Legislative Report
August 2009
July was a rather interesting month in Lansing as state government goes. The legislature was not in session for a major part of the month, although a number of legislative committees were meeting. Legislators’ attention was focused on the 2009-10 budget for the fiscal year starting October 1, 2009. The two political parties are attempting to reconcile their differences on a target appropriation figure and how to reach that figure. With all indicators showing that Michigan continues in a deep recession, there is lack of agreement on how to balance the budget. They will most likely achieve a balanced budget by a combination of cuts, carefully crafted revenue increases and use of federal stimulus money. Use of the federal stimulus dollars will lead to a slippery slope (or “cliff” which is the word being bandied about in legislative circles) in two to three years when the stimulus money runs out. The current problem will recur and be exacerbated once the stimulus dollars are gone. So the budget discussions continue between the two political parties. . .
What made the legislative scene interesting, however, was a major proposal put forth by the Speaker of the House Andy Dillon regarding a single, statewide public sector health insurance program. Under Dillon’s proposal, all health insurance programs for public sector employees would be state administered for both active and retired employees. Mr. Dillon alleges that some $900 million could be saved by pooling health care programs for all public employers. It was originally suggested that this program could be implemented in 2010, but Mr. Dillon retreated from that stance. Legislation to establish and implement Mr. Dillon’s proposal has not yet been introduced.
The Dillon proposal has generated tremendous media coverage and, surprisingly, has been endorsed by a number of individuals and organizations. Republicans Mike Cox and Senate Majority Mike Bishop quickly endorsed the proposal, as have a number of associations representing school administrators. Governor Granholm has indicated that she has some reservations and many questions about the proposal and is not prepared to endorse it. Editorially, a number of newspapers have joined the bandwagon in support of the proposal. The Gannett-owned Detroit Free Press quickly endorsed the proposal and took the Governor to task for not supporting it, while its sister newspaper, The Lansing State Journal, suggested it was worth exploring but stopped short of an outright endorsement of the concept.
The rationale behind the concept is to bring public sector health care costs in line with both health care costs in the private sector and public sector costs of other states. Some of the questions yet to be answered about Dillon’s proposal are what the impact of the Headlee Amendment will have on the cost of the proposal; whether the current binding arbitration law will have to be amended to allow union employees to be included; will university employees fall under the proposal as “public sector” employees; are the projected savings accurate; etc? The big question is whether it will be” a one size fits all” plan or will there be choices? Needless to say, “the devil is in the details” which we have not seen because the legislation has not been written.
SERA will watch this conceptual plan unfold and weigh in on it as we learn more about it. HB 4072, which combines state employees with school employees for heath care purposes, pales compared to the potential impact this plan could have on state retirees who have been described in various newspaper articles as having the “Cadillac” of health plans. Most unions are already expressing reservations about the plan as are associations representing local governments. It will be extremely interesting to see how this controversial proposal eventually develops. Dillon may find lack of support within his own Democratic caucus.
Among the limited number of bills which saw action during July which may be of interest to retirees/seniors are:
Regulation of mortgage loan originators — SBs 462-65 have been signed by the Governor and are now Public Acts 75 through 78. The new laws require mortgage loan originators to be licensed and bonded, and it regulates their conduct. The law requires continuing education for such individuals and provides sanctions for violating the Mortgage Loan Originator Licensing Act also created by these laws. The purpose of the new laws is to tighten controls over loan originators to prevent the activities which lead to the recent mortgage market failure.
Regulation of insurance companies’ unfair and prohibited trade practices — HBs 5144-51 are bills which amend the Insurance Code to do, among other things, protect insurance company employees who report unfair and deceptive practices of their company, establish a Whistleblower protection fund to reward employees for exposing their employer, provide sanctions when the company fails to deal fairly and in good faith with their customers, allow for civil actions to be brought against insurance companies for damages sustained by the insurance companies practices, and places the presumption of disproving the claim of acting in bad faith on the insurance company. The series of bills also provide that the president or CEO of an insurance company who knowingly creates, fosters, or encourages an environment that leads to systemic wrongful denial of claims is guilty of a felony punishable by imprisonment for up to four years and/or a fine of not more than $50,000. Finally, under the bills, if the Commissioner of the Office of Insurance Regulation determines that an insurance company acted in bad faith in failing to pay timely benefits under a policy, the company would be required to assist the customer in repairing his/her credit report if the insurance company’s actions caused damage to the credit report. These bills are on a fast track for approval after being introduced on July 14 and assigned to the Insurance Committee. Several days of hearings have already been held on the bills which are extremely controversial and being rigorously opposed by the insurance industry.
House Judiciary Committee seeking subpoena power — The House Judiciary Committee is seeking subpoena power with the introduction of HR 123 which, if approved, would grant subpoena power to the Judiciary Committee. Granting such power to a committee is unusual. The Chairman, Mark Meadows, sought subpoena power after trying to get certain records from the Office of Attorney General. At issue is how the Attorney General disposes of money awarded thorough lawsuit settlements. Subsequent to the introduction of HR 123, Attorney General Cox personally appeared before the Judiciary Committee where a very sharp exchange of words took place between the Attorney General and Representative Meadows. There has been no action on the House Resolution since its introduction.
Transfer of UP State Fair to Delta County — With the state seeking to get out of the annual state fair business, SB 596 would convey the U.P. State Fair grounds to Delta County for the financial consideration of $1. The property would have to be used for public purposes including the Annual U.P. State Fair. If not used for this purpose and in accordance with the conditions set forth in the bill, the property would revert back to the state. This bill passed both houses and has been signed by the Governor and is now PA 72.
Miscellany
Executive Order Transferring functions of Department of History, Arts and Libraries (HAL) — Governor Granholm issued E.O. 2009 — 36 which transfers the functions of HAL to various agencies. The following is how HAL functions are being disposed of: (1) Library to the Department of Education; (2) Library Services for blind to the Commission for the Blind; (3) Michigan Historical Commission (state archives, historical records, etc) to Department of Natural Resources; (4) Michigan Council for the Arts and Cultural Affairs to the Michigan Strategic Fund; (5) Census reporting to the Department of Information Technology; (6) Historic Preservations and Review Board and Idlewild Centennial Commission to the Michigan Housing Development Authority. The Executive Order creates a Center for Innovation and Renovation Board composed of nine persons including the Superintendent of Public Instruction and the Director of the Department of Natural Resources. This Board is charged with the task to explore a partnership with the City of Lansing and Michigan State University which would result in an new cultural center utilizing the building housing the State Library and Museum. The Governor’s Executive Order is extremely controversial and very unpopular and may be overturned by the legislature. The genealogical records of the state library are among the finest in the country and are heavily utilized. The public is having difficulty accepting the dissolution of a fine cultural gem owned and operated by the state.
The Michigan Housing Development Authority (MSHDA) reestablishes its mortgage assistance program — The Mortgage Assistance Program was discontinued in December, 2006 because of the Authority’s low bond cap. As the result of the influx of federal stimulus dollars, the bond cap has been raised, so the program has been reinstated. The rules for the program will be the same as before. A 20% income credit is available to homeowners for their annual mortgage interest paid provided the home is being used as the person’s primary residence. Participants are limited to MSHDA’s income and loan restrictions based on where they live.
Twenty six legislators participating in voluntary pay reduction — Twenty-one senators and five state representatives are returning part of their pay either directly back to the state or giving it to charity. Local legislators participating in this program are Senator Gretchen Whitmer of East Lansing (six days pay), Representatives Dick Ball of Laingsburg (six days) and Joan Bauer of Lansing (three days and plans three more). Representative Rick Jones of Grand Ledge has promised to donate six days to charity although there is no record that he has done so. These voluntary reductions are being made as a result of the layoff days being experienced by state employees.
City of Highland Park no longer under a financial manager — The financial affairs of the City of Highland Park have been returned to City officials by the State’s Emergency Loan Board. The declaration of Highland Park’s financial emergency was not lifted, however. In an unrelated action, Attorney General Mike Cox has filed suit against Art Blackwell, a previous long time emergency financial manager of Highland Park, to recoup some $264,000 Blackwell paid himself without the payment being authorized by the Emergency Loan Board. The lawsuit also charges Blackwell with breach of contract, violation of statutory conversion law and breach of fiduciary duty.
People in the News
John Freeman, a former Democratic state representative who served three terms in the 1990s, has announced that he is a candidate for Governor. Mr. Freeman is from Oakland County.
Andrew “Rocky” Raczkowski, a former state representative from Farmington Hills and a former Republican candidate for U.S. Senate in 2002, has announced he will oppose Democratic U.S. Representative Gary Peters in Oakland County’s 9th District. Mr. Raczowski is currently in the military and deployed overseas.
Tim Walberg, a conservative Republican who defeated Joe Schwarz for U.S Congress three years ago and then was defeated by Mark Schauer last year, announced that he will again oppose Schauer, who is currently the Congressman from the 7th District, in the 2010 congressional race.
Brigadier General Michael McDaniel, head of Michigan’s homeland security function since 2003, has been named U.S. Assistant Secretary of Defense for Homeland Defense Strategy and Force Planning. McDaniel is a veteran Michigan Assistant Attorney General and also served on Governor Granholm’s staff before she appointed him to the homeland security post in Michigan’s Department of Military Affairs.
Rick Snyder, former head of Gateway Corporation and a resident of Ann Arbor, announced his candidacy for Governor on the Republican ticket.
Senator Michelle McManus, a Republican from Lake Leelanau, announced her candidacy for Secretary of State by filing the requisite number of petitions to get on the GOP convention ballot.
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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