Senate Republican Caucus Budget Plan Near Completion

With the hope of finalizing the last 10 percent next week, the Senate Republican Caucus released details of their alternative fiscal year (FY) 2012 budget proposal. Characterizing the plan as 90 percent complete, the Caucus will reportedly meet during the upcoming break with some members participating via conference call to complete the proposal.

The Caucus’ alternative tax plan calls for a 6.75 percent business tax rate on both S-corps and C-corps, rather than Governor Snyder’s proposal to tax only C-corps at 6 percent. The estimated $353 million increase in tax revenue over the Administration’s proposal would help fill the roughly $900 million hole left by the Senate Republicans’ decision not to include the Governor’s proposed elimination of the public and private pension exemptions from individual income taxation.

Although not as significant as the Governor’s proposed business tax cut, the Senate GOP’s modified Corporate Income Tax (CIT) plan would still be a 50 percent cut to the $2.2 billion Michigan Business Tax (MBT), bringing in an estimated $1.1 billion.

$165 million in one-time money would be obtained by changing the eligibility date for children entering kindergarten from December 1^st to September 1^st (the first year would result in fewer enrolled children if the plan is adopted) while another $250 million in the plan is coming from draft budget targets set below the Governor’s recommendations.

This still leaves the Caucus about $130 million short of the $900 hole left by leaving out the “pension tax,” a number the caucus evidently has plenty of proposals to reach. Senator Howard Walker (R-Traverse City) has a K-12 budget draft to cut half-day kindergarten programs in half (saving roughly $245 million) and Senator Jack Brandenburg (R-Harrison Township) has proposed capping school districts’ “rainy day” funds; however, both of those concepts have been met with considerable resistance and are reportedly not among those being considered.

Labels: corporate income tax

posted by PAA Online , Friday, March 25, 2011 12:34 PM
LINK DIRECTLY TO THIS ARTICLE

U.S. Census Data Released – Trends Evident

Tuesday’s release of the U.S. Census data for Michigan resulted in numerous trends, most notably the City of Detroit’s population falling to century-old numbers, as well as population shifts out of urban areas and generally west.

From 2000 to 2010, the City of Detroit lost more than 25 percent of its population, falling from 980,000 to 714,000. Once the 5^th largest city in the United States, falling only behind New York, Chicago, Los Angeles and Philadelphia and boasting a population of 1.8 million people (circa 1950), the 2010 census numbers place Detroit somewhere around the 20^th largest city.

Sterling Heights was the only true “urban center” (city with 100,000 or more residents) that witnessed a population increase according to the new numbers. Flint, Saginaw, Pontiac, and even Grand Rapids (still the state’s 2^nd largest city) saw population drops. While population centers seemed to shrink, the data showed a shift to far outlying suburbs. The central Michigan area seemed to be among the areas enjoying increased population – Livingston, Clinton, and Isabella counties being three of the five with double-digit growth. Wayne County lost 11.7 percent of its population.

Among other implications, the census data present significant challenges to members of the House and Senate redistricting committees, charged with redrawing the lines for legislative districts. Given the numbers, the City of Detroit, for example, stands to lose as many as three House seats and two Senate seats.

Labels: census data

posted by PAA Online , 12:33 PM
LINK DIRECTLY TO THIS ARTICLE

Unemployment Insurance Benefits Extended – And Cut

The Republican Legislature quickly passed legislation Wednesday to make technical changes in Michigan’s law in order to qualify for $500 million in federal money. The measure allows the roughly 150,000 currently unemployed Michigan workers to obtain benefits for an additional 20 weeks, but also limits those filing for unemployment after January 15^th of 2012 to 20 weeks as opposed to the current 26 weeks.

House Bill 4408, sponsored by Representative Jim Stamas (R-Midland) had been introduced to tackle fraud in the unemployment insurance system through a $5 million investment, and now moves to Governor Rick Snyder’s desk for approval after passing on largely party-line votes.

Debate on the measure resulted in the most heated partisan battle in the Senate for the young legislative session. Democrats asked for the legislation to be read in its entirety, taking about an hour and resulting in Republicans issuing a Call of the Senate, during which members are not allowed to leave and the doors are locked.

Only one member of the Senate Republican Caucus joined Democrats in voting against the measure (Senator Joe Hune, R-Fowlerville), resulting in a 24-13 tally. Senator Goeff Hansen (R-Hart) was excused for family business. Three Democrats joined their Republican colleagues in the House in voting yes (65-44) when the legislature returned for concurrence in the changes.

In related news, an audit issued by State Auditor General Thomas McTavish, CPA, stated that the Unemployment Insurance Agency failed to collect as much as $191.9 million in fines for fraudulent filings and $61.3 million in overpayments for a three-year period ending September 30, 2010.

Labels: unemployment benefits extended

posted by PAA Online , 12:27 PM
LINK DIRECTLY TO THIS ARTICLE

Governor Issues Special Message On Local Government Reform

In an effort to incentivize local governments to adopt best practices, Governor Rick Snyder released a plan in Grand Rapids Monday to distribute the $200 million in revenue sharing not under the Constitution in three categories: accountability and transparency; consolidation of services; and employee compensation.

The first third of revenue available to municipalities can be obtained by posting their financial data to an online portal by October 1^st, similar to the dashboard previously touted by the Administration. A municipality can obtain the second-third by developing a plan for service consolidation with other communities by year’s-end. The final third, considerably more complex, would require the municipality to have all new hires pay 20 percent of health care insurance and be placed in a defined contribution plan or other retirement plan with a capped employer contribution rate, among other items.

Failure to comply with any of the three categories would reduce funding; however, no state department or agency will be charged with enforcement. Local governments would be trusted, according to Governor Snyder, until the Administration is given a reason not to trust them.

The package of reform also contains efforts to assist local government in consolidating services through reform of PA 312 (the state’s binding arbitration law for fire and policy) instead of the elimination of it as the Legislature has been currently debating.

Reactions to the Governor’s plan were mixed, as expected. Democratic leaders in the Legislature were quick to criticize, while many of the Republicans that joined the Governor at the announcement, such as Senate Reform, Restructuring, and Reinvention Committee Chair Senator Mark Jansen (R-Gaines Township) described the message as “dead-on.” The Governor’s special message can be viewed in its entirety at:

http://www.michigan.gov/documents/snyder/2011Special_Message-1_348148_7.pdf

Labels: local government reform

posted by PAA Online , 12:26 PM
LINK DIRECTLY TO THIS ARTICLE

Prison Closure Announced

Governor Rick Snyder’s budget recommendations, released in mid-February, included the plan to shutter a then-yet-to-be-determined correctional facility. The Florence Crane prison in Coldwater will close June 1^st and the inmates will be transferred to other facilities as announced Thursday.

The 1,056 prisoner facility costs $27.4 million to operate each year - $6.6 million will be saved in the current fiscal year based on the June 1^st closure.

The Coldwater prison was chosen for a number of reasons, according to the Department of Corrections. Mounting physical plant needs, considerably high operational costs, required higher staffing ratios, and the facility’s proximity to other prisons were cited. The March 2011 prisoner count of 43,842 represents a continued decline.

The plan may result in employee layoffs; however, the Department of Corrections hopes to mitigate such loses through worker transfer to other facilities, retirement by those of eligible age and coordination with agencies such as Michigan Works!

posted by PAA Online , 12:24 PM
LINK DIRECTLY TO THIS ARTICLE

PAAdvisory Briefs

State Police Posts to be Reduced

In an effort to reach the $20.7 million Governor Snyder hopes to cut from the State Police budget, officials announced the planned closure of 33 posts, reducing the number from 62 to 29. While 21 of the 33 closures will be complete, 12 will become “detachment” posts allowing for trooper administration; however, not open to the public. None of the more than 1,000 current troopers will be laid-off under the plan.

Live-in Partner Benefits Rejection On-Hold

Senate Concurrent Resolution 9, sponsored by Senator Mark Jansen (R-Gaines Township), will have to wait for the House of Representatives to return from the two-week Spring Break as Republican’s failed to muster the necessary 11 votes from Democratic colleagues to obtain the super-majority two-thirds passage. The measure, as previously reported by PAAdvisory, would reject the Civil Service Commission’s decision to allow unrelated adult co-habitants of state employees to qualify for health care. The Senate already passed the rejection with a two-thirds vote. The House must do so by April 18^th.

Granholm Joins Dow Chemical Board of Directors & Pew Charitable Trust

Former Gov. Jennifer Granholm has joined Dow Chemical Co.’s board of directors. On Thursday, the chemicals company said the Democrat has a “demonstrated track record” of cultivating public and private sector collaborations that have laid the groundwork for sustainable growth for 21st century manufacturing.” In addition, the former Governor will be promoting the economic and environmental benefits of clean energy throughout the country in her new position as senior advisor to the Pew Charitable Trust. Granholm will also continue as a contributor for Meet the Press and will be teaching at the University of California-Berkley through 2013.

Governor Reacts to Dems Call for Constitutional Amendment

A week after Democratic leaders in the Legislature introduced a measure that would guarantee the right to the collective bargaining process by amending the Michigan Constitution, the Governor reacted by pointing focus back onto the budget, tax and local government reform. Governor Snyder reiterated his priorities and his stance in working well with organized labor.

posted by PAA Online , 12:14 PM
LINK DIRECTLY TO THIS ARTICLE

This Week's Newsletter

Past Newsletters