Capitol News
April 2013
March saw the 282 bills passed by the Legislature and signed into law during the lame- duck session go into effect. Among them are the Right To Work law; a revised emergency manager law; a prohibition of teen drivers using handheld cellphones; lifting the ban on killing wolves; and a prohibition on insurers using credit information to deny, cancel or refuse to renew car or home insurance (though it still can be used to determine premiums). Also going into effect are regulation of clinics providing abortions; requiring sports-related concussion awareness measures; extension of the statute of limitations from 10 to 20 years for kidnapping, attempted murder and manslaughter; and an increase in the cap on cyber charter schools from two to 15 by 2014, potentially boosting the total to 30,000 students.
Pension Tax and HPTC Repeal
Five Republican Senators, including the chair of the tax-writing Senate Finance Committee, created quite a splash by introducing a bill on March 20 to repeal the pension tax and restore the Homestead Property Tax Credit. SB 280’s primary sponsor is Senator Rick Jones of Grand Ledge. Other sponsors are Sens. Tory Rocca of Sterling Heights, Joe Hune of Hamburg Township, Dave Hildenbrand of Lowell and Jack Brandenburg of Harrison Township.
All five Republicans voted in 2011 against the re-write of the state tax code initiated by Gov. Rick Snyder which gave businesses a $1.8 billion tax decrease while increasing taxes on seniors and other individuals. However, none of the five Republican Senators supported proposed Democratic amendments to the 2011 income tax bill that would have stripped out the pension tax and the reduction in the Homestead Property Tax Credit.
Jones explains — In an interview with MIRS News, Jones said the bill would result in $600 million less revenue annually. He said he's open to cutting the budget by that amount or putting a sales tax increase on the ballot, which has been proposed for road funding, and using some of that money to cover the shortfall.
For the pension tax, Jones said the three age tiers are a “poor concept.” He said he was born at the end of 1952, but those born a few days after him won't get a deduction, whereas he gets a $20,000 one. Jones said that the tax should have been enacted to go into effect 10 years in the future, so people could plan accordingly.
For the HPTC, Jones said he's talked to people who are just a little over the limit for their homes' value and are “very upset.” The HPTC is a deduction of up to $1,200 that was eliminated for people with household resources of $50,000 or more. The prior threshold was $82,650. The exemption also isn't available to homes with a taxable value of more than $135,000.
Senator Bert Johnson of Detroit and 7 other Democrats introduced a repeal of the pension tax, SB 145, in February 2013, and supported the 2011 amendments to strip out the pension tax.
Whether the new Senate Republican bill is re-election pandering (all sponsors are up for re-election in 2014) or a serious bill remains to be seen. Both bills have been referred to the Senate Finance Committee chaired by Senator Brandenburg.
Dem’s Plan — House Democrats have announced a “Middle Class Plan to repeal the state's income tax on pensions; to require employers to inform employees about the Earned Income Tax Credit and restore it to 11 percent; as well as restoring the state's homestead property tax exemption and the child deduction credit among many proposals.
Pension tax not popular — A Marketing Resource Group-Inside Michigan Politics poll conducted March 17-23 of 600 likely voters found 54 percent of Michiganians dislike the pension tax. Sixteen percent of respondents said they're less likely to vote for a candidate who voted in favor of the tax and 39 percent said they're much less likely to do so, according to the poll. Opposition was uniformly strong, but highest among Democrats, blue-collar workers and retirees according to the poll.
Right to Work Update
Ingham County Circuit Court Judge William Collette will allow the American Civil Liberties Union and others to proceed with their challenge of the Right To Work law over alleged violations of the Open Meetings Act. Meanwhile over 70 school districts, community colleges, public universities and municipalities have renegotiated labor contracts since the Right To Work law passed. If these new contracts extend union security provisions, legislators are threatening retaliation. If the new contract doesn't save taxpayers at least 10 percent, appropriations would be impacted. Universities would lose 15 percent of their state funding. K-12 schools could potentially lose thousands of dollars in technology and performance grants.
More to come — Also being discussed are more restrictions on public unions such as banning exclusivity clauses and requiring union recertification when a labor contract is expiring. Legislation already introduced this session would eliminate prevailing or union-scale wages for certain public works projects. Democrats have threatened to withhold support for Governor Snyder's tax increase proposals for funding roads as long as the prevailing wage legislation remains alive.
Public divided on RTW — According to a Michigan State University quarterly survey, Michigan residents are almost evenly divided on whether the new right-to-work laws in the state will help Michigan's economy. Of the 1,013 people questioned, 42.7 percent said they thought the laws would help the state's economy. But 41 percent said it would hurt. With overall union membership in the state falling from nearly 50 percent of the workforce in the early 1960s to less than 20 percent today, the state has effectively enacted a right-to-work status on its own without law according to the survey’s director, Dr. Charles Ballard.
Other Public Policy News
Budget season — The Budget Office and Appropriations Committees have been hard at work on the budget for FY 2014. Negotiations on a road financing plan and school funding are the big ticket items. It looks like the federal budget sequester’s immediate effect on Michigan state government’s budget is a cut of $150 million in federally funded programs. That could be translated into 50 or more layoffs. In compliance with collective bargaining agreements, layoff notices were sent to all state unions on March 8 about potential layoffs on or after April 8.
Auto insurance rate increase — The Michigan Catastrophic Claims Association announced a 6 percent ($11) increase in the personal injury protection portion of state-required auto insurance. The MCCA assessment will go from $175 per vehicle to $186 per vehicle for the period between July 1, 2013, and June 30, 2014. Of the charge, $156.44 will cover anticipated new claims, $29.19 will address a $2 billion estimated deficit related to existing claims, and $0.37 will go to administrative expense. Due to better medical care, more victims of auto accidents are living and living longer, increasing the costs of care. Auto no-fault reform bills have been actively debated in the last session of the legislature and will likely pick up again soon.
Grand Rapids Home for Veterans — The Michigan Civil Service Commission has rejected AFSCME appeals and upheld the privatization of about 150 Resident Care Aide jobs at the Grand Rapids Home for Veterans administered by the Michigan Department of Military and Veterans Affairs. Veterans and state workers testified at the March 20 MCSC meeting that the private contractor J2S Group that replaced the civil servants with $10/hour workers was providing poor care for the 600 veterans at the home through low staffing levels, high turnover and untrained employees. The Commission said it rules on privatization decisions based on whether a savings of at least 5% can be achieved and in this case the projected savings were over 40 percent. Commissioner Chuck Blockett in a written dissent urged the Commission to modify the MCSC standards for evaluating proposed contracts. The next step is an appeal to Ingham County Circuit Court.
Wolf Protection — Keep Michigan Wolves Protected, a group opposing a sport hunting season for gray wolves, submitted more than 250,000 signatures to force a vote to repeal the law permitting a wolf hunting season that was passed during lame duck last December. If the Board of State Canvassers in the next 60 days certifies that 161,305 or more signatures are valid, then the measure would go on the November 2014 ballot.
Education Achievement Authority — On the last day before their two-week spring break, the Michigan House spent 7 hours debating and caucusing before passing narrowly an expansion of the Education Achievement Authority, a state entity that has been running 15 underperforming Detroit schools since last fall.
HB 4369 would expand the EAA to 50 schools statewide. Key amendments garnered the needed majority: allowing the school board that oversees a school in the bottom 5 percent of schools to instead put that school under the oversight of its regional intermediate school district; ensuring that if the EAA hires a public school employee who is part of the Michigan Public School Employees Retirement System that the employee will remain in MPSERS; requiring notification of school districts in January what schools are designated as underperforming; requiring that EAA schools take part in state assessments and educator evaluations; and creating exit pathways for schools to leave the EAA. Opponents argue that there is only five months’ experience with the EAA concept, not enough time to determine if the experiment is working.
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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