Legislative Report
May 2009
For the last three months, I have begun this report with a summary of the economic picture facing the State of Michigan. Inasmuch as there has been little change, the challenge I face is how to paint this picture each month without duplicating what I wrote the previous month. I don’t think I can. At any rate, the state’s economic picture continues to be a bleak one. No one really knows the depth of the deficits facing state government during this fiscal year nor next fiscal year.
In early May, the Governor is expected to issue an executive order mandating severe cutbacks in state agency expenditures which may include layoffs in some agencies. The executive order will call for some $300 million in reductions. The remainder of the anticipated 2008-09 fiscal year deficit, which is estimated by some to be in the neighborhood of one billion dollars, will be made up with federal stimulus funding and hopefully improvement in the state’s revenue estimates. Use of the stimulus funding in this manner will only delay the inevitable in terms of fixing the longstanding structural deficit.
Appropriations bills are being worked on for the 2009-10 fiscal year even though there is no agreement on what the 2010 revenue estimate will be. An official estimating conference, which includes the heads of both the House and Senate Fiscal Agencies and the State Treasurer, is to be held in mid-May to try to reach agreement on expected revenue for next fiscal year. Stimulus money will also be available to patch holes in the budget as is being done this year. Passing appropriation bills under these circumstances is based on pure speculation and probably will result in this year’s fiscal experience repeating itself next year.
The answer to this continuing fiscal problem lies in politicians biting the bullet and making some very hard decisions on cutbacks in services and revisions in tax structure which should eliminate the structural deficit which has plagued the state for many years. Such actions will require the understanding and the acceptance of the public of reduced services and/or increased taxes. The solution most likely will embody both options.
I am often asked whether we, as retirees, are subject to reductions in our pensions. Inasmuch as our pensions are Constitutionally guaranteed, we are secure in not being subject to eminent reductions in the amounts of our base pensions. It would take a constitutional amendment to reduce our pensions as they exist currently. However, increases in health care costs could erode the spending power of our monthly pensions. Another method of eroding the spending power of our pensions would be to require retirees to pay state income tax. This could be done legislatively, although it would be a highly unpopular and politically unwise move to pass such legislation.
In terms of legislative activity during April, the legislature was on break for a couple of weeks, so there was limited legislative action. There were a number of committee hearings during the month, however. The following are some of the bills which were subject to some legislative action during April and which may be of interest to retirees/seniors:
Prohibition against shut off of a senior citizen’s utilities under certain conditions: HB 4673 would prohibit a municipally owned electric utility company from shutting off service during the heating season (November 1 through March 31) for nonpayment of a delinquent account if the customer were an eligible low income customer or a senior citizen who is at least 65 years of age. In both cases the customer would have to advise the utility of his or her eligibility. Another way to be considered for electric shut off protection is by the customer paying a monthly amount equal to 7% of the annual estimated cost and demonstrating within 14 days that he or she had applied for state or federal heating assistance. If an arrearage existed at the time an eligible customer’s non-shut off application were submitted, the utility would have to allow the customer to pay off the arrearage in equal monthly installments between the date of application and the start of the subsequent heating season. This bill has passed the House and gone to the Senate Committee on Energy Policy and Public Utilities.
Rules/Guidelines for shut off protection of senior citizens and low income customers: HBs 4384–4388 are a series of bills that would assure maximum protection to those covered by various laws. HB 4384 would require a utility provider to comply with any rules promulgated by the Public Service Commission regarding shut off protections for senior citizens and low income customers. HB 4385 would require a provider to include with any shut off notice the energy assistance telephone line number at the Department of Human Services or an operable 2-1-1 system telephone number. HB 4386 would require a municipally owned electric or natural gas provider to postpone a shut-off of service for up to 21 days if the customer or a member of his or her household were a medically critical care customer or had a certified medical emergency, If the shut-off occurred without postponement being obtained, the provider would have to restore service for up to 21 days and continue restoration for a period not to exceed 63 days in any 12 month period per household. HB 4387 would permit the Public Service Commission to review violations of applicable shut-off laws and order remedies and penalties as provided by law. HB 4388 would require a utility to comply with any rules promulgated by the Public Service Commission regarding shut-off protections or a customer billing dispute. The bills have passed the House and gone to the Senate Committee on Energy Policy and Public Utilities.
Allow no reason absentee voting and methods of obtaining and submitting such ballot: HBs 4097 and HB 4367 would allow a voter to obtain an absent voter ballot without requiring a justification when making application for the ballot. Additionally, the voter could apply for and deliver such ballot to the county clerk by mail, in person, by facsimile, or by electronic mail. These bills would eliminate the current requirements for eligibility to obtain an absent voter ballot and the method of obtaining and submission of such ballot. Instead, the bills would define “absent voter” to mean “a qualified and registered elector who votes without attending the polls on the day of the election.” The ballot could be obtained from and delivered to the county clerk by any of the means outlined above. HB 4097 was reported out of the House Committee on Ethics and Elections, but then re-referred to the same Committee. HB 4367 has passed the House and gone to the Senate Committee Government Operations and Reform.
Prohibit increases in insurance premium during term of policy: HB 4070 would amend the Insurance Code to prohibit insurance companies from increasing the premium for an automobile or home insurance policy during the term of the policy, unless (1) the premium had been based on materially incorrect information provided by the applicant or insured or (2) a change in the terms or coverage of the policy is requested by the insured customer. Currently a company may increase the cost of coverage after full or partial payment has been made. This means a customer has to cave in and pay the increase or search for a different insurance company. Many believe that this is wrong and this bill is intended to address the problem. The bill has passed the House and gone to the Senate where it has been assigned to the Committee on Economic Development and Regulatory Reform.
Retirement center liquor license eligibility: SB 216 would create a new class of liquor license applicable to a “non public continuing care retirement center” which would allow such facilities to sell wine, beer and spirits to residents and their guests for on premises consumption. The facilities that would be eligible for such a license are those which provide full-time residential housing predominantly for individuals over 62 years of age, is registered as a “facility” under the Living Care Disclosure Act (an adult foster care facility, nursing home, retirement home, home for the aged, or a place that undertakes to provide care to an individual for more that one year.) Only twenty such licenses could be issued by the Liquor Control Commission and the Commission could transfer the license of a facility that went out of business. The bill has been reported out of the Senate Committee on Economic Development and Regulatory Reform and is on the Senate floor for consideration.
Caregiver tax credit: — Our members may have read a letter to the editor in the Lansing State Journal asking citizens to support SB 139 which would grant a $1000 tax credit to caregivers of parents who live in the home of the taxpayer for at least 180 days per tax year. This bill was introduced on January 29, 2009 and remains in the Finance Committee. I normally do not report on newly introduced bills until they have at least been reported out of Committee. I am deviating from that practice here only because of the letter to the editor. Due to the cost implications of this bill if it were to pass, it probably will not be given serious consideration.
Transfer of responsibility for state retiree health care plan design and administration — HB 4072 is this year’s version of last year’s HB 5545. It moves the health care plan design and administration from Civil Service to the Office of Retirement Services, Department of Management and Budget. SERA continues to oppose HB 4072, which is now in the Senate, for reasons which have been stated in previous Legislative Reports and documents supplied to each Chapter. We continue to strongly encourage SERA members and their friends and families to contact their state senators to request that they oppose HB 4072 if it comes up for a vote.
Miscellany
Court overturns rate filing challenge — Office of Financial and Insurance Regulation (OFIR) Commissioner Ken Ross announced that he would challenge any insurance company filing rates for home and automobile insurance premiums using credit scoring as a consideration in the rate determination. Three home owner insurance companies and seven automobile insurance companies’ rates were challenged on this basis. The OFIR Commissioner’s rationale for challenging the rate was that credit scoring is not a proper indicator of insurance costs and thus discriminatory. The insurance industry went to the Barry County Circuit Court and requested an injunction based on a 2005 ruling by the Barry County Court that prohibited the Commissioner from outlawing credit scoring by insurance companies. The Court extended its 2005 ruling and issued a new injunction. Credit Scoring can still be used in homeowners and automobile insurance rate determination unless the injunction is overturned by a higher court.
Opponents to Constitutional Convention begin campaign — Anticipating a campaign to support a favorable vote for a Constitutional Convention when the question appears on the ballot in November of 2010, opponents to such a convention have begun their campaign even though there is no known support for a convention. A group known as Citizens Protecting Michigan’s Constitution which is supported by the Michigan Chamber of Commerce and the Michigan Education Association has started a campaign to defeat the ballot question. There is a fear that more damage may be done than most people would anticipate were the entire Constitution subjected to revision. While most people believe that there are sections of the Michigan Constitution that need tweaking, it should be done one question at a time on the ballot. Last year’s attempt to get massive constitutional changes by a group known as Reform Michigan Government Now! has frightened opponents. The proposed changes never made it to the ballot because the courts ruled that the changes were too massive and constituted revisions rather than amendments. In the meantime, Secretary of State Terri Land has begun developing the framework for a Constitution Convention should voters call for one in November 2010. If approved, it would begin on July 12, 2011 at noon. The Secretary of State would run the Convention until its members select a president. Other issues the Secretary of State is dealing with is who could run, how long those elected could serve, and how they would be replaced should they not serve the entire period.
Secretary of State offices to get ATM machines — By June, most Secretary of State offices will have on-sight automated teller machines. There will be a $2 service fee for using the ATMs with the money going to the state General Fund.
Highland Park Financial Manager replaced — The Local Financial Assistance Loan Board has appointed Robert Mason of Farmington Hills as the new Financial Manager for the City of Highland Park. He replaces Art Blackwell who was removed by the Board with only a couple of weeks remaining on his contract. Blackwell had accepted unauthorized compensation and failed to return it within the time period set by the State Treasurer. Mason’s compensation will be the same as Blackwell’s — $ 11,000 per month. Mason’s appointment is for a 90 day period. Highland Park has been under an emergency manager for eight years.
People in the News
State Representative Robert Jones, a Democrat from Kalamazoo, has announced that he has been diagnosed with esophageal cancer. He will receive radiation treatment every three weeks and does not plan to be absent from sessions.
L. Brooks Patterson, Oakland County Executive and a prominent Michigan Republican, has announced that he will not run for Governor of Michigan. This came as a surprise to many political observers.
Mike Nofs, a former state representative, announced his candidacy for the 19th District state senate seat formerly held by Mark Schauer who was elected to the U.S. Congress.
Kwame Kilpatrick, the now disgraced former Mayor of Detroit, may have violated the Michigan Campaign Finance Act by using some of his campaign funds to pay attorneys for work in his criminal case. The Secretary of State is reviewing the matter and is expected to issue a ruling within 45 days.
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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