Detroit, State Enter Into Consent Agreement

The process began early Wednesday when the Court of Appeals over-turned the Ingham County Circuit Court judge’s temporary restraining order preventing the Detroit Financial Review Team from meeting. Upon meeting, the review team quickly and unanimously approved the proposed consent agreement.

This was soon followed by the Detroit City Council convening. Council President Charles Pugh, President Pro Tem Gary Brown, and Council members Ken Cockrel Jr., Saunteel Jenkins and James Tate then cast the five necessary “yes” votes to give the proposed consent agreement the approval of City Council, 5-4.

Thursday, Governor Rick Snyder, Mayor Dave Bing and State Treasurer Andy Dillon signed-on. After the appropriately signed copies are filed with the state Office of the Great Seal and the Ingham and Wayne County clerks’ offices, the agreement will take effect.

The consent agreement calls for the appointment of a Financial Advisory Board to oversee the city’s finances and make recommendations for improvements. Of the nine members, the Governor will appoint three board members, the Mayor will appoint two, City Council will appoint two, the State Treasurer will appoint one and the Governor and Mayor will jointly appoint one subject to City Council confirmation.

Additionally, the Mayor is required under the agreement to hire a chief financial officer (CFO) who will provide updates to the state, city, and the Financial Advisory Board, and to create the position of program management director to oversee reform efforts. While the agreement provides that the city officials retain significant authority, it is clear that those authorities will transfer in the case of wrong doing or lack of progress.

Potentially the most controversial issue is the consent agreement’s requirement for new labor contract negotiations by midsummer, including switching new hires to a defined contribution retirement system. If an agreement is not reached, Mayor Bing is provided the authority to impose new contracts.

While no estimated timeline is included, the length of appointments and the structure put in place by the agreement lends itself to a minimum of two years under these provisions and likely longer.

posted by PAA Online , Friday, April 6, 2012 10:18 AM
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Personal Property Tax Reform Ready

An eight bill package to reform Michigan’s personal property tax (PPT) will be introduced in the Senate upon the legislature’s return from Spring Break – and reports are that Senate Finance Committee Chairman Senator Jack Brandenburg (R-Harrison Township) plans to waste little time in addressing the measures.

As expected, the package will serve to eliminate the PPT on industrial property over a ten year phase-out beginning in 2016. Further, it creates a threshold of $40,000 under which business will not have to pay either commercial or industrial PPT.

The roughly $900 million annual revenue impact to local units of government will be partially paid for by expiring business tax credits; however, local units have been advocating for a constitutional guarantee of full funding replacement – something the Republican administration and legislature opposes.

The legislation may be introduced as early as April 17^th with a hearing before the Senate Finance Committee coming shortly thereafter.

posted by PAA Online , 10:17 AM
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House GOP Appeals Immediate Effect Ruling

On Monday, Ingham County Circuit Court Judge Clinton Canady III issued a temporary restraining order that calls upon House of Representatives leadership to cease ignoring House Democratic caucus calls for record roll call votes on immediate effect and, further, reverses the immediate effect granted to a number of previously passed bills. On Thursday, the House Republican Caucus and Attorney General Bill Schuette appealed the ruling.

Judge Canady’s restraining order reversed the immediate effect that had been granted to two measures already public acts – House Bill 4246 (PA 45) prohibiting the organization of graduate student research assistants, and House Bill 4929 (PA 53) prohibiting school districts from deducting union dues from employees’ paychecks. The order also strips the immediate effect granted to House Bill 5063, legislation to require the Board of Canvassers to approve a petition before it is circulated. That measure; however, is currently awaiting action in the Senate.

The GOP appeal contends that the court unconstitutionally ventured into the realm of the legislature’s authority, violating simple principles of separation of powers.

posted by PAA Online , 10:17 AM
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Higher ED Budgets Again Tie Funding to Conditions

The House and Senate Appropriations Subcommittees for Higher Education have moved their respective budget proposals, House Bill 5377 and Senate Bill 955.

The Senate version calls for $1.4 billion in funding, matching the recommendations of Governor Rick Snyder. Among the significant items is a call for a difference in allocation of the performance-based portion of the funding to universities from the Governor’s recommendations. The Senate panel has included a measure for universities using the Integrated Postsecondary Education Data System (IPEDS) as a means to compare the institutions with others nationally. Additionally, the Senate version distributes the performance formula based funding differently than the executive recommendations with more going to Wayne State University.

The House Appropriations Higher Education Subcommittee struck a bit more controversial chord with their version, completely changing the criteria within the performance based funding portion of the budget. The measure includes five specific funding criteria for additional resources beyond the baseline dollars – two of which are reporting on embryonic stem cell research and certifying that undergraduate students are not required to carry health insurance.

The House budget is roughly $340,000 less than the $1.4 billion recommended by the Governor. Both versions passed their respective Appropriations Subcommittees on party-line votes.

Next week’s PAAdvisory will include brief analyses of some departmental budgets, such as transportation and corrections.

posted by PAA Online , 10:17 AM
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PAAdvisory Briefs

Suit Filed Challenging Union Dues Payroll Deduction

A coalition of four teacher union groups – the American Federation of Teachers-Michigan, the Association of Federal, State, County and Municipal Employees Council 25, the Michigan Education Association and the Service Employees International Union Local 517M – filed a federal suit challenging the constitutionality of Public Act 52, the legislation recently passed prohibiting school districts from deducting union dues from employees’ payroll. The Ingham County Circuit Court has already issued a finding temporarily suspending the effect of the law because of an unrelated suit regarding immediate effect (see related story above).

Stabenow Reports $7 Million in Campaign Resources

After raising $1.5 million in the first quarter of 2012, the campaign to re-elect U.S. Senator Debbie Stabenow (D-Lansing) reported approximately $7 million in cash on-hand. The significant number matches the Senator’s fundraising mark for a single quarter, having raised $1.5 million also in the second quarter of 2011.

Unemployment Rates Fall Across State

The Michigan Bureau of Labor Market Information & Strategic Initiatives reported that unemployment rates fell in February in 15 of Michigan’s 17 labor markets. The greatest fall of 0.5 percent was in the Detroit-Warren-Livonia market, while the two that didn’t fall were Bay City (unchanged) and Northeast Lower Michigan (0.1 percent increase).

EM Likely For Muskegon Heights Schools

The Muskegon Heights School District Financial Review Team finalized recommendations to Governor Snyder early this week, recommending that a financial emergency be declared and that an emergency manager be named. The Review Team noted that, among other statistics, the district had not ended a fiscal year with a positive fund balance since the 2006 fiscal year. If an Emergency Manager is named it will be the seventh local unit and third school district under the authority of an EM.

posted by PAA Online , 10:16 AM
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