Legislative Report

July 2005

It appears that agreement on issues is very difficult to come by in the halls of state government. Instead of a reduction in the number of issues outstanding between the legislature and the Governor, the list continues to grow. This is especially true as the 2005-6 budget is being debated. The cause of the major divide appears to center around politics and philosophical/values issues. The Republican controlled legislature has made some significant reductions in programs impacting vulnerable citizens (Medicaid and Social Services) as it attempts to come up with a balanced budget. Additionally, there is still no agreement on how to “jump-start” the economy through business tax measures and economic incentives to attract new businesses. Nero continues to fiddle while Rome burns. Stay tuned.

The following are some of the legislative activities during the month of June which may be of interest to retirees/seniors:

SB 522 is a legislative solution to an issue which has been of concern to the citizens of Lansing for the last several years. This bill, which has passed both the house and the senate, would allow utility companies to construct and maintain utility lines along a limited access highway without approval of the local government in which such a highway is located. The City of Lansing has been the lone holdout for the construction of a pipeline on the outskirts of Lansing along the I-96 corridor by the Wolverine Pipeline Company. Other municipalities have given their approval for the pipeline construction. This bill now goes to the Governor who will have to decide whether to sign or veto it.

HB 4636 was reported in last month’s Legislative Report. This bill would revise the item pricing law by eliminating the requirement that individual items have the cost of the item on them if certain conditions were met. Those conditions are that electronic scanners must be located throughout the store (one scanner for every 5,000 square feet of floor space) to allow customers to check the price, and signage with the item name and price prominently displayed which must be placed near the item. The bill provides that scanners must have an accuracy rate of 98%. The bill also provides for penalties for pricing violations. This is a very controversial bill with consumer interest groups opposing it while grocers and retailer organizations support the bill. The bill has been reported out of the Committee on Commerce and is before the full House for consideration.

HB 4834 is commonly referred to as the payday lending bill. This bill would regulate those businesses which loan money to customers for a fee and hold a customers check for a period of time before negotiating or cashing the check. The fee which such firms may charge and the amount they may loan is currently unregulated. These lending firms would have to become licensed. Under the bill, a firm could enter into one transaction with a customer for up to $500 and could charge a service fee of up to 15% of the transaction, plus an additional amount not to exceed $5 for database verification and the firm’s cost of complying with the act. The maturity date could not exceed 31 days. There would have to be a signed agreement between the borrower and the lender. An agreement could not be renewed but could be extended if no additional fee was charged and if the balance did not exceed the amount owed on the original agreement. The bill as it passed the House was a compromise bill which would make it more palatable to the Governor. The major issue involves the amount of the service fee for such loans. It has gone to the Senate where it was originally assigned to the Committee on Banking and Financial Institutions and then reassigned to the Committee on Economic Development, Small Business, and Regulatory Reform.

HB 4959 is a bill introduced in response to a U.S. Supreme Court decision declaring Michigan’s law prohibiting the sale of wine to residents by out-of-state wineries unconstitutional. The Supreme Court ruled that because Michigan law allows the direct sale/shipment of wine products to Michigan residents by in-state wineries, it cannot prohibit the direct sale/shipment of wine to Michigan residents by wineries located in other states. This bill would change the current law and prohibit the direct sale/shipment of wine to Michigan residents regardless of where the winery is located. The supposed rationale is to make sure that wine is not sold to minors who may order wine and have it shipped from a winery. So rather than come in compliance with the Supreme Court decision by including non-state wineries in direct sales, this legislation is banning all direct sales/shipment. All wine sales would have to go through a middle man — a wine distributor under this bill. This is being done at the behest of the Michigan Beer and Wine Wholesalers Association which has one of the most powerful lobbyist operations in the state. Reportedly, hundreds of thousands of dollars are contributed to legislators’ campaign chests each election cycle by the Association. The bill has been reported out of the Committee on Regulatory Reform and is on the House floor. Independent Michigan wine producers are not happy with this bill and are supporting HBs 4987-90 which would allow direct wine sales/shipment by both in-state and out-of-state wineries.

HB 4217 would require that petitions proposing constitutional amendments, the initiation of legislation, or a referendum on legislation would have to indicate whether the circulator of the petition was being paid, and if so, by whom, stating the name of the individual or organization providing the compensation. Such information would have to be on the front of the petition in 10-point bold face type. This bill has passed the House and has gone to the Senate Committee on Government Operations.

HB 4148 is a repeat of a bill which was vetoed by the Governor last year. This bill would require the Director of the Department of Civil Service to create a new office within that Department responsible for the consolidation and reorganization of all human resource operations within the executive branch of state government (including the Departments of Attorney General and State). Eventually, all human resource authority, power, duties, responsibilities, functions, personnel, equipment, and budget resources would be located and performed in the new Office of Human Resource Operations in the Department of Civil Service. This bill has passed the House and has gone to the Senate Committee on Local, Urban, and State Affairs. If passed by the Senate and presented to the Governor, she will most likely veto the bill again. Administration officials testified against the bill while it was in the House committee.

HBs 4418-19 are intended to revise the law to make the recommendations of the State Officers Compensation Commission (SOCC) consistent with the Constitutional Amendment approved by the voters in August, 2002. The provisions of the bill would (1) require the legislature to approve the SOCC recommendations by a majority vote for them to be effective, (2) allow the legislature to reduce the SOCC recommendations but by the same proportion for all state officers, (3) prohibit the legislature from reducing salaries and expense allowances below current levels, (4) delay the effective date of the recommendations until the term of office immediately following the next general election, and (5) include the Secretary of State and the Attorney General in the list of officers to whom the SOCC recommendations apply. The bills have passed the House and gone to the Senate Committee on Government Operations.


Supreme Court on Status of Health Benefits — At long last, the Michigan Supreme Court has rendered a decision on whether retiree health benefits are an accrued benefit and whether statutorily granted benefits create a contractual obligation. The decision was the result of a lawsuit filed by several school employee retirees who claimed that their pensions were being diminished by increased cost of health care benefits in violation of the Michigan Constitution. The Court ruled that the statute that provided health care benefits to school employee retirees did not create a contractual obligation which could not be changed. The Court also found that health care benefits are not an accrued benefit similar to retiree pensions. Thus there is no violation of the Constitution or statute by passing on some health care costs to school employee retirees. The Court opined that accrued benefits are limited monetary benefits which grow over time, which is not the case with health care benefits. A dissenting opinion by two justices agreed that a contractual obligation did not exist, but did not believe the trial record was clear as to whether a substantial impairment in pension benefits existed. The thirty page opinion dealt specifically with the school employees system, but it appears to be applicable to all retirement plans under the State Retirement Systems.

Breakdown in SERS Membership — Retirees exceed the number of active employees in the State Employee Retirees System. In 2003-4, there were a total of 80,395 members of SERS of which 45,619 were retired members of the system. The reasons for the increase in retired members and the decrease in active members are twofold. SERS is now a closed system inasmuch as new hires in state government since 1997 have gone into a defined contributions instead if a defined benefits program. Also, the early retirement programs of 1997 and 2002 changed the status of some 13,000 employees from active to retired.

Prescription Drug Scam Alert — Attorney General Cox has issued a warning to seniors about a telemarketing scam regarding prescription drugs. Seniors are being called with offers to assist them in enrolling in the Medicare prescription drug program or to tell them that their Medicare card is about to expire and asking for personal information such as Social Security number, bank account number, or credit card number. You should never give out person data to solicitors. Also, you should request that anyone making such an offer for assistance, do so in writing. Additional information on this subject can be found on the Attorney General Website.

Insurance Purchasing Groups — The Office of Financial and Insurance Services and the Governor’s Office of Faith Based Initiatives are seeking the assistance of insurance companies in recognizing and cooperating with church and community organizations being formed to negotiate reduced rates for home and automobile insurance in urban areas of the state. In forming the purchasing groups, it was noted that the current rates may not be unreasonable, but are unaffordable. It was further noted that insurance companies should first look at driving records and home insurance claims records rather than street addresses.

Long-Term Care Executive Order — Governor Granholm has issued Executive Order 2005-14 dealing with long term-care. The thrust of the Executive Order is threefold: (1) Establishes a Long Term-Care Supports and Services Office to coordinate and implement the nine recommendations of a previously established task force on how to improve nursing homes, allow consumers more power, and make citizens aware of their choices when they decide to retire. (2) Establishes a Supports and Services Advisory Commission to guide and advise the Office [50% of commissioners will be residents in long-term care Facilities], and (3) Authorizes three demonstration projects on the best way to create a long-term care single point-of-entry system which would assure a wide range of options and explain what they are.

People in the News

Dick DeVos — of Amway fame, and a wealthy conservative Republican from Grand Rapids has announced his candidacy for Governor. His wife, Betsy DeVos, is former Chairperson of the state Republican Party.

James Barcia — a state senator and former U.S. congressman has had federal criminal charges involving laundering of money dropped. He was accused of participating in a plan to funnel money to the campaign of U.S. congressional candidate Carl Marlinga who was then Macomb County prosecutor.

Elizabeth Weaver — who earlier announced her intention to resign as justice of the Michigan Supreme Court later this year, has withdrawn that announcement. She apparently believes she can work on the issues of terms limits and the Supreme Court appointment process better from within than as a private citizen.

Elizabeth Haar — who has been serving as acting CEO of the State Accident Fund since the resignation of James Epolito has been named permanent CEO of that organization by the Blue Cross/Shield board.

James Epolito — who recently suddenly resigned as CEO of the State Accident Fund has been named as CEO of the Michigan Economic Development Corporation. Don Jakeway, its previous CEO will continue with MEDC concentrating specifically in the area of economic development.

Dan Wyant — Director of the Department of Agriculture has announced his resignation effective July 29. He will become president of the Edward Lowe Foundation, a fund which assists entrepreneurs.

Jerry Moskal — a veteran newspaperman died at the age of 76. He served as a Lansing State Journal writer and Capitol Bureau Chief for Gannett papers for many years.

Editor’s note: Alvin Whitfield is former President of the Lansing SERA Chapter and former Chairperson of the Michigan SERA Council and current Legislative Representative for both the Council and the Lansing Chapter. He may be contacted at 1241 Runaway Bay Drive, C-3, Lansing, Michigan 48917; phone 517/703-9666; e-mail: alwhit@worldnet.att.net.

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