Green Scissors Report

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* * *
Americans want
government to cost less
and make more sense.
* * *

Overview & Summary
Save $2.8 Billion
Protect the
Environment

The clearest message from the last two elections is that voters want leaders of all political perspectives to
work together for a government that costs less and makes more sense.
Now a coalition of 28 taxpayer, environmental, conservation, and deficit-reduction groups has responded
to the electoral message. The coalition has drawn up a proposal for Michigan that would protect the environment and save taxpayers $2.8 billion -- $2.4 billion in federal funds, and $400 million in state and local funds.
This report, Green Scissors Michigan, identifies ten federal spending and subsidy programs in Michigan that either are not needed, or have outlived their usefulness even as they waste taxpayer dollars.
***
•Green Scissors Michigantargets five proposed new highways that would cost taxpayers $2 billion, at a time when Michigan's greatest infrastructure need is to repair existing roads. The new highways, planned for
the outskirts of cities and towns, also would accelerate sprawl, and undermine family-owned main street business.
• The biggest single federal savings identified in this report -- $750 million --would come from ending a
costly tax credit that has spurred the drilling of thousands of natural gas wells in Michigan's northern lower
peninsula. The wells, and associated industrial facilities, have fragmented thousands of acres of publicly-
owned forest lands. Meanwhile, the beneficiaries of the tax break -- utilities, drilling firms, and multinational
energy companies-- have enjoyed a dramatic appreciation in the value of their businesses, at taxpayer
expense.
• This report also focuses on the Navy's Extremely Low Frequency (ELF) transmitters in Michigan's
Upper Peninsula. These are expensive military communications relics that have outlasted the Cold War.
Senator Russell Feingold (D-WI) has said that ELF "lingers like a blot on our budget." Turning off the ELF
program would save $60 million over five years.
• In several other cases, Green Scissors Michiganrecommends alternatives to federal proposals that are
less costly, and address community concerns about the quality of life and the environment.
For instance, instead of building a new road through the scenic Pictured Rocks National Lakeshore in the
Upper Peninsula, a simple upgrade of an existing county road would save nearly $5 million.
Ending federal support for a quasi-government forestry council that has failed to become self sufficient or
conduct balanced analysis could save $540,000 over five years.
In another example, prohibiting federal flood insurance and other subsidies for risky shoreline development on Michigan's vulnerable Great Lakes coasts would protect taxpayers from liability for millions of dollars in potential losses due to storms and erosion.
The savings identified in Green Scissors Michiganreflect the best available data collected from government studies and independent experts. The savings estimates are cumulative, starting in 1997, and generally extend over the life of the project.
Vision for the Future: Cut the Obsolete Ideas of the Past

Taxpayers, conservationists, and deficit reduction advocates share a deep concern for the future. They recognize that the wasteful and environmentally destructive subsidies identified in Green Scissors Michigan
reflect the thinking of the past.
Some of these programs began with noble intentions, such as improving transportation or protecting
national security. All of them, however, have proven to be at best inefficient, and at worst, counter-productive.
Government must learn from experience, and act so that American taxpayers and the environment are not burdened with handouts, bailouts, or cleanups.
This report recommends cuts and reforms in:
• Programs that provide financial aid to the well-off, and distort the market.
Michigan's largest Antrim Shale natural gas producer is Terra Energy. Half of the company's wells qualify
for a generous tax credit under Section 29 of the Internal Revenue Code. In 1995, in the largest private energy
company sale in state history, Terra Energy was sold for $63.6 million to CMS Energy, the parent company of
Consumers Power.
In addition to enriching private investors, the Section 29 tax credit artificially increases the supply of natural gas and lowers its market price. This encourages waste and discourages conservation of a non-renewable resource.
• Programs that continue to be funded, even though their original purpose has been forgotten. The U.S. Forest Service has spent more than $1 million since 1987 on a forestry planning council that has
become a promotion program for the timber industry, and has failed to achieve promised self-sufficiency.
The Lake States Forestry Alliance was intended to help Michigan, Minnesota, and Wisconsin balance logging and conservation. However, in its 1995 plan the Alliance urged the cutting of 25% more trees than the previous year, and admitted that "environmental effects were not examined in detail."
Intended to become self-funded by 1990, the Alliance still receives over $100,000 per year in federal
money.

(continued on next page)



		* * * Americans want government to cost less and make more sense. * * *
Overview & Summary Save $2.8 Billion Protect the Environment
	The clearest message from the last two elections is that voters want leaders of all political perspectives to work together for a government that costs less and makes more sense. Now a coalition of 28 taxpayer, environmental, conservation, and deficit-reduction groups has responded to the electoral message. The coalition has drawn up a proposal for Michigan that would protect the environment and save taxpayers $2.8 billion -- $2.4 billion in federal funds, and $400 million in state and local funds. This report, *Green Scissors Michigan, identifies ten federal spending and subsidy programs in Michigan that either are not needed, or have outlived their usefulness even as they waste taxpayer dollars. •Green Scissors Michigantargets five proposed new highways that would cost taxpayers $2 billion, at a time when Michigan's greatest infrastructure need is to repair existing roads. The new highways, planned for the outskirts of cities and towns, also would accelerate sprawl, and undermine family-owned main street business. • The biggest single federal savings identified in this report -- $750 million --would come from ending a costly tax credit that has spurred the drilling of thousands of natural gas wells in Michigan's northern lower peninsula. The wells, and associated industrial facilities, have fragmented thousands of acres of publicly- owned forest lands. Meanwhile, the beneficiaries of the tax break -- utilities, drilling firms, and multinational energy companies-- have enjoyed a dramatic appreciation in the value of their businesses, at taxpayer expense. • This report also focuses on the Navy's Extremely Low Frequency (ELF) transmitters in Michigan's Upper Peninsula. These are expensive military communications relics that have outlasted the Cold War. Senator Russell Feingold (D-WI) has said that ELF "lingers like a blot on our budget." Turning off the ELF program would save $60 million over five years. • In several other cases, Green Scissors Michiganrecommends alternatives to federal proposals that are less costly, and address community concerns about the quality of life and the environment. For instance, instead of building a new road through the scenic Pictured Rocks National Lakeshore in the Upper Peninsula, a simple upgrade of an existing county road would save nearly $5 million. Ending federal support for a quasi-government forestry council that has failed to become self sufficient or conduct balanced analysis could save $540,000 over five years. In another example, prohibiting federal flood insurance and other subsidies for risky shoreline development on Michigan's vulnerable Great Lakes coasts would protect taxpayers from liability for millions of dollars in potential losses due to storms and erosion. The savings identified in Green Scissors Michiganreflect the best available data collected from government studies and independent experts. The savings estimates are cumulative, starting in 1997, and generally extend over the life of the project. Vision for the Future: Cut the Obsolete Ideas of the Past**
	Taxpayers, conservationists, and deficit reduction advocates share a deep concern for the future. They recognize that the wasteful and environmentally destructive subsidies identified in *Green Scissors Michigan* reflect the thinking of the past. Some of these programs began with noble intentions, such as improving transportation or protecting national security. All of them, however, have proven to be at best inefficient, and at worst, counter-productive. Government must learn from experience, and act so that American taxpayers and the environment are not burdened with handouts, bailouts, or cleanups. This report recommends cuts and reforms in: • Programs that provide financial aid to the well-off, and distort the market. Michigan's largest Antrim Shale natural gas producer is Terra Energy. Half of the company's wells qualify for a generous tax credit under Section 29 of the Internal Revenue Code. In 1995, in the largest private energy company sale in state history, Terra Energy was sold for $63.6 million to CMS Energy, the parent company of Consumers Power. In addition to enriching private investors, the Section 29 tax credit artificially increases the supply of natural gas and lowers its market price. This encourages waste and discourages conservation of a non-renewable resource. • Programs that continue to be funded, even though their original purpose has been forgotten. The U.S. Forest Service has spent more than $1 million since 1987 on a forestry planning council that has become a promotion program for the timber industry, and has failed to achieve promised self-sufficiency. The Lake States Forestry Alliance was intended to help Michigan, Minnesota, and Wisconsin balance logging and conservation. However, in its 1995 plan the Alliance urged the cutting of 25% more trees than the previous year, and admitted that "environmental effects were not examined in detail." Intended to become self-funded by 1990, the Alliance still receives over $100,000 per year in federal money.
	(continued on next page)