UNDER THE DOME
Capitol Update for September 8th through October 15th, 2010
Cynthia Ann Paul
The House Passes a Bill making it a Crime to Misinform The Electorate- The House voted on a two-bill package that would make it a felony to misinform citizens of their right to vote. The crime would be punishable by up to five years in prison, HB 4880 and HB 4881. The bills passed the House 80-24 and 79-25 and have been referred to the Senate Campaign and Election Oversight.
Suta Dumping Light Passes the Senate- SB 1037 and SB 1038 would establish a regulatory framework for the professional employer organizations, also known as PEOs, which are often hired by companies to handle their payroll. Some companies have hired PEOs as a way to skirt their unemployment tax obligations, also known as SUTA dumping (for State Unemployment Tax Act). These bills would require PEOs to report to the state how many employees they are serving and many would also be required to report those numbers for each company that hires them to handle payroll. This has been referred to the House Committee on Regulatory Reform.
Driver Responsibility Fees- HB 4098, HB 4101, HB 4604 and HB 5603 repeal the driver responsibility fees for all but the most dangerous drivers, like those with multiple drunken driving convictions. The repeal would begin 2012 to prevent opening substantial holes in an already stretched budget for the next two fiscal years. All four bills passed by a vote 105-0. A number of lawmakers involved with the original passage of the fees have called it a mistake. These have been referred to the Senate Judiciary Committee.
House Passes Legislation to Allow Local Communities to Collect from Inmates- The House passed HB 6156 that would expand the number of communities eligible to seek reimbursement from inmates in their jails for the costs of running those facilities. Currently only communities in Kent, Macomb, Oakland and Wayne counties are permitted to charge their inmates for the costs of their incarceration. This has been referred to the Senate Judiciary Committee.
Senate Judiciary Passes Prisoner Ombudsman- The Senate Judiciary passed a package of bills (SB 1223, 1224, 5958 and 5959) to allow the prisoner ombudsman access to prisoner health records without the necessity of obtaining individuals releases from each prisoner and they would also grant the ombudsman access to morality records, currently out of their reach. This remains on the Senate floor.
Handgun Licensing- The Senate Judiciary Committee passed (HB 5473 and HB 5520) that would exempt federally licensed firearms dealers from completing that paperwork and would exempt them from state licensure requirements to transport or possess a pistol. Currently, people with a license to carry a concealed weapon may skip the step of completing paperwork with law enforcement, but federal firearms dealers must still complete the process for each gun they plan to purchase, resulting in a duplication of screening since dealers have already gone through it. This has passed the Senate 35/0 and has been ordered enrolled.
Community Colleges Can Offer Four-Year Degrees- Under HB 4837 and HB 5533 community colleges would be able to offer four-year degrees in nursing, concrete sciences, maritime and culinary arts under legislation that squeaked through the House. The bills passed by a vote of 55-49 and 55-48 and have not been sent to the Senate yet.
Budget Information:
State Employee Retirement- State workers who are currently eligible to retire, have a combined age and years of service of 80, or have 30 years of service can apply for the enhanced pension multiplier. Workers who want to retire by November 1 have until October 22 to inform the state of their intention to retire, while workers planning to retire by January 1 have until November 5. People eligible for retirement now will receive a 1.6 multiplier (normally 1.5) up to $90,000 of their final average compensation. Workers with 80 years of service and age, or those with 30 years of service, will see a 1.55 multiplier if they retire, also up to $90,000. All state employees will have to pay 3 percent of their salary toward retiree health care costs, starting November 1st, 2010, but sun setting September 30, 2013. Eighteen Democrats, joined Republicans on the vote: Dillon, Angerer, Bledsoe, Byrnes, Corriveau, Cushingberry Jr., Durhal Jr., Espinoza, Gonzales, Jackson, Johnson, Leland, Lemmons, Melton, R. Schmidt , Sheltrown, Slezak and Spade. Reps. Gregory and Bettie Scott were absent for the vote. The Senate quickly followed the House vote with a 20-14 party-line vote to pass the revised version of the bill. But Senate Democrats held up sending the bill to Governor Granholm for a week by withholding immediate effect on the bill. An overlooked part of the recently passed state worker retirement bill is that employees who decide to retire by January 1, instead of November 1, would still have to pay 3 percent of their salary starting in November to a health care trust. This was signed into law as PA 185 of 2010. For more information on this bill please visit http://seiumi.org/State_Employee_Retirement_Incentive_Legislation.aspx.
The Govneror Signs K-12 Money to the Community Colleges- A key component to balance the current year budget, is the transfer of $208 million of School Aid Fund money to cover the state’s payments for community colleges, HB 6086. Thus, freeing up $208 million in general fund money that would usually pay for community colleges for other general fund programs. The move was made possible through additional federal funds for K-12 public schools to the School Aid Fund. The bill was signed into law by Governor Granholm, PA 158. Please see Under the Dome Column from June 25th through September 7th, 2010 for more detail on this supplemental.
The Tax Amnesty Program Passes- SB 884 would allow people with unpaid taxes before December 31, 2009 to pay up without any penalty between May 15th through June 30, 2011. The Senate had included a penalty for taxpayers who failed to file a return during the amnesty period, but the House struck that language. The House version allocates $6.8 million to Treasury to administer the amnesty program, while the Senate version had provided $1 million. Additionally, the legislation is no longer tie-barred to bills dealing with phasing out the Michigan Business Tax surcharge (SB1), revising the MBT's small business and entrepreneurial credits (SB 69 ), reducing the film credits (SB 838 ) and requiring a person live in Michigan for six months before obtaining the Earned Income Tax Credit (HB 4514 ). Governor Granholm signed this bill into law, PA 198 of 2010.
Federal School Funding- Under HB 5872, all school districts would receive a one-time payment of $154 per pupil, plus an additional $23 to $46 per pupil, depending on their current funding level under this bill. The bill spends the $316 million in federal money designed to preserve public school employee jobs. It first replaces, for the 2010-11 fiscal year only, the $154 per pupil cut that all districts received in the 2009-10 fiscal year. Then districts that receive $8,489 per pupil or more would get another $23 per pupil. Districts receiving the minimum foundation grant once the added $154 is included, $7,316, would get another $46 per pupil. Those receiving a per pupil amount between those numbers would get an amount between $24-45 per pupil. The proposal also contains $4.5 million for intermediate school districts instead of the $16 million that passed the House. Governor Granholm signed HB 5872 (PA 205), which overall had $316 million in federal money designed to preserve public school employee jobs, but vetoed the section that distributed $246 million by giving $154 per pupil back to each district. She said the state either needs to award the money on the basis of its main funding formula or through shares of Title I. The Granholm administration had received an informal indication from the federal government that the state’s allocation would run afoul of their rules.
House Approves Escheats Program- Under HB 6421, unclaimed property would pass to the state after only three years instead of the current 5-year period, except travelers' checks will still revert back after 15 years (the current law). The Senate also adopted amendment-exempting members of the military on active duty outside the United States. This will allow the state to take possession of unclaimed property, and collect the interest on it, more quickly. This will bring in an additional $166 million for the state in the 2010-11 fiscal year and an extra $61 million for 2011-12. However, it will mean $35 million in reduced revenue to the state in each of the following three fiscal years. Governor Granholm signed this bill into law as PA 197 of 2010.
Sunday Liquor Sales- SB 6007 allows businesses to sell liquor before noon on Sundays. It also allows restaurants with liquor licenses to provide alcohol at catered offsite events, instate wineries to charge for samples at their facilities, liquor licenses at several community colleges and Western Michigan University’s Grand Rapids campus; it prohibits winemakers from using multiple distributors in a single geographic area and shortens the ban on Christmas holiday sales. Instead of the old ban, which covered part of December 24 and all of December 25, the ban will now last from just 11:59 p.m. December 24 through noon December 25. Governor Granholm vetoed HB 6007, she supported repealing the ban on liquor sales before noon on Sundays, reducing the Christmas holiday liquor sales ban and other provisions. But she objected to portions of the bill that would have allowed restaurants and other food establishments to sell and deliver liquor at off-premises locations, authorized liquor licenses at several community colleges and Western Michigan University’s Grand Rapids campus and permitted free samples of wine up to nine ounces. This bill was part of the 2010-11 budget deal and was projected to bring in $9.1 million in new revenue to the state.
Alternative Incarceration Program (AKA Boot Camp)- The budget agreement also included extending the sunset on the state’s boot camp program by two years HB 4538, passed unanimously in both the House and Senate and was signed by Governor Granholm and is PA 194 of 2010.
The Actual Budgets:
Target Agreements:
Budget Gov.’s Rec Senate House G.F. Target
Agriculture $28,828,700 $30,297,100 $29,381,600 $30,297,100
Attorney General $29,168,000 $28,580,100 $28,196,000 $28,559,400
Civil Rights $11,279,100 $10,988,100 $10,756,500 $10,975,700
Community Colleges $299,100,500 $289,940,500 $299,100,500 $295,880,500
Community Health $2,016,461,800 $1,920,421,400 $2,023,521,200 $2,430,451,900
Corrections $1,875,904,500 $1,908,576,700 $1,993,205,900 $1,918,546,200
Education $20,011,900 $19,795,700 $21,612,100 $21,914,100
DELEG $45,426,700 $47,607,900 $43,945,200 $47,607,900
Executive $4,630,800 $4,630,800 $4,498,300 $4,630,800
Higher Education $1,543,378,500 $1,527,238,500 $1,590,734,800 $1,543,378,500
Human Services $994,228,400 $916,456,100 $934,528,200 $930,064,600
Judiciary $152,731,100 $151,573,100 $154,180,600 $152,073,100
Auditor General $11,155,000 $11,155,000 $10,808,800 $11,155,000
Legislature $100,574,300 $100,574,300 $98,323,300 $100,574,300
Veterans Affairs $36,951,100 $36,432,900 $35,413,300 $36,424,700
DNRE $42,104,300 $41,341,500 $40,797,400 $41,309,400
School Aid $30,206,200 $225,606,200 $31,706,200 $18,642,400
State $14,179,200 $13,950,900 $13,593,800 $13,910,800
State Police $258,930,500 $258,193,400 $252,360,100 $241,870,600
Transportation $0 $0 $84,000,000 $0
Treasury-Debt Service $42,118,300
Treasury-Operations $56,038,000
Treasury-Revenue Sharing $0
Treasury-Strategic Fund $22,781,500
State Employee Retirement Savings $60,000,000
Total $8,257,466,200
State Police Budget (HB 5888)-It totals $529.2 million ($260.4 million general fund), a 3.9 percent increase over current year (2.9 percent increase in general fund). Among the changes is shifting $1.4 million for the Law Enforcement Information Network from local fees to general fund and $1 million for victim’s services from the expiring Crime Victims Rights Fund to general fund. The conference committee also kept the seven security guards at the Capitol and increased funding for them to $624,800. The conference also gave them authority to patrol legislative buildings and grounds as well as the Capitol. Among the largest increases is $8.5 million in federal funds from moving the Office of Drug Control Policy into the department. The conference report cut a total of $1 million from fleet spending, all general fund, moving $200,000 of that to laboratory operations. The governor had recommended cutting only $856,800 from the line. The conference report also cut $7.5 million ($5.7 million general fund) from economic adjustments, reflecting opposition to a 3 percent increase for unionized state employees. It was signed into law as PA 163 of 2010.
Military Affairs Budget (HB 5885)- The bill spends $150 million gross, a 0.1 percent increase, and $36.4 million GF, a 0.5 percent increase. The primary increase is $3.4 million in economic adjustments, but that includes a 3 percent reduction to state employee compensation. The conference also cut $8,200 from headquarters and armories administration. It retains the special maintenance line by pulling general funds from the Grand Rapids Veteran’s Home and information technology projects. It was signed into law as PA 162 of 2010.
Department of Education (SB 1154)- It totals $127 million, $21.9 million general fund, a $14 million gross increase over current year. Part of that increase is $7.4 million ($2.4 million general fund) to cover administration of the education reforms that were adopted as part of the application for the federal “Race to the Top” grants. Because the state was not awarded any of the grants, state funds have to cover the implementation. The conference did not cut the Library of Michigan as much as Governor Jennifer Granholm proposed. While it agreed to eliminating the library’s Regional Federal Depository status and its participation in MelCat (an electronic inter-library lending system), it provided funds to retain the non-Michigan genealogy collection and the Michigan-specific collection and to keep those documents accessible to the public. The budget cuts aid to local libraries by $250,000, but that is expected to be replaced by $1.5 million in School Aid Fund revenue. The conference also called on the department to provide a report on cyberschools, two of which opened this school year. The schools, under the education reform legislation, this year are limited to 400 students and next year to 1,000. The report asks for a look at the costs of providing the education. It also asks for a look at schools granted seat-time waivers. It was signed into law as PA 164 of 2010.
Community Colleges (SB 1151)- It totals $295.9 million ($204.9 million general fund). The state discontinues its 14-year policy of reimbursing colleges for the property tax revenue they lose because of renaissance zones. Colleges have been reimbursed for lost revenues from renaissance zones, which relieve taxpayers of property taxes in certain urban and rural areas, since renaissance zones were created in 1996. In the current 2009-10 fiscal year, the reimbursement equaled $3.5 million. The elimination of the reimbursements is equivalent to an overall 1 percent reduction in state aid to colleges. Elimination of the reimbursement will have a disproportionate effect on those colleges whose districts include areas with renaissance zones, particularly Montcalm Community College, the Wayne County Community College, Grand Rapids Community College, Kellogg Community College and Lake Michigan College. For Montcalm, the $341,039 reduction is the equivalent of an 11 percent cut in the state aid it receives. For Wayne County, it's a 4.3 percent cut. In total, 23 of the state’s 28 community colleges would see a reduction. Exact reductions are as follows: Alpena: 0.2%; Bay de Noc: 0%; Delta: 1.4%; Glen Oaks: 0.2%; Gogebic: 0.1%; Grand Rapids: 2.4%; Henry Ford: 0%; Jackson: 1.2%; Kalamazoo Valley: 1.1%; Kellogg: 2.8%; Kirtland: 0%; Lake Michigan: 3.6%; Lansing: 0.2%; Macomb: 0.6%; Mid-Michigan: 0.1%; Monroe: 0%; Montcalm: 11.4%; Mott: 0.4%; Muskegon: 0.8%; North Central: 0%; Northwestern: 0.3%; Oakland: 0.3%; St. Clair: 0.3%; Schoolcraft: 0%; Southwestern: 0%; Washtenaw: 0%; Wayne County: 4.3%; West Shore: 2.6%. This was signed into law as PA 165 of 2010.
Department of Agriculture (HB 5875)- It totals $76.5 million gross for the department, a 4.3 percent cut from current year. But general fund spending, $30.3 million, is up 1.6 percent. The Department of Agriculture saw its overall spending cut, but general fund increased. The largest part of the overall cut was the loss of $2.1 million in federal funds, including $1.2 million from the American Recovery and Reinvestment Act. The budget also reflects moving the Office of Racing Commissioner to the Gaming Control Board, a $1.7 million loss of restricted funds. Much of the general fund increase in the budget is $332,200 for food safety programs. Total, those programs will see $9.7 million for food safety and $3.3 million for milk safety. The budget also moves the Michigan Agriculture Environmental Assurance Program, Right to Farm activities and the Intercounty Drains program, all proposed for cuts by the administration, into separate lines. The administration has given assurances the programs will not face line-item veto. This has been signed into law as PA 166 of 2010.
The Judiciary Budget (HB 5883)- The state’s courts will receive $260.4 million, a 0.6 percent increase, but general fund support for the courts is cut 0.7 percent to $152.1 million. The budget provides $76.5 million gross for the department, a 4.3 percent cut from current year. But general fund spending, $30.3 million, is up 1.6 percent. Among the cuts, $1.2 million general fund is removed from cost of living increases for court employees and $240,000 is cut to reflect reductions in judgeships in local trial courts. But the budget provides a $2.6 million gross, $2.4 million general fund, increase for other economics. The budget also shifts $2.6 million from general fund to the Juror Compensation Reimbursement Fund. The plan also creates a community court pilot program, giving $20,000 for the experiment. This has been signed into as law as PA 167 of 2010.
Department of Energy, Labor and Economic Growth (DELEG) HB 5884- It includes substantial cuts in both overall and general fund spending, with the $1.28 billion gross representing a 16.7 percent cut. General fund fell 12.8 percent to $47.6 million. Among the highlights, the Bureau of Fire Safety was retained with $2.6 million in general fund instead of the fee increases proposed by the governor or the fireworks sales proposed by the House. The Michigan Nursing Corps remains, but the $500,000 general fund amount was replaced with federal funds, giving an overall $200,000 increase. The Workers Compensation Agency loses $321,500 general fund, spread across the administration, Board of Magistrates and Appellate Commission. The Liquor Control Commission received $1 million in additional restricted funds for bootlegging enforcement with the anticipation that will generate $4 million in fines, all going to the general fund, through changes in the liquor code. The bill also requires the commission to coordinate with the Department of State Police in enforcing both liquor and tobacco bootlegging. The No Worker Left Behind program would be completely federally funded under the bill with the elimination of the $4.5 million general fund contribution. The budget retains Butch Hollowell’s post as automobile and home insurance consumer advocate, but cuts his funding in half with the expectation that the position will be discontinued by the new governor. Among the largest cuts to the department is $211.2 million in federal and restricted funds from moving the Michigan State Housing Development Authority to the Department of Treasury and $1.9 million from moving the Land Bank Fast Track Authority to the same place. Another $102.9 million in cuts represents loss of one-time federal funds. This has been signed into law as PA 186 of 2010.
Granholm told the Legislature she plans to ignore a provision that would prohibit development of ergonomics rule and that the Legislature cannot require the department to contract for a new unemployment insurance computer system.
Department of Community Health Budget (SB 1152)- It totals $14.1 billion, of which $2.4 billion is paid for with general funds. That represents a 5.1 percent, or $116.9 million increase in general fund spending over the current fiscal year. The budget also reflects a $103.6 million increase in general fund spending to reflect increased caseloads, but general fund support also grew to cover shortfalls in the Merit Award Trust Fund, Healthy Michigan Fund and Medicaid Benefits Trust Fund. An influx of federal money has spared the Department of Community Health's 2010-11 fiscal year budget. It restored adult dental and podiatric services for residents on Medicaid after more than a year of those services having been eliminated. It drops a proposed 4 percent cut in Medicaid reimbursements to physicians. The budget contains a $1 million cut local public health depts., however that is less than the $2.7 million cut the governor had proposed. The state selected to cover people with pre-existing conditions as the federal health care reform is implemented. The Legislature also included language allowing DCH to contract out its administration of the state's medical marijuana program. Substance abuse services was cut by $1.6 million, which is what the governor had recommended. Transitional Medicaid was eliminated for the 950 adults with dependant children with incomes up to 185 percent of the federal poverty level who are transitioning off the program. That saves $3.7 million. Medicaid mental health services was cut $2.5 million as enrollment in the federal home and community-based support program would be frozen by 300 people. The governor's recommendation to require adult foster homes and homes for the aged to pay for their employees' background checks was not included in the final budget. The Senate had cut non-Medicaid community mental health programs by $57 million, but the budget includes a $5.4 million reduction. One-time $27 million in gross funding (no general funds) for a pool covering outpatient services. The Healthy Michigan Fund was trimmed by $39,000 gross, but had $251,000 in general fund added to it. It was signed into law as PA 187 of 2010.
Governor Granholm vetoed the Early Childhood Collaborative Secondary Prevention line. Lawmakers had allocated up to $1 million for prenatal care outreach and service delivery support in areas with high infant mortality rates through the nurse family partnership, but the governor vetoed that funding, saying there were insufficient funds appropriated to support the initiative. The Legislature had also asked the department to expand its prescription drug website, but the governor vetoed that section, again saying there wasn’t enough money appropriated to cover the cost.
Department of Corrections (SB 1153)- It totals $2 billion ($1.91 billion general fund). That's a 0.5 percent increase from the current year in overall funding. The budget agreement cuts $42 million, or 3.8 percent, from the department's facilities instead of outright closures, thus, requiring the dept. to find savings. The agreement also calls for extending the sunset by two years on the state’s boot camps. The department maintains that it can implement the closures without legislative approval. The County Jail Reimbursement Program of $16.6 million, a $6.85 million increase from the 2009-10 fiscal year. The budget also calls for the department to implement a number of efficiencies, such as a $6.1 million reduction in prison food services through efforts to improve the supply chain, $6.5 million through reforming the transportation supply chain and $21 million in health care savings. Those savings would be achieved by restructuring existing health care contracts and improved prescribing practices ($10 million) and adopting a single drug formulary and consolidating certain mental health services ($11 million). This has been signed into law as PA 188 of 210.
Governor Granholm vetoed a $500,000 transfer to the auditor general’s office and vetoed $50,000 for inmate learning pilot programs.
Department of Environment and Natural Resources (SB 1161)- It totals $719 million ($41.3 million general fund). That's a 1 percent increase from the current year (6 percent increase general fund). The conference report supported Governor Granholm's call for a $1 million cut to State Historical Programs ($394,300), Wildlife ($151,000), the Mackinac Island State Park Commission ($134,100), general law enforcement ($116,800) and information technology ($103,900). The budget also cuts the water program by $1.3 million, or 13 positions. The conference report softened another $1.35 million in cuts passed by the House to $490,600. It also contains a pilot program where the department would reopen six out of the 12 shuttered campgrounds, enabling them to receive their funding from the new state park passport program. Department officials would have to report to the Legislature by March 1 on their plan to start the pilot project. The budget also includes a $100,000 increase for the Aquatic Nuisance Control Program. And the budget includes $2 million in Game and Fish Fund money for the upgrade of software that runs the system that sells hunting and fishing licenses. This was signed into law as PA 189 of 2010.
Higher Education (SB 1157)- It totals $1.58 billion ($1.54 billion general fund). That’s a 2.1 percent decrease from the current year (2.4 percent decrease general fund). The conference committee opted to increase funding for the state’s financial aid programs by 10.2 percent, or $8.65 million. Paying for that increase meant increasing the cut to university operations by 2.8 percent. It retained the King-Chavez-Parks program, which provides funding to institutions of higher education for specific efforts to help economically disadvantaged students. The budget keeps funding for that program at current-year levels for tuition grant. Financial aid programs receiving increases were the Competitive Scholarship program (12.8 percent), based both on merit and need; the Tuition Incentive Program (19.9 percent), which assists students who have been on Medicaid; and the Children of Veterans Tuition Grant, which provides assistance to the children of veterans killed in action, missing in action, or severely disabled in action (20 percent). Additionally, the budget cuts the Michigan State University Agricultural Station and MSU Extension service by 2.8 percent each. It was signed into law as PA 203 of 2010.
Department of Human Services (HB 5882)- It totals $6.96 billion ($930 million general fund), a 17.7 percent, or just over $1 billion in additional funding for next year, while the general fund portion is 9.1 percent, or $77.7 million above current year spending. The main news in the budget is that lawmakers added 684 child welfare workers, 417 of which will be new child protective services workers. The additional workers, which will cost the state $37.1 million in general funds, is a move toward meeting the staffing levels for caseloads required under the Children’s Rights lawsuit settlement. The budget does include new boilerplate language requiring DHS to report on the money it provides to the Child Care Council for administrative costs, along with money transferred for union dues. Governor Granholm had recommended adding 850 new workers. Private foster care and adoption services also see a boost in funding, with $5.9 million added to move casework to those agencies from the state. A special adoption contract costing $1 million, which is aimed at getting long-term state wards into permanent placement, and a 36 percent rate increase to adoption rates for private agencies also was restored after the governor vetoed similar funding in the current year budget. The budget includes $280.4 million in one-time Temporary Assistance for Needy Families funding, which will be used to both enhance programs as well as offset some general fund support for the department. Public assistance caseloads will see a $633.3 million ($32.9 million general fund) increase over the current fiscal year, most of which is for the Food Assistance Program to fund an expected average caseload of just over 1 million. The budget hires 36 inspector general staff starting in January to weed out people on the front end not eligible for state services. Net savings to the general fund would be $4 million. Meanwhile federal funds will be used to hire 175 positions to determine disability benefits, which suffer from a backlog. Lawmakers removed licensing fees for child care organizations and adult foster care facilities, as well as a $25 child support fee assessed to custodial parents. Instead, $2.7 million in general funds will be used to offset the lost fee. This has been signed into law as PA 190 of 2010.
Governor Granholm’s vetoed boilerplate language providing reimbursement rate increases for various service providers in the Department of Human Services and lines that provided earmarks for programs in particular counties.
Department of Transportation Budget (5889)- It totals $3.236 billion, $128.3 million less than the current year’s budget. The budget includes no general funds. The reduction is due mostly to $98.4 million in federal stimulus money not being renewed and another $30.2 million reduction in restricted funds. It allows a limited amount of spending on current Detroit River International Crossing contracts, the DRIC language adopted allows the department to spend $250,000 on contracts let on the project before September 1, and then another $500,000 from January 1 to May 31, 2011. Despite the ongoing controversy on DRIC through the year, the main issue during the conference meeting was the $84 million established to ensure that the state would match all available federal monies. Under the proposal the state will raise $40 million of the needed amount through the sale of short-term notes, $11 million will come from lapsed toll credits, $12 million will come from redirected driver’s licenses fees, $2.1 million in savings from the elimination of funding to pay for the 3 percent pay increase for unionized state workers, $6 million in other departmental savings, $1 million in cuts in Welcome Center operations and deferring $11.3 million in capital outlay projects including construction of a Welcome Center in Port Huron and construction of salt sheds. This was signed into law as PA 192 of 2010.
Governor Granholm vetoed boilerplate requiring the state treasurer to come up with an alternative cost allocation plan for motor fuel taxes and mandating the department conduct a study and vetoed a $100 placeholder that was to be used for matching funds for transit-oriented projects.
General Government Budget (HB 5880)- It totals $3.3 billion ($590.5 million general fund), which is $226 million, or 7.3 percent, more than current year spending. But general funds are cut 8.8 percent, or $56.8 million. It includes a freeze on revenue sharing payments to local units of government. Also, boilerplate in the Department of Treasury appropriation states that any funds appropriated for public-private partnerships are prohibited from being used for the Detroit River International Crossing.
Below are highlights of changes to all the budgets:
· Attorney General- The budget totals $73.4 million ($28.6 million general fund), which is a 0.8 percent, or $225,600 cut, from current year spending. The department will see a cut in staff by 15 positions, saving $1.1 million, as well as cuts to staff funded through the homeowner construction lien fund and auto theft prevention grant, both of which were eliminated. The savings in the budget were offset by the 3 percent increase in unionized state worker salaries.
· Civil Rights- The budget totals $12.8 million ($11 million in general funds), which is a 6.2 percent, or $730,700, cut from the current year. Most of the savings are achieved through a carry forward of 10 positions that were cut in the current fiscal year. Two accounting positions were also transferred to the Department of Technology, Management and Budget.
· Executive Office- Overall, the budget totals $4.6 million (all general fund). Reductions in spending total $192,900. The budget would be cut here by 4 percent, which would be achieved through administrative reductions.
· Legislature- The budget here would also see a 4 percent cut in general fund support, as the appropriation totals $102.3 million (a $4.2 million savings from the current year). A portion of the funding for the legislative corrections ombudsman comes through a $250,000 interdepartmental grant from the Department of Corrections.
· Legislative Auditor General- Another 4 percent cut awaits the auditor general, for a savings of $464,800, which will be achieved through unspecified administrative reductions. The total budget is $15 million, which is $11.2 million in general funds. Audits related to the DOC will be funded through an interdepartmental grant of $500,000 from the department.
· State- It totals $213.5 million ($13.9 million general fund), which is a 22.5 percent, or $4 million, cut in general fund support for the department. Funding for the Business Application Modernization, a project completed by the former Department of Information Technology, is eliminated, saving $2.8 million. The budget adds $1 million for credit and debit card service assessment, while $1.2 million in savings would come from a variety of areas ($287,600 for regulatory services, $277,900 for branch operations, $277,500 for central operations, $272,300 for department services operations, $7,000 for executive direction operations and $60,000 for information technology administrative reductions). But branch operations and central operations would see a combined $1 million increase through revenue from the new state park passport fee.
· D.T.M.B.- The budget totals $974.4 million ($299.7 million general fund), which is a 2.1 percent, or $6.2 million increase. The budget includes $6.5 million for increased rent payments, as well as $1.5 million for the gubernatorial transition. But there is $1.3 million in savings from building contract reductions, reorganization and further staff restructuring. Technology services are cut $8.2 million in interdepartmental grant authorizations for the various departments, although there is $14.5 million in IDG increases for certain department projects, the largest of which is $14.2 million for increased costs developing a statewide automated child welfare information system and necessary staff for the Department of Human Services. The Civil Service Commission will see 20 positions cut through retirement, possible layoffs and applying administrative rate reductions for information technology costs, saving $1.8 million.
· Treasury- It totals $1.9 billion ($120.9 million general fund), which is a 20.4 percent cut, or $31 million, compared to current year spending. The budget eliminates nine positions, for a savings of $1.8 million, while nine positions will be added to audit staff to deal with Michigan Business Tax filings, which will cost $1 million. Another four positions will be added to eliminate the backlog of paid error returns to be processed that will cost $400,000 in restricted funds. Seven new positions will be added, at $900,000 in general funds, for a new Business Property Tax Appeal program. Debt service payments will be reduced by $22.5 million through refinancing and refunding of those payments. The Office of Racing Commissioner will see 10 positions that were transferred from the Department of Agriculture under 2009 executive orders, as well as additional race dates, for a total of $2.3 million. Boilerplate was added to allow commissioner to pay rewards of $5,800 or less for information regarding crime within the industry. The Lottery would see a 5 percent cut in promotions and advertising while one position would be added to assist the introduction of Powerball. The 21st Century Jobs Program will increase by $46.5 million in restricted funding to restore the general fund cut that occurred in the current fiscal year. Meanwhile, the economic development job training program is eliminated under the budget, for a savings of $4.7 million. The budget also appropriates up to $10 million in unreserved general funds to the Michigan Strategic Fund for a grant to the Detroit Institute of Arts.
This was signed into law as PA 191 of 2010.
Governor Granholm vetoed a boilerplate section that authorized the attorney general to use funds collected under the state’s Medicaid False Claim Act.
Personnel:
Theis Leaving - Ken Theis is leaving the Department of Technology, Management and Budget effective October 1. Phyllis Mellon, who served as DMB interim director after the departure of Director Lisa Webb Sharp until DTMB officially came to be, will serve as interim director.
In the Courts:
Mackinac Center’s Case Against the Childcare Workers-The Supreme Court has ordered the Court of Appeals to explain why it threw out a lawsuit filed against the state’s unionization of child care workers after the appeals court ruled against the plaintiffs without any explanation. The Mackinac Center for Public Policy filed this lawsuit, which sought to compel the state to discontinue the collection of union dues from private child care providers who serve those receiving aid from the Department of Human Services in exchange for working, on behalf of three day care providers. The case is Loar v. Department of Human Services (SC Docket No. 140810).
Judge Holds Governor Granholm Committed an Unfair Labor Practice By Taking Away the NERES 3% Raise- Governor Granholm and her administration deliberately committed unfair labor practices when they decided to rescind a 3 percent pay raise to nonunion state employees, an administrative law judge ruled. The state dropped the raise for 14,000 employees to save $45 million toward the 2010-11 fiscal year budget. Judge William Hutchens singled out for criticism Sharon Bommarito, director of the Office of State Employer, who refused to testify before him despite a subpoena. In his decision he stated "It is reasonable to conclude that at a minimum, Bommarito, the governor and her legal counsel concluded that the interest of saving $45 million outweighed the possibility of a negative outcome in an unfair labor practice hearing and made the decision to repudiate the consensus agreement, knowing full well that their actions may be violative of Civil Service Rules," Mr. Hutchens wrote.
Federal Court Upholds Healthcare Reform- The federal health care reform law did not exceed its authority to require all people to have health insurance by 2014, held U.S. District Judge George Caram Steeh. In a lawsuit brought by the Thomas More Law Center from Ann Arbor and four individuals who had joined in the suit, challenging the law's power to require them to either have insurance or pay a tax. The individuals also worried their insurance costs could go to cover abortions, which they oppose. While most attention on lawsuits against the law focus on suits in Virginia and Florida (Attorney General Mike Cox has joined in the Florida lawsuit) challenging the law. Mr. Steeh held that the law does not exceed congressional power under the commerce clause of the U.S. Constitution.