Capitol News
April 2014
The Legislature’s last day before spring break was March 27 with a planned return April 22 for the Senate and April 17, 23, and 29 for the House. Governor Snyder took the opportunity to go on a European trade mission while the Legislature was gone.
Budget Bills Advance
There was a flurry of activity before spring break to complete some budget and appropriation work. The revenue surplus reported in January initially sparked various plans to lower the income tax rate (House and Senate) or expand the Homestead Property Tax Credit (the Governor). Reportedly constituents are telling their lawmakers that they want the potholes fixed and don’t bother with a measly $50 tax break. So far this year, lawmakers have put $215 million into special road funding - $115 million will be for “priority projects” and $100 million to assist with maintenance needed due to the harsh winter.
Pothole Politics — Last term the money for “priority projects” apparently went mostly to Republican districts according to Democrats. The Democrats would like the money to be spent according to the Michigan Department of Transportation’s Five-Year Plan. The governor and some others want a more long-term commitment of permanent revenue.
Rep. Tom McMillin (R-Rochester Hills) introduced HJR EE, a joint resolution that aims to amend the Michigan Constitution to modify the Natural Resources Trust Fund so that some of its revenue is directed to a new Local Transportation Fund. The NRTF receives funds generated by mineral production on state-owned land and it hit its cap of $500 million in 2011. That cap has been raised twice by voters. Any spillover funds go into the State Parks Endowment Fund, which has its own cap that could be reached in the near future. The NRTF is supposed to pay for recreation projects and land acquisition, but the state already owns 24 percent of the land in the state. The Michigan United Conservation Clubs (MUCC) said it is opposed to the new resolution.
Senators Bruce Caswell and Rick Jones recently introduced a bill to raise the sales tax by one percentage point that would be designated for roads and bridges.
Speaker of the House Jase Bolger proposed taking the portion of the sales tax that now goes to the General Fund as well as some use tax revenues to generate $450 million for roads in 2015 without raising taxes, an amount he said would rise to $500 million by 2018. The other proposals include ending the 19 cents per gallon tax on gasoline and 15 cents per gallon tax on diesel fuel and replacing them with a 6 percent tax on the price of fuel at the wholesale level. Mr. Bolger said this would be a revenue neutral change for gasoline and raise $47 million in new revenue from diesel fuel sales. The plan would increase fees on permits for overweight and oversize trucks, a move that would raise $4.5 million.
Other Appropriation Actions — Before the break, both Houses completed two appropriation bills for the Governor to consider: the Natural Resources Trust Fund and the FY 2013-14 K-12 Supplemental. House Appropriations subcommittees have advanced 17 individual budget bills to the overall House Appropriations Committee to create the House’s overall budget plan for FY 2015. The House has trimmed $133.4 million in General Fund spending from the Governor’s proposed budget. Five Senate Appropriations Subcommittees are still working on their bills while 12 have advanced their bills to the Senate Appropriations Committee.
The Governor has gotten his proposed $65 million for preschool education expansion and increased K-12 funding. Likely the polling indicating 53 percent of voters believe he slashed school funding back in 2011 and 2012 has helped motivate the Governor and his legislative colleagues to direct more funding for classrooms. The Governor was also successful in getting a little funding for a program to encourage legal immigrants with college degrees to stay in Michigan.
Other Legislative Issues
Goodbye Landlines — The Governor signed SB 636 to allow telephone land line (copper wire) providers to discontinue basic local exchange and/or toll service upon notice to the Michigan Public Service Commission and customers. Currently a telecommunication provider cannot discontinue service unless one or more alternative providers are furnishing a comparable voice service to the exchange. This new law will go into effect January 1, 2017. Customers could file a complaint with the MPSC if they feel comparable service is not available.
Property Tax Change — The Governor has also signed HB 4810 to amend the General Property Tax Act to eliminate a requirement that a home not be for sale in order for the owner to continue to claim the principal residence exemption while living in a nursing home or assisted living facility. The bill would be retroactive and effective for taxes levied after December 31, 2012.
EAA Advances — Attempts to expand the Education Achievement Authority beyond the 15 failing Detroit schools have occupied a great deal of House time over the last few months. The House passed it over hearty Democratic objections. The Governor would like another 50 schools statewide to be in the EAA. The Senate is likely to take up the issue after spring break.
U.S. Con-Con — Republicans voted to join more than 20 other states calling for a federal constitutional convention to write a balanced budget amendment into the U.S. Constitution. If 34 states do this, a Constitutional Convention will be called, and the whole document may be up for grabs, not just the addition of a balanced budget provision.
Personal Property Tax — Saying the measure both gets rid of a dumb tax and helps local governments, Governor Snyder and Lieutenant Governor Calley in his absence have signed the bills that should help local communities recover revenues after the personal property tax on industrial property is eliminated. The bills earmark more use tax revenue on out-of-state purchases to guarantee full replacement of the PPT to communities. The state (instead of local governments) would levy a special assessment on personal property. Convincing the voters in the August primary to approve the proposal is the next hurdle. The Governor admits the issue will not be the easiest for the public to grasp, but that it is not a tax increase.
Electricity Deregulation — The House Energy and Technology Committee held two hearings in March on HB 5184 that would move the state from a system of hybrid-electric regulation to deregulation and remove the 10 percent cap on energy competition. Rep. Mike Shirkey, sponsor of the bill, claimed Michigan’s electricity prices are too high because there is not adequate competition. DTE Energy’s president Steve Kurmas testified that rates will not decrease under the bill and innovation in the field will halt in Michigan. He said if HB 5184 becomes law the company will not invest in additional generation in the state. Note: in last month’s Capitol News I mistakenly wrote that Americans for Prosperity sponsored ads attacking the bill. Actually AFP is in favor of the bill.
Michigan News
Gay Marriage Temporarily Legalized — On Friday, March 21 at 5:05 p.m., Judge Bernard Friedman issued a ruling striking down Michigan’s 2004 constitutional prohibition on same-sex marriage. On Saturday, the County Clerks in Ingham Muskegon, Oakland and Washtenaw counties opened to dispense 323 marriage licenses to same-sex couples. Attorney General Schuette quickly appealed the ruling and by Saturday evening, the 6th U.S. Circuit Court of Appeals in Cincinnati issued a temporary stay of the decision. On the following Tuesday the stay was made permanent. Meanwhile U.S. Attorney General Eric Holder declared that the federal government would recognize the marriages for federal benefits. Governor Snyder issued a statement saying the marriages were legal, but the stay on the U.S. District Court ruling declaring Michigan’s ban on same-sex marriage unconstitutional means they can receive no state benefits from their marriages as long as the stay remains in place or unless the lower court ruling is eventually upheld.
Healthy Michigan — On April 1 more than 11,000 people applied for Healthy Michigan, the newly expanded Medicaid health care insurance for those with incomes up to 133 percent of the federal poverty level. Like the federal Web site for Obamacare, there were a few start-up glitches in the beginning. In the first year, the program is expected to cover 320,000 people, eventually rising to 470,000. People can learn more at www.michigan.gov/mibridges, by calling 855-789-5610, or visiting a Department of Human Services office.
Right To Work Lawsuit Update — Federal Judge Stephen Murphy recently dismissed parts of the AFL-CIO’s case challenging Michigan’s new Right To Work law. He allowed challenges to the state’s authority to regulate certain labor practices, but dismissed the challenge to the part of the law barring the payment of union dues as a condition of employment. The AFL-CIO believes that the RTW law tries to regulate where the federal government should have sole authority. The case is Michigan State AFL-CIO v. Callaghan in the state’s Eastern District Court in Detroit.
Marijuana News — Twelve localities are likely to see ballot proposals to decriminalize adult possession of small amounts of marijuana. If enough petition signatures are collected the question will appear on August or November ballots in East Lansing, Mt. Pleasant, Saginaw, Oak Park, Hazel Park, Lapeer, Utica, Port Huron, Clare, Onaway, Harrison and Benzie County according to the Safer Michigan Coalition, sponsor of the measures. A 2012 EPIC/MRA survey suggested 65 percent of those surveyed supported treating marijuana possession as a civil infraction. This new effort follows successful local ballot initiatives in Lansing, Jackson, Ferndale, Detroit, Grand Rapids, Ypsilanti, Flint, Kalamazoo and Ann Arbor.
Auto Insurance Fee — The Michigan Catastrophic Claims Association has announced that the assessment for the 12 months starting July 1 for auto insurance will be the same as for the current period, $186 per year. The fee pays for the cost of caring for people catastrophically injured in crashes. The MCCA paid out $983 million in the 12 months ending June 30, 2013.
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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