Capitol News

March 2013

National outlook — With federal budget cuts, otherwise known as ’the sequester” looming, President Obama’s State of the Union Address on February 12 didn’t include big federal program expansion.

The White House says the sequester will cause Michigan to lose $42.3 million in education funds and 540 Michigan school jobs. About half will affect primary and secondary education in 80 schools with high percentages of lower-income students. The other half of the education cuts will impact special education programs for disabled children statewide. Ten thousand civilian Department of Defense employees will be furloughed in Michigan; 4,400 children in Michigan won't get vaccines for measles, mumps, flu and whooping cough. Michigan will lose $1 million to react to health crises and disasters; there will be $1.8 million less for Michigan’s senior meal programs. The Navy's Blue Angels flying squadron is canceling several shows in Michigan due to the budget cuts.

The next federal crisis is passing continuing resolutions to avert a total federal government shut down. And despite all this bad news, Wall Street hit historic high valuations in early March.

Pension tax — As predicted, many seniors are doing their taxes right now and discovering the effects of the three senior tax changes adopted in 2011 for tax year 2012. Especially hard hit are those with incomes above $20,000 a year who will receive a smaller or no refund due to changes in the Homestead Property Tax Credit and elimination of the special senior exemption. Bills to repeal the pension tax have been introduced but have little hope of passage. An interesting bill is HB 4301, which would allow a surviving spouse to retain the exemptions of the deceased older spouse.

Emergency Manager for Detroit — Governor Snyder has taken the required final steps toward appointing an Emergency Manager for Detroit. The Governor said it is a crisis years in the making, stemming from massive population flight, loss of businesses, horrific financial practices, the cutting of state revenue sharing aid, political infighting, corruption, a bureaucratic morass and outdated technology. The most recent telling sign of the city's dilapidated financial infrastructure came with the report in The Detroit News showing the city failing to collect half the property taxes its residents and businesses owe. The Governor’s decision made national headlines, including a long segment on MSNBC’s The Rachel Maddow Show.

Roads — As promised in his State of the State message, Governor Snyder announced a plan to raise $1.2 billion to fix Michigan’s failing roads and bridges, save an estimated 100 lives a year, and reduce vehicle repair costs. His plan includes an increase in the gasoline tax to 33 cents per gallon from the current 19 cents for regular fuel and 15 cents for diesel as well as a 60 percent hike in vehicle registration fees on light vehicles and 25 percent on heavy trucks. Republican Secretary of State Ruth Johnson announced that she did not support Snyder’s proposal to raise registration fees, saying our fees are in the upper half of the country already and the proposed increase could cause financial problems for struggling families.

At least three alternative funding ideas are being discussed. All of them would eliminate the 6 percent general sales tax on gasoline and raise revenues for roads through a gasoline tax hike. The difference is in how they would replace the $942 million in lost sales tax revenues that helps fund schools and local government. One proposal would extend the sales tax to services, broadening the base of the tax in an increasingly service-related economy. Another would ask voters to raise the sales tax rate without broadening the tax base. Still another would raise the 6-mill State Education Tax on property. House Democratic Leader Tim Greimel has announced opposition of his caucus to the suggestion of a general sales tax increase because it is a regressive tax that hits middle-class working families the hardest and it is not related to road usage. However, some important Republican leaders are favoring asking voters to increase the sales tax.

BCBS — Bills overhauling Blue Cross Blue Shield of Michigan without anti-abortion language are on the Governor’s desk at this writing and approval is expected. The bills make BCBS a non-profit corporation and move it into the insurance code with all other insurance carriers in the state. Provisions in the bill maintain the existing freeze in Medigap coverage rates until 2016. There is concern among advocates for the disabled and senior citizens that Medigap coverage rates will increase by thousands of dollars in 2016, even with the endowment fund set up in the bills that would subsidize payments for those eligible. The bill was opposed by Attorney General Bill Schuette over concerns that taking the oversight out of the Attorney General’s office would subject seniors to Medigap insurance increases eventually. Currently BCBS subsidizes Medigap policies $200 million each year and that will decrease to $15 million over time. BCBS supported the overhaul.

Ballot Issues — Recall that reform of the Personal Property Tax passed last year and will involve a legislatively initiated referendum on the August 5, 2014 ballot for voters to approve or disapprove the replacement revenue for metropolitan areas throughout the state.

The Board of State Canvassers recently approved petition language for three statewide ballot proposals. The first asks whether to repeal or approve the first open hunting season for wolves recently signed into law. Advocates report being halfway through collection of the necessary 161,305 signatures.

Another proposal would amend the Michigan Constitution to extend the power of referendum to bills containing appropriations. Currently the Constitution prohibits referendums on appropriation bills and the legislature has inserted token appropriation amounts in some substantive policy bills like the Right To Work legislation and the Emergency Manager Law to prevent repeal by the voters. A third initiative petition would establish a state law banning oil and natural gas fracking in Michigan.

RTW Update — Bills to repeal the Right To Work legislation have been introduced in both houses but it is unlikely they will receive any action. Meanwhile the laws will go into effect at midnight March 27. Coming to the legislature’s attention is that the Taylor School District and its teachers union adopted a 10-year contract extension with union security provisions banned in the RTW law. Additionally, Wayne State University extended its union contract for eight years. Republican legislators have threatened to punish school districts and public universities in the appropriations process for agreeing to contract extensions that keep in place mandatory union membership or non-member fees.

A coalition of labor unions, the American Civil Liberties Union and several Democratic state lawmakers filed a lawsuit in Ingham County Circuit Court seeking invalidation of the right-to-work laws over alleged violations of the Open Meetings Act on January 31. Briefs in the lawsuit were recently filed and a hearing is scheduled in Judge Collette’s courtroom on April 3. Separate lawsuits seeking to overturn the laws are in the Michigan Court of Appeals and federal courts. Governor Snyder has also asked the Michigan Supreme Court to determine whether right-to-work is constitutional and, specifically, whether state employees are subject to the law.

Three recent polls by EPIC/MRA, Lambert-Edwards, and Public Policy Polling indicate that the Governor’s job approval numbers have dipped precipitously as a direct result of his approval of the RTW legislation. Prior to signing the law he had a job approval rating above 50 percent. Now his job approval numbers are in the high 30s or low 40s. The PPP poll found that he trailed 3 potential Democratic challengers.

Supreme Court News — Due to the vacancy created on the Michigan Supreme Court by the resignation of disgraced Justice Diane Hathaway, Governor Snyder has appointed Macomb County Chief Circuit Judge David Viviano, 41, to the high court. This will give Republicans a 5 2 majority on the court. Viviano will have to run for election in 2014 to complete Hathaway’s term, which ends in 2016.

The Michigan Campaign Finance Network reported recently that more than $18 million was spent on the 2012 campaigns for the Michigan Supreme Court, but just 25 percent of that total was revealed in campaign finance reports. Prior to the 2012 race, the most expensive Supreme Court race took place in 2000, when a total of $15.9 million was spent for the three seats up for election that year.

Schmidt-Bolger investigation — Ingham Circuit Judge Rosemarie Aquilina has announced a six-month extension of her investigation into the Schmidt-Bolger election shenanigans last May. The order revealed the identity of the special prosecutors she is using: former Ingham County assistant prosecutor Michael Ferency, as well as John Smietanka, the former U.S. attorney for the Western District of Michigan and the Republican nominee for attorney general in 1994 and 1998.

Obamacare implementation — Having failed to get the House to approve a state-run health care exchange, Governor Snyder is trying to gain legislative approval of Michigan’s participation in the state-federal partnership health care exchange model provided in the federal health care law. However any participation with Obamacare requirements is anathema to many Republican legislators and it remains to be seen if the Governor can get the necessary approval by the end of March deadline. Failure to adopt this model will mean that the federal government will totally control Michigan’s heath care exchange.

The Governor also wants to participate in Obamacare’s Medicaid expansion to 133 percent of the poverty level. State costs should go down with the expansion, uncompensated care now paid for by hospitals should decrease, the state would not have to pick up any share of the increased cost until 2020 and then only 10 percent of it, and the expansion could help spur as many as 13,000 more jobs in the state and generate another $100 million in tax revenues, state officials testified. The tea party group RetakeOurGov opposes the move; AARP says Michigan seniors would benefit from Medicaid expansion. It would mean health coverage for about 75,000 Michigan seniors from ages 50 to 64, according to AARP and would save the state about $200 million a year through 2019.

Passing — Former Con-Con delegate and Michigan Court of Appeals Judge for 23 years, Robert Danhof, 87 recently died. Former Michigan conservative Democratic Representative John Maynard, who served in the House from 1975-1990, has died at the age of 83.

News of the Day — If you are a SERA member, you are eligible to receive News of the Day, a periodic (not daily) e-mail about breaking news and media stories of interest to state employees and retirees. Write to michigansera@comcast.net giving your name and chapter.

Editor’s note: Mary Pollock is the Lansing SERA Chapter and SERA Council’s Legislative Representative. She may be contacted at 1200 Prescott Drive, East Lansing, MI 48823-2446; Phone 517-351-7292; E-mail michigansera@comcast.net.

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