand hasn't been there.

And also some of these incentives that were in place during the Biden administration are also looking like they're on the way out because Trump isn't a huge fan of those.

So it is it is certainly big news for Michigan.

Always, You know, I think all these officials are always gla to see investment in the state.

But also, yeah, just looking at what this investment is, does signal industry is watching what's happening and making some big shifts.

And of course you mentioned the big picture.

What's the eventuality in terms of EV.

Overnight Congressman John James got the president to sig legislation to be able to block what California wants to do in terms of movin is shifting everything into EVs.

So certainl I would think he would consider that's a win for him.

But are we really givin the store away to China, Simon?

Yeah.

I mean I think it's really interesting because when you look at where Governor Gretchen Whitmer has invested political capital in terms of her economic agenda over the past few years, it's been in trying to bring that electric vehicle supply chain to Michigan.

When you look at Goshen, when you look at the Ultium Ultium Battery plant and also the Ford venture in Marshall, Michigan all of these are sort of either downscaling or mired in litigation.

And so it's going to be difficult to sort of reverse that path dependency.

When you look at the electric vehicle transition, Europe, Asia, they're all moving ahead of the United States.

And I think that we're sort of developing a lag in that transition in part du to protectionist trade policies.

You know we can't get Chinese EVs here.

And right now you have companies like BYD in China who are building factories that could put out a million vehicles a year selling these vehicles at a loss through state subsidies.

And so when you look at wher the competitive stance of Asia is, it's becoming an increasingly difficult marketplace for North American automakers to break into.

All right.

Let's talk about what happened in Lansing this past week.

Back in April, Democrats in the Senat passed their education budget.

Now we se the Republicans have their plan passed by, I think just three votes.

But there's a lot of debate and all of this is supposed to be done by July 1st.

What's the chance of tha happening and how much friction is there going to be between the House's plan and the Senate's plan?

There' going to be a lot of friction.

I guess never say never on this July thing.

It's always the goal of lawmakers to get it done before school starts.

Superintendents would love to be able to have that so they can make their plans.

Yes.

Yes.

So their budget schedule is a little different than the state's budget schedule.

They constitutionally have to be done by October.

October 1st is the final day.

Technically, there's a state law that if they want to push it to the summertime to make it easier for school and local governments to plan.

But these plans are very, very different right now.

And it doesn't sound like there's a lot of people seeing eye to eye on the House plan, you know, made some pretty significant cuts and has requirements for gender neutral bathrooms.

There' there's a lot going on in there that was not in the Senate budget and that Senat Democrats are not big fans of.

So I think there's there's a lot of there's a lot of room in between these budgets that would need to be negotiated.

So I think it was Senator Camilleri said we couldn't be farther apart.

So that.

Yeah, so yeah, these are radical shifts.

I mean, obviously there's, you know, big attention grabbing stuff in the House Republican bill like as Lauren mentioned penalties for schools that have transgender friendly bathrooms or sports teams, stuff like that.

But then there's also diversity equity or exclusion.

You'll be penalized for that.

Yeah, but there's also just a radical shif in how programs would be funded.

The House plan essentially gets rid of all these are called categorical like specific buckets for funding and instead puts them al into the foundation allowance.

And so schools can have the money and decide how to spend it.

But you know, the fea is that if there's not devoted money for free lunches and breakfasts, that schools are going to, you know, maybe not do that universally.

So these are big programs that Democrats specifically have built into the budgets in recent years and touted.

Governor Whitmer, the free lunch and breakfast is like one of her marquee education proposals.

The House would do away with that.

I mean, it would give schools more money actually, in the foundation allowance to do as they wish with.

But it wouldn't require some of these programs that Democrats have reall sought to fund in recent years.

Simon all the Democrats voted against it.

Almost all the Republicans voted for it, but two Republicans didn't.

What was that all about?

Right.

And, you know, I think this sort of echoes what we saw under the Democratic trifecta a bit when you look at the to see changes of policy that are proposed in this education budget, This is, you know, Republicans effectively staking out a position, a statement of purpose, it of a statement of purpose.

It's counter to what Democrats want to do.

But at the same time, they have a relatively narrow majority in the House, but 58 votes.

And they need and basically all of those votes on board in order to get this legislation passed.

Now, the House was in sessio for more than 10 hours yesterday as they were trying to cobble together this majorit to get this legislation passed.

They were eventually able to get there, but only by reversing a lo some of these higher education funding cuts that we saw specifically in the higher education portion of the budget, I should say.

I mean, if you rewind a bit back to, let's say 2011 and Rick Snyder's first year in office, amid a budgetary shortfall, there was a 10% funding cut to higher education to Michigan's universities.

And this was something that you heard echoed and discussed for years afterwards in terms of like the belt tightening that it required at these institutions right now, they're proposing a 65% increase or decrease in state fundin to the University of Michigan.

So when this shakes out as it passes the legislature, will we see a budget cut that dramatic?

I'm very skeptical of that, of course, and especially with Democrats in control of the Senate.

Where do you see an area of compromise or do you think I mean, the like you said they're a mile apart on one end versus the other and they've got to come to the center.

Hopefully, they've got to com to the center, but they may not.

What areas?

Oh, yeah.

It is important to reiterat that these are value statements for both the Democrats and Republicans.

There is likely goin to be somewhere in the middle.

Some of these some of these things in question have been bipartisan in the past.

You know, I think I think where you might find a little more friction are some of these things.

The House Republican have a lot of value statements emblematic of what the Trump administration is doing, lik DEI and anti-trans initiatives.

Democrats have been very against that.

So some of those social issues will probably be sticking points.

But, you know, when it comes to a sea change in how, you know, schools are funded, for example, I think you could probably see some Republicans being a little more comfortable with past precedent.

But that said, you know, a lot a lot remains to be seen.

A lot of negotiations need to happen.

And these are also just the education budgets.

I mean, the interesting thing about the House K-12 plan, for instance, is that it actually spends more money than Democrats had proposed, not less.

It's not huge cuts.

It would just have these penalties built in.

But I think that's the reaso you saw a couple conservatives maybe peel off, because it' still a pretty big budget bill.

The question is what other areas of the budget are Republicans going to try and target?

Because they've also got this $3 billion road funding plan that they've unveiled but haven't said exactly how that would be funded.

So there's a lot of questions left, a lot of moving parts.

I mean, you know, the fact that thi budget is coming out almost in mid-June is pretty late, already to even propose one.

So I am very, very skeptical they'll get to an agreement by July 30.

But as you know, Lauren mentioned, constitutionally, the real deadline is October one when the new fiscal year starts.

If they're not there, we could be looking at the first government shutdown, you know, even hours, as it were, in the in the early to mid 2000's.

I'm sorry, Go ahead.

Simin.

Yeah, I think that there's a pretty complicated political calculus at play here for Republicans.

On one hand, as Jonathan pointed out, they are looking to increase that foundational alignment, the per pupil funding that they're giving, you know, relative to Democrats, because I think that their fear is is that if they're going to cut all of these social programs about, they want to require, you know, $100 fines, if you include your pronouns in a school email, that then they can't also, you know, cut these poor people foundation allowance, because this is somethin that Democrats are going to use as an election talking point and make hay with saying that Republican wanted disinvest in education, but at the same time they have this majority that they need to cobble together that still has a number of fiscal conservatives in it who really value the notion of cutting down the size of government.

That government should play less of a role and that we should have a larger rol for charter and private schools.

So I think you see tha in terms of the funding shifts, looking to move money from higher educational institution towards a scholarship program, which then could direct that money towards private universities.

And so, you know, trying to balance all that out you can see sort of the trouble that that caused them last night.

Is this dissension, Jonathan, going to lead to more ballot issues, turn it over to the people, to a great extent?

Well, I mean, ballot issues take so long to get off the ground that I don't think what we're seeing this year is necessarily going to lead to that.

But yeah, I think we might see a lot of ballot issues this year.

You know, we tend to thin are who we tend to in Michigan every few years, you know, especially when there are big statewide races on the ballots.

Different group want to get in front of voters with their issues.

And we're seeing a fair amount of that, obviously.

Our guest today is with one of those groups.

But Simon has written about the prospec of a constitutional convention that's going to be on the ballot automatically there.

You know, there's groups trying to reform election law so that non, you know, with stronger safeguards to ensure non-citizens can't vote.

There is potentially, you know, rumblings of an attempt to remove the states same sex marriage ban that's dormant bu still on the books technically.

So we might se a lot on the ballot this year.

You are hearing in terms of Governor Whitme and where she is on all of this.

Is she forcefully involved in these negotiations or she just sitting bac letting her leaders in the House and Senate work all this out before she steps in in terms of the budget or, oh, you know, she is she has, I think, been involved but hasn't said much, hasn't said much publicly.

I think kind of waiting.

Yeah.

I think that one of th difficulties that we've had here is that because so little legislation has been produced by this legislatur and signed by Governor Whitmer, there haven't been a lo of examples of these government leaders getting together and coordinating and negotiating together.

So as we move forward in the budgetary process, it's going to be interesting to see without a lot of reps put in in terms of, you know, getting these negotiations to happen.

All right.

Well, I guess we're going to get some grassroots opinions on all of this with our guests, Rachelle Crow-Hercher, and she is with the Michigan Education Justice Coalition.

Welcome to the off the record.

Thank you for having me.

Good.

Very good.

All right.

I want to take the first question, Lauren.

Sure.

Yeah.

Well, tell us a little bit about the proposal that you've put together.

Why why is this the right pat forward for funding education?

Well, our proposal is a fair share surcharg on the wealthiest Michiganders.

It would be a 5% increase in the marginal rate for individual filers over $500,000 a year and joint filers over $1,000,000 a year.

And yet I think that this is the right route to go because we, as we see in the budget negotiations, there's a lot of times when education is sort of on the bac burner of a priority for folks.

So by constitutionally amending and requiring these funds to go to the school aid fund, we are saying that this is our value statement.

This is where we believ every child in Michigan deserves a quality, adequately funded education.

So it's a value statement and it also is a little bit of a preventative for negotiations and removing those funds later on if this was to go through the legislature.

But then in addition, you know, because we are changing the tax structure that has to go through the constitutional route.

Aren't you afraid that people will look out there and say you're just taxing the wealthy?

Well that's exactly what I'm doing.

Yeah, but.

But don't you fear that there may be a backlash for that?

That's not what I'm hearing on the ground, quite frankly.

There are times when I' discussing this with folks who, you know, folks might assume are politically opposed to that kind of thing.

And the first line of let's tax the rich is what brings them in.

They don't care what it's for, but they are enthused over the idea of taxing the rich across the state.

So I'm not afraid of that fight.

And that question, which I'll have you guys focus grouped or pulled tha specific phrase, tax the rich.

I can imagine that on billboards.

We have.

Yes.

And?

It polls very well.

Why do you think that is?

I think that we are in a tim politically where folks are not seeing our representatives on either side of the aisle understand and value what working class and middle class Americans are going through.

And we all see that those values of community are not reflected and that the wealthy are buying elections.

They are rating things or attempting to raise things at the federal level in order to give billionaires more tax cuts.

There's a movement of working class and middle class folk who understand that they are not getting the fair end of this deal.

Sure.

Rachelle critics are already saying this.

You know, I' sure you're prepared for this, that money does not solve educational problems alone.

We have seen the governor in the legislature in recent years every year touting record funding for K-12 education.

And yet our test scores ar some of the worst in the nation.

They're not necessarily improving.

You know, what is money actually going to solve here?

Well, first of all, I agree.

I think it's both and situation.

Money is not going to fix all of the problems.

But Michigan has disinvested itself from education, whether we're spending, you know, record amounts of money, which we hear on both sides of the aisle, we are spending record of amount of money in total in terms of total dollars.

But when we adjusted for inflation, we're not spending a record amount of money.

And so that's reflected in our test score and the achievements of our kids over the past decade and a half of this investment in education.

Michigan.

Michigan is 49th out of 50th in growth of education funding since 2012.

Are there safeguards in thi proposal, though, that ensures the money just doesn't go to more administrators and actually gets into the classroom?

It is subject to audit.

That is in the language.

So for sure there are some safeguards that are built into it.

And you know, we are out there all the time advocating for what parents and students are telling us they want to be funded.

So our top priorities are going to be career and technical education, reducing class sizes and attracting and retaining high quality teachers.

You also want students to be involved in thi from almost a grassroots level.

You want them on local boards, you want them with the Michigan State board.

That's going to be a drastic sea change.

It is a drastic sea change, but yet I can say this.

We model this at the Michigan Education Justice Coalition.

We are a coalition of community orgs that have parents, students, educators and board members at the table.

So we are very much so a model of involving and including a youth voic in our policy recommendations.

And I think that it's entirely possible that we continue to listen to what students sa they need in their classrooms.

Michigan has had a flat income tax for a really long time, and this would sort of provide some of the structural change that, you know, advocates like yourself have been talking about for decades.

You know, if you open that door in the Constitution as you're hoping to do, raise taxes on folks making over $500,000 a year, I can envision criticism saying that this is going to open the door, that then that tax increase is going to descend through lower income levels.

Do you have any safeguards in the ballot proposal that shows that this is not going to sort of descend down into middle incomes or even poor folks in terms of a tax increase?

Well, this is a very specific 5% surcharge on the wealthiest of owners or wealthiest of earners.

Sorry.

Any other change to the tax structure would have to go through a similar ballot proposal initiative because of the limitations of the state constitution.

So if voters say that that's what they want to do, then that's what voters say they want to do.

I have no control over after hours goes through or hopefully goes through wha voters vote for in the future.

You know, at the same time, nex election, we're going to have, as Jonathan pointed out, a constitutional conventio question on the ballot as well.

Are you going to tell you supporters to vote against this, given that it could place the amendment you're trying to make potentially at risk?

I think that I'm going to continue to be neutral on that right now until I know more about what is coalescing on the ground for a proposal of a constitutional event and what are folks saying They want to do.

I guess I'm curious, is there anything in the initiative or is your group supportive of any any particular plan to on how to disperse the funds regionally?

Usually, if a local millage to raise funds for schools comes forward, people can at least be assured that the money is going back to their community.

Is there any any plan for how how different regions might might get some of this funding if this were to pass?

I mean, this goes through the school aid funds.

So it's the same mechanism of control that exists now, which is we have to go and talk to our representatives and tell them what our priorities are from year to year, which I think is the beauty of it.

Ther is not a year that goes by that we don't have hundreds of community members go to Lansing and talk with their representatives about what they prioritize for the education budget.

And I think that's a beautiful mechanism of democracies that we do have a say because we elect the folks that distribute those fund and then we get to go and talk to them and tell them what we want to see.

Rachelle, I think I read that you guys anticipate this will generate about $1.7 billion a year for education.

How did you arrive at that and how did you arrive at the $500,000 or $1,000,000 per couple threshold for this 5%?

I'm going to call it a tax.

You can call it a surcharge.

I'm a call it a tax.

Well, how we arrived at the 5% number is through polling and focus groups.

How we calculated what it would generate is all the smart economists who are math nerds and much bette at that kind of thing than I am.

Part of this proposal, you want to get to the emotional change that you would like to see take place i Education is not just funding.

This is also in terms of policy.

How big of a problem is that for this generation of students?

There's not a day goes by tha I don't talk to a young person that isn't frustrated with their situation in their schools, with a situation in their schools.

And I hear from students from across the state, rural students in the Soo and the western region of the U.P.

to students in Grand Rapids, to students in Pontiac and Detroit.

I mysel live in Utica Community Schools.

There is not a day goes by that I don't hea from students and parents about.

Their priorities are not being reflected either in their local educatio budgets with their school board or at the state level.

How are you going to get you have to get West 600,000 signatures.

How do you plan to get it and how are you going to pay for them?

Or how well, how we're going to get it as we are all we have a plan and we have a lot of volunteer in place to get in the streets and talk to Michiganders about education funding.

We are not paying fo signature collection on our end that the Michigan Education Justice Coalition, but we are dedicatin a fair amount of our staff time and our volunteer time to getting in their sneakers and canvasing and attending all the summer events to collect those signatures.

When you say you're not paying for signatures, does that mean your group specifically or the whole coalition?

My group specifically, and I can identify that most of our coalition members have no plan at this time to pay for paid signature collectors.

Are you saving your money then, for a ballot campaign?

I mean, if it makes the ballot, I don't know if you've heard, but rich people have a lot of money and they might want to spend to defeat this proposal.

We're not only are we saving our money, but I argue all the time that grassroots is the way to go.

And I want to make sure that as we're collecting signatures, we're having conversations with Michiganders across the state about this issue.

So you're going to obviously this the thrust, this battle proposal to raise more money for schools.

But what sort of outcomes can you point to?

What can you say that, you know, if you if we raise this more money this is what's going to happen.

I mean, there's plenty of established scholarshi in the idea that money matters.

We actually distributed a one pager of research that points to money actually does lead to better outcomes whether it's smaller class sizes that allow teachers to focus more on kids, to give them more differentiate instruction, to give them more one on one time, to better facilities, to having full bellies, and with breakfast and lunch programs, those all lead to better outcomes for students.

The evidence is settled in that matter.

So having the discussion that is that we can just fix this through policy alone and not raising revenue I think is disingenuous.

All right.

Ms.. Crow-Hercher, thank you so much for joining us.

And will you stay in touch with us on this issue as you roll it all out?

Absolutely.

Thank you for having me.

All right.

We look forward to getting you back on off the record down the line.

And panel, we want to thank you for joining us today on Off the Record.

We want to thank you at home for joining us.

And happy Father's Day to all the fathers out there.

I'm Chuck Stokes filling in for Tim Skubick.

Good day.

Production of Off th Record is made possible in part by Bellwether public Relations, a full servic strategic communications agency partnering with clients through public relations, digital marketing and issue advocacy.

Learn more at bellwetherpr.com For more off the record, visit WKAR.org.

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