Legislative Report

April 2007

Fiscal chaos reigns in Lansing. So what else is new, you ask. Over the last four years, I usually have begun this report with observations regarding the state’s fiscal crisis resulting from a structural deficit. It occurs to me that I could use the beginning paragraphs of any of those previous 48 or so articles to begin this report. Unfortunately, the nature of the problem has not changed other than it has gotten worse.

An indication of how much the state’s fiscal problems have deteriorated is the front page editorial which appeared in the Sunday, April 1, edition of the Detroit Free Press. The editors took both the Governor and the legislative leadership to task for their lack of leadership and inability to put politics aside and craft a permanent solution to the fiscal crisis. The headline for the editorial read “Put Michigan First — Now.” The article went on to state that “This stalemate threatens to wreck Michigan’s credit rating, saddle the state with a reputation for fiscal buffoonery and suck away more tax dollars to higher interest payments.

The urgency of the front page editorial was contained in a paragraph which stated “The Detroit Free Press rarely in the last century has given front-page space to its editorial opinions. But when people ask us, ‘What on earth is going on in Lansing?’ we feel compelled to say in this prominent way ‘nothing much’ except partisan hissing.”

The Free Press article concluded with this comment: “How bad must things get before this state’s so called leaders realize whom they signed on to work for — and lead”?

The state treasurer has warned that a cash flow problem may occur during the month of May. This may necessitate borrowing money from one of the established dedicated state funds. The State Employees Retirement Fund has been mentioned as a possible source for this loan. Please be assured that if the Retirement Fund is tapped, it will not impact our pension payments. This is an unusual but not unprecedented action.

Legislative Committees did manage to ignore the fiscal problems and attend to more mundane matters. The following is a report of legislative committee activities which may be of interest to SERA members:

HB 4440 is a bill intended to stimulate housing sales. It would amend the General Property Tax Act to suspend from March 1, 2007 to September 1, 2008, an increase in taxable value upon the transfer of ownership of property exempted as a principal residence from the tax levied for school operating purposes. Currently, under the State Constitution, the taxable value of a parcel of property may not increase from one year to another by more than 5% or the increase in the consumer price index, whichever is lower, until there is a transfer of ownership. Once a property is sold (ownership transferred) the parcel is then taxed on its State equalized valuation (50% of its true cash value), creating the so-called “pop up” tax. Under the Act, a transfer of ownership includes, but is not limited to, various conveyances and transfers listed in the Act. The Act also describes transfers that are not included in the definition. Under the bill, during the eighteen month moratorium period, “transfer of ownership” would exclude the transfer of property exempted, as a principal residence from the tax levied by a local school district for school operating purposes if the person to whom the property was transferred claimed the exemption for tax purposes. This is a controversial bill which some believe flies in the face of Constitutional prohibitions. It has passed the House and gone to the Senate Committee on Finance.

HB 4103 is a consumer protection bill which would allow a person to place a freeze on his/her credit report. Essentially, no one could access a person’s credit report once the freeze was placed on it. The person who placed the freeze could lift it via the use of a password to facilitate purchases they want to make requiring a merchant to check on their credit worthiness. There would be a small fee ($10) for placing the freeze and temporarily lifting it. One of the more controversial aspects of the bill is the 15 minute deadline placed on the merchant to temporarily lift the freeze for the purposes described above. Some believe this timeframe places an unwarranted (if not impossible) burden on the credit reporting agency. The bill also provided that certain entities (law enforcement, for example) could access a “frozen” report under certain circumstances. The bill has passed the House and gone to the Senate Committee on Banking and Financial Institutions.

HB 4239 addresses the election season practice of unidentified prerecorded calls being made and e-mails being sent on behalf of various political candidates. These are commonly known as “robo” calls. Under this bill, such electronic means of communication would be required to clearly state at the beginning of the message, the name and address of the person paying for the communication, the same as is required for radio ads under the Michigan Campaign Finance Act. Also, the bill requires such messages via telephone not to be made between 9 p.m. and 9 a.m. This bill has passed the House and gone to the Senate Committee on Campaign and Election Oversight.

HBs 4064 & 4280 is a bill which anticipates a cut in the federally funded low income home energy assistance program block grant funds. To prevent cuts in this program for Michigan residents, HB 4064 would create a new Home Heating Fund to fund home heating credits under the Income Tax Act. HB 4280 would amend the Income Tax Act to allow taxpayers to contribute to the Home Heating Credit Fund through a check-off. The check-off could be in increments of $5. The state General Fund would be required to match the amount of cumulative designations made by taxpayers to the Fund. The two bills are tie-barred, which means unless both are passed, neither will take effect. The Fund would be administered by the Department of Treasury with interest earnings being returned to the fund. Donations could also be made to the Fund. A substitute bill has passed the House and gone to the Senate Committee on Energy and Technology.

SBs 203, 204 & 374 are bills to come in compliance with the Federal Medicaid requirements. Since 1993, the federal government has required states to establish an estate recovery program for Medicaid recipients who are age 55 or older and receive Medicaid long-term care services. Michigan is the only state which has not complied with this requirement. Some $4 billion could be in jeopardy if the estate recovery effort is not implemented (although it has not been cited by the federal government since 1993 for failure to implement). Some $1.7 million is built into the current year budget from the recovery effort. SB 203 would require a licensed funeral director to file a death record with the Department of Community Health within 72 hours after an individual’s death. SB 204 would modify the Estates and Protected Individuals Code to include Medicaid payments in the priority for payment of claims and allowances from an individual’s estate. SB 374 would require the Department of Community Health to establish and operate the Michigan Estate Recovery Program to comply with the requirements of Medicaid. The bill has been referred to the Committee of the Whole of the Senate.

HB 4512 is a bill on a fast track. This bill allows for a one-time interest-only payment to the State Employees Retirement Fund on the unfunded actuarially accrued liability for the current fiscal year. The State’s contractual actuary has recommended that the minimum interest charge be 4.5%. By deferring the payment of the principal, the state would realize a General Fund savings of $44.8 million. Please note that this bill, if passed, will not affect retiree pensions. The bill was introduced on March 22 and had been moved to the House floor by March 27.


Mental Health Parity — A number of bills have been introduced to place mental health services on par with physical illnesses as far as insurance coverage is concerned. A strong coalition opposes this effort because of the potential cost of putting mental health on par with physical health. The argument goes that if these bills were to pass, many small employers may have to discontinue physical health insurance coverage because of the increase in cost. The Health Purchasers Coalition believes that no coverage for any specific illness should be mandated. These bills are extremely controversial and have been debated, without passage, in previous legislatures.

Gunn Lake Casino Compact — Governor Granholm has signed a compact with the Gunn Lake Tribe of Pattawatomi Indians to allow the establishment of a casino in Allegan County. The compact calls for increased payments to the state as casino revenue grows and limiting casino competition within a nine county area. The compact has been sent to the legislature for approval although the issue of putting the land on which the casino is to be built in trust by the federal government is tied up in federal court on appeal. The land must be put in trust before construction can start.

Elimination of health care for legislators — A move is afoot to eliminate the lifetime health care coverage for state legislators when they turn 55 years of age after serving their maximum terms in the legislature. It appears bills will be introduced to accomplish this. It will affect future legislators, not those currently serving.

People in the News

Representative George Cushingberry, Chairman of the House Appropriations Committee, faces trial in Ingham County Circuit Court on two felony charges and one misdemeanor charge of Campaign Finance violations. He is accused of perjuring himself when he signed forms indicating his campaign finance records were accurate and failure to file certain forms.

Richard Kalm, a veteran Macomb County Sheriff Department employee, has been appointed as Executive Director of the Gaming Board of Control by Governor Granholm. He succeeds Dan Gustafson. He is the first law enforcement person to be appointed to this position.

Kimberly Dawn Wisdom, MD, Michigan’s Surgeon General, has reduced her hours as a state employee to 12 hours per week. Her salary will be paid by the Kellogg Foundation and Henry Ford Health Systems. She will return to Henry Ford Health Systems as a Vice President.

Representative John Garfield, a Republican from Rochester, recently was arrested in East Lansing and charged with drunk driving. He pleaded guilty to a reduced charge of driving while impaired in late 2005.

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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