Capitol News

March 2014

March, April and May are the months for legislative hearings and deal-making on the Governor’s proposed budget for FY15 and FY16. The process goes on until after the May Revenue Estimating Conference. The Governor’s action to sign or veto the various bills is anticipated for June so that entities such as the schools know their revenues for the start of their budget year July 1. Of course in an election year, there is always time for some work on policy issues that appeal to voters but have no budget implications.

Mid-Year Supplemental Appropriation

Although axle-bending, shock-absorber shattering pot holes are worse this year than in anyone’s recent memory, differences emerged in the Michigan Senate and House on how much money to spend on a mid-year supplemental appropriation to help state and local governments fund spring road repairs. The Senate wants $100 million; the House wants $215 million.

Another contentious issue is solving the Health Insurance Claims Assessment revenue shortfall. HICA was created during the state tax overhaul in 2011 to require certain third party administrators, carriers and self-insured entities to pay an assessment on health care claims to finance part of the state’s share of Medicaid funding. But HICA did not produce the expected revenues. Part of the debate over funding the HICA shortfall coincides with reforming auto insurance. Speaker of the House Jase Bolger has proposed adding an item to auto insurance bills to cover the HICA shortfall, while the Senate wants to tackle auto insurance reform measures separately.

The bill, SB 608, is in conference committee at this writing but is supposed to go to the Governor by March 14. As a result of the road repair crisis and the contacts from constituents that legislators are receiving, rolling back the income tax or adjusting the Homestead Property Tax has become a little less popular among majority Republicans. Talks about long-term funding for roads and infrastructure is ongoing with no announced agreement as yet.

Meanwhile all the appropriations sub-committees have been having hearings on their part of the budget. None of those bills have come out of committee just yet.

Ballot Proposal Updates

Personal Property Tax — The PPT is a tax on equipment and industrial fixtures that business pays each year to local government. In some communities it is a large share of revenues to support police, fire, schools and general operations. In 2012, the Legislature punted the elimination of the PPT to the voters in the August 2014 primary with a promise to come up with a system to replace all the revenue to local governments.

A 10-bill package was introduced in February and passed the Senate within a week. The bills earmark more use tax revenue on purchases out-of-state to guarantee full replacement of the PPT to communities. The state (instead of local governments) would levy a special assessment on personal property.

Democratic Leader Senator Gretchen Whitmer dissented, stating her concern about whether schools and local government would receive the full revenues lost by the PPT elimination. She also raised legal questions about abrogating the authority of the Elections Commissioner for ballot language and imposing a local tax without the citizens of a community approving it.

Wolves — Keep Michigan Wolves Protected has until March 13 to submit 161,305 voter signatures for a referendum to overturn Public Act 21 of 2013 which gave the Natural Resources Commission authority to designate new game species, which it promptly did by including wolves. If enough valid signatures are validated by the Board of State Canvassers, the measure would be put on the November ballot. In that case, there will be two wolf hunt-related questions on the November ballot. In 2013, the Humane Society spent hundreds of thousands of dollars on an initial petition drive. They collected enough signatures to suspend the wolf-hunting law until voters could decide. Months later, however, the Legislature approvedPublic Act 21 of 2013. Both referendums could be on the November ballot and both would have to be approved by voters to ban future wolf hunts in Michigan.

There is also a petition circulating for a “citizen-initiated” pro-wolf hunting law that would reinforce the NRC’s ability to designate game species and issue fisheries orders. If sufficient signatures are gathered and then passed by the legislature, it could help continue a hunt in the future. Likely there is going to be a lot of voter confusion with potentially three proposals on the ballot about the same or similar issue.

Minimum Wage Increase — On February 19 the Board of State Canvassers approved the petition form for Raise Michigan’s initiated law to raise the minimum the wage to $8.10 an hour on January 1, 2015; $9.10 an hour on January 1, 2016; and $10.10 an hour beginning in January 2017. There would be subsequent annual cost-of-living adjustments based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, CPI-W. The proposal would raise tipped workers minimum wage, currently $2.65 an hour, to $3.50 an hour beginning January 1, 2015 and raise their minimum wage by 85 cents on January 1 annually until they reach the full minimum wage.

Four business lobby groups eager to stop the minimum wage have been apparently planning an opposition campaign. The Michigan Chamber of Commerce, small and independent businesses, and the restaurant association are the main opponents. The Detroit Three may also weigh in because an increased minimum wage puts upward compensation pressure on unionized labor negotiations.

Meanwhile, six other petition drives have been approved as to form and may be circulating at this time.

Quick Takes

Okrie v State of Michigan Lawsuit Update — The challenge to the pension tax and subsequently, the challenge to the transfer of the Court of Claims (where disputes with the state of Michigan are heard) to a panel of the Michigan Court of Appeals, is still in early motion stages. On January 25, Judge Servitto denied a motion to stay the proceedings pending outcome of the constitutional challenge of the court transfer. On February 24, attorney Gary Supanich filed an amended class action complaint to include a breach of service credit contracts.

Supanich would like examples of state employees who purchased service credit (or participated in the Michigan Investment Plan for school employees), how much invested and what kind of return was expected. He is interested in your story and whether the representations made to you included statements that service time purchased would result in a higher pension that would not be taxed. Contact him at 800-419-7310 or through his Web site, www.michigan-appeal-attorney.com.

Unemployment declines — Michigan’s unemployment rate plummeted to 7.8 percent in January, its lowest point since May 2008, the largest monthly decline in more than 30 years and the largest gain in employment in more than 15 years. It was more than a full percentage point lower than the same month in 2013 and a full five points lower than in January 2010, when the rate was 13.8 percent. The national unemployment rate dropped to 6.6 percent in January. Michigan's unemployment rate began to climb in 2008 and peaked at 14.2 percent in 2009, as the state and nation reeled from an economic downturn that sent two of the Detroit Three into bankruptcy and a Wall Street collapse with worldwide impact.

The “R” Word Eliminated — The Michigan House and Senate have passed unanimously a package of bills and resolutions to eliminate the word “retarded” from state statute and replace it with "developmental disability" or "intellectually disabled," as appropriate. Michigan was one of 7 states that had not yet removed the “R” word from statutes.

Electricity Deregulation — In 2008, Michigan adopted laws to restructure the retail electric market to allow 10 percent of electricity customers to be served by alternative electric suppliers. Such laws were passed in the hope that competition would provide lower prices. House Bill 5184 sponsored by Mike Shirkey (R Clark Lake) would remove Michigan’s current statutory cap on electric choice. In Michigan the 10 percent cap was reached at the end of 2009 and there is a current waiting list.

Television ads sponsored by Americans for Prosperity have attacked removing the cap, alleging that it is dangerous. Recently a report issued by leading Illinois business groups projects that Illinois electric customers are spending $37 billion less on electricity after the state got rid of its “monopoly-style” electric system and brought in competition and customer choice. Supporters of HB 5184 say eliminating the cap would save money for customers and support the economy by lowering businesses’ energy costs. Opponents, such as Consumers Energy and DTE Energy, say the legislation would shift hundreds of millions of dollars in annual fixed costs to electric customers who stay with the utilities. AARP says it opposes HB 5184 because it would jeopardize the affordability and reliability of electric service for residential utility customers in Michigan.

Auto No-Fault Developments — Wayne County Executive Robert Ficano, Macomb County Executive Mark Hackel and Oakland County Executive L. Brooks Patterson recently urged the Legislature to reject any auto insurance plan that would reduce the current unlimited medical and personal care coverage for those injured in vehicle accidents. Proposed amendments to HB 4612 cap the benefits at $10 million and set up a fee schedule system similar to the workers’ compensation program instead of the open fee system now in place. The Insurance Institute of Michigan retorted that the key problem with the system is the lack of controls on hospital charges.

Landline phone bill — There have been no further developments on SB 636, which would give traditional telephone companies a way to move customers off copper-wire landlines to internet-based service after January 1, 2017 without getting prior approval from the Michigan Public Service Commission. It has been approved by the full Senate and House Committee on Energy and Technology. It sits on the House floor ready for floor action. Again, if you are concerned about this bill because you have a phone-monitored pacemaker, an implantable cardiac defibrillator, a medical alert device, or a home security service dependent on copper wire landline, call your Michigan House member and express your opposition to this bill. You can locate your Representative and the contact information at www.house.mi.gov/mhrpublic. SERA and AARP oppose the bill.

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 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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