Legislative Report as of Sept. 28, 2018
The Legislature wrapped up their summer recess with a two day session last week. They will not have session again until October, and even that is expected to be abbreviated. The focus is completely on the November election right now, and with it shaping up to be one of the more competitive elections in recent years, legislators are spending all of their time on the campaign trail. In fact, it is possible that the Legislature would not have even come back in September at all if not for a pair of petition initiated proposals that leaders in the House and Senate felt had to be addressed before the September 7 deadline for legislative action passed (more on that below). More on that and other issues below.
House Committee Takes up Retirement Forfeiture Bill
The House Financial Liability Reform Committee heard testimony on HB 5918, sponsored by Rep. Pete Lucido (R-Shelby Twp.) on September 5. Rep. Lucido stated that the bill was introduced in response to the Larry Nassar case at Michigan State University. The bill seeks to expand current law that allows for a public employer to rescind an employee’s pension if they are convicted of a felony concerning a breach of the public trust.
Specifically, HB 5918 would allow an employer that is a member of a state-run retirement system to take away retirement health care benefits from any employee who resigns or is terminated for cause of willful and wanton neglect of duty. State-run retirement systems are the State Employees Retirement System, the Michigan Public School Employees Retirement System, the Judges Retirement System, the State Police Retirement System, and the Michigan Legislative Retirement System.
Organizations representing state employees like UAW Local 6000 and AFSCME Council 25 took a position in opposition to the bill, citing the fact that the triggering mechanism – willful and wanton neglect of duty – is a largely arbitrary standard that would create situations in which employees were denied due process rights. The current law requires a felony conviction for a specific type of crime (e.g. embezzlement, unjust enrichment, etc.) for an employee’s pension to be forfeited. HB 5918 creates a situation wherein employees could lose retiree health care benefits with little recourse. Moreover, just like the current law, the bill takes no account of an employee’s family members or survivors who did nothing wrong, yet lose the opportunity to collect retirement benefits should their family member be terminated for the specified reasons.
A substitute bill was drafted by members of the committee that would firm up the criteria by which retiree health care could be lost. The amended bill would have a requirement of either a felony conviction, or a determination in civil court that an employee acted with a willful and wanton neglect of duty. At the very least the amended version would require a determination by a court before termination of benefits, unlike the bill as introduced which would have left that decision to the discretion of the employer. The committee did not act on the bill, but could take it up again as soon as this week.
The House and Senate held a marathon session on September 5 in order to take up two citizen initiated petitions that otherwise would have appeared on the November ballot. The first would raise the minimum wage to $12/hour by 2022, and to $12/hour for tipped employees by 2024. The second petition initiative would require employers to offer paid sick leave to their employees. Employees would earn one hour of paid sick leave for every thirty hours worked, capping out at a total of 72 hours of paid sick leave per year. Employees of small businesses (fewer than 10 employees) could get up to 40 hours per year with some exceptions that would allow them to receive more.
Business organizations such as the Michigan Chamber of Commerce and the Michigan Restaurant Association have taken positions in opposition to both ballot proposals, and they encouraged the legislature to take steps to prevent the initiatives from reaching the ballot. After a series of court challenges failed to stop the initiatives, their only recourse to prevent their appearance on the November ballot was to have the Legislature pass the initiatives into law. By passing them into law, the Legislature prevents them from going on the ballot, and it preserves the opportunity for the Legislature to amend them (or even repeal them) before the end of the year.
The conventional wisdom in Lansing is that, after the election, the Legislature will bring up the issues again in the Lame Duck session for the purpose of either limiting the new minimum wage and sick leave laws, or possibly repealing them altogether. Attorneys for both ballot proposals have claimed that the Legislature would be violating the Michigan Constitution if they amend the proposals before a newly elected Legislature is seated in January. Leaders in the House and Senate have disagreed with that legal assessment, and maintain that they are free to alter the proposals yet this year in any way the majority chooses.
Since many legislators only voted to approve the ballot initiatives and make them state law for the express purpose of amending or repealing them in November or December, we expect these issues to come back again soon after the election.
Lame Duck Session Looms
At the end of each two-year legislative cycle, there is a period of time between the November election and the seating of newly elected legislators in January called the “Lame Duck” session. Outgoing lawmakers who have either been term-limited or defeated at the polls are still able to cast their votes on any issues House and Senate leaders put before them. This is often when some of the most controversial issues come forward, like the passage of Right to Work in December of 2012.
This year the shape of what Lame Duck will be shall be determined by the outcome of the November 6 election. If Republicans maintain control of the Governor’s office and both Legislative chambers, the Lame Duck session may be relatively quiet (like it was in 2016). If the “blue wave” actually happens and Democrats sweep into power, Lame Duck might also be relatively quiet, since the current Republican leaders would know that anything they did could be undone in January. However, the most likely scenario is one where Republicans lose their complete control of Michigan government, but hang onto enough to stymie any attempts by Democrats to make major changes in 2019. Should that be the outcome on November 6, the Lame Duck session will be of epic proportions.
Issues that could surface in the Lame Duck Session:
Public Employee Attacks
: There is a possibility that the very right for public employees to collectively bargain could come under attack in November and December. The Michigan Public Employee Relations Act allows public workers to unionize, but it could be amended to restrict that ability or even repealed altogether. House Bill 4399 would require public employee unions to have recertification votes every two years – something that would hamstring the effectiveness of collective bargaining since decertification would be ever hanging over the heads of union leaders. The bill has been lying dormant since last year, but is the kind of action we might see in Lame Duck. While such attacks would not hit MAGE with the same impact as groups like AFSCME or the UAW, it would still weaken the overall ability for public employees to have a say in their wages and working conditions.
No-Fault Auto Insurance
: While just about everyone in the state agrees that Michigan drivers pay too much for auto insurance, there is yet to be anywhere near a consensus on how to address the problem. The insurance industry maintains that our benefits are too rich and that capping the amount they have to pay for medical damages would result in lower rates. However, Michigan insurers have yet to agree to a mandated rate reduction in exchange for lowering their exposure. There may be another effort to jam something through the Legislature in Lame Duck if the insurance industry feels their support in Lansing will drop next year due to the elections.
Even though this legislative session has seen two packages of bills already signed into law to curb pension and retiree health care costs for school and other public employees, anti-pension radicals in the Legislature have yet to achieve their true goal – that of ending traditional pension systems for all public workers. State employees lost out in 1997, and as the first generation of state workers in the new Defined Contribution plan near retirement age, it is becoming more and more apparent how large a cut in retirement support that change in 1997 really was. While the Michigan Constitution protects state workers who are still in the old Defined Benefit plan from having their benefits cut, it does not protect against changes to retiree health care benefits that could have a major impact on their overall retirement income.
: No matter who comes out on top on November 6, it is not unusual for tax cuts to come up in the Lame Duck session. Should Gretchen Whitmer win the governor’s race, Republican leaders in the House and Senate could very likely push for a major tax reduction that would hamstring the next Governor’s ability to keep state government operating. Governor Snyder has been opposed to making any more large tax reductions that would jeopardize the state’s bottom line, but it would not be out of the question for the last act of his administration to be another reward for corporate supporters – and a big fat budget buster for the next administration.