Proposed Ambulance Service Tax Raising Concerns Among Municipalities

A proposal adopted in early 2015 to draw down additional federal Medicaid match revenue to support increased ambulance reimbursements is proving to be a bigger challenge to implement than originally believed and is bringing out potential unintended consequences that could be devastating to communities with publicly-operated ambulance services.

House Bill 4447 became Public Act 104 in July of 2015.  This legislation, among numerous other things, provided the Department of Health and Human Services with authority to develop a Quality Assurance Assessment Program (QAAP) on ambulance services as a financing mechanism to draw down additional Medicaid match from the federal government.  This same financing scheme has been used within other health care industries as a way to improve reimbursement rates for providers without straining the state’s budget.

As originally proposed, this mechanism would have imposed a state tax on ambulance run revenues that the state would have used to improve reimbursement rates for Medicaid-eligible ambulance runs.  In gathering the data and developing the formula needed to arrive at an appropriate tax rate, however, the Department interpreted federal guidelines as requiring that ambulance service providers needed to submit all local government revenues related to providing ambulance services, not simply revenues accrued from ambulance runs.  With this interpretation in place, publicly-operated ambulance providers stand to bear a much larger burden of the proposed QAAP tax than the private ambulance providers who do not provide additional EMS or fire services.

Additionally, the complexity of dividing out costs related solely to ambulance services in communities with multiple tax revenues supporting their fire and EMS services and/or personnel serving multiple functions, including ambulance service, and applying a tax on top of those existing taxes is causing alarm bells to sound for many municipalities that operate their own ambulance services.

The League is participating in meetings with the Department, fire chiefs and other municipal fire personnel, and state legislators in an attempt to get a better understanding of the potential that this program could cause a negative financial impact on communities.  While increased Medicaid reimbursement rates are a laudable goal, they cannot come on the backs of municipalities.  Enough concerns have been raised that warrant this concept be re-evaluated before being implemented.

If your community provides municipal ambulance service, please contact our office to discuss this issue and the potential impact on your community.

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

State Budget Process Set to Resume Following Spring Recess

Budget subcommittees in both the House and Senate were hard at work last week wrapping up much of the initial work on their respective appropriation responses to the Governor’s FY17-18 proposed budget.

Responding to requests for additional funding from the League and other local government groups, the House General Government subcommittee sent House Bill 4232 to the full House Appropriations committee recommending a $12.4 million increase to the statutory revenue sharing (CVTRS) line item.  For communities currently receiving a CVTRS payment, these additional dollars would be distributed on a per capita basis, equating to an additional $1.62396 per person.  If adopted as part of the final budget framework, this would be the first statutory revenue sharing increase in three years and a welcome increase in light of last year’s overall revenue sharing cut as sales tax revenue driving Constitutional payments fell below the previous year.

The League also had the opportunity to testify before the Senate General Government subcommittee, making a similar case for increased funding for revenue sharing.  While the Senate subcommittee has yet to complete their proposal, public comments from members of the subcommittee seem to indicate an interest in looking at options for a funding increase to this line.

Once subcommittee work is completed following the spring break, the full Appropriations committees in each chamber will begin their consideration of the various budget recommendations, followed by consideration from the full House and Senate, all before the mid-May consensus revenue estimating conference.  Final budget action is on track for completion in early June.

Please contact your State Representative and Senator and urge them to support an increase to statutory revenue sharing.

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

Senate and House Take First Steps on Transportation Budget

This week the Senate Transportation Subcommittee passed SB 148 and the House Transportation Subcommittee passed HB 4242. Each of these bills appropriates just over $4.3 Billion in transportation revenue to MDOT, counties and cities and villages. Each of these budgets has a baseline appropriation of $491.2 million dedicated to cities and villages. This is an increase of $49.6 million over the current fiscal year.

SB 148 would create a grant based program that appropriates an additional $3.1 million to assist villages with a population under 2000 with resurfacing costs. Grants would be equal to 75% of an individual projects cost and could not exceed $250,000. The Transportation Asset Management Council would administer the grant program and would prioritize projects based on the greatest return on total infrastructure value.

HB 4242 would also dedicate addition resources to local roads by allocating $10 million from the Transportation Economic Development Fund and $2 million from the Local Agency Wetland Mitigation Fund. This would result in an additional $7.9 million for county road commissions and $4.1 million for cities and villages.

These bills are is still a work in progress. The budget is expected to be complete by June 1st so we are at the beginning not the end of the process. As the budget moves forward the differences between the two bill will need to be worked out. The League will continue to track these bills and provide you with ongoing updates as they forward.

John LaMacchia is the Assistant Director of State and Federal Affairs for the League handling transportation, infrastructure, energy and environment issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

House Committee Deadlocks on Physically Present to Vote Bill

Legislation that would ban elected government officials from voting remotely through Skype or conference call failed to get majority support in the House Committee on Oversight this week.

House Bill 4184 is a reintroduction of legislation which passed the House and Senate last term, but died after the House declined to vote on a Senate change. The legislation, as introduced, amends the Open Meetings Act to require an elected member of a public body be physically present to vote on an issue in order for a meeting to be considered open to the public. There is one exception that allows one remote video vote a year for a “good cause” such as a serious illness or a family member death.

The committee deadlocked 3-3 on moving the bill to the House floor when one Republican member joined the panel’s two Democrats in voting no. The vote was reconsidered and essentially tabled for the day.

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.

Senate OKs Brownfield Redevelopment Bills

On Wednesday the Senate passed a five-bill package (SB 111, SB 112, SB 113, SB 114 & SB 115) which would allow “transformational” redevelopment projects to capture state tax when a gap is identified between the financial viability of a development project and the cost of building that development.

The legislation requires a certain level of private investment from each project based on the population size of the community the project will be located in. The League worked closely with the bill sponsor and stakeholders to have the investment threshold lowered for the lowest population group so more communities would have the opportunity for a transformational project if the legislation is enacted.

In addition to the private investment, a project must show a net economic benefit and get approval from the local unit of government, where the project will be located, before it would be eligible for state tax capture. Only one project could be approved in a community per year, and the total tax capture the state authorizes cannot exceed $40 million per year.

The legislation now moves to the House and has been referred to the Committee on Tax Policy.

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.

Early Morning Income Tax Vote Comes Up Short

After over 12 hours of behind the scenes negotiations, the Michigan House ended up voting down a third alternative for an income tax cut in the early hours of Thursday morning.  The amendments that were proposed to HB 4001 H-3 would have lowered the state’s income tax rate from 4.25% down by .1% per year for the next two years and then any further reduction down to 3.9% would have been conditioned on the state’s Rainy Day Fund having a balance of at least $1 billion.  If fully phased down as proposed, the legislation would have sliced more than $1.1 billion from the state’s General Fund revenues.  Once the final vote was tallied, the amended version only had 52 supporters, with 55 members voting against the measure (see page 4 of the linked pdf to see how each legislator voted).

The Municipal League was joined in opposition to this legislation by a broad coalition of organizations and individuals, including Governor Snyder.  As an organization we are extremely thankful for everyone who engaged with their State Representative this week, urging them to protect revenue sharing and local government services and opposing this bill.  We encourage you to reach back out to those legislators who voted No and thank them for their vote.

While the bill was defeated this morning, it is possible that the vote could be reconsidered in the coming weeks, so please be prepared to re-engage with legislators should this bill come back up.

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

League Testifies on Need to Restore Revenue Sharing

The House Appropriations subcommittee on General Government, which includes the appropriation for revenue sharing, met yesterday to begin their consideration of Governor Snyder’s budget recommendation for the upcoming 2017-18 fiscal year.  This week’s subcommittee hearing centered on revenue sharing and the Municipal League was invited to present our position on revenue sharing to the eight-member subcommittee.

The Governor recently recommended, for the third straight year, that statutory revenue sharing for cities, villages and townships remain flat, at $248.8 million.  The Governor cited an estimated 2.3% expected growth in sales tax revenue to boost Constitutional payments, despite the shortcomings of those same estimates in the budget year that just ended last fall (Constitutional revenue sharing payments fell by nearly $1 million compared to the previous FY).  In his original presentation, the Governor also pointed to the $109 million in additional revenue that local units of government received from the new personal property tax reimbursement process as a reason why he was not restoring dollars into revenue sharing, something which the League quickly responded should not be counted as a proxy for the many years of budget cuts and neglect.

Following a historical overview of the revenue sharing program from the House Fiscal Agency, the Municipal League used our opportunity to address the subcommittee by explaining the important role that revenue sharing plays in every community’s budget. We walked the legislators through the limited resources that communities have available to provide critical services and how this broken system has been disconnected from the economic recovery that the state’s budget has experienced in recent years and the critical need that exists for this budget to include additional funding for revenue sharing, above the Governor’s recommendation.  You can view a copy of the League’s presentation here – Gen Govt SubCommittee-Feb 2017.

Following our testimony, the Michigan Townships Association and the Michigan Association of Counties also addressed the subcommittee urging their support for additional funding.  The subcommittee will continue hearings over the coming weeks with their recommendation due around the spring break.

Please contact your legislator and urge them to support increased funding for revenue sharing.

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

Michigan Rural Task Force Conference

MDOT is pleased to announce the first annual Michigan Rural Task Force Conference. The conference will be held in Mt. Pleasant at the Comfort Inn located at 2424 S. Mission, Mt. Pleasant, MI 48858 on Thursday, March 30, 2017 beginning at 1:00 pm.

Please click on the following link for the conference agenda. RTF Conference 2017 Agenda

To attend please RSVP to Anna Swanson; swansona1@michigan.gov  no later than March 23, 2017. If you have any questions about the conference, please contact Pamela Boyd (517) 335-2803; boydp1@michigan.gov, or Andy Brush (517) 335-2534; brusha@michigan.gov.

For hotel information please click here.

John LaMacchia is the Assistant Director of State and Federal Affairs for the League handling transportation, infrastructure, energy and environment issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

New MSHDA Grant to Fund Neighborhood Placemaking

The Michigan State Housing Development Authority (MSHDA) recently announced a request for proposals (RFP) for a new “Neighborhood Enhancement Program” which provides communities an opportunity to fund placemaking projects in priority neighborhoods. MSHDA worked with the League and other statewide partners to develop the program, and they are eager to receive creative and innovative proposals in three main categories: beautification, public amenities and infrastructure enhancement. MSHDA, in the first year of this program, is interpreting those categories broadly.

Cities must work through a 501(c)(3) non-profit organization to apply. Proposals are due March 15. For complete details, visit the MSHDA 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.

House Committee Reports Bill Eliminating State Income Tax

 

A plan to eliminate the state’s income tax was voted out of a House committee Wednesday morning. The first full fiscal year impact of this plan would reduce the state’s General Fund by over $1.1 billion, or roughly 10%.  The Michigan Municipal League is actively opposed to this proposal as it could jeopardize the essential services that Michigan citizens rely on, such as police and fire protection, schools and roads.

We need your help to oppose this bill by contacting your State Representatives and letting them know how this proposal will hurt your community and their constituents.

The House Tax Policy committee reported House Bill 4001, a complete repeal of Michigan’s 4.25% personal income tax.  The state income tax brings in more than $9 billion towards the FY16-17 state budget…about 70% of the state’s current $10.8 billion General Fund and more than 20% of the $12.6 billion School Aid Fund.  While the bill would phase out the income tax by .1% per year over about 40 years, the initial reduction would move the rate to 3.9% on January 1, 2018.  The first full, fiscal year impact of over $1.1 billion would occur in FY18-19.

Supporters in committee cited the state’s current estimated budget surplus and previous statutory changes lowering the rate to 3.9% that were never implemented as reasons to move this bill.  It is expected that the House majority will propose an alternative to the Governor’s recommended budget that will reflect the cuts necessary to achieve the reductions that this change would require.

When a similar conversation took place in Lansing in 2015 as part of the road funding debate, MML commissioned a report to examine the impact of a proposed $350-700 million diversion of GF/GP dollars towards road funding would mean to the rest of the state’s budget.  The results of that analysis were not pretty and those same concerns hold true today…items of direct interest to municipalities like revenue sharing, PPT reimbursement dollars, PILT payments, fire protection grants, distressed community grants, and community development funding were all identified as programs that would be at risk in a scenario where the state General Fund undergoes this type of reduction. In addition, the final product of the road funding deal, which obligates an eventual $600 million of income tax dollars will never be able to be met if the income tax is eliminated.

Following opposition from the State Treasurer, the education community and the MI League for Public Policy, the MML joined in testimony against this proposal, urging the committee to consider the budget consequences of such a reduction.

Michigan’s broken fiscal model for local governments simply will not allow for any additional cuts to state support for municipalities.  The League continues to advocate for full restoration of revenue sharing.  This proposal would eliminate any ability for that reinvestment to occur.  While the legislature may view this as a policy debate, a decision of this magnitude will have real-life consequences for every resident of this state.

The bill passed committee on a 7-4 party line vote, with two Republican members abstaining.  It is very likely that the full House will move on this bill quickly now that it is on the floor, possibly ahead of any matching alternative budget proposal.  Please contact your State Representative today and let them know of your concerns about how such a drastic reduction in state revenues will impact the residents and services in your community.

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