Legislative Report

April 2009

Uncertainty continues to reign in Lansing with the unemployment rate continuing to rise (11.6% for January and 12% for February) and other economic indicators reflecting discouraging statistics. With this as a backdrop, the 2009-10 budget is being worked on by the legislature and decisions are being made regarding where the federal stimulus funds should be spent, unions are targets of concession requests and the usual political bickering is occurring regarding all of these issues. Legislators are seeking ways of easing the burdens of their constituents through changes in tax structure or creating new tax credits for taxpayers or generally seeking relief for taxpayers. As ideas on these measures surface, Governor Granholm continues to remind legislators that any tax relief measures must be offset by corresponding increases in revenue. This creates unique challenge for those responsible for balancing the current and next year’s budget. One of the major proposals being debated is whether the state should abandon the unpopular Michigan Business Tax (MBT) in favor of a graduated income tax to replace the revenue lost through the MBT. It will be interesting to observe the infighting and decision making processes regarding the state’s fiscal crisis. One thing is for certain, it will not be pretty!

After a year of failing to get HB 5545 passed which would have changed the responsibility for approving and administering the health care program for state retirees, its successor bill, HB 4072 passed the House during March. HB 4072 makes the Office of Retirement Systems responsible for selecting and administering the health care plan for state retirees. Currently, the plan is approved by the Department of management and Budget and the Civil Service Commission and administered by the Civil Service, Office of Employee Benefits. It appears HB 4072 was passed as a result of its chief proponent, Representative Mark Meadows, being named Democratic Caucus Leader and Chairman of the Judiciary Committee where the bill was assigned. The bill obviously was strongly pushed by legislative leadership and made a priority item for the Democratic Caucus agenda. SERA leadership now encourages it members to turn their attention to the Senate where HB 4072 has been assigned to the Appropriations Committee. We must not be discouraged or give up our opposition to the passage of HB 4072! Please contact your state senator and express your opposition to this bill and request that your senator oppose HB 4072.

Not surprisingly, a number of bills were acted upon during March which address the impact of the current economic climate on citizens of the state. Some are specifically targeted toward seniors. The following is a summary of some of the more pertinent bills in this category which saw some type of legislative action:

Require landlords to notify tenants of foreclosure on rental properties – HB 4211 would amend the Truth in Renting Act to require rental agreements to contain a provision that requires a landlord to notify a tenant of any foreclosure actions on the property within 30 days after the redemption period has begun and at least 30 days before the redemption period is concluded. If a property is leased during the redemption period, the landlord would be required to provide written notice that the property has been foreclosed on to the proposed tenant before entering into a lease agreement. The notice would have to indicate the number of days remaining in the redemption period. Violation of the provisions contained in the bill would be a civil infraction carrying a fine of up to $500, in addition to being liable to the tenant for damages. The bill has passed the House and gone to the Senate Committee on Banking and Finance.

Exempting sales tax on vehicular trade-ins – SB 201 would exempt the value of a vehicle used as a trade-in in the acquisition of another vehicle from the sales tax currently assessed in such a transaction. The value of the traded-in vehicle would be deducted from the total transaction cost before the state sales tax is calculated for the sales transaction. Hundreds of dollars would be saved by citizens if this bill were to pass. There are some 32 other states which allow a deduction of the value of a trade-in before calculating the sales tax due on a motor vehicle sales transaction, saving hundreds of dollars for the purchaser. The bill would apply to titled vehicles including watercraft, motor vehicles or trailer coaches, heavy earth-moving equipment and snowmobiles if these items were use as partial payment on the purchase of new or used similar equipment. The bill has passed the Senate and gone to the House Committee on Tax Policy.

Income tax credit on home purchases – SB 346 would amend the Income Tax Act to allow taxpayers to claim a refundable credit equal to 10% of the value of the price of a newly purchased home or $10,000, whichever is less. The home would have to be used as the principal residence and eligible to be claimed as a principal residence under current tax law. The credit could be claimed for property purchased after the effective date of the bill through December 31, 2010. The bill has passed the Senate and gone to the House Committee on Tax Policy.

Refund anticipation loans made by tax preparers – HB 4166 and HB 4607 are intended to protect taxpayers from predatory lending practices of certain tax preparers. They would create two new laws which require certain information to be disclosed to a customer before an application for a refund anticipation loan is completed and executed. Currently some tax preparers provide the customer immediate payment of an anticipated refund from the Internal Revenue Service (IRS). Upon receipt of the IRS refund the customer must repay the loan plus interest charges and fees which sometimes result in annualized finance charges of 50% to 500%. HB 4166 would create the Refund Anticipation Loan Disclosure Act, define terms and require certain disclosures be made to a borrower before completing an application or an agreement, create penalties, and restrict a municipality from limiting the act’s applicability. HB 4607 would create the Refund Anticipation Loan Act to require certain actions on the part of the loan facilitator when involved in providing a refund anticipation loan. The bill has a rescission provision which allows the borrower the right to change his/her mind, creates penalties, and restricts municipalities from limiting the act’s applicability. The bills have passed the House and gone to the Senate Committee on Banking and Financial Institutions.

Mortgage modification in lieu of foreclosure – HBs 4453-55 are bills which would allow a borrower to be given the opportunity to work out a modification arrangement for a loan on a principal residence before foreclosure proceedings could begin. HB 4453 would prohibit a party from initiating foreclosure proceedings if the prescribed procedures had not been followed or the applicable time limits had not expired, or if the parties had agreed to modify the loan and the borrower was not in default under the modified agreement. HB 4454 would require the foreclosing party, before proceeding with sale under the law, to serve written notice on the borrower containing specific information, including the designation of a contact person who had the authority to make modifications. Foreclosure proceedings could not begin for 90 days if the borrower requested a meeting with the designated contact person. The bill also requires that a list of housing counselors be provided to the borrower and requires certain conditions to be met before a foreclosure sale can take place. The detailed provisions of HB 4454 are intended to afford the borrower maximum protection against foreclosure and allow the borrower to bring civil action to forestall foreclosure if the required procedures were not followed. HB 4453 would require the Federal Deposit Insurance Corporation’s “FDIC workout program” for delinquent residential first mortgages to be used in modification of residential mortgage loans. The bills have passed both the House and the Senate and are on their way to the Governor for signature.

Remove immunity for lawsuits against drug companies – HBs 4316-18 are a group of bills which would (1) eliminate the current immunity against product liability lawsuits for drugs which have been approved by the federal Food and Drug Administration (FDA), (2) create a three year window during which claims could be filed for injuries resulting from drugs during the time the current immunity was in place (January 2, 1996 until the effective date of HB 4317), and (3) allow civil suits to be filed under the Consumer Protection Act if a business misrepresented risks associated with a drug, herb, dietary supplement, or botanical supplement. HB 4318 would add to the list of unfair, unconscionable, or deceptive methods, acts, or practices in the conduct of trade or commerce contained in the Consumer Protection Act the following: “Failure, on the part of a manufacturer or producer, to accurately represent the risks involved in the intended use of a prescription or over-the-counter drug or medication or an herbal product, dietary supplement, or botanical extract.” The bill recently passed the House and has been transmitted to the Senate for its consideration.

Bills impacting consumer utility bills — Several bills have recently been introduced that would prevent the shutoff of gas or electrical utilities for low income individuals and some seniors, eliminate the sales tax on home heating utility bills, and require utility companies to routinely identify senior citizens and low income customers and notify them regarding shut off protections applicable to them. These bills will be reported on in future Legislative Reports provided they are reported out of Committee and see significant legislative action.


Department of Community Health’s quit smoking initiative — The Department of Community Health has launched a program under which citizens wishing to quit smoking are given an eight week supply of one of the following: nicotine patches, gum, or lozenges. The Department’s smoking cessation hotline increased from its normal 40 calls per 15 minutes to 400 calls per 15 minutes after the program was announced. In two days some 4300 calls were received. The previous high was 200 calls. A second line had to be added. The Department smoking cessation telephone number is 1-800- QUIT NOW! or 1-800-480-7848

Attorney General announces mortgage company settlement — Attorney General Cox has announced that $9.9 million received by the state in a settlement with Countrywide Mortgage Company will be distributed to some 3697 people who received sub-prime and pay-option adjustable rate mortgages from January 1, 2004 to December 31, 2008. Each holder of one of these mortgages would be eligible to receive $1800. Mr. Cox further announced that a $1.2 million grant from the settlement money would be made to the 211 family crisis telephone line. Also, $250,000 grants each will be made to Focus: Hope, a social agency in Detroit, and Detroit government to help neighborhoods hard hit by foreclosures.

People in the News

Aldo Vagnozzi, a former state representative who became term-limited at the end of last year, died at the age of 83. A Democrat from Farmington Hills, he had been a former mayor, councilman and school board member in that City.

Harmon Cropsey, a former state representative and state Senator from Clinton County, died recently at age 91. A Republican, he won a special election to the House in 1981 and served two years in the Senate from 82-90. He was the father of current State Senator Alan Cropsey.

Sherry McMillan, a political Independent member of the Civil Service Commission since 2002, has been elected President of the Commission. She is a resident of Walled Lake.

State Senator Michael Switalski, a Democrat from Roseville, announced he will run against U.S. Congressman Sander Levin of Southfield for the 12th District (Oakland and Macomb Counties) congressional seat. It is unusual for a prominent fellow party member to oppose a sitting official in such an election.

Peter Hoekstra, a Republican U.S. Congressman from Holland, has announced that he will be a candidate for Governor in 2010.

Correction: The February Legislative Report erroneously stated that former Representative William Keith served in the legislature from 1973 -82 and 1993 -94. Mr. Keith did not serve the ’93-’94 term. I apologize for the error and thank SERA member Bob McKerr for calling it to my attention.

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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