2011

LEGISLATIVE UPDATES ....

MUCH TO DO IN JUST NINE DAYS
With only nine session days remaining in the House and Senate after lawmakers return from their fall break - there are a plethora of front-burner issues still left to tackle before the end of the year.

Among them is anti-bullying legislation, state employee pensions, workers' compensation, teacher union dues collections, fresh appropriations spending, and let us not forget education reform, energy efficiency aid, and possible brownfield credits.

Those are what's hot, but what is not?

Don't look for floor action on mandating schools of choice, Right to Teach, no-fault insurance reform, helmet and Personal Property Tax (PPT) before the singing of Auld Lang Syne on New Year's Eve.

PPT REFORM ON HOLD
Anyone hoping for elimination of the state's Personal Property Tax (PPT) will have to wait until least next year for that change.

Lt. Gov. Brian Calley and Sen. Jack Brandenburg (R-Harrison Twp.), chair of the Senate Finance Committee, said there is not a current plan to bring the issue up before the end of the year.

In late October, Calley said the administration was looking to phase out the PPT "in the next few weeks," but on Wednesday Calley said because the legislative schedule for the remainder of this year is so crowded and so many things going on, work on a PPT plan would begin in January.

That was confirmed by Brandenburg.

"I'm fairly confident we are going to get this done," Brandenburg said.

HOUSE DEMS PUSH SMALL BUSINESS PLAN
Last week House Democrats rolled out a small business initiative they claim will give tax credits to small businesses that hire unemployed workers and allow the state of Michigan to invest in banks to increase capital for business loans.

Under the Democrats' plan, businesses that hire Michiganders unemployed for 60 days or more could earn a tax credit of$3,000 per person. That coupled with their veterans tax credit (HB 5144) unveiled last week; businesses could receive a maximum of$4,000. The other tax credit bills haven yet to be introduced.

Ari Adler, spokesman for the House Republican caucus, called the Democrat plan interesting considering the House Democrat caucus "locked arms and voted against tax relief for small businesses" just a few weeks ago.

RELIGIOUS EXEMPTION OUT OF ANTI-BULLYING BILL
The House, on an 88-18 vote, has passed legislation (BB 4163) that removes language-allowing bullying for religious reasons. An earlier Senate-passed version containing the language touched off a national firestorm.

The House-passed version would give school boards six months to draw up anti-bullying guidelines for their district and submit copies of their policies to the state.

Like the Senate version, the House measure does not address cyber bullying.

HEALTH CARE EXCHANGE CLEARS THE SENATE
Legislation establishing a health care exchange has passed the Republican-controlled Senate despite an uproar from Tea Party activists who warned Republicans would pay the consequences for its passage.

Senate Bill 23-12 passed with all the "no" votes coming from Republicans who argued the bill doesn't provide an effective solution consistent with free-market principles.

The federal Affordable Care Act (ACA) says states must implement a health insurance exchange by Jan. 1,2014 or the federal government will step in and run one. If the ACA is over turned by the courts, Michigan would not have to implement its own program.

The Senate-passed measure, which is now in the House, would create a MiHealth Marketplace website - a non-profit entity that would serve as a clearinghouse for health plans to submit their products for those who don't get health insurance through their employer.

HOUSE DEMS: FREEZE FRACKING
A package of legislation (HBs 5149 through 5151), introduced by House Democrats, would prohibit fracking until a study is completed and would make oil and gas companies subject to the same water withdrawals as other companies.

Fracking (hydraulic fracturing) is a process by which water and chemicals are pumped into a formation containing natural gas pushing the gas up into a collection container along with the wastewater.

Currently, up to 5 million gallons of water can be used to open a new well.

Fracking in Michigan is overseen by the Department of Environmental Quality (DEQ). The department argues that "deep study" would likely cause a moratorium on fracking for at least five years and could cost millions of dollars.

AG: MED MARIJUANA CAN BE SEIZED
Police may now seize pot possessed by licensed medical marijuana patients due to an opinion issued by Attorney General Bill Schuette.

Schuette opined that a provision in the Michigan medical marijuana law prohibiting police from seizing the pot from patients is invalid because it conflicts with federal law.

He warns that officers who return marijuana to patients could be prosecuted as dope dealers.

Michigan voters approved the law in 2008.

SUIT FILED OVER KEG LAW
The folks at Bell's Brewery of Kalamazoo are foaming at the mouth over Michigan's new law on keg sales of beer - so much so the brewery has filed suit against the state in Kalamazoo County Court claiming the law unfairly targets the state's microbrewery industry by adding restrictions that do not include the liquor and wine industries.

The brewery's president says someone without a driver license or a state ID can't buy a keg under the law and if the required tag on the keg is ripped off, the person buying the keg won't get back their $30 deposit which then becomes a disincentive to return the keg which costs $130.

The law is intended to reduce the number of kids being injured from alcohol consumption at house parties and "keggers" gatherings.

SCOTT RECALLED
On a narrow 232-vote margin, Rep. Paul Scott (R-Grand Blanc) becomes the first state lawmaker to be recalled from office since 1983 when two Democrat senators were recalled for voting to increase the state income tax.

Scott immediately vacated his seat. House Speaker Jase Bolger (R-Marshall) quickly appointed Rep. Tom McMillan (R-Rochester Hills) to chair the House Education Committee on an interim basis.

Although there was some reported voting irregularities, but not enough questionable votes for Scott to make up the margin of difference, neither the Michigan Republican Party nor the House Republican caucus is going to pursue any court challenges.

With that determination, both Democrats and Republicans in Genesee County will choose a contender to replace the recalled Scott in a Feb. 28 special election.

Ari Adler, spokesman for Speaker Bolger said Republicans plan on continuing to move forward with a charter cap bill and other education reform items on the House Education Committee's agenda.

SUPREMES: SNYDER PENSION TAX PLAN O.K. - ALMOST
On a 4-3 voter, the Michigan Supreme Court has ruled Gov. Rick Snyder's plan eliminating the state income tax exemptions on pensions is constitutional save for the one piece dealing with the graduated nature of the personal exemption. That piece amounts to an $80 million hit in the state budget.

However, because the state is expected to close the FY 2011 books with a surplus, former House Fiscal Agency (HF A) Director Mitch Bean said there wouldn’t have to be any reductions in the budget.

According to Justice Stephen Markman, who wrote the majority opinion, the Court did not decide whether the tax reform represents wise or unwise, prudent or imprudent public policy but only decided that P.A. 38 of2011, for the most part, was consistent with the state and federal constitutions.

Dan McLellan, representing state retirees, said he would recommend the case be taken to the federal courts. He contends that since 1943 state law has protected state employee pensions from the income tax - a guarantee extended into the Constitution.

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October 19, 2011

Dear Valued Customer:

I am writing to inform you that the Michigan Legislature has approved a new 1 percent tax to be applied to certain Michigan health insurance claims beginning January 1, 2012. Gov. Rick Snyder signed the bill into law on September 20, 2011.

The new 1 percent tax will replace the current 6 percent use tax applied to Medicaid managed care plan services and will be used to support Michigan's Medicaid program. It also ensures that Michigan continues to receive funds from the federal government for its Medicaid program. Tile tax applies to self-funded health care plans and health insurance carriers operating in Michigan, including Blue Cross Blue Shield of Michigan and Blue Care Network.

I know you have questions about the claims tax and how it will be paid. The enclosed FAQ will give you some preliminary information. We will update the FAQ as more information becomes available and post it online. The information will be available at bcbsm.com on Oct. 26. To access the FAQ, log in to Group Secured Services and click on Michigan Claims Tax under What's New, News & Notes.

In the meantime, please contact your Blues sales representative or contracted agent if you have any questions.

Sincerely,
Ken Dallafior
Senior vice president Group Business and Corporate Marketing

The summary and FAQ are provided for information purposes only. They should not be considered legal advice or relied upon as such. You should consult your legal counsel and the underlying laws and regulations in order to gain a full understanding of the law.

To view Frequently Asked Questions on Michigan's 1 percent claims tax, click here.

Ladies and Gentlemen,

A week that was supposed to be quiet ended up with quite a bit of activity.

Worker's Comp - HB 5002 was passed by the House of Representatives 59-49, with 4 Republicans joining all the Democrats in voting No. We were successful in eliminating the mental health provisions in the bill but we are still going to have to battle on the issues of "phantom" wages and access to one's own physician. This bill was viewed as a campaign thank you to the Chamber of Commerce from the House Republicans. We believe we have more fertile ground in the Senate to make improvements in the bill. We will most likely send the floor memo we sent to the House to all Senate members this coming Tuesday so they are aware of our continued concern with some provisions in the bill.

Paid Union Positions - HB 4059, which passed the House back in April, was finally given a hearing in the Senate. Testimony was taken from mostly education groups and there appears to be recognition that the demands on public safety are different from the classroom. There has been a substitute version of the bill prepared but that was not adopted yesterday as no official action was taken, only testimony. In a separate conversation with the Governor's legislative liaison, the statement was made that the Snyder Administration is open to fixing this for police and fire. The substitute that we have ready to go does just that. There was no indication given as to whether there would be another hearing scheduled for next week.

Consolidation - There was a sudden initiative to make progress on the municipal consolidation bill, HB 4309-4310-4311. The Senate leadership circulated new language that was forwarded to you on Tuesday evening. This language is being inserted in bills as they go back and forth between the Senate and the House. We can expect final passage either today or Tuesday of next week.

It does the following:

1. Affirms the right of local governmental units to consolidate - We have acknowledge that in the past

2. Allows for "impact" bargaining as a permissive item of bargaining - While not mandated, they have at least acknowledge our concerns about the importance of ?"impact" bargaining

3. Clarifies that no employment relationship exists between employees and the new authority.

4. Makes an authority effective 180 days before the actual transfer of equipment and responsibility. Before that effective date, the participating units of government have to put in writing the names of the employees who will be transferred to the authority.

5. The terms and conditions of a labor agreement are in effect until modified or until 6 months after the transfer to the authority. Negotiations of the new authority contract must begin 180 days before the employees transfer to the authority.

6. The union representation of those employees will stay in effect under the new authority.

7. Employees may seek new representation and are eligible to assert that they are not represented on the day the authority takes effect.

8. If multiple labor groups represent all or part of the employees of the new authority, if there is not a mutual agreement on new representation, a new election will be conducted under MERC auspices.

9. If no agreement is in place between groups, the workforce shall be merged by using a single seniority list. This list will have all employees from each participating municipality employed or having recall rights on the date of transfer to the authority. The list will be used for initial assignment, layoffs, recalls, job bidding and any other potential use. Disputes over ranking on the seniority list will be heard by a single arbitrator from MERC.

10. Nothing in the act requires a municipality or an authority to assume a collective bargaining agreement between another municipality and its employees. This language is going to be used to cover collective bargaining, seniority and impact bargaining in all the consolidation legislation.

Just when you thought it was safe to go back in the water.

Jim

LEGISLATIVE NEWS

 NO BRIDGE BILL BY JULY 4th

Yes, Governor Rick Snyder told a gathering at the Greater Detroit Regional Chamber of Commerce gathering on Mackinac Island "It's time to build the bridge."

Yes, he urged lawmakers to get the necessary legislation needed (SB 410 and SB 411) that would create the authority to build a second span between Detroit and Canada by July 4th before the House and Senate take a scheduled two-month recess in July and August.

No, it isn't going to happen.

Senate Majority Leader Randy Richardville (R-Monroe), sponsor of the bill, said last week, "It's not going to be done by June 30." He made the decision after talking with Senate Economic Development Committee Chair Mike Kowall (R-White Lake) who scheduled at least one more public hearing this week and there may still be more to come.

Following testimony early last week, Richardville told reporters there is only one firm Republican vote for the bill in that chamber and that vote is his.

Both Lt. Governor Brian Calley and Canadian officials testified in favor of the bridge, all saying it would not cost Michigan taxpayers any money. There was also testimony from representatives of the Ambassador Bridge who strenuously oppose any construction of a second span across the Detroit River.

Will the bridge issue be linked to redistricting, as some Democrats would like to do as a way of getting a better deal in reapportionment?

Both Governor Rick Snyder and Richardville said Tuesday they want no part of it.

Some Democrats think differently, contending the administration needs their votes to build the bridgee.

FY 2012 BUDGET IS SIGNED

Calling it "a major milestone in the reinvention of Michigan," Governor Rick Snyder on Tuesday put his pen to HBs 4526 and 4325 finishing the FY 2012 budget on the earliest date in 30 years.

Included in the $47.4 billion budget are a new incentive-based revenue sharing program for local governments and an incentive-based system for the state's 15 universities; a tougher 18 month lifetime limit on welfare payments; $115 million in state employee concessions; and money for brownfield and historic grants used by the Michigan Strategic Fund to attract businesses to the state.

Snyder vetoed four items in the budget - money for a precollege engineering program; a special $4.25 million adoption subsidy; money for a mental health illness study and $80,000 for surface mining.

He also said he would ignore some items in the boiler plate portion of the budget calling them not legally enforceable. Those include penalizing universities that offer health care benefits to employee's domestic partners, requiring public universities doing embryonic stem cell research to report data to the state, and administrative requirements for the Michigan Gaming Control Board in dealing with the horse racing industry.

TELECOMMUNICATIONS ACT CHANGES BECOME LAW

Legislation (HB 4314) that will eliminate and revise several sections of the Michigan Telecommunications Act (MTA) was signed into law by Gov. Rick Snyder.

The new law is designed to help major telecommunication service provides better compete in an industry being taken over by ceU phones.

The new law does the following:

• Removes from the MTA language that grants the Michigan Public Service Commission (MPSC) the ability to revoke licenses or order cease and desist orders when determining that rates, quality of service or conditions of service violate the Act . • Clarifies that the terms of mediated agreements between telcos not be disclosed to anyone other than the telcos, including the MPSC

• Basic local exchange carriers will be able to opt out of printed directory delivery requirements

• Includes voice-over-Internet-protocol (VoIP) and wireless service as "comparable voice services" for purposes of determining whether alternative te1com providers are operating in an exchange.

• Removes the Relay Service Advisory Board

• Landline service providers can opt out of delivering printed directories for customers and instead provide free directory information by request

HOUSE PASSES TEACHER TENURE REFORM

It would be easier to fire bad public school teachers under a four-bill package of legislation (HBs 4625 through 4628) that has cleared the GOP-controlled House on a mostly party-line vote.

The measures would reform the current process that grants tenure protection based on longevity rather than job performance.

The legislation grants effective teachers protections against internal politics based on performance evaluation; fast tracks "highly effective" teachers to receive tenure in three years; gives administrators more legal wiggle room in the process of firing or suspending a teacher; and requires a teacher and principal to give their mutual consent to any teacher transfer.

House Democrats criticized the legislation as going too far. Teacher unions are focusing their efforts to derail the measures in the Republican-controlled Senate where the bills are now pending.

FAILING DETROIT SCHOOLS TO GET HELP

A new state-run Educational Achievement System (AES) designed to give more control to parents and teachers as well as millions of dollars more in resources to students is being created to help 45 failing Detroit public schools.

Those schools will be placed under control of the AES but the Detroit Public School system will continue to manage the school properties, deal with the district's debt and receive tax revenue from the state.

Governor Rick Snyder said the 45 failing schools will be the pilot schools for a new system to eventually spread across the state within the next five years.

DPS Emergency Manager Roy Roberts will chair the executive committee of the AES.

HOUSE BILL BLOCKS "FORCED UNIONIZATION"

On a straight party-line vote, the House has passed legislation (HB 4003) that would block large groups of independent workers from receiving government money for their work, being lopped together under an umbrella organization through an inter-local agreement and put through an election to organize.

Such situations occurred twice under the Granholm administration.

The bill, dubbed "forced unionization" would clarify who is and who is not considered to be a public employee.

SENATE PUTS "FIX" IN AUTO INSURER BILLS

Legislation (SBs 441 and 442) that would require auto insurers to provide information on policyholders to the Secretary of State beginning October 1 passed the Senate on

Thursday. The move would allow the state to use auto insurance information to recoup an estimated $5 million in lost Medicaid money by letting state officials figure out if Medicaid ended up paying the medical expenses of a car accident victim when another insurer would have been required to do so.

SENATE ACTION WOULD "NIX" PLAs

Project labor agreements (PLAs) would be banished under legislation (SB 165) that cleared the Senate Thursday on a party line vote with Democrats protesting that it was another attack on unions. Current PLAs, often required on state and local building and works projects, spell out a project's labor costs, hours and rules and often require nonunionized contractors to sign onto local labor agreements.

HOUSE GETS MORTGAGE FRAUD BILLS

A bi-partisan package of legislation that would toughen penalties on those convicted of mortgage fraud has cleared the Senate and is heading to the House. The nine-bill package would make mortgage fraud at 20-year, $500,000 penalty and would extend the statute of limitations from six to 10 years.

DeLONEY IS NEW LCC CHAIR

Andy DeLoney is the new chair of the Liquor Control Commission (LCC) replacing Nida Samona whose term expired earlier this month. DeLoney, who has been vice president of public affairs for the Michigan Restaurant Association, will serve a term expiring June 12, 2015. The current term of LCC Commissioner Pat Gagliardi's has also expired but Governor Rick Snyder has yet to make any announcement regarding that position.