May 9, 2021
The biggest news of the month is that Michigan has moved to a new metric for determining COVID-related restrictions. Governor Gretchen Whitmer announced on April 29 the “MI Vacc to Normal” plan that will use four vaccination-based milestones — using data for Michiganders 16 years or older who’ve received their first dose — to guide future steps required to get back to normal:
Vaccinations — Vaccinations are available for free to all 16 and above who want to protect themselves and the community — and get back to normal. See how to get your vaccination at Michigan.gov/COVIDvaccine or call the COVID-19 Hotline at 888-535-6136 (press 1) Monday through Friday from 8 a.m. to 5 p.m., Saturday and Sunday 8 a.m. to 1 p.m. To find a vaccination site, often one that will take walk-ins, text your ZIP code to GETVAX (438829) or VACUNA (822862) in Spanish to find three locations nearby with vaccines in stock. As of May 7, 54 percent of Michigan residents 16 and older were vaccinated. Information around this outbreak in Michigan is changing rapidly. The latest information is available at?michigan.gov/Coronavirus?and?CDC.gov/Coronavirus. To learn more about the COVID-19 vaccine, visit Michigan.gov/COVIDvaccine.
PARTIAL RETIREMENT TAX REPEAL
The House Tax Policy Committee heard testimony on April 14 concerning a bill to return Michigan to its pre-2012 policy on taxing retirement income. If House Bill (HB) 4002 becomes law, after December 31, 2021, all taxpayers regardless of birth year would receive income tax exemptions on retirement income. The bill would also allow for all of those 65 and older to receive a deduction for certain investment income that is currently only available to those born prior to 1946. HB 4002 is sponsored by State Rep. Joe Bellino (R-Monroe).
Background — Recall that in 2011 three surprise tax changes for seniors were adopted by the GOP-led Legislature and signed by newly elected Republican Governor Rick Snyder as part of a large tax overhaul:
As a result of these changes, seniors and pensioners were estimated by the Fiscal Agencies to have paid $528 million more in State taxes for Tax Year 2012 alone. Likely that has added up to well more than $5 billion from seniors’ pockets since then. Taxable pensioners and seniors were estimated to have contributed 36 percent of the increased taxes on individuals in 2012 yet seniors were only 13 percent of Michigan’s population. At the time, Michigan SERA opposed the pension tax vigorously and submitted a brief in opposition to it in the Michigan Supreme Court to no avail.
Leave or Stay — Michigan’s taxation of pensions and retirement income has been a big factor in many State retirees’ decision about staying in Michigan or fleeing to a more tax-friendly (and perhaps warmer) state. Retirees staying in Michigan support our economy with their Medicare and health care expenditures, Social Security payments, pensions, and private savings. According to the National Institute on Retirement Security fact sheet for Michigan, each dollar paid out in pension benefits supported $1.48 in total economic activity in Michigan. Further, expenditures stemming from state and local public pensions alone in 2018 supported 81,593 jobs that paid $4.2 billion in wages and salaries, $13.2 billion in total economic output, and $2.1 billion in federal, state, and local tax revenues.
Revenue Loss — State Rep. Bellino stated in introducing the bill “In the past we’ve been scared about not having that money. We’ve got plenty of money now and we owe the older taxpayers in this state.” Despite the fact that most Democrats and some Republicans used the pension tax as a campaign issue, the bill provoked a surprisingly wide array of opposition (and some support) from both Republicans and Democrats at the hearing. The biggest concern was replacement of the $370 million per year revenue loss to the State rather the $370 million loss to retiree incomes. Another concern expressed resentment of public pensions in general and their favored tax treatment compared to private retirement income. The committee did not act on HB 4002 and the bill sponsor’s office says there is no news about it to report.
Contact the Committee — Michigan SERA submitted the only written testimony in support of the bill for the hearing. We are encouraging SERA members to contact their own State Representatives through phone, e-mail, or at their virtual coffee hours, and e-mail the House Tax Policy Committee members urging approval of the bill. More information about doing this can be found on the opening page of the Michigan SERA website at www.mi-sera.org.
ANNUAL PENSION SUPPLEMENT NEWS
$300 Cap — The other active legislative project for SERA is trying to amend HB 4264 to take out the sentence capping our annual defined benefit pension supplement at $300 per year/$25 per month. As explained in last month’s “Capitol News,” the 3 percent annual supplement capped at $300 on the State employee retiree annual supplement was established in 1987. Subsequent inflation is such that only 15 percent of State retirees get a full 3 percent annual supplement and the other 85 percent are capped at $300 a year. That $300 in 1987 is worth about $129 in today’s dollars because of inflation. As a comparison, the school employee pension annual supplement was set at 3 percent with no cap.
House Action — The bill was referred out of the House Appropriations Committee on March 24, had a second reading in the House on April 15, and third reading was scheduled for April 21. Our Coalition for Secured Retirement lobbyist Todd Tennis of Capitol Services approached the Appropriations Committee Chair State Rep. Thomas Albert (R-Lowell) to sponsor a floor amendment to eliminate the $300 cap but he did not support it. Tennis then recruited State Rep. Regina Weiss (D-Oak Park) to sponsor a floor amendment but it got defeated on a voice vote and fast gavel. HB 4264 then unanimously passed the House. It was transmitted to the Michigan Senate where it was referred to the Senate Appropriations Committee.
Meetings — Subsequently, SERA Legislative Committee member Bill Gehman and I met with State Senator Tom Barrett (R-Grand Ledge) who is Majority Vice Chair of the Senate Appropriations Committee. We gave him information about our proposal and asked for his support. Similarly, I sent materials and talked with staff of State Senator Curtis Hertel (D-East Lansing) who is Minority Vice Chair of Senate Appropriations Committee, asking for his support. SERA Coordinating Council Chair Bob Kopasz and I met with Office of Retirement Services (ORS) Director Anthony Estell and his assistant to brief them on our proposal. ORS will try to get a rough estimate of the cost to the pension fund. Bob and I also met with the Governor’s Deputy Legislative Director to give him information about why we need the 34-year old cap lifted. Perhaps some of these briefings and meetings will bear fruit in the coming weeks and months. Uniformly the concern was the cost to the pension system for this increase in our annual supplement. Sometimes equity ideas like this take time to gel.
PROPOSED ELECTION BILLS
Despite the fact that 250 audits of the November 2020 election in Michigan turned up no serious errors that would change results, and every legal challenge was dismissed, scores of bills have been introduced to address perceived problems and difficulties in Michigan’s voting system. Until 2018 and the Constitutional amendment permitting anyone to vote by absentee ballot, most people voted in person and the vast majority of absentee voters were those 65 and above. In the November 2020 election, 60 percent of voters voted by absentee ballot. Absentee voting is presumed to be a future popular choice of voters beyond the pandemic era but it is apparently seen by many as a source of potential election fraud and misconduct.
House Elections Committee — At this writing, the Michigan House Elections and Ethics Committee has reported out five bills proposing election law changes, all relatively non-controversial. All five bills have passed the House and been referred to the Senate Elections Committee. The most relevant to SERA are HB 4134 which would require clerks to keep a permanent absentee voter list (currently it is an option) and HB 4135 which would require cities and townships with three or more precincts to have an Absentee Voter counting board for each precinct. City and township clerks could enter into agreements with nearby city and township clerks, or with their county clerk, to consolidate efforts for counting absentee voter ballots. This would increase the likelihood of getting election results faster.
Senate Elections Committee — The Senate Elections Committee is where the highly publicized GOP-sponsored bill package (Senate Bill (SB) 273 through SB 311) proposing significant changes to State election laws is being considered weekly. The Committee is chaired by State Senator Ruth Johnson (R-Holly) who is a former Secretary of State and former County Clerk. She has begun calmly and methodically taking oral and written testimony on some less controversial bills in the package. She has stated several times that she intends to produce bi-partisan bills that would gain Democratic Governor Gretchen Whitmer’s signature.
Secretary of State (SOS) — Current SOS Jocelyn Benson has put out her own list of desirable changes to election law in Michigan that differs from the GOP plan. Additionally, she has issued a document dividing the 39 GOP bills into three categories: Bills to Restrict Voting Rights, Bills to Harm Election Administration, and Significantly Flawed Bills. Despite the seeming adverse positions between the former and current SOS, the SOS legislative representative contributes informative and helpful testimony at each hearing on the proposed bills.
Other Reactions — The League of Women Voters of Michigan has issued an announcement of its opposition to all 39 bills. Thirty Michigan corporations have issued a statement opposing measures to restrict voting rights in Michigan. And many other organizations have weighed in on one side or the other. The Michigan Republican Party has announced its intention to by-pass the Governor’s veto of any of the bills with a voter-initiated law. Michigan SERA is monitoring these bills very carefully, especially those affecting convenient and safe absentee voting.
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