Capitol News
January 7, 2018
The Michigan House and Senate adjourned December 13 with the announced intention to return for 2018 on January 10.
2017 IN REVIEW
During 2017 the House introduced 1375 House Bills and 26 proposed Constitutional Amendments. The Senate introduced 740 Senate Bills and 14 proposed Constitutional Amendments. Both chambers passed and Governor Rick Snyder signed 267 bills into law. The Governor vetoed 5 bills, all Republican sponsored. The most notable were two bills to accelerate the reduction of the sales and use tax on the difference on an automobile trade-in and the Choose Life license plate to raise money for Right To Life of Michigan projects.
Some of the top laws of 2017 include these identified by Gongwer News Service. The referenced bills can be found at www.michiganlegislature.org:
UIA Fix: Gongwer thought the biggest story of the year was the UIA scandal and the bill package resulting from it. Between October 2013 and August 2015, nearly 44,000 cases of fraudulent unemployment benefits were determined by computer analysis. Subsequently complaints and lawsuits alleging major miscalculations, mistakes, lack of notice and other problems ensued. Many of the accused were forced into selling their assets or bankruptcy because of being denied unemployment benefits. The administration defended its actions for many months, but after a review, most of the alleged fraudulent claims were found incorrect. The agency director, Sharon Moffett-Massey, was reassigned and a new director from Utah was hired.
A workgroup was convened by Rep. Joe Graves (R-Linden) with stakeholders from all sides with the goal of fixing the agency and its processes, leading to major legislation that quickly sailed through the Legislature and was signed into law. The bills are HB 5165 through HB 5172. They reform agency processes, reduce penalties for committing fraud and address imposter claims made by identity thieves, among other changes. As the bipartisan legislation was being voted on after lawmakers and a group of stakeholders spent hundreds of hours negotiating the final product, Governor Rick Snyder issued a call for a victim compensation fund to be established, a remarkable reversal of position and attitude. The proposal is expected to be considered in 2018.
More School Employee Pension ”Reform”: Republicans pushed through significant teacher pension changes over Democratic objections by creating a hybrid plan in which employees will share more of the costs while state and employer contributions to the 401(k) plan will be increased. The bill is SB 401.
Opioid Addiction: Legislation passed last fall to address the increasing deaths and disability caused by opioid addiction. The new laws will require physicians to check a patient's medical history to ensure they are not getting excess medications, cap prescriptions for acute pain at seven days, require parental consent for prescribing controlled opioid substances under certain circumstances, and improve reporting requirements and instruction to school students on opioid abuse prevention. The bills are HB 4408, SB 270, SB 166, SB 167, SB 273, SB 274, SB 47, HB 4403, HB 4406 and HB 4407.
Municipal Retirement Package: As reported last month, the revised municipal retirement reform bills were a major win for police, fire, and other municipal employee unions. The new laws will increase reporting standards statewide for communities to determine if municipal retirement systems are being properly funded. The goal of the legislation is to move toward eliminating unfunded liabilities, which total about $7.46 billion for pension liabilities and $10.13 billion in retiree health care liabilities. The bills codify the recommendations of the Responsible Retirement Reform for Local Government Task Force appointed by the Governor to give some early warning signs on retirement systems slipping into crisis and create a board to help those communities develop corrective action plans. Communities in general would be required to prefund both retirement and retiree health benefits.
The original version of the bills contained provisions for allowing greater state control to fix underfunded municipal retirement systems similar to emergency managers. The package consisted of SB 686, SB 688, SB 691, SB 692, SB 694, SB 696, SB 699, HB 5301, HB 5304, HB 5306, HB 5308, HB 5310 and HB 5313.
Super PAC Legislation: The new law will allow candidates for state office to raise more dark money for their own campaigns in Super PACs. SB 335 and SB 336 were signed into law in September 2017.
OTHER TOP STORIES OF 2017
House Rejects Income Tax Cut, Auto Insurance Changes: Majority-party legislative leadership usually count the votes and don’t conduct a roll call vote on measures that won’t pass. However, in 2017 a proposed income tax cut and auto insurance reform were measures that were sure to go down in defeat but were put up for a vote anyway. The very first House bill was reduction of the state income tax from 4.25 per cent to 3.9 per cent. It fell 3 votes short of passage. In the fall, the House fell 10 votes short of passing legislation to overhaul auto insurance. House Speaker Tom Leonard (R-DeWitt) said his members wanted a vote on the income tax cut, no matter the result. And he said voters needed to know where legislators stood on the auto insurance legislation. No doubt these votes will be used by Republican primary challengers.
Ballot Proposal Surprises: On August 17, the Michigan Board of State Canvassers approved as to form the Voters Not Politicians ballot proposal to amend the Michigan Constitution to remove the drawing of political district lines for Congressional and state legislative districts from the legislature and governor and transfer the responsibility to an independent Citizens Redistricting Commission. Four months later on December 18, the all-volunteer VNT turned in over 100,000 more voter signatures than required to get on the ballot, a remarkable feat not seen in Michigan for the last 14 years. The purpose of the proposal is to end gerrymandering, the process where the party in power uses its control to draw political districts to protect its incumbents and ensure future dominance of the electoral process. Michigan SERA Executive Board endorsed the VNP effort and encouraged its chapters and members to get involved by inviting a speaker from VNP to chapter or other meetings, donate to the effort, and volunteer to help collect signatures.
Another surprise was Lt. Governor Brian Calley’s attempt at a ballot proposal to make the Legislature part time with a yearly session ending by April 15. It was suspected that the ballot drive was a crypto-effort to boost Calley’s campaign to run for Governor. After some false starts and mini-scandals, Calley handed off the petition drive to former Representative and State Board of Education member Tom McMillin (R-Rochester Hills).
On January 4, 2018, U.S. Attorney General Jeff Sessions issued a retraction of President Obama’s guidance directing U.S. attorneys not to charge people under federal law if they were following state law on medical and recreational marijuana. Marijuana remains an illegal drug under federal law. The Sessions memo has created ambiguity for the ballot proposal sponsored by the Coalition to Regulate Marijuana Like Alcohol which would legalize recreational marijuana in Michigan for those over 21. The Coalition turned in about 360,000 signatures on November 20, 2017. Additionally, the legislature and executive branch are in the midst of regulating the medical marijuana businesses legalized in Michigan by an earlier ballot proposal.
Enbridge Energy Line 5: At the beginning of the year, the possibility of catastrophic pollution of the Great Lakes by the twin Enbridge Energy oil pipeline at the bottom of the Straits of Mackinac was not acknowledged as a significant threat by the Snyder administration. This led to a ballot drive to shut down Line 5. Although the 180-day ballot drive window period ended without sufficient signatures, the Snyder administration began publicly criticizing Enbridge for providing misleading information about the condition of the pipeline. Enbridge acknowledged several gaps in the pipeline's protective coating and pipeline supports missing or in disrepair. The Snyder administration and the company reached an agreement late in the year for the company to take several actions to fix the problems. 2018 may see either closure of the line or possibly putting it into a tunnel beneath the straits.
Flint Water Prosecutions: On December 20, 2017 Michigan Department of Environmental Quality water analyst Adam Rosenthal pleaded no contest to a misdemeanor charge of failing to provide reasonable facilities to inspect records as part of the ongoing criminal investigation into the Flint water crisis. Rosenthal is the second current or former state employee to agree to a plea agreement. Two former Flint water employees also have pleaded no contest in exchange for their cooperation with prosecutors.
Michigan Department of Health and Human Services Director Nick Lyon is being tried for felony charges of involuntary manslaughter and misconduct in office. The state’s chief medical executive, Dr. Eden Wells, has been charged with involuntary manslaughter, misconduct in office, obstruction of justice and lying to a peace officer related to her role in the Flint water crisis and Legionnaires' outbreak. Both are undergoing preliminary examination hearings at this writing.
Meanwhile, the Environmental Protection Agency has notified the state and the city of Flint to get moving on spending the $100 million in federal funds designated for water projects. Less than $193,000 has been spent so far since passage on March 17.
FEDERAL TAX LAW CHANGES
In December Congress passed and President Trump signed the federal Tax Cuts and Jobs Act of 2017. Fortunately, the tax overhaul retained the medical expense deduction and restored the 7.5 percent income threshold (formerly 10 percent) for all tax filers for two years. According to the AARP, nearly three-quarters of tax filers who claimed the medical expense deduction are age 50 or older and live with a chronic condition or illness, and 70 percent of filers who claimed this deduction have income below $75,000. The new law also retained the additional standard deduction for those age 65 and older, as well as rejected proposals to make significant changes to the tax treatment of retirement contributions.
The Michigan Public Service Commission is looking at the effect of the new tax law on utility profits and therefore on utility rates, a big factor in many retirees’ budgets.
Under the federal tax changes, personal exemptions have been effectively eliminated in favor of significantly increasing the standard deduction. Under Michigan state tax law, without the federal personal exemption state taxpayers cannot claim state personal exemptions, and that could lead to taxpayers owing as much as $1.4 billion more in income taxes. Governor Snyder, Treasury Secretary Nick Knouri, and legislative leaders are discussing ways to fix this state revenue windfall, including some mention of repealing the pension tax! Michigan SERA will be communicating with legislators about this opportunity to soften the blow to current and future retirees from the 2011 state pension tax.
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 links to media stories of interest to state employees and retirees. Write to michigansera@comcast.net, giving your name, email address, and chapter name.
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 michigansera@comcast.net.
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