Capitol News

February 4, 2017

The Legislature returned January 11 for House swearing-in ceremonies and leadership elections. The new Speaker of the House Tom Leonard (R-DeWitt) and Minority Leader Rep. Sam Singh (D-East Lansing) are both from the Lansing area.

Having done much of the work on a corrections and criminal justice reform package of 20 bills over the last several years, the Senate unanimously passed 17 of its criminal justice reform package and sent all the bills on to the House where they were assigned to the House Michigan Competitiveness Committee chaired by Rep. Lee Chatfield (R-Levering).

In another bi-partisan effort, House members have rolled out an 11-bill package subjecting the Legislature and Governor’s office to the Freedom of Information laws that would allow the public access to documents with some exceptions and exclusions. These are basically the same bills that passed the House last September. The bills have been referred to the House Committee on Michigan Competitiveness and are expected to pass easily. Michigan is one of only two states that exempt its Legislature and governor from open record laws.

NEW BILLS SO FAR

Several bills have been introduced in the new session of the Legislature of specific interest to Michigan SERA members and seniors in general.

  1. The proposal to roll back the income tax (HB 4001) until it is eliminated over 30 years, if passed and signed into law, would supply some tax relief for all Michigan residents but remove a $9 million revenue source for all state programs. Neither a replacement tax nor designated programs to cut are proposed in this bill, but will likely come up for discussion in budget negotiations in any tax decrease is seriously contemplated.
  2. Again we are seeing bills to modify or eliminate the pension tax in HB 4052, 4055, 4083, 4092, 4132, 4159, and SB 41, all Republican-sponsored bills. These sorts of bills have not even gotten a hearing in the last four years. Since the House members who passed the pension tax in 2011 are now gone through term limits, it is thought that the House, at least, might entertain some positive movement on pension tax modification or elimination.

    Restoring the pension exemption from the income tax would decrease state revenues by over $300 million by my calculations in 2011, but it might attract some votes from those who want to decrease the scope and size of state government as well as those who sympathize with the plight of pensioners on relatively fixed incomes. Again the issue is replacement revenues or program cuts.  Paying for it with projected growth in the state economy is another option. The Governor is still opposed in statements he has made recently.
  3. New House member Darrin Camilleri (D-Brownstown) and Sen. Jim Ananich (D-Flint) have proposed exempting seniors from increases in vehicle registration fees in HB 4040 and SB 71. Again, the road improvements that vehicle fees support would take a cut of unknown amount at this time.
  4. SB 39 sponsored by Sen. Rick Jones (R-Grand Ledge) revises exceptions to the definition of surviving spouse in relation to funeral representative. The bill has already moved out of Committee. The opportunity to designate a funeral representative was added to our probate code last year. This bill provides for the situation where someone dies intestate (without a will) but is estranged from the spouse.
  5. I am following SB 60 concerning child and dependent care tax credit because this tax credit was eliminated in the 2011 income tax overhaul but was important to some SERA members who are financing the care for disabled spouses, children, parents or other relatives. This same bill has gone nowhere in the last four years.
  6. Once again auto insurance reform bills are on the radar and the first of these is HB 4049 to bring more sunlight onto the Catastrophic Claims Association assets.  I follow this because most of us have vehicles and auto insurance, and like utilities, are a built-in expense of the cost of living in Michigan.

Former Rep. Jim Townsend’s bill protecting surviving spouses’ pension tax tier based on the deceased spouse’s older age will be reintroduced soon I am reliably informed. However, the Michigan Department of Treasury by internal policy allows a younger surviving spouse to claim the age of a deceased spouse for the purpose of determining the pension tax tier. If you are in this category, please bring this to the attention of the person doing your state taxes.

PUBLIC RETIREMENT TASK FORCE

Over 300 local units of government that provide retiree health care and pensions have $14 billion in unfunded liabilities.

The Michigan House had introduced in late November last year a sweeping set of bills that would have severely impacted retirement benefits for all municipal employees in Michigan and potentially all public employees. However, the Governor opposed acting on the matter during Lame Duck and the matter was temporarily shelved.

The Governor announced in his 2017 State of the State plans to name a task force composed of legislators, local government, and local government employees that will meet in 2017 to develop recommendations for addressing these unfunded liabilities. We will watch this Task Force for any implications for other public employees’ retirement benefits.

Meanwhile the Municipal Employees' Retirement System, which handles 85 percent of the state's municipal pension plans, said recently that investment returns in those plans were 11.1 percent in 2016. For MERS, the last 35 years have averaged a 10.12 percent annual gain on its invested pension portfolio, well above the assumed 7.75 percent used to calculate funding required by municipalities. But even these investment returns are still not sufficient to fund both pensions and retiree health care for many municipalities.

VOTER FRAUD NOT FOUND

Anderson Economic Group did a second analysis of Michigan’s November 8 election after President Donald Trump alleged widespread fraud and substantial numbers of illegal votes cast. In a statement, AEG said that using accepted election forensics it found no evidence of hacking or fraud. Voting in 2016 followed expected patterns similar to 2012 in all but 3 counties, and those anomalies were explainable. It found that votes for Republicans increased across the state, and not in any patterns that would show tampering.

AEG analysts compared populations of foreign-born residents to changes in partisan support in each county. "Of the top ten high-immigrant population counties, nine saw the share of voters favoring the Democratic Party candidate fall from 2012 to 2016," with Washtenaw County being the only one to see a gain for Democrats.

OKRIE UPDATE

Gary Supanich, attorney in the pension tax challenge Okrie v State of Michigan, reports that the on January 5 the Michigan Supreme Court denied Okrie a hearing to appeal the adverse decisions in the courts below.

Supanich is considering a reconsideration request. Should that fail, Okrie has exhausted the possibilities in state court using the many different arguments raised. The potential for a federal court challenge would require more funding for the attorney work required to do it.

FEDERAL NEWS

Most of the news at the national level has focused on the inauguration of the new president, his nominees to cabinet positions and sub-cabinet positions, 18 executive orders in the first two weeks, and lawsuits and massive demonstrations concerning all of the above.

The appointment of the Health and Human Services Secretary is probably the most important to seniors because that position oversees the Medicare function. Member of Congress Dr. Tom Price was nominated for this position. He has introduced legislation to totally repeal the Affordable Care Act in the last several sessions of Congress. Total repeal would eliminate some of the program expansions and cost savings in Medicare that the ACA established. Both Michigan U.S. Senators Stabenow and Peters have announced opposition to the nomination of Price.

Medicare — No Medicare replacement bill has been introduced yet and from all the commentary, Republicans are still pondering just how they will handle the repeal and replace mantra they have espoused. I am beginning to hear more talk of repair rather than repeal, but we will have to wait and see.

The Michigan House Appropriations Committee was recently told that a University of Michigan report showed that most of the state’s hospitals have seen dramatic savings in uncompensated and charity care under the state’s Medicaid expansion program (Healthy Michigan) that is offered because of the Affordable Care Act. Without it Michigan would be on the hook for $255 million more per year to cover the mental health and other programs the Medicaid expansion now helps to fund for over 600,000 Michiganians.

Infrastructure — President Donald Trump’s transition team released in December an internal list of its top 50 national emergency and security infrastructure projects. The list includes three from Michigan: completing the M-1 Rail Streetcar line in Detroit, constructing the Gordie Howe International Bridge over the Detroit River and building a new shipping channel at the Soo Locks.

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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