Office of Legislative Affairs

Legislative Update

For the week of August 31, 2009 . . .

BUDGET TALKS RUNNING IN PLACE - Although participants to the budget discussions publicly continue to express optimism the process will be completed prior to the October 1st start of the new fiscal year, with just 30 days left to complete the process, signs are beginning to emerge that the talks are not going as smoothly as indicated.  Foremost among those signs is the fact key participants have increased the frequency of their budget meetings while sources close to the behind-closed-door talks contend budget targets-initially intended to be set during July-remain unresolved.  And, for the first time this cycle, one participant raised the specter of enacting a continuation budget in acknowledgement of the fact the Legislature may not have enough time to officially complete the paperwork on the new budget before the fiscal year actually starts.  However all the involved parties-noting the legislative process tends to resolve problems when it has to-continue to stress they have no interest in revisiting the budget process of 2007 which resulted in a short shut-down of the state when that budget remained unresolved on October 1st.

Furthermore, Senate Majority Leader Mike Bishop also said the talks had stalled-a situation which he said occurs frequently in any negotiations process.  But, the comments loomed more ominously as they echoed the statement made by Senate Minority Leader Mike Prusi that the talks had come to a "standstill."  Mr. Bishop again made the complaint that-unlike Senate Republicans who have gone on record in support of a painful, but already-passed, balanced budget proposal-the Administration and House Democrats had yet to place any firm proposals on the table.  Attempting to remain within the confines of the agreement not to release budget talk details until a final deal is hammered out, Mr. Bishop said the talks had essentially covered the waterfront with regard to potential revenue enhancement options but that Democrats had not told Republicans to look at any option seriously.  And, while he said his Caucus was open to discussions on reducing or eliminating under- or non-performing tax credits as long as the added revenue goes toward elimination of the Michigan Business Tax surcharge, he reiterated, the Administration should not expect any support from any member of the Senate Republican Caucus for any proposed tax increase.  He also said the disputed cuts made by the Senate-passed budget to college scholarship funding "was part of the negotiations."

The primary sticking point in the discussions remains dealing with the state's ever-shrinking revenues and how to best address the $2 billion shortage that decline has created between state income and current expenditures.  The Administration continues to argue additional revenues must be generated to prevent draconian cuts in programs aimed at the education, health and safety of Michigan citizens while Republicans counter that the state-like its constituency-must adjust its spending to reflect the economic reality of the times.

JOBLESS RATE AGAIN LEADS NATION - Although Michigan was among a group of four states and the District of Columbia that reported an increase in jobs for July, the U.S. Bureau of Labor Statistics said Michigan's 15 percent unemployment rate again led the nation for the month.  According to the Bureau, Michigan reported a gain of 38,100 jobs during the month, with state officials saying the surge in employment was primarily due to hiring in the tourism sector.  The Bureau, noting the national unemployment rate stood at 9.4 percent for July, said 26 states experienced an increase in their unemployment rate, 17 states and the District of Columbia reported rate decreases and seven states reported no change from the prior month.  The Bureau also noted a total of 15 states and the District of Columbia now have unemployment rates in excess of 10 percent, with Rhode Island-which had reported a rate higher than Michigan just a few months ago-holding down second place nationally with a 12.7 percent unemployment rate.  The Bureau's report also noted North Dakota continued to hold the distinction of having the nation's lowest unemployment rate by reporting 4.2 percent of the month.  In terms of job losses over the past year, California has lost a total of 760,200 jobs, followed by Florida which has lost 410,100.  Rounding out the top eight, Illinois has lost 286,500 jobs, followed by Michigan at 280,800, Ohio at 254,700, Texas at 222,500, North Carolina at 221,900 and Georgia at 205,900.

SENATE DUMPS HAL FOR STATE, BUT FUTURE IN DOUBT - In actions unlikely to move any further, the Senate used a nearly straight party-line vote to reject Governor Granholm's Executive Order disbanding the Department of History, Arts and Libraries (HAL) and scattering the state's collection of documents, books and other historical items throughout state government.  But, having rejected the Governor's budget austerity proposal, the Upper Chamber then approved a package of bills that also eliminated HAL and placed all the department's functions under the authority of the Department of State.  But, neither action is expected to move forward as it is unlikely the Democrat-controlled House will seriously consider the options put forth by the Republican-led Senate nor will the majority in the Lower Chamber consider bucking their own Governor on this issue-especially after a gubernatorial spokesperson stated Ms. Granholm continues to stand by the order.

In releasing her Executive Order, Ms. Granholm said the end result would save $2 million in spending in the state's budget.  She also argued her order had attempted to place the to-be-terminated department's functions within departments in a fashion that made sense from a relationship and efficiency standpoint-such as placing the State Library within the Department of Education.  But, Republicans charged-as had a number of interest groups-that the order would disperse many of the historical and research materials across government and throughout the state while effectively making them inaccessible to the general public.

Even as the Senate deliberated the Executive Order and their measures moving the artifacts to the State Department, the Governor issued a clarifying directive that revised and elaborated on the plans contained in the initial order.  Among those concerns were her assurances-in specific directions to the Superintendent of Public Instruction for example-that there would be a state librarian and that all citizens would have open access to any of the state's collections transferred to non-governmental third parties.  The Governor's clarifications were sufficient to garner the support of many of her party's Upper Chamber lawmakers, many of whom said they disagreed with her decision but supported her constitutional authority to implement the envisioned changes.

HOUSE DEMS PUSH GOP ON UNEMPLOYMENT - Engaging in a state-wide media program, House Democrats again challenged Senate Republicans to consider-and ultimately pass-legislation that would expand unemployment benefit eligibility in order for the state to receive some $139 million in additional federal stimulus monies.  The measure, which passed the House earlier this year, would allow the payment of benefits to individuals receiving worker training, those working part-time and those refusing to accept a part-time job if offered, with the expansion funded, in part, by federal dollars.  However, the federal restrictions also prohibit a state accepting the program's money from setting a sunset on the enabling legislation-a provision which business groups and Senate Republicans argue will increase the cost of doing business in Michigan once the federal monies dry up in 2011.

In staging the media events, key House Democrats suggested the Senate embrace the program with the Legislature then revisiting the issue prior to the loss of the federal funding.  They also argued that now is not the time to block consideration of the measure as some 100,000 residents face the loss of their benefits by year's end as the current federal benefit extensions expire.  But, a spokesperson for Senate Majority Leader Mike Bishop argued "that's not how we do things," calling the move to adopt a program that will lead to higher taxes for businesses when the state is actively trying to improve its business environment to attract investment "irresponsible."

However, that position was countered by Senate Minority Leader Mike Prusi who issued a statement saying, "The House did their part months ago to secure nearly $140 million to help workers who are trying to be retrained or were laid off from part-time positions.  Now it's time for us to act.  Hiding behind the budget negotiations or partisan misinformation is a shortsighted, reckless approach that Senate Republicans need to abandon so we can get help to struggling families right away."

GOVERNOR SUPPORTS MORE HORSE TRACK GAMING - Horse racing interests, long seeking other sources of revenue to support the "sport of kings," apparently have a new ally in the form of Governor Jennifer Granholm.  Speaking to the media at an unrelated event, Ms. Granholm said she would support a proposal to place various Lottery terminals and events at the state's horse racing tracks, but, she quickly noted, that addition would have to first be approved by voters due to a recently adopted constitutional amendment.  The industry has pursued additional revenue options for some time, with some interested parties contending the activity proposed by the Governor would have to generate sufficient additional funds for the track to make the option of interest and worthwhile.  The concept is reportedly being put forth as part of the budget negotiations with Ms. Granholm saying she is "very interested in looking at ways that would generate revenue for scholarships" and methods that "would enable tracks to thrive."  The unexpected support caught racing interests off guard with industry representatives saying while they remained committed to the preferred "racino" concept-which would permit electronic gaming at the racing venues-they were certainly willing to discuss other options, especially since race track in neighboring states were about to launch similar programs which will likely attract track patrons and race horse owners to those facilities instead of those located in Michigan.  However, industry spokespersons also stressed they would need more details on the Governor's suggestion and knowledge of where the additional monies were being committed before taking a position on the proposal.

ODDS AND ENDS - In an action being viewed as her most enthusiastic endorsement of Lt. Governor John Cherry to succeed her in 2010, Governor Jennifer Granholm e-mailed her supporters state-wide encouraging them to financially support Mr. Cherry's gubernatorial campaign.....members of the Legislative Commission on Statutory Mandates contend Michigan could become a national leader in preventing unfunded mandates on local governments if the state adopts the proposals the Commission is expected to submit by year's end.....Senate Majority Leader Mike Bishop has confirmed the Senate Government Operations and Reform Committee will not consider legislation banning workplace smoking until the budget is finalized......House Speaker Andy Dillion announced House Public Employee Healthcare Reform Committee Chair Pam Byrnes will be joined by Majority Vice Chair Tim Melton, Harold Haugh, Bert Johnson, Michael Lahti, Daniel Scripps, Kate Segal, Woodrow Stanley, Minority Vice Chair Phil Pavlov, James Bolger, Bob Genetski II, Matt Lori and Bill Rogers on the panel created to explore the pooling of public employee health insurance programs under one plan.....Republican gubernatorial candidate Rick Snyder-being the only candidate who could potentially finance his own campaign out of his own pocket-has called on fellow Republican candidates to pledge they will not accept funding from political action committees.....Governor Granholm said that the Michigan Merit Award program will be funded again this year, although she admitted the college financing program may "have to take a slight haircut."