2013 closed with the usual rush to get everything done that had been put off for months.
Civil Service Takes No Action on Impasse Issues
The Civil Service Commission meeting of December 18 saw a packed meeting room to consider the Impasse Panel’s recommendations regarding employee pay and benefits for FY15 that begins October 1, 2014.
After hearings with all the parties, the Impasse Panel had recommended a 2 percent base pay increase on October 1, 2014, and October 1, 2015, plus a .5 percent lump-sum award to employees on October 1, 2014. But it also agreed with the Office of the State Employer that all employees should be put into the News State Health Plan in effect since April 1, 2010 for employees hired on and after that date. This would cause a significant out-of-pocket cost increase for most active state employees. After hearing over an hour of testimony, the Commission could not muster the three votes necessary to approve or modify the Impasse Panel’s recommendations and decided to defer the matter until a January 15 Commission meeting. By law the Commission must forward to the Governor’s office a decision about pay and benefits for automatic inclusion in the executive budget, usually released in early February.
Because the State Health Plan benefits and cost-sharing features are usually applied to the state retiree health care benefit, SERA is taking action to advocate for softening or eliminating any proposed impact - as it has successfully done in past years. See Bob Kopasz’s Chair Talk in the December and this issue for more information about the proposed health benefit changes and SERA’s response.
Pension Tax Lawsuit Update
The quick passage of PA 159 of 2013 transferring the Court of Claims from the Ingham County Circuit Court judges to a panel of the Court of Appeals has delayed action on Okrie v State of Michigan, et al, the class action lawsuit challenging the reduction or elimination of the tax exemption on pensions for those born after 1945. Okrie’s attorney Gary Supanich has filed a motion for reconsideration of Judge Marie Aquilina’s decision denying Okrie’s motion for summary disposition and the state has requested an extension of time in which to file its response. Supanich has also filed a new complaint with the Court of Appeals challenging the constitutionality of PA 159 on the grounds that it violates the separation of powers clause in the Michigan Constitution. See Supanich’s Web site for more detail, www.michigan-appeal-attorney.com.
Revenue Surplus Appears
One of the factors undermining the State Employer’s position at the CSC meeting was the announcement on the day before the meeting that the Senate Fiscal Agency was projecting a revenue increase of over $400 million for FY 2014 from what was projected in May 2013 because recent tax revenues were higher than expected. OSE had argued during bargaining that the state did not have the money to sustain current health benefit levels. As of this writing it appears that the Senate and House Fiscal Agencies as well as the Department of Treasury estimate that for the current fiscal year and for the 2014-15 fiscal year there will be a combined revenue increase of between $1.1 and $1.3 billion for the General Fund and School Aid Fund.
Once that news hit, everyone seemed to have ideas of how to spend the windfall. Some wanted to return it to taxpayers in the form of reductions in the income tax rate, now at 4.25 percent, to 3.9 percent. The education, road, and municipal lobbies all chimed in with their wish list. Governor Snyder cautioned that the Revenue Estimating Conference on January 10 would give final numbers. He mentioned that the recent elimination of the sales tax on traded-in vehicles beginning December 15, 2013 would benefit most taxpayers immediately and was not a planned budget expenditure for FY14. He didn’t mention the fact that the legislature’s failure to give immediate effect to the Medicaid expansion was costing the state an unbudgeted $70 million in FY14.
Important to retirees is Rep. Greg MacMaster’s (R-Kewadin) announcement that he wanted to use the state's projected surplus for rolling back the pension tax. MacMaster said he's considering a new formula that applies a different tax based on a person's birth year, marital status and pension amount. SERA is meeting with him to give him our ideas about it.
MedImpact — MedImpact Healthcare Systems is the new prescription drug provider for non-Medicare eligible state employees and retirees. It agreed to open a call center in Michigan as part of its bid. The Michigan Economic Development Corporation recently announced that MedImpact will be awarded a $150,000 grant to open a new office and support center in Van Buren Township with 75 employees. MedImpact is headquartered in San Diego. The company plans to invest up to $2.1 million, and the township will support the project by providing use of public facilities, the MEDC said.
Abortion Insurance Ban — The Right To Life of Michigan-backed initiated law banning insurance coverage of abortions received no legislative hearings and was passed by both houses on December 11. The debate featured the most memorable and stunning speech by Senate Democratic Leader Gretchen Whitmer that most Capitol watchers had ever witnessed. As a way of putting a real face on how the bill made no exception for rape or incest, she revealed that she had been raped while in college and had until that moment not revealed this to her parents or been public about it. Her story went viral on social media and she was interviewed by numerous national and international media.
The law will take effect March 14. Self-insured employers like the State of Michigan and most large employers will not be affected by the law. Insurers are revealing little at this point about how they will handle the new law because it permits abortion coverage through purchase of a separate rider. Meanwhile, activists who support the legal right to an abortion are considering a petition drive to suspend the law and put it up for referendum on the 2014 ballot. They will need to gather more than 161,000 signatures before March 14. Another option would be another initiated law or constitutional amendment in which case they would have 6 months to gather over 300,000 signatures.
Landline Phone Elimination — SB 636, also called the ATT Bill, would give traditional telephone companies a way to move customers off copper-wire landlines to internet-based service after January 1, 2017 without getting approval from the Michigan Public Service Commission. Only if a customer complained within 90 days after receiving notice of a landline company’s decision to eliminate the service would the MPSC investigate whether there was adequate alternative phone service available. The phone companies would still have to get permission from the Federal Communications Commission.
The bill passed the Senate on December 5 and was reported out of the House Committee on Energy and Technology on December 11 with 3 Republicans abstaining. It is now on final status on the House floor but likely not taken up until concerned Republicans are satisfied.
The AARP opposes the bill as a threat to consumers who depend on land lines for certain services like medical monitoring of pacemakers, implantable cardiac defibrillators, and other lifesaving devices. Landlines are also used by some home security services. And when the power goes out, only landlines are still working. SERA expressed opposition to the bill as currently written.
SERA Recent News — If you are a SERA member, you are eligible to receive SERA Recent News, a periodic e-mail about breaking news and media stories of interest to state employees and retirees. Write to firstname.lastname@example.org, 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 email@example.com.
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