Legislature Considering Retiree Health Care Reforms

Following the Legislature’s attempt at retiree health care (OPEB) reform during lame duck last year, the League was invited to participate in Governor Snyder’s Responsible Retirement Reforms workgroup earlier this year.  That group published its report in July (See the report here) and while the report achieved some limited consensus, the League expressed disappointment that the recommendations did not offer any opportunities for communities to better control the cost structure and ongoing liabilities from this crippling cost driver ( www.SaveMICity.org )

Key legislative leaders and Administration officials have been meeting this fall to develop a legislative proposal based off of the task force report and have solicited input from the relevant interest groups, including MML, and other local government and labor groups.

Our basic understanding of the proposal, based upon the structure of the task force report, is that it would establish legacy cost funding levels and/or percent of budget spending thresholds that if a community were to trip one of those triggers, they would be subject to Treasury review.  Following that review if Treasury deemed a community to be in an underfunded status, the community would have a period of time to develop their own plan to address those under-funding concerns, working with their active and retiree populations.  If a community is unable to develop a plan to address this situation, then a yet to be identified enforcement mechanism would be employed to utilize a specified list of options to address the underfunded situation.

The House Local Government committee heard testimony earlier this month from the state Treasurer, outlining the findings of the task force report and a presentation of data outlining the status of municipal pension and OPEB funding statewide from one of the legislative leaders involved in this issue, as well as the City of Port Huron.

With only about three weeks of session remaining this calendar year, there is broad speculation that a reform proposal could be introduced following the Thanksgiving holiday.  The League is hopeful that any forthcoming proposal will be a thoughtful approach that ensures good, sustainable healthcare for retirees by including useful tools for local units to control their OPEB expenses. We are awaiting an opportunity to review any proposed language to determine if it meets those objectives. This is a quickly evolving situation, so stay tuned as we move through the coming weeks.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Federal Tax Reform Update – US Senate Proposal

Staff from the National League of Cities shared the following information with MML and other state leagues over the weekend, following the Senate’s release of their proposed version of tax reform…

Late Thursday, the Chairman of the Senate Committee on Finance Orrin Hatch (R-UT) released the Chairman’s Mark of his Tax Cuts and Jobs Act.  The Senate Committee on Finance is expected to markup this legislation on November 13, 2017 at 3:00 p.m. We urge you to contact your congressional delegation, especially the Senate Finance Committee (www.finance.senate.gov/about/membership).

After 4 days, the House Ways and Means Committee concluded committee markup on Thursday as well.  A floor vote on H.R. 1 is expected next week, most likely on Wednesday or Thursday.     

In the House, there are still nine Republicans who are opposed to the tax bill because of its treatment of SALT: New Jersey Reps. Leonard Lance, Frank A. LoBiondo and Christopher H. Smith; New York Reps. Peter T. King, Lee Zeldin, Elise Stefanik and Dan Donovan; and California Reps. Darrell Issa and Tom McClintock. Please thank those Members of the House who are standing strong with us in writing or via social media.

The House and Senate leadership have both stated that they expect to go to conference to reconcile differences in the bills, but they could bypass going to conference entirely.  Either way, they hope to send a final bill to the President for his signature in December. Below, find quick summary on bill differences.

 

  House Bill – Final As of Mark Up Senate Bill – No Markup
Tax Exempt Municipal Bonds Retained (not included in bill) Retained (not included in bill)
Private Activity Bonds Eliminated Retained
Non-refundable Bonds Eliminated Eliminated
State and local income and sales taxes Eliminated (except for those attributable to business income) Eliminated (except for those attributable to business income)
Property taxes Retained (up to $10,000) Eliminated
Mortgage interest Retained (but only on debt up to $500,000 for new loans; no interest on second home, no interest on new home equity loans) Retained (but no deduction on home equity loans)
Personal casualty losses Eliminated (except for federal declared disaster areas) Eliminated (except for federal declared disaster areas)
Nonqualified deferred compensation arrangements Eliminated Eliminated
Historic Tax Credits Eliminated Retained (but reduces their value)
New Mark Tax Credits Eliminated Retained (until current authorization expires in 2 years)
Work Opportunity Tax Credits Eliminated Eliminated
Low Income Housing Tax Credits Eliminated Retained

Today, the Chairs of House Municipal Finance Caucus released an oped to protect bonds and tax credits. www.washingtonexaminer.com/…

Also, NLC was in US News and World Report on tax reform www.usnews.com/news/the-report/articles/2017-11-10/…

We will continue to challenge any plan that threatens the tax exemptions for bonds used to finance critical infrastructure, eliminates the state and local tax deduction that protects local decision making and erases tax credits that strengthen communities.

 

 

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

League Signs Onto NLC Letter Urging Changes to Federal Tax Reform

The National League of Cities (NLC) submitted a letter this afternoon to the members of the House Ways & Means committee expressing support for preserving the tax exempt status of municipal bonds, but relaying concern with a number of provisions that will negatively impact local governments across the country.  As a signatory to this letter, the key concern for Michigan communities is the potential loss of authority for advanced refunding…preventing municipalities from refinancing debt to take advantage of lower interest rates.  This along with the loss of the federal Historic Tax credit program are two key items being raised by NLC and by MML with Michigan’s congressional delegation.  You can read the NLC letter here – NLC SML House Tax letter 2017

As House committee testimony continues throughout the week, we urge League members to contact their member of Congress and ask them to support the changes proposed by NLC. https://www.house.gov/representatives/

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Financial Dashboard Grant Details Released by Treasury

Local units of government that purchase financial forecasting and transparency reporting tools through one of the State of Michigan’s approved vendors, Munetrix or Forecast5, can now apply for a partial reimbursement.

All cities, villages, townships and counties that enter into an agreement to purchase these web-based tools through Munetrix or Forecast5, on or before December 1, 2017, are eligible for a partial reimbursement under the Financial Data Analytic Tool Reimbursement Program. A total of $500,000 in funding is available for reimbursements during the State’s 2018 fiscal year.

Cities, villages, townships and counties interested in applying for a partial reimbursement must submit their Financial Data Analytic Tool Reimbursement Request (Form 5568) to the Michigan Department of Treasury no later than December 1, 2017.  Attached is a copy of Form 5568 and an informational page regarding the program.

To learn more about the program or to download a reimbursement form, go to  http://www.michigan.gov/treasury/0,4679,7-121-1751_2197-451435–,00.html

Revenue Sharing and Grants Division

Michigan Department of Treasury

517-373-2697

TreasRevenueSharing@michigan.gov

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Congress Releases Details of Federal Tax Reform Proposal

Congress released the following details of the proposed federal tax reform legislation:

– Ways & Means Cmte Tax Reform Highlights

– bill text  https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf

Following NLC’s lead, MML staff have been talking with Michigan delegation members about preserving the State & Local Tax deduction (SALT) within the federal tax code.  The version of the bill released today retains a portion of that deduction for taxpayers to continue deducting local property taxes, but eliminates the deduction for local income taxes.

NLC leaders released the following statement in response to today’s announcement: http://www.nlc.org/article/tax-reform-bill-an-affront-to-local-control

You can view NLC’s State and Local Tax Deduction resource page here: http://www.nlc.org/SALT.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

State Tax Commission Publishes Latest Headlee Inflation Rate

The State Tax Commission met this week and approved a series of tax bulletins important to local units of government:

The State Tax Commission at their meeting on October 30, 2017 approved the release of Bulletin 16 of 2017, Inflation Rate Multiplier for 2018.  

The 2018 Property Tax Calendar.  

Recalculating Taxable Values for the Assessment Years which follow the Years Changed by an Order of the Michigan Tax Tribunal. This Bulletin rescinded and replaced Bulletin 6 of 1999.

Interest Rates on Michigan Tax Tribunal Judgments.

State Tax Commission
PO Box 30471
Lansing, Michigan 48909-7971
Phone: 517-335-3429
Fax: 517-241-1650
Email: State-Tax-Commission@michigan.gov

 

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Senate Committee Reports Bills Protecting Local Debt Limits

Jeff Budd, Coldwater, and Sen. Mike Shirkey

Jeff Budd, Coldwater, and Sen. Mike Shirkey

The Senate Finance committee reported a bill package on Tuesday that has been a priority for the League this term.  Following testimony from the bill sponsors, League staff and officials from the city of Coldwater, the committee voted unanimously to send the bills to the Senate floor for further consideration.

The recently introduced package, Senate Bills 590-593 (Stamas/Shirkey), reverses an unintended consequence of the new personal property tax (PPT) reform system on municipal debt limit calculations. Currently, many local units of government are bound by statutory debt ceilings tied to a percentage of that community’s total assessed value for all real and personal property.  As small taxpayer and manufacturing equipment is removed from the tax rolls over the coming years due to the new personal property tax reform system, communities find themselves facing a situation where their statutory debt limit will be artificially reduced. This was an impact that was not discovered during the development of the PPT package in 2014, but had recently come to light in municipalities that were in discussion with rating agencies and bond counsels for potential bond proposals.

Working with Treasury and officials from the Michigan Government Finance Officers Association, the League was able to secure language through our Senate sponsors (Sen. Mike Shirkey-Clarklake and Sen. Jim Stamas-Midland) that allows for the assessed value equivalent of each community’s PPT reimbursement payment to be added into the debt limit calculation for every city, village and charter township, essentially holding every community harmless from any reduction in their debt limit due to the reduction of their overall assessed value.  This new provision is similar to how the Home Rule City Act allows for each city’s revenue sharing payment to be included in that city’s debt limit calculation.

These bills are now on the Senate floor awaiting a vote in the coming weeks before moving to the House for consideration.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

 

 

 

Governor Signs Fix for Local Candidate Filings

Governor Snyder signed House Bill 4892 (Chatfield) on Monday morning, just in time for the affected communities to print and prepare their November ballots for mailing.

Now known as Public Act 118 of 2017, HB 4892 will allow any community that inadvertently followed candidate filing deadlines outlined within their charter, as opposed to the uniform filing date established within Michigan election law (15th Tuesday prior to the election), to place all otherwise eligible candidates back on the November ballot.

One provision was added to this bill in the House that differentiates this language from a similar fix that was done in 2015 for the city of Flint.  The House amendment now includes a $2500 penalty/reimbursement of costs for any community that utilizes this extension in 2017 and adds a $5000 penalty for any community that misses the state filing deadline in the future.

The League worked with the cities of Sault Ste Marie and Tecumseh to develop the original language in HB 4892 (and the companion SB 526-Schmidt) and move the bill through both the House and Senate in a matter of weeks to ensure implementation in time to meet federal ballot deadlines for military and overseas voters.

The League will continue working with member communities, the Legislature and the Secretary of State to guard against similar situations occurring in the future.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

House Moves Bill To Correct Local Candidate Filing Deadline Errors

The League's Chris Hackbarth (center) testifies in Lansing Wednesday along with Sault Ste. Marie City Manager Oliver Turner (left) and Tecumseh City Manager Dan Swallow (right).

The League’s Chris Hackbarth (center) testifies in Lansing Wednesday along with Sault Ste. Marie City Manager Oliver Turner (left) and Tecumseh City Manager Dan Swallow (right).

The Michigan House voted 92-13 on Wednesday afternoon to send the League-supported House Bill 4892 (Chatfield) over to the Senate for their consideration.  The bill had moved out of the House Elections & Ethics committee earlier Wednesday morning and is on a tight schedule for completion in order to be effective during the current election cycle.  This bill provides an avenue for local candidates, who relied on incorrect filing deadline information and were subsequently prevented from appearing on the upcoming November election ballot, to have the filing deadline extended to include their names.  Officials from the cities of Sault Ste. Marie and Tecumseh were in Lansing to testify with the MML and their local State Representatives, Rep. Lee Chatfield and Rep. Bronna Kahle, in support of the bill.

Recent situations in these two communities brought this issue to the forefront when they discovered that their city charter deadline provisions were no longer in compliance with recent state law changes.

Rep. Lee Chatfield meets with Sault Ste. Marie City Manager Oliver Turner and City Clerk Robin Troyer in Lansing Wednesday.

State Rep. Lee Chatfield (right) meets with Sault Ste. Marie City Manager Oliver Turner and City Clerk Robin Troyer in Lansing Wednesday.

Legislation passed in late 2012 moved all candidate filings from the 12th week prior to the election back three weeks to the 15th week prior to the election.

Officials in these two communities -Tecumseh and Sault Ste. Marie – realized this discrepancy too late and a number of candidates for city council and mayor were precluded from appearing on the ballot. In working with their local legislators and the League, we were able to craft language in HB 4892 (duplicated in SB 526-Schmidt) that is a mirror image to what was done in 2015 when the City of Flint encountered a similar situation and needed a change in the state election law to get that city’s mayoral candidates back on the ballot. Today’s action moves the bill forward as a way to allow a community that utilized an incorrect filing deadline to work with the Secretary of State’s Bureau of Elections to accommodate those candidates that otherwise would have qualified for the November ballot.

Swift action is needed in the Legislature to ensure that all ballots are printed and military and overseas ballots are mailed by September 23rd.

The Michigan Municipal League will be working to get the bill brought up and acted upon next week in the Michigan Senate.

Communities utilizing filing deadline or other election dates within their charter need to be aware of state election law changes and make the necessary adjustments to their internal processes or charter amendments to protect themselves from encountering this same issue.  The Secretary of State’s Bureau of Elections publishes an election calendar each year with all of the relevant filing and election process dates outlined. Communities are encouraged by the Bureau to track these dates closely to avoid being out of compliance with state law.

The League will be working with the Bureau of Elections and the Michigan Association of Municipal Clerks as we move forward from HB 4892 to promote a more robust level of communication and education on key election deadlines and law changes.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Treasury Announces Grants for Financially Distressed Communities

Treasury released the following information this morning regarding grant dollars available through Treasury’s financially distressed city, village and township program:

Cities, villages and townships experiencing financial struggles can now apply for a grant to help fund special projects and free up tax dollars for important services, according to the Michigan Department of Treasury (Treasury).

Applications are now being accepted for the Financially Distressed Cities, Villages, and Townships (FDCVT) grant program. Municipalities interested in applying for an award must submit applications to the state Treasury Department by 11:59 p.m. on Friday, Oct. 20, 2017.

All cities, villages and townships experiencing at least one condition of “probable financial distress” as outlined in the Local Financial Stability and Choice Act are eligible to apply for up to $2 million. A total of $5.4 million in funding is available for Treasury to award through the FDCVT grant program for the 2018 fiscal year. 

Grant funding may be used to pay for specific projects or services that move a community toward financial stability. Preference will be given to applications from municipalities that meet one or more of the following criteria:

  • A financial emergency has been declared in the past 10 years.
  • An approved deficit elimination plan for the General Fund is currently in place.
  • Two or more conditions indicating “probable financial distress” currently exist.
  • The fund balance of the General Fund has been declining over the past five years and the fund balance is less than 3 percent of the General Fund revenues.

Due to requirements outlined under state law, school districts are not eligible for funds from this grant program.

For more information about the FDCVT grant program or to download an application, go to www.michigan.gov/revenuesharing.

 

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.