Capitol News
January 8, 2017
Because both Congress and the Presidency are now in the hands of one party, combined with the Republican Party’s platform plan to save Medicare, Medicaid and Social Security through drastic changes, and the stated positions of several proposed nominees to federal posts to end Medicare as we know it, I am expanding Capitol News to monitor and report on major federal legislative and executive proposals on Medicare, Medicaid, and Social Security. But first, Michigan government news.
State News
Energy — Lame Duck of the 98th Michigan Legislature was the usual flurry of activity for the last three weeks of session. The most heralded achievement was getting bi-partisan energy bills passed on the final day of session with the House staying in session 33 consecutive hours. The Governor signed the bill on December 21 with an April 20 effective date.
The new law revises the system for how the Public Service Commission considers requests for construction of new power plants, changes how the process for 10 percent of customers allowed to contract with other than the two major electricity supply companies (Consumers Energy and DTE Energy) is managed, and increases the percentage of electricity that must be generated from renewable sources from 10 to 15 percent by 2021.
Representatives from northern Michigan and the Upper Peninsula attempted to amend SB 437 to conduct a study and create a plan to build a transmission line connecting the two peninsulas, but it failed. The Governor remarked that the new law will provide a clear path for replacing old and inefficient coal-fired plants with gas-fired ones, while assuring sufficient electricity supply and environmental safety.
Speed limits increase — The Governor has signed new legislation to increase speed limits on some highways in Michigan next year after a study conducted by the Department of State Police authorizes them. HB 4423, HB 4424, HB 4425, HB 4426 and HB 4427 allows speeds in Michigan to rise to 75 miles per hour for some highways and 65 mph on some other highways. The new maximums are limited to only 600 miles of freeway and 900 miles of mostly rural highways where the base speed limit now is 55 mph. The bills also would allow exceptions for reduced speeds in hospital zones.
Wolf hunting — Recall that voters rejected the first legislative attempt to authorize a wolf hunt. So our Legislature passed a second measure with an appropriation making it referendum-proof, but the courts struck it down for other reasons in November 2016.
Wolf hunting advocates introduced and were able to pass in less than 6 legislative days during Lame Duck SB 1187 to authorize the Legislature and the Natural Resources Commission to designate hunting game, but only the Legislature could remove a species from the list. The bill has a $1 million appropriation in it, which makes it voter referendum-proof. The Governor has signed the bill.
The NRC has twice previously voted to designate wolves as game, but the species is on the federal endangered species list. The new law allows for a hunt to take place if or when wolves come off the federal list. Wolves have been removed by the federal administration and replaced by courts several times in the last few years.
Failed to Move — Although the Governor has signed over 500 bills into law during the two-year session, important issues that died without final action are cuts to teacher and municipal retiree healthcare and pensions, anti-union picketing bills, toughening voter identification laws, codifying the Citizens United campaign finance ruling into Michigan Campaign Finance Law, reforming criminal defense, expanding freedom of information laws to the governor and Legislature, ending paid time for public union representatives and more.
The Michigan Legislature convened on Wednesday, January 11, for the 99th Legislative two-year session as mandated by the Michigan Constitution. Any bill not receiving approval by both houses in the session ending December 31 would have to be re-introduced in the new legislative session.
SOS modernization — It was reported to the Legislature recently that the Secretary of State spent $45 million on an aborted computer upgrade and modernization project when the SOS canceled the project in August 2015 after Hewlett Packard missed multiple milestones. A decision on a new contractor is expected early in 2017.
Unemployment Agency update — Current UIA Director Sharon Moffett-Massey has been reassigned to work special projects and a thorough review of the agency has been announced. The agency is reeling after it was revealed that its automated computer system for identifying unemployment fraud between October 2013 and August 2015 wrongly identified and penalized thousands of claimants. Complicating matters - the agency was shifted around state government several times in the last few years and had changing department-level leadership as well.
Flint update — The Flint Water Investigative Team headed by special counsel Todd Flood under the supervision of Attorney General Bill Schuette, announced on December 20 that former Flint Emergency Managers appointed by Governor Snyder - Darnell Earley and Jerry Ambrose - were charged with felony false pretenses, conspiracy, misconduct in office and willful neglect of duty for their decisions involving using the Flint River as the city’s water source and actions to eventually move the city to a new water pipeline.
Also charged with misconduct in office and willful neglect of duty are two top former Flint water officials, Howard Croft and Daugherty Johnson. Flood’s team had previously charged nine others, all lower- to mid-level state and city employees. These are the first top officials charged in the case. All of the charges, except willful neglect of duty, are felonies. Investigators stated that the investigation is not over.
You knew it was coming: Casting for a Lifetime movie on the Flint water crisis is underway. Singer Cher is slated to portray a Flint resident whose family is impacted by the water crisis.
Macomb Sinkhole — A football field-size sinkhole opened up in Fraser during the Christmas holidays and Governor Snyder recently declared a state of emergency for Macomb County because of it. The sinkhole damaged a number of houses as well as causing problems for thousands of residents due to restricted sewer flow capacity.
Gas prices — On January 1 the state tax on gasoline rose by 7.3 cents a gallon and the diesel tax increased by 11 cents. The increase will give Michigan the 5th highest gas tax in the nation, but will help to fund desperately needed road and bridge repair and improvements across the state. Vehicle registration fees will also be increasing this year.
Gus Harrsion passes — Gus Harrison, who led the Department of Corrections as director under four governors for 20 years, has died. A corrections facility is named in his honor. He also became the state’s first lottery director, serving from 1972-79.
Governor appointments — Governor Snyder has named former Republican House Speaker Jase Bolger of Calhoun County to the Michigan Civil Service Commission, succeeding Independent Thomas Wardrop, whose termed expired December 31, 2016. Wardrop served as chair of the Commission. Bolger’s appointment expires at the end of 2024.
The Commission is now two Republicans (Bolger and James Barrett, former Michigan Chamber of Commerce CEO), one Democrat (Robert Swanson, retired Director of the Department of Labor and Economic Growth), and one independent (retired State Personnel Director Janet McClelland).
According to Gongwer News, Bolger was a strong adversary of unions and instrumental in Michigan becoming a right-to-work state.
Snyder also recently appointed termed-out Rep. Al Pscholka (R- Stevensville) to become the state’s next Budget Director, replacing outgoing Budget Director John Roberts, who is leaving in February for a position with Blue Cross/Blue Shield of Michigan. Pscholka was most recently the chair of the House Appropriations Committee.
2017 Priorities — Dan Lauwers (R-Brockway) has been elected the new Republican House Floor Leader. He said an interview with Gongwer News that he would like to see the House address municipal retirement benefits and civil service changes in the new session of the Legislature.
He introduced with former Speaker Kevin Cotter, HJR MM of 2016 and House Bill 5677 of 2016, measures that would remove just cause as a basis for discipline of state classified employees and substitute language in the Constitution to allow the heads of the principal departments to discipline or dismiss employees “for conduct that directly and negatively impacts the department’s ability to accomplish its statutory duties in a fair, timely, equitable, and transparent manner.”
House Bill 5677 would have created the Grievance Procedure Act, which would establish a legislatively-mandated procedure for appeal of a disciplinary decision made by a department head, replacing Civil Service Commission Rule and collective bargaining agreement provisions on discipline and grievance procedures. HB 5677 was tie-barred to HJR MM and both died at the end of the legislative session.
Mr. Lauwers said it didn’t get enough consideration because opponents were automatically very negative, linking it with Flint. Lauwers said a manager should have the authority to discipline, demote or promote an employee.
Federal News
Trustees report — According to the Social Security and Medicare Trustees latest report in June 2016, Social Security can pay full benefits until 2034 and Medicare’s Hospital Insurance (Part A) trust fund through 2028. SS and Medicare are not “going bankrupt” imminently. Even if their trust funds were to be depleted, SS could still pay about three-fourths of scheduled benefits using its tax income, and Medicare HI could pay about 80 percent or more.
Our aging population is the major cost driver since the share of Americans 65 or older will grow by nearly half over the next 25 years. This demographic shift and the rising cost of health care are the major motivators to address the issue of financing SS and Medicare now rather than later to restore longer-term solvency.
For many years the two major parties have been at odds over how exactly to address the problem. Now that there is Republican party control of the Presidency and both houses of Congress, it is likely that reform of some kind will be high priority.
President Trump — In a Tweet in May of 2015, candidate Donald Trump stated:
“I was the first & only potential GOP candidate to state there will be no cuts to Social Security, Medicare & Medicaid. Huckabee copied me. — Donald J. Trump (@realDonaldTrump) May 7, 2015 .”
However, there is no statement on candidate Trump’s Web site about social security or Medicare. In his health care position statement, his first plank commits to repeal of the Affordable Care Act and replacement with Health Savings Accounts.
Repeal of the ACA necessarily impacts Medicare because the ACA contained considerable provisions improving Medicare’s financial outlook, extending its solvency 11 years. There were provisions reducing the growth in Medicare payments to hospitals and other health care providers and to Medicare Advantage plans, Medicare benefit improvements such as prevention programs and reducing the prescription drug “donut hole,” payment and delivery system reforms, higher premiums for higher-income beneficiaries, and other new revenues. A repeal of ACA will necessarily change Medicare in some way, so it is important to be watchful.
Congress and Medicare — The Republicans in Congress do not at this writing have a single plan for replacement of the ACA. The plan seems to be repeal the ACA immediately with a future effective date, then pass replacement bills. For example, the House Budget Resolution for Fiscal Year 2017, introduced by Health and Human Services (HHS) Secretary-nominee and current House Budget Committee Chairman Tom Price of Georgia (an orthopedic surgeon) in March 2016, proposed a full repeal of the ACA. The House Republican plan, “A Better Way,” introduced by Speaker of the House Dan Ryan in June 2016, proposed to repeal some, but not all, of the ACA’s Medicare provisions.
The Congressional Budget Office (CBO) has estimated that full repeal of the ACA would increase Medicare spending by $802 billion from 2016 to 2025. Full repeal would increase spending primarily by restoring higher payments to health care providers and Medicare Advantage plans. The increase in Medicare spending would likely lead to higher Medicare premiums, deductibles, and cost sharing for beneficiaries, and accelerate the insolvency of the Medicare Part A Hospital Insurance trust fund.
Congress and Social Security — U.S. Rep. Sam Johnson of Texas introduced on December 8, 2016, H.R. 6489, the Social Security Reform Act of 2017. It has been referred to the U.S. House Committee on Ways and Means. H.R. 6489 gradually raises the retirement age from 67 to 69 for Americans who are 49 or younger. It changes the formula that determines the size of a retiree’s initial payments and it mandates a less generous formula for calculating cost of living increases among other things.
The Social Security Actuary has analyzed HR 6489 and generally states that it will make the trust funds solvent for 75 years. But is the Johnson plan the way we want to do it?
U.S. Rep. John Larson of Connecticut plans on reintroducing the “Social Security 2100 Act,” in the 115th Congress (2017-2018). The “Social Security 2100 Act” would:
- provide an across-the-board increase for all beneficiaries of about 2 percent, a change that is projected to yield an annual increase for the typical retiree of $300;
- adopt a fair and far more accurate formula used to calculate the annual Social Security Cost-of-living Adjustment (COLA);
- provide tax relief for Social Security beneficiaries due to an increase in the threshold for taxation of Social Security benefits to $50,000 for individuals and $100,000 for joint filers, up from $25,000 and $32,000, respectively and
- give an increase in the special minimum benefit so that it equals up to 125 percent of the poverty level for an individual. This would be indexed in future years by increases in the average wage level prevailing in the national economy
What SERA Members Can Do — Medicare and SS preservation and advocacy organizations have been notifying their members about these matters and urging people to contact their members of Congress and the President-Elect about it immediately. Your economic and health security are at stake so please stay informed and communicate with your federal representatives. Contact information for them is available on the SERA Web site www.mi-sera.org on the Capitol News page and many other sources.
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 links to media stories of interest to state employees and retirees. Write to michigansera@comcast.net, giving your name, email address, and chapter name.
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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