Under the Dome
Capitol Update May 1-May 15, 2007
Cynthia Ann Paul
30 Days to Act or Massive Cuts to Health Care & Schools- On April 30th, Governor Granholm gave the Legislature 30-days to take care of what is now a $713 million budget deficit in the current fiscal year, cut schools by $122 per-pupil, establish a 6 percent cut in Medicaid provider rates.
Dueling Business Tax Plans
House Democratic Business Tax Plan Moves the House After Committee Love Fest- The Committee hearing was a love in with major corporations, business groups, local governments, labor, nonprofits, public universities, library and human service groups all had something nice to say about the House Democratic replacement to the expiring Single Business Tax. Giving a boost to the concept of fully replacing the revenue lost by the upcoming repeal of the SBT and lowering personal property taxes. On the House Floor- Democrats used a parliamentary tactic to avoid taking up Republican amendments, but four GOP members supported the legislation, making the vote 61-48. Republican members supporting the bill were Rep. Ed Gaffney (R-Grosse Pointe Farms), Rep. Mike Nofs (R-Battle Creek), Rep. Glenn Steil Jr. (R-Cascade) and Rep. Lorence Wenke (R-Richland). Rep. Lee Gonzales (D-Flint) was absent for the vote. The State Chamber of Commerce backed the approach taken by the House and had not endorsed the Senate plan.
Senate Business Tax Plan- Passed the Senate floor on a partyline vote, SBs 94, SB 95, and SB 96). It uses a modified gross receipts tax and income tax while providing a net tax cut of some $600 million initially and growing each year. The full impact of the cut would not be felt during the 2007-08 budget, which already has a projected deficit of some $1.5 billion, because the $1.56 billion plan would not kick in until three months into the fiscal year. The Senate plan provides a 25 percent cut in personal property taxes on existing assets, but calls for a total elimination of newly acquired industrial and commercial property. The cost of that break is $87 million initially, but rising each year as additional equipment and property is added, hitting perhaps $300 million within five years, analysts say. Big business groups and manufacturers have lined up in support of the House tax plan. Senator Cassis said the Senate plan is supported by the National Federation of Independent Business, and groups representing insurance agents, bankers, grocers, restaurants and builders/contractors.
Comparing the Two Plans- Senate analysts shows several similarities, including a limit on revenues. The House imposes a 2-year hold, with a rebate triggered should revenues go above current intake now plus 10 percent, while the Senate holds revenues at $1.56 billion plus inflation and 1 percent. Both plans offer industrial and commercial personal property tax relief and they continue existing credits under the SBT like MEGA, brown field and renaissance zones. The House and Senate also both incorporate a unitary filing requirement and base apportionment solely on sales. How the plans treat certain sectors is part of the disagreements between them. For instance, small businesses that qualify would receive an alternative tax at a rate of 1.8 percent under the House plan, while the Senate dictates that firms with gross receipts above $350,000 and below $15 million could elect to pay either the income or modified gross receipts. The House plan also incorporates Michigan-based credits and credits for start-up businesses and the Senate plan institutes a new entrepreneurial credit. Financial organizations would also be treated differently under the two proposals. The House holds those firms to the same income and net worth tax with a credit specifically for them, while the Senate sets up a net worth tax (or capital tax) of .225 percent. The Senate plan also keeps insurance companies on the same rate as the SBT (1.0735 percent) while the House imposes a 1.25 percent premium tax, though it offers credits currently available under the SBT.
House Approves and Governor Signs Supplemental SB 404 (PA 7)- This includes mostly federal spending but also provides for $400,000 from the Michigan State Police Troopers Association to avoid layoffs of 29 troopers until June. The supplemental, is $77.4 million gross, of which none is in general funds, was amended to reflect less federal spending in the Department of Human Services budget. The bill also includes a donation of $250,000 from Delta Dental for dental sealants for poor children and $3.7 million in federal, local and donated funds for 45 full-time positions in local Human Services field offices to assist welfare recipients. The bill continues the Health Information Technology Initiative by replacing the $7.3 million in general fund cut by executive order with restricted funds. The bill provides an additional $63,000 in general fund for the Family Independence Program, but pays for that with $171,000 in general fund and federal cuts by canceling leases on unoccupied offices in Southeast Michigan. And it prevents 20 layoffs in the Department of Environmental Quality by shifting $150,000 in the Air Quality Program and $737,000 in the Land and Water Management Program from federal funds to state restricted funds.
Civil Service Commission Lay off Rules- The Civil Service Commission approved rules May 2, 2007, that would allow the state to implement temporary layoffs of non-union state employees. As approved, the rules require written notice of a temporary layoff, but do not specify how far in advance of the layoff that notice must be provided. The rules also potentially opened the need for legislation. For most state employees, the days would still count toward service time for retirement and the pay they would have received on those days would be calculated as part of their final average wages at the time they retire. But for State Police commanders, officials from both Civil Service and the State Police Command Officers Association said there is no provision for temporary layoffs in the statute that governs their retirement system. Those days then potentially would not count toward their retirement. They would, for all employees, still count toward seniority, accumulating leave time and benefits.
Senate Approps. Approves Agriculture Budget (SB 222)-Several areas in the Department of Ag. took a hit as a result of the state's fiscal problems, with most of the Senate Appropriations Committee debate centered on trying to find ways to continue funding for intercounty drain programs. As it is, the $109.6 million bill is $3.2 million in total spending above Governor Jennifer Granholm's recommendation, but it matches her $29.3 million in general fund spending level, bringing it 2.5 percent below the current year. After advocates failed with attempts to shift $500,000 from state horse racing programs to restore five employees in the drain program, and then targeting the general fund instead, the committee left in just nominal funds to keep the item alive for future negotiations. Among the cuts in the bill are nearly $600,000 from local conservation districts, the subcommittee chair (Senator Brown) said the state will actively seek federal funding, $3.8 million in reduced federal funds for the Emerald Ash Borer program, nearly $1 million from the cooperative resources management initiative, and $529,500 and five positions from the department's management services division. The Senate did restore $150,000 that the governor had cut from the Right to Farm program. In other aspects, the bill requires the department to actively search for $70 million in federal funds for conservation funding and to work with the federal government to get certification of TB-free status in the Lower Peninsula.
Bulk Purchasing (HB 4588)- Passed out of the House unanimously. This legislation provides an incentive for local governments to purchase goods and services through the MiDeal bulk-purchasing plan operated by the state.
Notice Of Discharge Income Tax Increase- Rep. George Cushingberry Jr. May 1 filed a motion to discharge his HB 4500 from the House Tax Policy Committee to the full House Chamber, which increases the income tax rate from 3.9 percent to 4.6 percent.
Home Health Care Workers Show up and Demand No Cuts - Home care workers and their patients argued that, should the cuts passed in March as part of the Senate efforts to patch the current year budget hole be implemented, more people will have to be placed in nursing homes because the workers will need to find other work. The current budget provided a minimum $7 per hour and provided a 50-cent increase for those making more than that, but the Senate-passed budget cuts eliminated that wage increase.
Corrections Budget
Prisoner Release- The Department of Corrections is proposing to release 3,200 nonviolent and infirm inmates - 2,000 less than officials originally proposed, 2,200 nonviolent offenders and about 1,000 inmates who are sick. The department still believes it can cut its budget by $92 million.
Closure of Jackson Facility-The Department of Corrections will have to wait at least another 30 days before it can close the Southern Michigan Correctional Facility in Jackson, said U.S. District Judge Richard Enslen. The Department of Corrections is asking the 6th Circuit U.S. Court of Appeals to allow it to close the Southern Michigan Correctional Facility in Jackson after U.S. District Judge Richard Enslen rejected the department's plan for moving ailing prisoners from that facility.
State Shutdown Still Looming- The potential of at least a partial government shutdown remains a looming phantom. Officially, the state wants to avoid a government shutdown. Worries about shutdown are among the factors helping drive lawmakers towards a budget resolution (and officials are hopeful they may be able to reach agreement on a cure to the 2006-07 budget by the end of next week) but a shutdown of sorts is inevitable, beyond those obvious health and safety workers, defining what is a critical function will be problematic.
Court of Appeals- Chief Judge William Whitbeck announced that court employees would be laid off for a total of eight days during the remainder of the fiscal year. The court has to cut its expenses by $1.1 million.
Governor Abolishes Many Boards- Governor signed 25 executive orders abolishing 26 Boards as an ongoing effort by the administration to eliminate unnecessary costs: The Board of Landscape Architects; The Board of Forensic Polygraph Examiners; The Personnel Agency Board; The Groundwater Advisory Council; The Groundwater Conservation Advisory Council; The Invasive Species Advisory Council; The Michigan Environmental Science Board; Ronald Wilson Reagan Memorial Monument Fund Commission; Temporary Reimbursement Program Advisory Board; Michigan Underground Storage Tank Financial Assurance Policy Board; Water Quality Monitoring Advisory Board; Laboratory Data Quality Assurance Advisory Council; Agricultural Marketing and Bargaining Board; Value-Added and Commercialization Roundtable; Agriculture and Rural Communities Roundtable; Highway Reciprocity Board; Community Health Advisory Council; Health Plans Advisory Council; Michigan Citizen-Community Emergency Response Coordinating Council; Community Health Specialty Services Panel; Retail Food Advisory Board; State School District Accountability Board; Task Force on Local Government Services; Commission on Higher Education and Economic Growth in Macomb County; Michigan Task Force on Elder Abuse; and Advisory Committee on Septage Waste Storage Facility Management Practices.
The Fair Tax Surfacing- Rumblings about the “fair tax” have been flying around, it replaces the Single Business Tax, the personal property tax, the 6-mill state Education Tax and the income tax by putting a 9.5 percent sales tax in their place.
Negative Supplemental (SB 220) Conference Committee Comes to a Grinding Halt –Over the disagreement of enhanced revenues for the 2006-07 fiscal year prevented on Tuesday, May 15th. The report would have resolved $337 million in a general fund deficit; it would also have included more than $200 million to prevent overspending in some departments (Community Health, Human Services and Corrections) with other cuts to keep the budget in balance. If the report were adopted, then the Legislature would have to have enacted separate bills to use $167 million held in other accounts and transfer that to the general fund.
Non-Instructional School Employees Have a Voice in Contracting Out (HB 4533)- Legislation that would allow school support staff to have a say in the privatization of services such as busing and maintenance, by striking the current wording that prohibits schools from discussing plans to privatize third-party, non-instructional support services during the collective bargaining process. Voted out of House Labor Committee.
SEIU Public Service Accountability Resolution Taken UP (HR 92) sponsored by Labor Chair Fred Miller urges state departments to analyze the fiscal costs and benefits of privatization and submit results to appropriations committees before making the decision to outsource. Unanimously voted out of House Labor Committee.
Campaign Finance Omnibus Bill Move the House (HB 4628)- The Substitute adopted eliminates the exceptions that were originally provided to fundraising activity in state-controlled facilities. The bill would still have campaign filings made at the county level for districts entirely within a county. The reporting threshold also was returned to $20 per election cycle from the $50 he had originally proposed. And the bill provides that "immediate family members" for purposes of soliciting contributions to PACs must be of voting age to contribute.
The bill would allow a public sector employee to make contributions to union PACs via payroll deduction and gets rid of the annual authorization requirement. The Substitute still has the head of the Bureau of Elections in charge of enforcing campaign finance regulation, not the secretary of state. The bill would also require quarterly campaign filings in off years as well as election years. Rep. Miller is interested in looking more at the real-time filing that has been proposed by Secretary of State Terri Land. The committee rejected a substitute offered by Republicans that left out the changes in the secretary of state's powers and the payroll deduction changes. The bill also provides for disclosure for robo-calls and specifies that candidates cannot receive wages from their campaign committee.
This passed the House on a 61-47 vote. House Republicans attempted to amend the bill several times to restore those powers to the elected official (SOS), as well as to remove Democratic provisions allowing payroll deduction plans for union employees and eliminating the zero-dollar reporting requirement ($20 would be the minimum instead), but those were not adopted.
House Passes Moratorium on Landfills (HB 4047)- Except for certain cases, a new landfill could not be built in Michigan until at least 2012, and every county in the state would have to provide a solid waste management plan to the state on a rotating basis under trash measures.
26- Year olds Can Be Covered under Parents’ Health Care (SB 280 & 283)- The Senate Health Policy Committee unanimously voted out bills that would require health plans to offer coverage for individuals up to 26 years of age under their parents' plans. It allows the continuation of hospital or medical care for a person until they're 26 under their parent's health care plan, even if they're no longer a dependent. The person is only eligible if he or she is unmarried, doesn't have any dependents, is a resident of the state and isn't eligible for coverage under an employer or other kind of plan. That person would have to have been covered under a parent's plan with no breaks for more than 62 days.
Rogers Get out to Vote Legislation Criticized (HBs 4777& 4778)- The House Ethics and Election Committee held hearing on bill to undo the law the Senator Rogers passed requiring an individual’s voter registration and driver’s licenses to have the same address. Committee members were told that students, senior citizens and people with disabilities are being left out of the process of voting because this statute. The Department of State remains opposed to the bills because creating a system in which a person could have multiple addresses lacks efficiency.
The Michigan Health Insurance Access Advisory Council (MHIAC)-A new coalition of groups has formed a new organization to try and find long-term solutions to help the uninsured in the state. Their mission statement will work to identify and put in place strategies to make sure residents can access affordable health insurance. The group consists of business associations, health care providers, consumers, labor groups and insurance companies from across the state and says it is a non-partisan, non-governmental group. This is the successor group to the uninsured advisory council. It is currently working on educating the public and others about the affect having uninsured people in the state has on the community. The group is also working to create a study that would assist members in understanding the economics of health care in the state and would examine the impact different heath care insurance options have on the state. The study would be used to develop a health care insurance proposal the group would advocate to the public and policy makers. – President, Phil Thompson represents SEIU and Change to Win in this group.
MICHUCAN- Last December & 2-years ago I provided the state council leadership with information about MICHUCAN, an organization that is pushing for universal healthcare. They are now leading a ballot initiative effort asking voters in November to ask the Legislature to do something about uninsured in the state. What those reforms might be would be up to the Legislature. The proposed initiative follows the pattern used in Massachusetts that led the governor and Legislature there to adopt a universal healthcare program, said John Freeman with the MICHUCAN. While they are not proposing any particular plan for reform, Mr. Freeman said any final reform plan would have to meet three key requirements: it would have to provide coverage for all of the 1 million uninsured in the state, it would have to force the healthcare system to become more efficient and it would have to hold down increases in health insurance rates.
7th Congressional District Race - Former state Senator and Adrian mayor Jim Berryman announced this week he's going to challenge incumbent U.S. Rep. Tim Walberg (R-Battle Creek) for the 7th U.S. House District in the 2008 election. Mr. Berryman, who currently works at the Michigan Education Association, said he's running because Mr. Walberg is too conservative for the people he represents.
In the Courts:
The Michigan Chamber of Commerce has officially been shut out of a case challenging the prohibition on payroll deductions for governmental employee union PACs. The Supreme Court agreed late Monday with the lower courts that the Chamber had no role as an intervener in the case (Michigan Education Association v. Secretary of State, SC docket No. 133661, Ingham Circuit Court docket No. 06-001537 AA). The MEA is challenging a ruling by Secretary of State Terri Land that, even if the union reimburses for the costs of the payroll deduction plan, it still counts as a governmental expenditure for a political purpose and so is prohibited. HB 4628- would overturn the ruling by defining such contributions as not government expenditure if the government is reimbursed its costs.