By Mary Pollock
The Michigan Legislature, in a late-night 18-hour marathon, passed a nearly $81 billion budget on a bi-partisan basis, three days after the September 30 constitutional deadline. It is about $2 billion under last year’s budget, less than the $84.5 billion proposed by Senate Democrats, but more than the $78.5 billion proposed by House Republicans.
Because of the delay, a novel eight-day continuation appropriation of $1.6 billion, House Bill (HB) 4161, was adopted early October 1 to allow for State government to continue to operate while budget negotiations were finalized and the Fiscal Year (FY) 2025-26 State budget was prepared. Part of the deal included Democrats adopting the House Republican-led measure to have every earmark (special funding request) publicly identified by its proponent legislator in advance of budget adoption, ending the past practice of adding last-minute grants to massive spending bills that were unveiled and quickly passed in late-night sessions without much public scrutiny. Under the new budget, there will be no State income tax on tips, overtime or Social Security, which matches changes made at the federal level.
At this writing, the Governor has not yet signed the budget bills, but she and her staff were heavily involved in the intense negotiation process. The Governor has authority to line-item veto spending measures.
Revenue and Roads – Revenue increases include a new 24 percent wholesale tax on marijuana products sold in the State that is estimated to raise $420 million in new revenue to fund road repairs and construction. All taxes on gasoline at the pump will now be dedicated to roads. The Governor had proposed $3 billion in increased spending on roads, including money for local government road costs. The expanded revenue is projected to eventually generate only $1.8 billion a year for roads, including about $1 billion this fiscal year as it takes effect.
Schools – A $21.3 billion school aid package is included in Senate Bill (SB) 166. It provides funding for free school meals and increases per-pupil spending to $10,050, a record funding level per student. Education funding broadly increased from last year by around $600 million, with K-12 school aid increasing the most by over $500 million. For higher education, university operations budgets increased by 2.8 percent, almost $48 million. Grants and financial aid for higher education, however, were cut by 4.2 percent, or nearly $23 million. Community college operations budgets increased by 2.1 percent, and their total appropriations increased by 6.7 percent, totaling nearly $500 million.
State Government – The $51.8 billion omnibus State departments budget ($12.5 billion from the General Fund) in HB 4706 eliminates around 2,000 unfilled classified positions but requires no layoffs. State buildings will have to be 80 percent occupied or sold, forcing departments to require more remote State workers to return to in-person work with their attendant travel, time, and cost to the employee.
SOAR Gone – The budget does not include what had been an annual $500 million deposit into the Strategic Outreach and Attraction Reserve Fund. Created with bipartisan support in late 2021 with the Governor’s strong backing, SOAR became controversial as the Whitmer administration spent more than $2 billion on large-scale subsidies and land development to try and lure job creators to the State. Some deals fell apart, and promised jobs were slow to materialize.
SCRAP THE CAP MISSING
Missing from the omnibus budget bill is mention of SERA’s proposal to eliminate the $300 cap on defined benefit State employee retirees’ annual cost-of-living adjustment by redirecting some excess annual funding for State employee retiree health care to pay for it. Although this is disappointing, all budget details or hand-shake deals are not yet known at this point.
DTMB Boilerplate – The Department of Technology, Management, and Budget (DTMB) appropriation contains boilerplate language (Paragraph 821) requiring the Office of Retirement Services (ORS) to produce a report on the Judges Retirement System, Military Retirement System, Michigan Public School Employees’ Retirement System (MPSERS), State Employees’ Retirement System (SERS), and State Police Retirement System showing tables and charts of annual required contribution flow per fiscal year and justification if payroll growth assumption is maintained at or above 0 percent for any pension or other post-employment benefit (OPEB) plan; requiring additional items to be reported for MPSERS (the largest pension system); and requiring ORS to post the most recent year’s Comprehensive Annual Financial Report for each plan within 90 days of the end of the fiscal year, i.e. by December 31.
Such a report will produce the fact that at least the MPSERS and SERS OPEB plans require annual State funding that is more than the money needed to provide full actuarial funding by the statutory goal of 2038. In effect, the current funding level will provide earlier full funding than planned. This is because the investments made by the State’s Bureau of Investments are doing very well.
SOM Retirement Board Request – Subsequent to SERA’s request to support our Scrap the Cap effort to the State of Michigan Retirement Board on August 7 during public comment, SERA Coordinating Council Chair Cheryl Streberger sent a written follow-up letter to the Board and the Office of Retirement Services on September 12 describing the background, the actuarial study, the retiree health care valuation, cost projection, and our position and request. So far, we have not received a reply.
The Board next meets at 1:30 p.m. on Thursday, November 13, in the Mason Building, Lansing. Perhaps there will be some discussion of our request at the meeting. Please join me in attending the meeting if you can!
OTHER LEGISLATIVE NEWS
Due to the budget stalemate, other legislative activity was minimal. The mobile alert system for seniors (Silver Alert) in HB 4362 and identity theft package of bills (SBs 360 – 364) have not moved since last month’s report.
Patient Surrogates – Important to seniors are the proposed amendments to Michigan’s probate code and adopted by the Michigan House unanimously in HBs 4418, 4419, and 4734 on September 18. The bills would amend the Estates and Protected Individuals Code (EPIC) by adding Part 6 (Surrogate Decision Makers for Health Care) to Article V of the code to authorize surrogates to make health care decisions for certain patients under certain circumstances.
The bills are intended to make it easier for family members to make medical decisions for a loved one when they are unable to do so. The bills permit a person to designate a closest living relative, such as a spouse, adult child, or sibling, as a patient surrogate to make medical decisions when the patient cannot without needing to go to court to obtain guardianship. According to bill sponsor Rep. Kelly Breen (D-Novi), “What these bills will do is help you avoid guardianship. That means you will not lose your autonomy. You will not have your civil rights compromised, and you will not have a stranger in charge of your life.” The bills also offer medical providers with certainty regarding who has the legal authority to make decisions.
HB 4734 would make changes to the Social Welfare Act in accordance with HB 4418. The bill would stipulate that the “appointed guardian” means a guardian appointed under the Estates and Protected Individuals Code and would add a patient advocate or surrogate designated under that law to the list of people authorized to act on behalf of an incapacitated person with regard to Social Welfare Act matters.
Attorney General Dana Nessel praised the passage of the bills, which a subcommittee of the Attorney General’s Elder Abuse Task Force helped craft. If enacted, Michigan would join 46 other states with similar laws.
Insurance Fraud Bills – The Michigan House passed a bipartisan package last month to overhaul insurance fraud penalties and reporting. HBs 4713 – 4719 establish tiered penalties, starting with a misdemeanor punishable by fines of up to $2,000 or three times the amount of the claim and up to one year in jail, and increasing to a felony punishable by fines of up to $50,000 or three times the amount of the claim and up to 20 years in prison. Related bills update criminal procedure, add racketeering provisions, allow civil fines, require insurer reporting, and expand fraud protections and insurer definitions.
According to committee testimony, insurance fraud results in annual costs for insurers which are passed on to consumers through higher premiums. Supporters argue that the bills would strengthen Michigan’s ability to investigate and deter insurance fraud. They also noted that mandatory reporting, as proposed in this bill package, would put Michigan in line with 45 other states.
Election Misinformation – The Michigan Senate voted along party lines on September 17 to pass a bill that supporters say would help reduce the spread of election misinformation. SB 533 would set civil fines for individuals making a false statement or misrepresentation about an election with the intent to impede or prevent someone else from voting. Civil fines would also be enacted for employers who employed an individual with a violation for election-related purposes.
Proponents argue elections and voting misinformation has increased over the past few years, especially in Michigan. For example, in October 2020 Attorney General Dana Nessel charged two men with multiple felonies for using robocalls to target voters of color in Detroit and other majority Black areas across multiple swing states to claim that voters would be placed in a database used to track down old warrants, collect debts, and impose mandatory vaccinations if they voted absentee. False election information has the potential to intimidate voters, reducing turnout and undermining the election process. However, states seeking to curb disinformation are also bound by the First Amendment of the U.S. Constitution, which generally protects false speech.
HOLIDAY NEWS
Thanks, Soo — Michigan’s 39th State Christmas tree will arrive in Lansing on November 1 after being selected from Sault Ste. Marie. The Department of Technology, Management, and Budget announced that a 68-foot spruce will be harvested on October 30 and transported downstate the next day to be set up at the corner of Capitol and Michigan avenues.
(Editor’s Note: Mary Pollock is the Lansing SERA Chapter and SERA Coordinating Council’s Legislative Representative. She may be contacted at michigansera@comcast.net.)