Capitol News
August 2014
With legislators all away on vacation, most of the media was consumed with campaign reporting. With less than 18 percent of the voters showing up at the primary, it calls into question just how much the media was able to compete with the usual summertime distractions.
Primary News
Proposal 1 — Voters approved Proposal 1 by a landslide even though it didn’t mention what it would really do — repeal the Personal Property Tax. Large industrial businesses in Michigan will eventually receive a $500 million per year tax reduction, a good return on the $8.3 million dollars they invested in portraying Proposal 1 as a boon to small businesses and local governments in Michigan.
Eighty percent of the reimbursement to local governments will come from the state’s general fund with a commensurate downsizing effect on all state programs unless the economy grows and with it, state revenues. With the Single Business Tax abolished in the tax overhaul that shifted $1.8 billion tax liability to individuals, especially pensioners, larger corporations subject to the new 2012 Corporate Income Tax were waiting for their turn and they got it this time. What will be next on their wish list?
Tea Party Influence —Michigan Republican Governor Rick Snyder, Democratic candidate Mark Schauer, and U.S. Senate hopefuls Gary Peters and Terri Land each coasted to uncontested primary election victories. The Tea Party contingent of the Republican Party had some high profile victories with U.S. Rep. Justin Amash (R-MI-3, Grand Rapids), State Senator John Moolenaar (R-MI-4, Midland), Todd Courser in HD-83, and Gary Glenn in HD-98 all winning.
It also handed incumbent Rep. Frank Foster (R-Pellston) a defeat, apparently because he supported Medicaid expansion and adding sexual orientation protections to Michigan’s civil rights law, something 70 percent of Michigan voters apparently support. But they weren’t successful in other campaigns. Former state Senate Majority Leader Mike Bishop (R-Rochester) and newcomer Dave Trott won against Tea Party-endorsed candidates in their bids for U.S. Congressional seats, the latter ousting incumbent U.S. Rep. Kerry Bentivolio.
Surprises? — To the surprise of many pundits, former Southfield Mayor Brenda Lawrence won the chance to take the seat vacated by U.S. Rep. Gary Peters, now running to replace the retiring U.S. Senator Carl Levin.
Incumbent Wayne County Executive Bob Ficano did not survive a series of scandals to succeed in the primary and Detroit Police Chief Wayne Evans was the clear winner there.
Oak Park and Hazel Park approved measures to decriminalize possession and use of less than one ounce of marijuana for adult use on private property, joining Lansing, Jackson, Ferndale, Detroit, Grand Rapids, Ypsilanti, Flint, Kalamazoo and Ann Arbor. Additional local proposals could appear on the November general election ballot in East Lansing, Mt. Pleasant, Saginaw, Lapeer, Utica, Port Huron, Clare, Onaway, Harrison and Benzie County. Eighty percent of new local tax proposals were approved and 99 percent of renewals passed.
Money — The Michigan Campaign Finance Network reported that independent groups with patriotic but vague-sounding names like Americans for Prosperity, Freedom Partners, Ending Spending and Senate Majority PAC had spent nearly $14 million so far on television ads to influence the state’s two biggest races — for governor and an open U.S. Senate seat — which is far more than the candidates themselves spent in uncontested primaries. The independent groups do not have to reveal just who their donors are whereas candidates must report contributors and their affiliations.
November ballot — In other election news, the minimum wage initiated law petition drive failed by 3,900 signatures to make the November ballot. However its backers declared victory because they were able to force the Legislature and Governor to raise the minimum wage to $9.25 per hour. The Board of State Canvassers has approved yet a third wolf hunting petition for the November ballot.
Updates on Continuing Stories
Pension Tax — No news on the Okrie v State of Michigan cases. We await the Court of Appeals decision.
Former Michigan House Fiscal Agency Director Mitch Bean has analyzed the assertion by most Democratic candidates and a few Republicans that the pension tax should be repealed. He concludes that the $357 million could be found — if the economy keeps perking along and state tax revenues continue to increase.
Aramark — A third incident of maggots in some food occurred in the last month. Four Aramark prison workers at Bellamy Creek Correctional Facility in Ionia were fired recently for having inappropriate sexual contact with inmates inside a walk-in cooler all caught on videotape. Corrections officers at the Muskegon Correctional Facility caught a female food-service worker with a prisoner in a kitchen office in a sexually compromised position.
A third of Aramark employees have had stop orders issued according to a Detroit Free Press investigation. Pressure is mounting on the Governor and the Department of Corrections to end the Aramark contract. DOC put Aramark on notice in June that it would strictly enforce the contract with regard to staffing levels, staff performance, meal substitutions, and meal quantity violations.
Detroit Grand Bargain — Detroit’s pensioners overwhelmingly approved the $800 million bankruptcy settlement deal that will reduce their pensions somewhat and abolish their cost-of-living increases but save the Detroit Institute of Arts with a combination of private donations and government help. The state will contribute $195 million from the rainy-day fund this year that will be repaid over time by annual payments from the state’s tobacco settlement fund. Meanwhile a creditor’s appraisal of the DIA’s art came in as worth twice the original estimate. Federal court hearings are scheduled to start August 21.
Road Fix — There is no reported news about the small legislative committee supposed to be working on a formula for a permanent source of increased road funding.
And if our state road funding crisis weren’t bad enough, the U.S. Congress is having its own road funding problems. According to the Associated Press, at the last hour before their summer recess, Congress did pass a $10.8 billion package to keep state transportation aid flowing with various funding gimmicks. There is a shortfall between aid promised to states and revenue raised by the federal 18.4 cents-per-gallon gas tax and the 24.4 cents-per-gallon diesel tax, which haven’t been increased in more than 20 years. It’s the fifth time in the last six years that Congress has patched a hole in the federal Highway Trust Fund that pays for highway and transit aid. The current fix is only expected to cover the revenue gap through next May — in an election year. Three blue-ribbon federal commissions have recommended raising fuel taxes, but opposition to a gas tax increase cuts across party lines; 70 percent of Republicans oppose an increase, while 52 percent of Democrats oppose it.
Miscellaneous
New PT law — The Governor has signed new laws that will permit patients to go to a physical therapist without a doctor’s referral much as they do with chiropractors. However it is up to health insurance companies and self-insured employers whether or not to pay for physical therapy and with what co-pays or co-insurance.
Healthy Michigan — Michigan’s Medicaid Expansion reports that it has enrolled over 325,000 Michiganians since it opened on April 1 this year, exceeding its enrollment goal. Healthy Michigan is a program that provides subsidized health care insurance for those age 19-64 with incomes at or below 133 percent of the federal poverty level ($16,000 for a single person or $33,000 for a family of four).
Medical MJ Dispensaries — Two bills to legalize and regulate medical marijuana dispensaries have passed the House and been reported out of the Senate Government Operations Committee chaired by Senate Majority Leader Randy Richardville. House Bill 5104 would expand the state’s definition of “marijuana-infused product” to include beverages and food items that contain the drug’s active ingredient, although foods containing the drug would be exempted from the state’s food laws. The other bill would allow “provisioning centers” to sell marijuana to certified patients or caregivers, something not allowed under Michigan law as of now. Cities and townships would have some authority to restrict where dispensaries could operate such as near schools.
Medicare and SS News — Social Security turned 79 on August 14. The latest annual report from the trustees for Social Security and Medicare says that Medicare’s solvency has been extended by four years from 2026 to 2030, attributable in part to the Affordable Care Act, which is helping to reduce costs.
According to the Center for American Progress’ analysis of the trustee’s report, the Trustees continue to estimate that Social Security will be able to pay all scheduled retirement, disability, and survivorship benefits through 2033. After 2033, the Trustees project that Social Security income from payroll taxes will be sufficient to cover 77 percent of promised benefits, unless policymakers implement changes before then.
Social Security has two trust funds: one for the retirement and survivorship benefit programs, and one for the much smaller Disability Insurance (DI) program. Individually, the Old Age and Survivors Insurance (OASI) trust fund is projected to deplete its reserves in 2035, and the DI trust fund will do so in 2016.
Rebalancing is an adjustment in the share of payroll taxes allocated to each of the trust funds and has occurred in a bipartisan manner 11 times in the program’s history to account for demographic shifts or other changes. About half the time funds have been reallocated toward OASI, and about half the time toward DI. Our federal elected officials can take action to strengthen this program - if they will act. You need to communicate with your members of Congress about the future of Social Security and urge them to act in a bi-partisan manner to rebalance these two funds.
On a longer term basis, one suggestion to secure more income for the Social Security trust funds is to raise the cap on the payroll income that is subject to the social security tax (FICA).
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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