House Shelves Plans for OPEB Reform During Lame Duck

During an early morning hearing today, the House Local Government committee deferred action on comprehensive retiree health care reform (OPEB) until next term.  The only bill in the original 13-bill package to see any further debate was House Bill 6075, a bill focused on reporting/transparency of retiree pension and health liabilities. This bill was reported from the committee and awaits action on the House floor.

The Michigan Municipal League has long cited the need to address the high cost of retirement health insurance while maintaining options for health care for municipal retirees. Although the League offered conceptual support for this proposal, the complexity of the issue makes it difficult to thoroughly consider during the lame duck environment.  For that reason, the League requested the House delay action on this proposal and allow for the opportunity to work with Gov. Rick Snyder, the incoming Legislature, and all of the relevant interest groups in the next term.

Over the course of the current legislative term, the League has pursued a comprehensive policy agenda aimed at reforming Michigan’s broken municipal finance system.  The agenda involves reform to cost drivers, restoration and diversity of revenue options, and the reviewing the structure of local government. Thoughtful OPEB reform remains an important component of the League’s municipal finance initiative, which we will continue to pursue in the new year.

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

Lame Duck Legislative Work Underway; Sign up for Inside 208 Updates!

subscribe-here-arrowThe Lame Duck session of the state Legislature is in full swing and there are a number of key issues potentially impacting your communities that the Michigan Municipal League is working on and watching. WE MAY NEED YOUR HELP over the next several days as the Legislature currently has session scheduled through Dec. 15.

For regular updates on what is happening, the League strongly encourages you to sign up to receive email alerts from our Legislative blog, Inside 208. Please go here and sign up in the “subscribe” box on the right side of the page by typing in your email address. This is a free service provided to League members and you will receive emails each time a new Inside 208 blog is posted about the latest Legislative activity happening in Lansing. As issues arise, the League will be posting regularly on Inside 208 and we may be asking you to contact your Legislators on various bills.

Currently, there are multiple pieces of legislation the League is following that could have both a positive and/or a negative impact on your communities.

Some of major issues we have blogged about so far include bills to reform Other Post-Employment Benefits (OPEB) or retirement health care, changes to Tax Increment Finance (TIF) Authorities, a bill that limits local control on transportation network companies and taxis (think Uber and Lyft), new economic development tools, and potential energy reform.

Please help us by signing up to receive our Inside 208 blog emails during this quickly-moving, ever-changing Lame Duck legislative sessions.

Matt Bach is director of media relations for the Michigan Municipal League. He can be reached at mbach@mml.org and 734-669-6317.

House Passes Six Bill TIF Reform Package Yesterday

House bills 5851-5856 are headed to the Senate for consideration. The six bill package which severely hinders a Downtown Development Authority and other TIF authorities ability to capture special millages was voted out of the House yesterday afternoon.

Language in this package defining what a new special millage is considered is vague. As the language is currently written, it will be easy to qualify existing special millages as new to avoid TIF authorities from capturing dollars needed to cover existing debt and other obligations. The League will continue to work to have the language amended and post updates as we have information to report.

Jennifer Rigterink is a legislative associate for the League handling economic development, land use and municipal services issues.  She can be reached at jrigterink@mml.org or 517-908-0305.

TIF Package Scheduled for House Floor Vote Today – Action Needed

House bills 5851-5856 which require TIF authorities to undertake additional transparency and reporting requirements, as well as eliminate the capturing of special millages after December 31, 2016, is scheduled for a vote in the House today.

The League has been very involved working to make sure that new transparency and accountability measures are palatable. We are very concerned with the language in this package that defines what a new special millage is. As outlined within this package currently, it will be very easy to take an existing special millage and qualify it as a new special millage to avoid TIF authorities from capturing. We have been told this is not the intention of the provision in the bills, yet the definition language has not been amended to clarify.

Contact your State Representative now to urge them to vote no on House bills 5851-5856 which will block tax capture of not just new millages, but most likely all renewed or revised millages.

Jennifer Rigterink is a legislative associate for the League handling economic development, land use and municipal services issues.  She can be reached at jrigterink@mml.org or 517-908-0305.

OPEB Reform Proposal on Lame Duck Agenda

The League's Anthony Minghine (left) and Chris Hackbarth (right) testify on the OPEB reform effort Thursday in the state House Committee on Local Government.

The League’s Anthony Minghine (left) and Chris Hackbarth (right) testify on the OPEB reform effort Thursday in the state House Committee on Local Government.

The bills, House Bills 6074-6086 went before the House Local Government committee today – Thursday (Dec. 1, 2016) at 10:30 a.m.

League staff were given an opportunity to testify on the bills this morning and supported the concept of what the bills aim to do. League staff were briefed on this proposal just prior to the bill introduction and it may move through the process during lame duck.

Governor Snyder’s administration, while preferring to deal with this issue next year as part of a comprehensive conversation, recognizes that this is a major issue and is likely to support it. View a Detroit Free Press article about the hearing here.

During the hearing, the League’s Chris Hackbarth and Anthony Minghine were given an opportunity to testify. The hearing recessed Thursday with no vote cast and resumed later in the afternoon and Hackbarth and Minghine were able to finish testifying. The Michigan Association of Counties and Michigan Townships Association also testified in the afternoon in support of the OPEB reform effort in concept. At the end of Thursday’s hearing, the committee chair, Lee Chatfield, R-Levering, urged people to read the package of bills over the weekend. Chatfield indicated the committee would likely continue the discussion on the issue next week.

“This is a great first step and we look forward to continuing the discussion,” said Hackbarth, director of state affairs for the League. “We support giving additional tools to our communities. (These bills) will allow additional local control.”

Minghine, the League’s COO and associate executive director, added: “We need a model that is sustainable. At first blush we are encouraged by where this package goes.”

The League has expressed concerns about dealing with this in such a short window, and expect that if this proposal is adopted there may be a need for follow-up legislation in the next session to address any issues that arise.

In summary:

The League's Chris Hackbarth testifies on the OPEB reform package of bills discussed in a state House committee Thursday.

The League’s Chris Hackbarth testifies on the OPEB reform package of bills discussed in a state House committee Thursday.

  • The proposal consists of 13 bills, solely focused on retiree health care. There is no proposal to address municipal pension systems.
    • 4 main bills and 9 trailer bills that will simply refer back to the changes made in the initial 4 bills
    • 4 main bills will provide for a new act that specifies allowable retiree health benefits, a transparency/reporting bill, a PERA bill, and an amendment to PA 312 binding arbitration
  • PERA amendment would state that retiree health benefit offerings are a prohibited subject of bargaining.
  • PA 312 amendment would prohibit an arbitrator from issuing an order that includes retiree health benefits.
  • There is a trigger mechanism in the proposal so that it would only impact municipalities with a GASB-defined actuarially funded level for OPEB below 80%.  No requirement for pre-funding for any community, regardless of current unfunded liability.
  • Package would address retiree health offering according to the type of employee
    • New hires after effective date could only be offered an employer contribution of a maximum of 2% of compensation towards a retirement health savings account. This offering is at the employers discretion.
    • Existing employees who do not retire before expiration of current contract would be subject to a minimum cost share of 20% of their retirement health benefit. The specific cost share would be set by the city. Extensions or renewals of existing contracts could not include retiree health benefit offerings outside of the 80/20 cost share.
    • For existing retirees, this same 80/20 cost share would be in effect, to the extent that the agreement they retired under does not offer a “vested” right to that benefit. This is a concept that is based in current case law and would allow changes to some, but not all retirees.
  • Once a retiree qualifies for Medicare, the municipality could only offer to cover a Medicare supplemental insurance product at the same 80/20 cost share level.
  • Retirees would be ineligible to receive health insurance coverage from the municipality if health insurance coverage is available from another employer subsequent to their retirement from the municipality.
  • Based upon the remaining session schedule, a bill introduction on 11/30/16 would require committee action immediately following introduction with floor action in the House not eligible until 12/6/16 at the earliest.  If the House moves the bills during the session week of 12/6-12/8, the bills would not be eligible to move in the Senate until the following week…12/13-12/15.
  • The bill package would have an effective date starting May 1 of 2017.

The League’s Board of Trustees was briefed on this proposal and while we continue to review the legislation the issue of OPEB reform has been a central component of the League’s municipal finance initiative and we testified in committee today in support of the concept of such reform.

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

 

Community Solutions Council

Last week the White House announced President Obama’s Executive Order establishing a Community Solutions Council. This effort builds upon the 2015 Community Solutions Task Force and will be a platform across federal agencies to strengthen relationships with local governments and local government partners. See below for additional information.

Read the White House Press Release

Read the Community Solutions Fact Sheet

Visit the Community Solutions Initiative website

Jennifer Rigterink is a legislative associate for the League handling economic development, land use and municipal services issues.  She can be reached at jrigterink@mml.org or 517-908-0305.

PPT Reimbursement Checks Expected Next Week

The Local Community Stabilization Authority met today (11/18/16) to authorize the disbursement of $374 million that was dictated by the new personal property tax reform system approved by the voters in 2014.  Nearly 500 cities and villages that experienced a loss in 2016 from eligible exempt personal property (including the first phase-out of eligible manufacturing personal property claimed in the first half of 2016) should expect to receive a check from the LCSA over the course of the coming week.  Approximately $140 million of the total is being distributed directly to cities and villages that is expected to cover 100% or more of their essential service, small taxpayer exemption, tax increment finance, and other losses resulting from the new law.

The reimbursement date of November 20th this year is one month later than it will be in coming years, due to the filing deadline extension that legislators approved earlier this year to allow manufacturers more time to claim the exemption on their equipment.  Going forward this annual reimbursement is expected to occur in October.  For communities with December tax levies, they should expect to receive a reimbursement check in February.

Treasury is expected to provide additional clarification on reimbursement calculation details sometime next week.

 

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

December 1st Deadline Reminder for Revenue Sharing

Reminder from Treasury that December 1st is the deadline for submitting the revenue sharing/transparency certification (Form 4886) for all cities, villages and townships that are eligible for statutory revenue sharing payments (CVTRS) for FY 2017.

 

Per 2016 Public Act 268, Section 952(3), attached is the FY 2017 detailed guidance for cities, villages, and townships. Additional information can be found on the Michigan Department of Treasury website: http://www.michigan.gov/treasury/0,4679,7-121-1751_2197_58826—,00.html, including the required certification form and available templates.

To receive full payment, Treasury must receive all required documentation by December 1, 2016.

In order to meet the deadline and qualify for the full CVTRS payment amount available, a local unit must submit to Treasury the documents listed below and make the documents available for public viewing in the city, village, township, or county clerk’s office or post them on a publicly accessible Internet website.

The required documents are:

  1. Signed City, Village, and Township Revenue Sharing and County Incentive Program Certification (Form 4886)
  2. Citizen’s Guide (minimum General Fund); see below for more information
  3. Performance Dashboard
  4. Debt Service Report (all funds)
  5. Projected Budget Report (minimum General Fund)

New Citizen’s Guide Reporting Option

The new Citizen’s Guide reporting options allow local units to indicate, via checkbox, on the CVTRS and CIP Certification (Form 4886) that they have elected to utilize Treasury’s new online system and will not be submitting a copy of the Citizen’s Guide. Although the new system is not yet operational, submissions will be considered on-time as long as local units elect this option on the Certification Form and submit all other required documentation on-time. A current version of Form 4886, with the checkbox, can be found here: http://www.michigan.gov/documents/treasury/4886_CVTRS_Certification_Form_2017_530568_7.pdf.

Submissions can be emailed to TreasRevenueSharing@michigan.gov, faxed to 517-335-3298, or mailed to:

Michigan Department of Treasury – ORTA

P.O. Box 30722

Lansing MI  48909  

Submissions

  1. Prior to submitting the documentation via email,            DOUBLE CHECK THE EMAIL ADDRESS to ensure that the address has been typed correctly. If the email address is typed incorrectly, Treasury will not receive the submission and unfortunately the local unit will not qualify for a payment.
  1. When submitting the documentation, DOUBLE CHECK ATTACHMENTS to ensure that all the required documentation has been attached. Submissions received without attachments do not qualify.
  1. After submitting the documentation:
    1. Within two business days of Treasury receiving your submission, you will receive an email reply stating the submission has been received. Starting November 28, 2016, Treasury will provide the email reply within four business hours.
    2. If a response email is not received from Treasury within the above time frames, contact Treasury at 517-373-2697 to verify that the submission has been received.
    3. Upon a review of the documentation at a future date, Treasury may request additional information to ensure a local unit’s compliance with 2016 Public Act 268.

Please Note

If a submission is sent via email or fax, Treasury does not require a mailed copy.

If you have any questions, please feel free to contact our office at 517-373-2697.

If Treasury does not receive ALL of the above documents by 11:59 p.m. on December 1, 2016, your local unit will not qualify for the full CVTRS payment amount available.

 

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

 

Election Results and Changes in House Leadership

State House

Republicans will retain control of the Michigan House of Representatives next year, as Democrats were unable to take the nine seats required to win the majority. The Republican majority is the same as in the 2014 general election, with 63 Republicans and 47 Democrats.

Two House Districts flipped this election. In the 17th House District, Incumbent Representative Bill LaVoy (D – Monroe) was unseated by Republican Joseph Bellino. Representative LaVoy was the only incumbent to not win re-election this year. The Democrats made up this one loss with Democrat Darrin Camilleri winning the Downriver-based 23rd District, currently held by Representative Somerville (R – New Boston).

Leadership

Those elected for Republican and Democrat leadership of the 99th Legislature will begin their new roles on January 1st, 2017.  Representative Tom Leonard (R – DeWitt) is the new Speaker of the House, replacing current Speaker Kevin Cotter (R – Mount Pleasant).

Representative Sam Singh (D – East Lansing) is the new House Minority Leader. House Minority Leader Tim Greimel announced Wednesday he would not seek re-election after the party was unable to narrow the Republican majority during the election. Representative Singh has many years of local government experience prior to him joining the House of Representatives. He served on East Lansing City Council for 10 years and is a former Mayor of East Lansing. See below for the new leadership.

house

New Members

There are 43 new members of the House of Representatives. Of these 43, there are over 15 with a background in local and county government. Please see below for a detailed chart, indicating their roles in municipal governments.

 

New House Members with Local Government Backgrounds
Name (District – Main City) Party Affiliation % Won Municipal Background
Julie Alexander (64 – Hanover) Republican 63% Jackson County Board of Commissioners
Sue Allor (106 – Wolverine) Republican 61% Cheboygan County Board of Commissioners
Julie Calley (87 – Portland) Republican 67% Ionia County Commissioner (8 years)
Brian Elder (96 – Bay City) Democrat 58% Bay County 7th District Commissioner (2003-2010) & Michigan Association of Municipal Attorneys
Jim Ellison (26 – Royal Oak) Democrat 59% Past Chairman of the Royal Oak Planning Commission & 7 terms as Royal Oak Mayor
Ben Frederick (85 – Owosso) Republican 56% Owosso City Council (9 years) & Mayor of Owosso
Patrick Green (28 – Warren) Democrat 66% Warren Councilman
Beth Griffin (66 – Mattawan) Republican 54% Van Buren County Commission Vice Chair
Michele Hoitenga (102 – Manton) Republican 69% Mayor City of Manton
Jewell Jones (11 – Inkster) Democrat 66% Inkster City Councilman
James Lower (70 – Cedar Lake) Republican 63% Vice-Chairman Ionia County Commission & Edmore Village Manager
Steve Marino (24 – Harrison Township) Republican 55% Macomb County Commissioner
Ronnie Peterson (54 – Ypsilanti) Democrat 75% Washtenaw County Commissioner
Yousef Rabhi (53 – Ann Arbor) Democrat 80% Washtenaw County Commissioner
Terry Sabo (92 – Muskegon) Democrat 68% 2011-12 Muskegon County Road Commissioner
William Sowerby (31 – Clinton Township) Democrat 56% Clinton Township Treasurer
Jeff Yaroch (33 – Richmond) Republican 70% Richmond City Council (16 years)

 

Jennifer Rigterink is a legislative associate for the League handling economic development, land use and municipal services issues.  She can be reached at jrigterink@mml.org or 517-908-0305.

Lame Duck Agenda Whispers in Michigan Legislature

MIRS article related to a OPEB issue.

MIRS article related to a OPEB issue.

In case you didn’t see it, there was a recent article in MIRS quoting Governor Snyder as suggesting municipal retirement health care reforms could be considered during the upcoming lame duck legislative session. This is an issue that the League has identified as a key cost driver for communities (www.SaveMICity.org) and is a major area of interest for our members.

While there are only between nine and eleven session days currently scheduled and no bills or proposals to react to, we are monitoring this issue very closely and working to ensure that should any proposal surface, municipal concerns and fiscal stresses will be at the forefront of the debate.

In terms of background on this issue: for over a year now, the Michigan Municipal League has been advocating for the need to reform the state’s municipal finance system. The League Board of Trustees approved a platform of municipal finance reform centered around cost, structure, and revenue.

opeb-chart-with-percentagesThe single biggest cost reform identified by our members is the need to restructure our retiree health care obligation, commonly known as OPEB – “Other Post-Employment Benefit”. The data (view pie chart and go here) supports what our members have repeatedly told us: the escalating costs of providing retiree health care benefits, not pensions, are the biggest impediment and greatest threat to investing in their communities.

We will continue to keep members updated if there are any developments along this topic.

(Posted by Matt Bach, League director of media relations, on behalf of Chris Hackbarth).

Please feel free to contact Chris Hackbarth if you have any questions: 517-908-0304 and chackbarth@mml.org.