Legislative Report March 2021

Whenever you have the Legislative and Executive Branches of government controlled by different political parties, some acrimony is expected.  There is always tension and competition to win not only favored policies, but also to win the public relations battle.  However, a solid year of pandemic restrictions have raised the temperature to unprecedented levels in Lansing.  The Legislature has already been victorious in one lawsuit against Governor Whitmer, and it is possible that another may be coming soon to a courtroom near you.
 
The major battle at the moment is over appropriating the federal COVID relief funds that were passed last December.  Legislative leaders have repeatedly tied spending bills to legislation that would strip the authority of MDHHS to issue pandemic-related orders.  So far, Governor Whitmer has vetoed these bills, and as a result a good portion of the federal funds dedicated to K-12 schools, unemployment benefits and other vital needs are going unspent.  This stalemate shows no signs of abating, even as additional federal funds are on the way, and the 2022 budget is being developed by House and Senate appropriations committees.
 
Other issues receiving attention in Lansing right now include state and school pension reforms, Senate confirmation of gubernatorial appointees, and the continued roll out of COVID vaccines.  More on these issues below.
 
 
Supplemental Budget Bills Partially Vetoed
 
A pair of bills aimed at appropriating over $3 billion in federal COVID relief funds were passed by the Legislature on March 4.  House Bill 4047 contained approximately $1.7 billion in federal funds dedicated primarily to vaccine distribution and COVID testing, food and rental assistance, and a $2.25 per hour wage increase for direct care workers in the health care industry.  House Bill 4048 sent nearly $2 billion to K-12 schools, with the bulk of that going directly into per pupil increases. 
 
However, part of the school aid bill was tied to House Bill 4049; a bill that would remove the ability of the Michigan Department of Health and Human Services to issue pandemic-related orders.  This is part of the same battle the legislative and executive branches have been having since last April.  Legislative leaders feel that Governor Whitmer is violating the separation of powers by unilaterally issuing orders related to the pandemic.  First this was done by executive orders from the Governor herself, but after the Michigan Supreme Court curtailed that power the orders have come from the Department of Health and Human Services under the auspices of the Michigan Public Health Code. 
 
The perspective from the Governor’s office is quite different.  Their belief is that the Legislature has dragged its feet on creating a plan to respond to the pandemic, and that the Governor has had no choice but to take strong actions such as closing schools and businesses and limiting large gatherings in order to slow the spread of the disease.  Unfortunately, there has not been a great deal of common ground found between the two drastically different viewpoints.  On the one hand, Republicans in the Legislature assert that the Governor’s actions are overly burdensome and unnecessary, and have put countless businesses and their employees in economic jeopardy.  On the other, the Whitmer Administration attests that the orders have saved thousands of Michigan lives. 
 
This standoff led to a good portion of the funds dedicated for schools to become a casualty of the Governor’s veto of HB 4049.  Over $800 million in federal COVID relief slated for K-12 education will go unspent for the time being.  Similarly, $150 million for the Unemployment Insurance Trust Fund, and $400 million targeted to tax relief for businesses were also vetoed.  On March 17, the Legislature responded to the veto by passing two additional bills (SB 29 and SB 114) that simply re-appropriated the money that had been vetoed.  This was touted as “giving the Governor a second chance to do the right thing.”  However, since these bills were passed without any consultation with the Governor’s office, it is very likely that these, too, will be vetoed.
 
 
Legislation Affecting State-Operated Pension Systems Possibly Moving in House
 
On February 24, the House Appropriations Committee held a hearing on a series of bills aimed at making changes to several state-run pension plans.  The bills would amend the Michigan Public School Employees Retirement Act (HB 4263); the Michigan State Employees Retirement Act (HB 4264); the Judges Retirement Act (HB 4265); and the Michigan State Police Retirement Act (HB 4266).  The bills have no effect on retiree benefits, but instead change assumptions that determine employer investments into the plans.
 
The legislation would most likely strengthen the long-term sustainability and fiscal health of the pension systems.  It would do this by reducing the assumed annual rate of return on pension investments, requiring the systems to use more accurate mortality tables, implement a layered amortization system, and reduce the time frame in which unfunded accrued liabilities must be paid.  The result would almost certainly require state and school employers to invest more funds in the near-term into the system.  However, it would also more rapidly address the debts owed by each pension system which would hopefully result in large savings in the long-term. 
 
None of these bills alter the current pension benefit provisions in any of the systems.  However, by strengthening the long-term financial stability of each system, they would reduce the likelihood that benefit cuts (or increased employee contributions) would be likely in the future.  The bills will likely receive a vote in the House Appropriations Committee sometime in the next few weeks.
 
 
Legislature Targets Appointment Process in Battle with Governor
 
Republican leaders in the Michigan House and Senate are using every tool in their arsenal to force Governor Whitmer to accede to their demands regarding COVID-19 policies.  In addition to using the budget process (see article above), they are rejecting numerous nominees to gubernatorial appointments ranging from university boards to department heads.  Since January, nearly 20 nominees have been rejected not for their lack of qualifications, but for the Governor’s refusal to sign legislation limiting executive powers.
 
The most prominent appointment to come under fire is Elizabeth Hertel’s selection as the new director of the Department of Health and Human Services.  Ms. Hertel was formerly a Deputy Director at the department, and she was named as the successor to outgoing Director Robert Gordon.  Ms. Hertel has gone before the Senate Advice and Consent Committee numerous times in the past few weeks, and several members of the Senate Republican Caucus are calling for her appointment to be rejected. 
 
As of this writing, no decision has been made on whether to even hold a Senate floor vote on the appointment.  If no vote is held by March 23, the nomination is automatically approved.