March 6, 2022
You know it’s close to spring when potholes sprout in Michigan along with the snowdrops and crocus. Governor Whitmer signed an Executive Directive recently ordering a speed up in pothole repairs on State trunk-line highways, but that is not going to fix local roads. Report them to your local public works department.
BUDGET AND TAX CUT PROPOSALS
This year’s budget negotiations are quite unique. There is a whopping $7.2 billion revenue surplus due to greater than expected State tax revenues from a booming State economy and federal pandemic relief funds. The Governor’s proposed $74.1 billion budget was rolled out February 9. It included $18.4 billion for schools, $6.3 billion for roads and infrastructure, and hundreds of millions in tax cuts for working families and seniors. Of greatest interest to SERA is the proposal to eliminate or modify the pension tax adopted in 2011.
Governor’s Plan — The Governor’s plan to eliminate the tax on retirement income would save half a million households on average $1,000 a year according to the State Budget Office. It would be phased in over four years, with a full cost by Fiscal Year (FY) 2025 of about $500 million in foregone annual State revenues a year. It would again exempt public pensions and restore deductions for private retirement income, including private-sector pensions, withdrawals from individual retirement accounts (IRAs), and the portion of a 401k account that is subject to an employer match.
GOP Plan — The GOP-backed plan is contained within Senate Bill (SB) 768 sent to the Governor on March 3. It would lower the personal income tax rate from 4.25 percent to 3.9 percent, provide a $500 child tax credit, and reduce the age for receiving a tax exemption on retirement income to age 62 (from 67) if the retiree qualifies after exercising the standard deduction.
According to the Senate Fiscal Agency analysis of the bill, the pension tax provision would increase the amount of income certain individuals age 62 or older could deduct. Individuals affected by the bill would include those born after 1945 and who are at least 62 years old, although some individuals born after 1945 who do not have retirement income affected by the bill would not experience any change in tax liability. Some taxpayers would not have sufficient income to fully claim the increased deduction amounts. If effective April 1, 2022, the proposed increased deduction amount for certain individuals age 62 or older would reduce State revenue by $295.5 million in FY 2021-22, $754.4 million in FY 2022-23, and $622.3 million in FY 2023-24. These reductions would continue to rise in magnitude as population demographics increased the number of taxpayers eligible for the deductions provided under the bill.
Negotiations — Upon news of the GOP’s $2.5 billion proposed tax cut, the Governor sent a letter to the leadership in both chambers saying the proposal was fiscally irresponsible, unsustainable, and could increase costs for Michigan families at a time when they can least afford it. “This legislation will create a massive, ongoing, multi-billion-dollar budget deficit. This would force the Legislature to either raise taxes on Michigan families, or make deep and painful cuts to public schools, road repairs, and police and fire protection.” While she said she will not support SB 768, she expressed encouragement that the Legislature agrees “that putting money back in the pockets of Michigan’s retirees and working families is a priority.” Conclusion: budget negotiations are going to be very interesting this year and retirees subject to the current pension tax born after 1945 are likely to see some modification or elimination of the retirement taxes they pay.
REMOVE CAP ON OUR COLA
In a presentation to the SERA Coordinating Council (CC) delegates on March 4, Sen. Curtis Hertel (D-East Lansing) stated the Governor’s office is aware of the need to address the 25-year freeze on the $300 cap to our annual defined benefit pension supplement. Hertel is the Democratic Vice-Chair of the Senate Appropriations Committee and chief sponsor of SB 775 to remove the $300 cap and simply provide a 3 percent increase to our base pay at retirement every year similar to those in the Michigan Public School Employees MIP plan. The preliminary cost estimate to the pension fund is $706 million if the bill were enacted as written.
That $300 established in 1987 is now worth less than $129 due to an average 2.62 percent per year inflation since then. The cap affects about two-thirds of all State employee retirees. In 1987, a first class stamp cost 22 cents, a gallon of regular gas was 95 cents, and a dozen eggs were 78 cents. If our $300 cap had kept up with inflation, we would be getting $742.47 a year now.
SB 775 was introduced December 7, 2021, after several months of work by SERA advocates. Please contact your State Senator and urge a hearing and passage of SB 775. SB 775 needs to be one of the priorities for the State’s budget negotiations. Contact information is available at https://senate.michigan.gov/.
As of this date there are 16 petition drives to initiate statutes or amend the Michigan Constitution.
At its March 4 meeting, the SERA CC voted to endorse the recommendation of the SERA CC Executive Committee to support Promote the Vote 2022 to secure more voting rights and improvements and Raise Michigan, to increase the minimum wage to $15/hour by 2027. The same recommendation urged opposition to Audit Michigan which would require a forensic audit of the 2020 and future elections. At its November 2021 meeting the SERA CC voted to oppose Secure MI Vote that would make it more difficult to obtain and vote by absentee ballot and Unlock Michigan 2 that would reduce the authority of state and local public health authorities during health emergencies like the COVID pandemic.
Newly proposed since my last report are:
Initiated statutes require 340,047 valid voter signatures and must be submitted to the Bureau of Elections by June 1, 2022, for the November 8 general election. Constitutional amendments require 425,059 valid voter signatures submitted to the Bureau of Elections by July 11, 2022, for the November 8 general election.
SERA is a non-partisan organization that does not endorse or oppose partisan candidates or political parties.
In a recent poll sponsored by the Michigan Independent Redistricting Commission, 65 percent of Michigan voters surveyed said that the redistricting commission — made up of randomly selected voters who applied for the job — should continue to draw Michigan’s political districts instead of handing the job back to State lawmakers. The preference was the same regardless of party affiliation.
Gongwer News Service recently gave the Michigan Independent Redistricting Commission the 2021 Newsmaker of the Year Award. It easily grabbed more reporters’ ink than just about any other story other than the pandemic in 2021.
In recent bi-monthly meetings, the Commission has discussed its future: how often to have meetings, responding to lawsuits, and how to cover costs. Despite a $1.2 million deficit, it voted itself a 7 percent raise on February 24.
Legal Challenges — There have been three lawsuits challenging the maps the Commission adopted on December 28, 2021. The Michigan Supreme Court on February 26 denied reconsideration of its earlier decision dismissing the Detroit Caucus challenge claiming dilution of the Black vote in Detroit districts drawn by the Commission.
On March 4, a three-judge panel of the U.S. District Court in the Western Michigan District dismissed one of the two claims in a Republican-oriented challenge to the U.S. Congressional district maps in Banerian v. Benson (USWDM Docket No. 22-00054). The court held the issue was nonjusticiable under U.S. Supreme Court precedent related to partisan gerrymandering. Claims regarding allegations that the plan for the U.S. House violates the “one-person, one-vote” principle remain. Oral arguments on the matter are scheduled for March 16.
Still in the briefing stage is the lawsuit filed by the League of Women Voters of Michigan and others alleging the State House maps drawn by the Commission do not comply with the partisan fairness requirement in the Michigan Constitution and have a Republican bias. The Michigan Secretary of State and a Washington, DC organization, Emerging American Majorities, filed friend-of-the-court briefs in the case.
Rep. Gary Howell (R-North Branch, Lapeer County) has asked Attorney General Dana Nessel for an AG Opinion on whether the Commission complied with redistricting criteria in the Michigan Constitution.
Voting and Elections
OAG Rreport — The Michigan Auditor General recently released an audit requested by legislative Republicans amid continued claims of fraud or improprieties in the 2020 election. The audit found some minor issues for the Bureau of Elections to fix, but largely found elections occurring between May 7, 2019, and November 3, 2020, were accurate and secure. The OAG report said that in the most recent presidential election, 1,616 votes were cast by dead individuals, just 0.02 percent of all votes cast, and not enough to change the 154,000 vote margin Biden garnered. Of those, most were legitimate voters casting absentee ballots but dying before Election Day. Death records and the Qualified Voter File were not reconciled in time to flag the deaths.
JCAR and SOS — The Secretary of State (SOS) has proposed administrative rules about voter signature verification procedures. In February, the legislative Joint Committee on Administrative Rules (JCAR) requested changes along party lines that Republicans said would resolve conflicts with existing law while addressing their opposition to creation of a presumption that a voter’s signature is genuine when reviewing an absentee ballot. Democrats stated the suggested Republican changes would make signature verification more difficult and could deter some people from voting. On March 4, SOS Jocelyn Benson rejected the JCAR requested changes. JCAR has 15 session days to accept the SOS proposed rules, or it can introduce legislation on the same topics if lawmakers wish to stop the rules or delay their implementation.
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