December 8, 2019
The Legislature’s last day before its holiday break is December 19 with plans to return January 8, 2020.
The standoff between Democratic Governor Gretchen Whitmer and the Republican-led legislature on the Fiscal Year 2020 budget (which started October 1, 2019) appears to have been partially resolved, a good start at accommodating divided government. On December 4, the Senate unanimously passed SB 376 and SB 152 which provide a combined $573.5 million in restored funding ($261 million General Fund, $70 million School Aid Fund) from vetoes and transfers the Governor made on September 30 and October 1. The bills restore funding to 27 of the 147 line items Whitmer vetoed. Put off until 2020 are negotiations on supplemental appropriations concerning items omitted from these bills.
The House and Senate also passed along party lines shell bills (SB 616, HB 5176) that will make some yet-unknown changes in state Administrative Board powers such as advance notice to the Legislature when the Governor intends to transfer money within a department. Two bills (SB 618, HB 5177) to establish a new July 1 budget deadline for lawmakers were also introduced and passed unanimously.
The proposed budget compromise bills include items the legislature left out of their proposed budget that the Governor wanted and some items the Governor vetoed that the legislature wanted. There is $38 million in private college scholarships, $35 million for charter schools, $27.4 million for local governments in lieu of taxes (PILT payments), $16.6 million for rural healthcare, $15 million for IT upgrades, $14.8 million for county jails, $13.1 million for secondary road patrols, $10.5 million to hire new corrections officers, $10.7 million for pediatric psychiatrist raises, $10.5 million for early literacy coaches, $10 million for school security upgrades, $5.1 million for 37 “critical access” hospitals, $4.5 million for lead paint abatement, $4 million in veterans grants, $1.25 for autism navigators, and $350,000 for autism intervention. The $13 million in individual bridge projects Whitmer vetoed is now going into the larger Transportation budget for general road and bridge repair.
The vetoed money for Pure Michigan is absent as is the $175 million the Governor wanted for her Reconnect Michigan program to provide tuition-free education opportunities for those 25 and older who are already working and want to earn an industry certificate or associate degree. The Department of Corrections got money to upgrade tethers and prisoner programming. There is $10 million for the 2020 Census and $2 million for the implementation of Proposal 2 (Redistricting Commission start-up) in the Department of State budget. The $37.26 million for the Going Pro skilled trades training program also didn’t make the bill.
The budget disagreements began with Democratic Governor Whitmer’s budget proposal in March which included a significant effort to address longstanding underfunding of road improvements and education with a 45 cent gas tax increase. GOP-leaders declared opposition to a gas tax increase and the Legislature went home for the summer promising negotiations, which never happened. At the last moment in September, the Governor relented on her tax plan to avoid a partial government shutdown and the legislature sent the Governor its unnegotiated appropriation bills. After a 48-hour review, the Governor vetoed 147 budget line items totaling $947 million of a $10 billion General Fund budget on September 30. On October 1 she used the Administrative Board to move $625 million around within 13 departments.
PENSION TAX CHANGE MAY MOVE IN 2020
Senate Finance Committee Chair Jim Runestad (R-White Lake) has indicated that he intends for his committee to work on pension tax bills now that the first budget cycle with divided government has passed. Two pension tax bills, SB 13 and SB 17, were introduced in January 2019 and have sat in his committee since. Governor Whitmer made pension tax repeal a campaign priority and included it in her budget proposal. Most of the members of the Legislature have said they favor repealing it. Estimates are that a total repeal may cost more than $300 million in lost state revenue.
UIA FRAUD CASE UPDATE
In 2013, the Unemployment Insurance Agency instituted the Michigan Data Automated System to detect unemployment fraud through a computerized review. In 2015 MiDAS wrongfully caused action against over 37,000 unemployment beneficiaries without human review of the MDAS decisions. By the summer of that year, human review was restored. It was found that about 22,000 out of 58,000 cases had an error rate of 93 percent by MiDAS. However the state continued to defend the UIA’s actions. The law at the time required the accused to pay back the benefits plus interest plus penalties equal to four times the benefits they received. Many owed tens of thousands of dollars and saw their wages garnished; some had to declare bankruptcy, and lost houses, credit ratings, cars and other possessions over the fiasco. A class action lawsuit was brought by the beneficiaries. The Snyder administration fought the case vigorously because hundreds of millions of dollars were at stake.
On December 5, after years of legal maneuvering, the Court of Appeals ruled unanimously against the state’s motion to dismiss the case (Bauserman v. Unemployment Insurance Agency, COA Docket No. 333181) and held the wrongfully accused can continue to discovery in the Court of Claims. Now Governor Whitmer and Attorney General Nessel have to decide whether the state will continue to fight and appeal the decision to the Michigan Supreme Court, or initiate settlement talks that could result in additional pressure on the state’s finances. Whitmer’s UIA Director appointee, Steve Gray, has conflicted himself out of the case because he did some work for the plaintiffs when he ran a clinic at the University of Michigan to help persons wronged by the unemployment system.
There also is a federal lawsuit on the same topic brought by different plaintiffs. That case is now in discovery.
RETIREMENT INCOME DEDUCTION FOR SURVIVING SPOUSE
The bill to give surviving spouses of some retirees the benefit of their deceased spouse’s age classification for Michigan income tax purposes, HB 4171 sponsored by State Rep. Julie Alexander (R-Hanover), passed the House unanimously on November 7. The bill has been referred to the Michigan Senate Finance Committee chaired by State Senator Jim Runestad (R-White Lake) as the next step in the process.
LIMITED GUARDIANSHIP BILL MOVES TO HOUSE FLOOR
The bill to allow a probate court judge to approve a limited guardianship to supervise visits with incapacitated individuals, SB 110 sponsored by State Senator Peter Lucido (R-Shelby Township), passed the Senate unanimously on October 2, was reported out of House Judiciary Committee in November, and is now on third reading by the full House without amendments.
Testimony in hearings indicated that some guardians or others responsible for an incapacitated individual are denying visits from relatives and friends. The bill would give relatives and friends of an incapacitated individual who have been denied visits the right to approach a probate court to appoint a limited guardianship to supervise visits.
REDISTRICTING COMMISSION NEWS
Drawing — Broadcast live through Facebook with reporters and other interested parties watching, the Secretary of State’s office on November 19 held an official drawing of 250,000 registered voter names from the registered voter database for the purpose of sending them a personal invitation to apply for the new Citizen Redistricting Commission. The independent auditing and accounting firm Rehmann, LLC executed the random selection process.
The invitation letters to voters should go out in early January 2020. Anyone can apply on-line at www.michigan.gov/sos. Applications must be notarized before submission and are due by June 1, 2020. Every Secretary of State branch in Michigan will notarize applications for free, with several township and city clerks also offering the service. A final, randomized drawing to create the 13-person commission — which will include four Democrats, four Republicans and five independent or minority party voters — is expected to take place in September 2020. The commission would be seated by October 2020.
Legal challenges — On November 25, the two lawsuits challenging the Redistricting Commission were denied a preliminary injunction by U.S. District Judge Janet Neff. The first case was brought by those who, under the law, would be prohibited from Commission membership including anyone who has served in a partisan post or run as a partisan candidate within the previous six years as well as their immediate family members. The other challenge brought by the Michigan Republican Party disputes the ability of persons to self-identify their political affiliation, saying there is no way for the Republican Party to assure those claiming to be Republican are in fact Republican. Both plaintiffs have given notice of intent to appeal the decision.
The lawsuits are Daunt v. Benson, USDWM Case No. 19-614 and Michigan Republican Party v. Benson, USDWM Case No. 19-669.
VNP launches Voters Against Corruption — Voters Not Politicians, the nonpartisan, grassroots group that led the drive to end partisan gerrymandering in Michigan through a successful constitutional amendment ballot proposal, is hosting a series of live and on-line/phone town hall meetings to discuss Michigan’s last-in-the-nation integrity rating and how voters can work for policies that fight corruption, hold politicians accountable, and bring integrity to state government.
VNP gathered feedback from people across the state through surveys and town halls to learn more about what issues the organization can address next. Some of the suggestions include fixing Michigan’s strictest-in-the-nation term limits, expanding access to public records, closing the revolving door from legislator to lobbyist, campaign finance reform, and changes to “lame-duck.”
VOYA ERROR ON 401(K) ACCOUNTS
The state’s 401(k) and 457 retirement savings account record keeper Voya erred in giving the Stable Value Fund an incorrect price from December 1, 2017 through September 26, 2019. Hundreds of state employees had their accounts adjusted up or down. The Department of Management and Budget spokesperson said “most of the changes were minor” and less than $100. He said there were 125 accounts reduced in value by more than $1,000 and 121 accounts increased in value by more than $1,000. State employees wanting a more thorough explanation should contact a Voya representative. The letter employees received from Voya provided a number and hours for employees to reach a customer service representative.
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