Capitol News

June 2015

Surviving Spouse Pension Tax Relief Bill Advances

A substitute HB 4124 sponsored by Rep. Jim Townsend (D-Royal Oak) to protect surviving spouse pension benefits was reported unanimously out of the House Tax Policy Committee on June 3. Under current law, the tax treatment of the retirement income of married couples filing jointly is based on the age of the older spouse. This bill would continue this tax treatment for the younger spouse after the death of the older spouse, as long as the surviving spouse did not remarry. Additionally, a surviving spouse born after 1945 who reaches the age of 67 and has not remarried may use her/his own or the deceased spouse’s date of birth when deciding which of several tax treatment options to choose. If enacted into law, it would begin in tax year 2016.

The bill’s bi-partisan sponsorship and committee vote portends well for the future of the bill on the House floor. However, the Governor has continuously opposed changes to the pension tax so your communication with him to support this small change in the law is needed. Go to his Web site to register your views or call his office at (517) 373-3400.

State Budget Adopted

For a fifth year in a row, both chambers have passed in early June the two big budget bills to fund state government. The budget approved by the Legislature totals $54.5 billion of which $10 billion is derived from state general fund/general purpose money and the remainder is federal or other sources.

The House overwhelmingly approved the Fiscal Year 2016 education budget bill 99-10, the most votes since 2010. The 248-page bill cleared the Senate 24-14. The K-12 schools budget for the 2015-16 fiscal year is expected to provide an increase in the foundation grant to school districts of $70 to $140 per pupil. About $31 million is dedicated to a new early literacy initiative that includes additional kindergarten instruction, reading coaches, and new K-2 assessments. Universities and community colleges got about 1.5 percent more than last year but they must keep their tuition hikes to 3.2 percent to qualify.

The $38.623-billion general omnibus bill to fund all non-education programs (SB 133) cleared the House 70-39 and the Senate 22-16. It includes $400 million in general funds for transportation, $115 million more than this year and $260 million more than required to qualify for federal matching dollars as current fuel taxes do not generate enough revenue to meet the federal match requirements. Controversial aspects of the bill are the closing of Maxey School and the planned closure or consolidation of 15 Department of Health and Human Services offices around the state to save $3.2 million. The film incentive program will be scaled back severely to just $5.9 million.

House Moves Its Roads Fix Plan

After voters rejected on May 5 by a 60-point margin the complex ballot proposal to raise the state sales tax to address increasing shortfalls in gas tax revenue dedicated to fixing roads and bridges, the House Republican Caucus rolled out its $1 billion, 12-bill, 4-year plan on May 14, held hearings and reported it out of the Roads and Economic Development Committee on June 3 over Democratic objections.

The House package only creates $40 million in new revenue. It takes $185 million from economic development incentives and $117 million from a working poor tax credit and makes up the rest from $700 million in projected state revenue growth. The new revenue comes from increasing the tax on diesel fuel from 15 cents per gallon to 19 cents to match the tax on regular gasoline (tying it to inflation) and increasing the registration fees for electric and hybrid vehicles by $100 and $30 each, respectively.

Meanwhile the Senate Republican Caucus began four weekly private meetings to develop its own road funding plan. The Senate plan is not expected before July.

Auto No-Fault Insurance Update

The costs of providing mandated unlimited, lifetime medical coverage as part of Michigan auto insurance policies has pushed the costs of auto insurance 20 to 35 percent higher than neighboring states, increasing the numbers of uninsured drivers to one in every five in Michigan according to the Insurance Institute of Michigan. The two bills that would drastically change the auto-no fault medical and long-term care insurance, SB 248 and 249, are still awaiting action on the House floor, likely stuck there because there are not the Republican votes to move them without amendments.

Meanwhile legislation allowing Michigan cities with over 35 percent uninsured motorists to contract with insurers to provide low-cost, low-benefit auto insurance coverage to its residents cleared the Senate Insurance Committee on June 3 on 5-3 vote with Sen. Bert Johnson (D-Highland Park) joining four Republicans in support. Sen. Wayne Schmidt (R-Traverse City) joined the other two committee Democrats in opposition. Sen. Jack Brandenburg (R-Harrison Township) was absent.

The “D-insurance” as it is called, would have a limit on medical benefits of $250,000 for critical care. Once a patient hits the $250,000 level for critical care, their personal health insurance would then be used for any medical cost above that amount. Under current auto-no fault, medical coverage is unlimited as is long-term care.

Opponents say that $250,000 is meager coverage for catastrophic injuries that can result in millions of dollars of medical, rehabilitation, and extended care. It would force many victims into medical bankruptcy and the publicly funded Medicaid coverage system.

Detroit Mayor Mike Duggan projects that Detroiters could pay $1,000 less each year for auto insurance if the bill is enacted into law.

Prevailing Wage

With a threatened veto by the Governor, advocates for repeal of Michigan’s prevailing wage laws are going to by-pass him with an initiated prevailing wage law repeal. The Board of State Canvassers recently approved petition language for a proposed voter-initiated act to repeal the prevailing wage law. After voter approval, an initiated law goes through the legislature, and if they take no action, the repeal would become law and cannot be vetoed. The petition language essentially copies the language of SB 1, SB 2 and SB 3 already passed by the Senate, including a $75,000 appropriation to block any voter-initiated referendum to repeal the repeal or enact a new prevailing wage law.

Other Petitions in Circulation

The prevailing wage law petition drive joins two others in circulation. Stop Overcharging is a proposed initiated law to enact a Fair Medical Prices for Consumers Act to prohibit a health provider from charging a higher price for medical goods or services than a price charged to other persons for the same or similar medical goods or services.

The Committee To Ban Fracking in Michigan is proposing an initiated law to amend the Natural Resources and Environmental Protection Act to prohibit the use of horizontal hydraulic fracturing (“fracking”).

Expected soon is a proposed initiated law decriminalizing possession and use of small amounts of marijuana. Two organizations are working to put a measure on the ballot. Under one proposal, those 21 and older could use marijuana as long as it's not in a bus, school, prison, child care facility or a public place. Pot could be taxed as determined by the Legislature. A five-person Michigan Cannabis Control Board would be created to provide more specific rules for marijuana use and sale. If enacted, pot could only be sold to the public at special stores that only deal in marijuana. Recreational marijuana would be taxed, but medical marijuana would not be.

Local Law Preemption

Although Michigan has “home rule” for local governments, HB 4052 would prohibit local units of government from adopting, enforcing, or administering an ordinance, local policy, or local resolution that regulates the relationship between an employer and its employees or potential employees if the regulation contains requirements exceeding those imposed by state or federal law. Local government could not regulate employment applications; establish a higher minimum wage; regulate work stoppage or collective bargaining; require an employer to pay local prevailing wage rates; require an employer to provide paid or unpaid leave time; regulate employer’s hours and scheduling for employees; require an employer or its employees to participate in any educational apprenticeship or training program; require an employer to provide any specific fringe benefit; or regulate or create administrative or judicial remedies for wage, hour, or benefit disputes.

An earlier version of the bill also prohibited local governments from passing stronger civil rights protections than federal or state law, potentially invalidating LGBT protections in 38 Michigan communities. There were demonstrations in and out of the hearing room in opposition to the bill. It was reported out of committee along party lines after all Democratic amendments were rejected. The full House has passed the bill and it awaits a hearing in the Senate Michigan Competitiveness Committee.

SERA Recent News — If you are a SERA member, you are eligible to receive SERA Recent News, a periodic e-mail about breaking news and media stories of interest to state employees and retirees. Write to, giving your name and chapter.

Editor’s note: Mary Pollock is the Lansing SERA Chapter and SERA Council’s Legislative Representative. She may be contacted at 1200 Prescott Drive, East Lansing, MI 48823-2446; Phone 517-351-7292; E-mail

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