Capitol News
May 2015
Proposal 2015-1 Crashes
Michigan voters rejected by a 4-to-1 margin Proposal 2015-1 to increase the sales tax that would have generated $1.2 billion more for roads as well as new funding for schools and local governments. Going into the vote, polling suggested a defeat by a 2-to-1 margin, but the measure lost by more than 80 percent in 60 counties. The “best” counties for the proposal were Washtenaw, Kalamazoo, and Ingham counties, where support surpassed 30 percent. It passed in East Lansing, Ann Arbor, and parts of Kalamazoo. It garnered the lowest percentage of the vote for a constitutional amendment since the adoption of the 1963 Michigan Constitution.
In remarks to reporters, Governor Rick Snyder attributed the loss to opposition to a new tax increase, anger at the Legislature for pushing the issue to voters, complexity of the proposal, and the desire to vote on a roads-only plan.
Road interests put up most of the money for the campaign, outspending the four No committees by more than 30-to-1, using television advertisements and mailers extensively as well as town halls led by local government officials.
The No side had the advantage of beginning early to frame the terms of the debate since the Yes side switched campaign consultants 30 percent of the time into the campaign period. It didn’t have the money to do much TV or mailers and instead relied on tele-town halls, emails, social media and many news releases to activate conservative grassroots activists.
Future —T House Speaker Kevin Cotter (R-Mt. Pleasant) announced that his caucus is considering cuts in the budget, especially a review of the $20 billion of annual restricted state spending, and eliminating some tax credits as a source of revenue for the roads.
Governor Snyder has announced that he would still oppose a plan like the House passed last session taking all the funds from other parts of the budget. He said the defeat of the proposal means there will likely not be additional revenue for the coming construction season.
EPIC-MRA veteran pollster Bernie Porn has suggested that lawmakers pass a gas tax increase and then put the sales tax back on the ballot to give voters a choice. He bases this proposal on polling data: a gas tax hike is extremely unpopular with voters. Only 27 percent of the voters strongly or somewhat favor that tax hike while 66 percent oppose it including 51 percent who strongly oppose it. Hence, as Porn explains, if you raise the tax they do not like, they are more likely to raise the sales tax instead.
Legislative Update
Since the two-year session of the 98th Legislature began in January 2015, 841 bills, 27 constitutional amendments, and 117 resolutions have been introduced.
Budget —The legislature returned from two weeks of in-district work on April 14. Each chamber has passed the two omnibus budget bills for education and the rest of state government. After the Combined Revenue Estimating Conference on May 15, budget bills will go to conference committees made up of members from each chamber for negotiation and reconciliation with the Governor’s proposed budget. Passage is likely during late May and early June.
Several bills of interest to state retirees are moving:
Protecting Surviving Spousal Pension Benefit —THB 4124 sponsored by Rep. Jim Townsend (D-Royal Oak) to protect surviving spouse pension benefits has seen no committee movement since the first hearing on March 4 before the House Tax Policy Committee. However amended language is in development that would make the bill retroactive to 2012, the first year of the pension tax, and allow a surviving spouse to claim the birth year of the deceased older spouse for tax filing purposes as long as the surviving spouse did not remarry.
The Governor has continuously opposed changes to the pension tax so your communication with him to support this small change in the law will be needed.
Attorney General Double Dipping Bill —T On May 5, the Governor signed new Public Act 20 of 2015 (Senate Bill 12). The Act allows retired state workers to contract with the Department of Attorney General as a witness, expert, or consultant for litigation involving the state without forfeiting their pension payments during the period of the contract. The bill requires that the Department of Attorney General determine that the contract is the most cost-effective option for the state.
Changes to Auto No-Fault Insurance —T Capping ten or more years of effort and negotiations, SB 248 and SB 249 proposing changes to auto no-fault insurance were suddenly announced for hearing on April 16, and reported out of the Senate Insurance Committee the next morning and adopted by the full Senate in the afternoon of April 17.
Seven hours of testimony the following week in the House Insurance Committee over three days resulted in a substitute being reported out to the House floor with all Democrats voting no and two of 11 Republicans abstaining.
The House Insurance Committee’s version like the Senate version did not abolish unlimited lifetime medical care as past reform measures have proposed. Instead it included a specific fee schedule with a reimbursement rate at 150 percent of the Medicare rate, a $15 per hour cap on family attendant reimbursement for a limit of 24 hours of family care per day, and a requirement for auto insurers to reduce rates by $100 per vehicle in the first two years. The bills phase out the Michigan Catastrophic Claims Association, replacing it with a new agency under state oversight (rather than the current MCCA insurance company oversight), and establish a fraud authority partially funded by insurers. A $150,000 appropriation in the bill would make it referendum-proof.
Amendments offered by Rep. Tom Cochran (D-Mason), minority vice chair of the committee, would have removed the $15 per hour limit on attendant care provided by family members, and require rate rollbacks of 10, 20, 30 and 40 percent, but all failed. Rep. Brian Banks (D-Detroit) won an amendment stipulating that attendant care limits would not apply to family members who were professional home health caregivers. An amendment offered by Rep. Robert Wittenberg (D-Oak Park), which failed, would have removed the appropriation in the bill. Amendments long sought by Detroit Caucus members to remove education levels and ZIP codes as factors in determining auto insurance rates also failed.
Citizens for Protecting Auto No-Fault blasted the bills, pointing out the fraud portion of SB 248 only considers fraud perpetuated by claimants when the committee heard testimony about insurers and independent medical examiners fraudulently denying claims. Hospitals and other supporters of the current system denounced the fee schedule as unworkable and financially ruinous, threatening the viability of trauma centers around the state.
Although proponents hoped for quick passage in the House, opposition from Republican Oakland County Executive Brooks Patterson and the 8 Oakland County House Republicans, some tea party wing members of the Republican Caucus as well as those who opposed last session’s reform proposal mean that there are not 56 votes in the House to pass the bills at this writing. Also emerging are concerns from Republican legislators in the Grand Rapids area with close ties to their local hospitals and medical provider systems. Most if not all Democrats will oppose the bills.
Prevailing Wage —T Senate Bills 1, 2, and 3, repeal of Michigan’s prevailing wage laws, has been announced for hearing by Senate Majority Leader Arlan Meekhof. The laws establish wage and fringe benefit rates to be paid to construction workers employed on state financed or sponsored construction projects. The compensation rates are higher than for private construction projects.
Senate Minority Leader Jim Ananich (D-Flint) issued a statement opposing the bills, saying that Senate Republicans want to lower the wages of Michigan workers but that Michigan Democrats will always side with workers and will never put profits ahead of families. Governor Rick Snyder has stated his opposition to repealing the prevailing wage laws.
Gubernatorial Update
Public Acts —T The Governor has signed 19 Public Acts as the pace of legislative productivity increases. Thirteen of these originated in the Senate, 6 originated in the House and all were Republican sponsored. There have been no vetoes — yet.
Ban on Drone Hunting —T New PA 12 sponsored by Sen. Tom Casperson (R-Escanaba) and PA 13 sponsored by Sen. Phil Pavlov (R-St. Clair) prohibit use of unmanned aerial vehicles (drones) to hunt game or fish, or to interfere with or harass another individual who is hunting or fishing. Both will be effective July 13, 2015.
Also signed into law is PA 16 sponsored by Sen. Rick Jones (R-Grand Ledge). It is an exemption for retired federal law enforcement officers with a license to carry a concealed pistol to carry a pistol in weapon-free zones in Michigan. Currently, a person who holds a concealed pistol license cannot carry the concealed pistol into no-carry zones such as day care centers or bars, unless specifically allowed by statute. Testimony from retired federal officers revealed that some report finding their names on hit lists or receiving verbal or written threats even after they retired. The law would go into effect July 13, 2015.
Education Reform —T Governor Rick Snyder recently unveiled his plan to restructure Detroit’s K-12 public education system. The Governor’s plan would give the current Detroit Public Schools and its associated emergency manager and powerless elected school board the authority to solely pay off the district’s debt with the current 18-mill levy on non-homestead property. A new 7-member City of Detroit Education District, four of whom would be appointed by the governor and three by the Detroit mayor which in time would switch to an elected board, would be in charge of operating the schools. The state would contribute $72 million for operation of the schools.
On the same day as the Governor’s announcement, hundreds of school personnel showed up in Lansing to protest, resulting in the closure of 18 Detroit schools. The State Board of Education has drafted its own plan that will be rolled out soon.
New OSE Director Appointed —T The Governor has appointed Marie Waalkes as the new Director of the Office of the State Employer. She previously served as the OSE's employee health management director and was previously a member of the Civil Service Commission’s Employment Relations Board. She is the former human resources director for the Department of State Police and Ottawa County. She has a JD from Cooley Law School.
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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