OPEB Reform Efforts Scuttled

Following days of meetings and negotiations, efforts to provide comprehensive reform tools for communities to better manage rising retiree health insurance costs were derailed and a stripped down proposal was adopted in the early hours Thursday morning.

House Bill 5298 and its identical counterpart, Senate Bill 686, served as the main vehicle of the revised package that was scaled back to only address the few areas of limited consensus that were agreed to in the July release of the Governor’s Responsible Retirement Reform for Local Government Task Force report.   While the League was a signatory to this report, we expressed disappointment in the lack of true reform recommendations and had hoped that the Administration and Legislature would expand on those recommendations and provide relief for communities struggling to balance the provision of good health care for their retirees against the ever-expanding budget burden of those benefits.

The final version establishes pension and OPEB reporting based upon existing local annual financial, actuarial valuation, and audit reports.  For communities identified through that reporting as being out of compliance with specified budget affordability and funding thresholds, the language identifies possible benefit level and funding changes that communities could utilize to address that “under-funded” status through a municipally-developed Corrective Action Plan.  A  Municipal Benefits Board is created within Treasury to provide communities with best practices and strategies to assist with the preparation of a Corrective Action Plan and its subsequent approval by that Board.

A number of companion bills were also adopted that League staff continue to review this morning.  We will continue to update members with any additional developments.  These bills will likely receive final legislative action next week and go to the Governor before the end of the year.

You can read the League’s statement on this morning’s action from Executive Director Dan Gilmartin here.

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

State House Considering Revenue Sharing Package

The League's Chris Hackbarth testifies about the proposed revenue sharing bills Tuesday, Dec. 5, 2017 in the House committee along with officials from the Michigan Association of Counties and Michigan Townships Association.

The League’s Chris Hackbarth testifies about the proposed revenue sharing bills Tuesday, Dec. 5, 2017 in the House committee along with officials from the Michigan Association of Counties and Michigan Townships Association.

Following the introduction last week of the 16-bill OPEB reform package, three additional bills were introduced in the House to create a structure that attempts to address the chronic under-funding of revenue sharing for local units of government.

Lead by chief sponsor, former Walker city mayor, Rep. Rob VerHeulen, House Bills 5314-5316 do three main things:

 

  1. Creates separate city, village, township (CVT), and county Revenue Sharing Trust funds to protect against future revenue sharing reductions. These trust funds would receive dollars earmarked directly from Michigan’s sales tax to provide the funding for statutory revenue sharing for CVTs based upon the current budget appropriation amount (approx $248 million for CVTs).
  2. Provides an initial attempt at increasing revenue sharing by growing the current statutory appropriation by $100 million over the next 20 years from the sales tax. The bills would divide these new funds ($5 million/year) equally between counties, cities, villages, and townships.
  3. Secures future Personal Property Tax (PPT) reimbursement revenue that is available above what is needed for 100% reimbursement, as an additional down payment on revenue sharing restoration.

The League’s Chris Hackbarth testified Tuesday about the bills in the House Competitiveness Committee along with officials from the Michigan Association of Counties and Michigan Townships Association.

The League supports the bill package in concept and continues to advocate for a plan that restores the revenue sharing cuts of the past decade and distributes dollars appropriately. The three bills were voted out of the House committee Tuesday and await action on the House floor.

Rep. VerHeulen issued a press release about the package and explained it would be funded through Michigan’s sales tax and would give a level of security to local communities in the case of an economic downturn.

“There have been compounding factors that have all led us to where we are at right now in areas across the state,” VerHeulen stated in the release. “Our communities face a funding crisis. They cannot make reliable payments into retirement systems for their employees, including police and fire, and money is often being diverted away from vital public services in an effort to keep up with funding those retirement benefit plans or other budget necessities.”

The bills could be considered in the full House by the end of the year.

Posted by Matt Bach, the League’s director of communications, on behalf of Chris Hackbarth. For details contact Hackbarth at chackbarth@mml.org.

Stay Tuned: OPEB Revisions Forthcoming and We May Need Your Help

UPDATED (10 a.m., Dec. 6, 2017): The League has been told to expect substitute versions for the 16-bill OPEB reform package sometime this morning or later today. The original package of bills, as introduced Nov. 30, was approved without support from Democrats in House and Senate committees Tuesday and have been tentatively scheduled for action on today’s House and Senate agendas. The League continues to actively press for amendments to the bills that would address our concerns. Please stay tuned as the League may ask you – our members – to contact your lawmakers to support or oppose the forthcoming revisions.

The League's Chris Hackbarth, right, testifies about the proposed OPEB legislation with officials from the Michigan Association of Counties and Michigan Townships Association.

The League’s Chris Hackbarth, right, testifies about the proposed OPEB legislation with officials from the Michigan Association of Counties and Michigan Townships Association.

FROM 4:30 p.m. Dec. 5, 2017: The League’s Chris Hackbarth and Anthony Minghine testified this morning and this afternoon in opposition to the introduced versions of the identical OPEB (Other Post Employment Benefit) bill packages in the Michigan Senate and House committees. Negotiation on these bills is ongoing and we are working diligently with the Governor’s Administration and House and Senate leadership staff to address our concerns. They have been receptive to our input so far and we are waiting for revisions that should reflect the input we have provided.

We testified Tuesday in both committees alongside officials from the Michigan Association of Counties and Michigan Townships Association. League member and Port Huron City Manager James Freed also testified. We continue to work and propose changes to the complex 16-bill package. The Senate Michigan Competitiveness Committee approved each of the bills, along with a related technical amendment, along party lines in 4-1 votes and sent them to the full Senate for a vote. The Senate adjourned for the day and may take up the package possibly later this week or next.

Port Huron City Manager James Freed testifies about the OPEB bill during a state House committee meeting Tuesday morning.

Port Huron City Manager James Freed testifies about the OPEB bill during a state House committee meeting Tuesday morning.

As most League members are probably aware, the League has been working for nearly two years on major municipal finance reform through our SaveMiCity initiative (go to saveMicity.org for details). The SaveMICity efforts has been looking for revenue, structure, and cost solutions to make our municipalities more fiscally sustainable. OPEB has been identified as our most significant budget cost driver in need of reform. Therefore the OPEB discussion happening now in the state Legislature is extremely important. For many months, League staff have been working with the legislature and governor’s office to help craft solutions to the OPEB problem.

The 16-bill package (House Bills 5298-5313 and duplicate Senate Bills 686-701) has pros and cons that League staff continue to assess to determine if these reform bills will provide necessary tools for communities to better manage these costs while remaining true to our fundamental beliefs –  that communities need the ability to provide reasonable benefits to their employees and retirees without crowding out essential city services.

The League's Anthony Minghine testifies before a state House committee.

The League’s Anthony Minghine testifies before a state House committee.

There are many parts of the bill package that the League supports, but we are also working to address a number of concerns that exist within the bills as introduced. Chief among them is the use of the Emergency Management (EM) law as the enforcement mechanism to address any impasse situation in the OPEB reform process. The League’s Anthony Minghine, deputy executive director and chief operating officer, testified that the use of the EM law is a “broad overstep” to the problem. Specifically, the League has raised concerns over the inclusion of language in this package that opens PA 436, the Emergency Manager law to add in a new provision for an emergency management team to be appointed in communities where the community and its bargaining units are unable to come to agreement on a local corrective action plans designed to address an OPEB or pension funding situation that exceeds specified funding and budget spending thresholds.

Port Huron City Manager James Free talks with the League's Anthony Minghine during the Senate committee hearing Tuesday afternoon.

Port Huron City Manager James Free talks with the League’s Anthony Minghine during the Senate committee hearing Tuesday afternoon.

View details about the OPEB bills in a previous blog that the League’s Chris Hackbarth, director of state and federal affairs, posted Thursday, Nov. 30, and updated yesterday here.

While it appears that both committees will be moving their respective bill packages to the floor today we anticipate changes to these bills before any further action and continue to actively press for amendments to the bills that would address our concerns.

Matt Bach is director of communications for the Michigan Municipal League. He can be reached at mbach@mml.org.

Medical Marijuana Emergency Administrative Rules Released

With less than two weeks to go before the State starts accepting medical marijuana facility license applications, the Department of Licensing and Regulatory Affairs released emergency administrative rules for the purpose of implementing the Medical Marihuana Facilities Act (MMFLA). The rules outline procedures and requirements for potential licensees, and took effect yesterday upon being filed with the Secretary of State.

Upon the League’s review of the 51 rules, it appears they follow what has been previously shared by LARA through their advisory bulletins. Below is a very brief overview of the rules.

Rule 1 – Definitions
Rule 2 – Terms
Rule 3 – Adoptions by reference (NFPA, food safety, etc.)
Rule 4-13 – Application procedures, requirements, inspections
*Rule 6 – Local requirements to be submitted
*Rule 9 – Requires proof of certificate of use and occupancy
Rule 14-18 – Notifications, reporting for changes, theft criminal activity, and penalty, violations, fines
Rule 19 – Temporary operation
Rule 20 – Transition period
Rule 21 – State licenses, licensees, operation
Rule 22 – Stacked licenses
Rule 23 – Changes to licensed facility
Rule 24 – Operation at same location
Rule 25-27 – Facility requirements (security, transporting, building and fire safety, security plan and measures
Rule 28 – Prohibitions
Rule 29-32 – Testing and sampling
Rule 33 – Edibles
Rule 34 – Max THC levels
Rule 35 – Storage of products
Rule 36 – Product destruction and waste management requirements
Rule 37-39 – Tracking and labeling
Rule 40-42 – Provisions centers (sale, purchase limits, marketing and advertising)
Rule 43 – Employees
Rule 44 – Definitions
Rule 45-51 – Contested case hearings

 

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.

League Testifies on OPEB Bills, Continues to Work on Revisions

The League's Chris Hackbarth, right, testifies about the proposed OPEB legislation with officials from the Michigan Association of Counties and Michigan Townships Association.

The League’s Chris Hackbarth, right, testifies about the proposed OPEB legislation with officials from the Michigan Association of Counties and Michigan Townships Association.

UPDATED (4:30 p.m. Dec. 5, 2017): The League’s Chris Hackbarth and Anthony Minghine testified this morning and this afternoon in opposition to the introduced versions of the identical OPEB (Other Post Employment Benefit) bill packages in the Michigan Senate and House committees. Negotiation on these bills is ongoing and we are working diligently with the Governor’s Administration and House and Senate leadership staff to address our concerns. They have been receptive to our input so far and we are waiting for revisions that should reflect the input we have provided.

We testified Tuesday in both committees alongside officials from the Michigan Association of Counties and Michigan Townships Association. League member and Port Huron City Manager James Freed also testified. We continue to work and propose changes to the complex 16-bill package. The Senate Michigan Competitiveness Committee approved each of the bills, along with a related technical amendment, along party lines in 4-1 votes and sent them to the full Senate for a vote. The Senate adjourned for the day and may take up the package possibly later this week or next.

Port Huron City Manager James Freed testifies about the OPEB bill during a state House committee meeting Tuesday morning.

Port Huron City Manager James Freed testifies about the OPEB bill during a state House committee meeting Tuesday morning.

As most League members are probably aware, the League has been working for nearly two years on major municipal finance reform through our SaveMiCity initiative (go to saveMicity.org for details). The SaveMICity efforts has been looking for revenue, structure, and cost solutions to make our municipalities more fiscally sustainable. OPEB has been identified as our most significant budget cost driver in need of reform. Therefore the OPEB discussion happening now in the state Legislature is extremely important. For many months, League staff have been working with the legislature and governor’s office to help craft solutions to the OPEB problem.

The 16-bill package has pros and cons that League staff continue to assess to determine if these reform bills will provide necessary tools for communities to better manage these costs while remaining true to our fundamental beliefs –  that communities need the ability to provide reasonable benefits to their employees and retirees without crowding out essential city services.

The League's Anthony Minghine testifies before a state House committee.

The League’s Anthony Minghine testifies before a state House committee.

There are many parts of the bill package that the League supports, but we are also working to address a number of concerns that exist within the bills as introduced. Chief among them is the use of the Emergency Management (EM) law as the enforcement mechanism to address any impasse situation in the OPEB reform process. The League’s Anthony Minghine, deputy executive director and chief operating officer, testified that the use of the EM law is a “broad overstep” to the problem. Specifically, the League has raised concerns over the inclusion of language in this package that opens PA 436, the Emergency Manager law to add in a new provision for an emergency management team to be appointed in communities where the community and its bargaining units are unable to come to agreement on a local corrective action plans designed to address an OPEB or pension funding situation that exceeds specified funding and budget spending thresholds.

Port Huron City Manager James Free talks with the League's Anthony Minghine during the Senate committee hearing Tuesday afternoon.

Port Huron City Manager James Free talks with the League’s Anthony Minghine during the Senate committee hearing Tuesday afternoon.

View details about the OPEB bills in a previous blog that the League’s Chris Hackbarth, director of state and federal affairs, posted Thursday, Nov. 30, and updated yesterday here: http://blogs.mml.org/wp/inside208/2017/11/30/legislature-introduces-opeb-reform-proposal/.

While it appears that both committees will be moving their respective bill packages to the floor today we anticipate changes to these bills before any further action and continue to actively press for amendments to the bills that would address our concerns.

Matt Bach is director of communications for the Michigan Municipal League. He can be reached at mbach@mml.org.

UPDATE: Talks Fluid; Legislature Introduces OPEB Reform Proposal

UPDATE (1 p.m. Dec. 4, 2017): Negotiations on the OPEB (Other Post Employment Benefits) reform package remain fluid. The Michigan Municipal League has remained fully engaged through last week and the weekend, including meetings with the Governor, Treasurer, and legislative leadership to fully understand the various components of the package, and are continuing to express concerns and suggestions. Based upon our review, we have identified additional issues in need of addressing. Chief among them relate to changes to PA 345 which allows the levying of taxes for public safety pensions, and the elimination of the bonding provisions for closed plans. We will be working on this package throughout the week. Please check this blog post regularly for further updates as things develop.

FROM THURSDAY’s blog post on this issue (Nov. 30): Following months of discussions between the League, legislative and administration officials on the need for additional tools to better manage retirement health benefit cost drivers, negotiations took a turn within the last 36 hours.  This shift in content has resulted in identical 16-bill packages being introduced today in both the House and the Senate.  These bills now include a number of provisions that were outside the original scope of those conversations that pose serious concerns for municipalities.

House Bills 5298-5313 and duplicate Senate Bills 686-701 were introduced this afternoon and were referred to the House and Senate committees on Michigan Competitiveness.  We have been told to expect these bills to be brought up by those committees next week, starting on Tuesday, December 5th.

The League has raised concerns over the inclusion of language in this package that opens PA 436, the Emergency Manager law to add in a new provision for an emergency management team to be appointed in communities where the community and its bargaining units are unable to come to agreement on a local corrective action plans designed to address an OPEB or pension funding situation that exceeds specified funding and budget spending thresholds.

Of additional concern, the package includes language mandating the pre-funding of retiree health benefits over a five-year phase-in period beginning in 2019 and mandates every community establish a section 115 irrevocable trust to hold all of those dollars.

The situation around these bills and their potential movement is very fluid right now.  League staff are working with member communities and other local government organizations to review and respond to these newly introduced bills and will be attempting to work with legislative leaders to address the concerns we have with the bills over the next few days.

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

 

DEQ to Host a Public Information Session November 29th Regarding Proposed Changes to the State Lead and Copper Rule

The Department of Environmental Quality (DEQ) is hosting a public information session regarding proposed changes to the state Lead and Copper Rule (LCR).  .

When:  Wednesday, Nov. 29, 2017

5 to 6 p.m.        Opportunity for public one-on-one Q&A and resource table displays
6 to 6:45 p.m.   Formal presentation on proposed LCR reforms
6:45 to 8 p.m.   Public Q&A

Where: Lansing Center, Ballrooms 5-8
333 E. Michigan Ave
Lansing, Michigan 48933

Why:    The purpose of the public information session is to provide information to and answer questions from the public regarding proposed changes to the state LCR.  After all questions received on Nov. 29 are evaluated, final proposed rules will be made available at least 30 days in advance of the formal public hearing in January, which is tentatively scheduled for the last week of that month.

The Michigan Municipal League is a participant on the LCR Stakeholder Workgroup that is assisting MDEQ with recommendations to address modifications to the Administrative Rules promulgated pursuant to Michigan’s Safe Drinking Water Act, 1976 PA 399, as amended. The ongoing discussion continues to be about how to best protect the public from lead exposure, but unfortunately the preliminary draft rules add additional burdens to community water supply systems that run counter to the principals of asset management and may ultimately hinder the protection of public health.

The draft rule would reduce the action level from 15 parts per billion down to 10 parts per billion, require communities to map their existing system to identify the presence of lead, require that a community water supplier be responsible for the replacement and cost of a private lead service lines, and many other requirements that could pose significant hardships on a community. The League has taken a stance that we are not opposed to determining how much lead is in our systems or the need to systematically begin removing the lead from our systems, but it cannot be done in such a way that reduces our ability to improve the overall performance of the system, causes a financial hardship or conflicts with the Headlee Amendment or the Bolt decision.

Link to the Preliminary Draft Rule: 2017 Preliminary Draft Lead and Copper Rule

Link to the DEQ Summary Document: Summary Lead and Copper Rule Requirements

The Governor has requested this be placed on an aggressive timeline and a finalized draft rule should be ready by the first of the year. Should our concerns not be addressed through the stakeholder process we will need to be prepared to offer public comments on the rule in early January. In the mean time we will continue to work with those stakeholders that have common concerns with the process and draft rules to make the necessary adjustment to help prevent exposure to lead while still allowing for the efficient management of our water supply systems.

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.

USDA Now Accepting Solid Waste Management Grant Applications

Our friends at the USDA asked the Michigan Municipal League to pass this along to our members. So here it is:

USDA Now Accepting Solid Waste Management Grant Applications

USDA Rural Development is currently accepting applications for Solid Waste Management grants. The deadline for the current funding cycle is Monday, January 2, 2018.

Funds can be used to evaluate current landfill conditions, identify threats to water resources, provide training to enhance operations and help communities reduce the amount of solid waste going into a landfill.

The program is open to local governments, non-profit organizations, federally recognized tribes and academic institutions located in areas with populations of 10,000 or less.

Further information on how to apply for this grant opportunity can be found at www.grants.gov, key search term SWMFY2018; visit www.rd.usda.gov/mi; or call (517) 324-5156.

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.