April 2024 Legislative Report

The Michigan Legislature, after a very fast-paced 2023, has perceptibly reduced the number of bills passing back and forth between chambers in 2024.  This is primarily due to the 54-54 partisan split in the Michigan House (with two vacancies).  It is also partially related to a larger focus on budget priorities as the House and Senate Appropriations Subcommittees begin their work building the 2024-5 state budget.  We expect the pace to slowly start picking up again as we move through the budget process, and especially when the vacant House seats are filled after an April special election.
 
Work in Lansing is primarily focused on the appropriations process, as House and Senate budget committees are preparing their responses to the Governor’s budget proposal.  In February, Governor Whitmer announced several new initiatives that she hopes the Legislature will fund.  These include universal Pre-K education, no-cost community college and career post-secondary schooling for Michigan residents, and a $5,000 family care giver tax credit. 
 
Labor groups in Lansing are also working to pass further legislation that benefits working families.  Efforts are underway to improve Michigan’s unemployment system (including increasing maximum benefit levels for unemployed workers), strengthen Michigan’s Workers’ Compensation system, and (of key importance to public employees) repeal PA 152 which requires public workers to pay at least 20% of their health care costs (known as the 80/20 law).  Much of this work is on hold until after House special elections take place in April.
 
 
Gridlock Stymies Michigan House
 
Last November, two members of the Michigan House of Representatives won local elections to become mayor of their home towns.  Representative Lori Stone (D-Warren) and Representative Kevin Coleman (D-Westland) gave up their House seats to take the office of mayor.  This left an even 54-54 partisan split in the Michigan House. 
 
Special elections will take place on April 16 in Warren and Westland to fill these vacancies.  Until then, however, Democratic Speaker Joe Tate (D-Detroit) has had difficulty convincing the Republican caucus led by Matt Hall (R-Richland Twp.) to give the necessary votes to pass more than a handful of bills.  Representative Hall has insisted that since the two parties have an equal number of members in the House for the moment that the chamber adopt a co-leadership model.  Democrats have rejected that notion and have elected instead to wait until the two vacancies are filled in April on the assumption that both will be won by Democratic candidates.  Should that occur, the Democrats will return to a 56-54 majority and again be able to pass bills without Republican assistance. 
 
Most pundits speculate that the two vacant House seats will be won by Democrats.  However, special elections in April come with a predictably low turnout.  This means that, while unlikely, it is not out of the realm of possibility that a Republican candidate could win one or even both seats.  Candidates in Warren and Westland will be working furiously over the next few weeks until the election.  In Warren, Republican Ronald Singer will face Democrat Mai Xiong; for the 13th House District and in Westland, Democrat Peter Herzburg will vie with Republican Josh Howell for the 25th House district. 
 
If the Democrats are both victorious, Democrats will once again have control over the Michigan House, Senate and Governor’s Office.  If Republicans win one or both seats, however, the power dynamic will shift in a major way.  Republicans would be able to exert more control over the process – particularly when it comes to the budget – than they have been able to do for the past 15 months. 
 
 
Whitmer Proposes Using Freed-Up School Retirement Funds to Supplement 2025 Budget
 
For a brief time in the 1980s, Michigan pre-funded retirement health care for public school employees by setting aside funds each year and earning investment income from those funds.  In the 1990s, that practice was ended and for over twenty years Michigan paid for the full amount of annual school retiree health care each year out of the General Fund.  In the 2010s, Michigan once again began to pre-fund retiree health care, thereby using investment earnings to help offset the total costs.  This year, for the first time ever, state budget officials predict that the retiree health care portion (known as “OPEB,” or, “Other Post-Employment Benefits”) of the Michigan Public School Employees Retirement System will be 100% funded. 
 
Because of this, the Office of Retirement Services and the State Budget Office argue that the state no longer needs to set aside additional General Fund dollars into the MPSERS system beyond the “normal” cost that will keep the fund at or near 100%.  The savings are estimated to be approximately $670 million.  The Governor has proposed that these dollars be repurposed to support other program goals such as free community college and universal Pre-K education. 
 
However, that proposal is running into several road blocks in the Michigan House and Senate.  First, some lawmakers are concerned about the fact that public school employees hired after 2012 have been cut off from receiving retiree health care benefits, and that the state should restore those benefits before reducing payments into the system.  Other lawmakers argue that only the OPEB portion of public school retirement costs are projected to be fully funded, and that the pension portion (which is much larger) is still hovering between a 60%-70% fundedness level.  Therefore, they say, those funds should continue to flow into the Michigan Public School Employees Retirement System whether the OPEB is fully pre-funded or not.
 
Should the Michigan House and Senate decide to decline the Governor’s recommendation to return that $670 million to the General Fund, what had already started out as a tight budget year could become much, much tighter.  Not only would several of the Governor’s priorities be jeopardized, but it could also result in actual cuts to some existing state programs.  The House and Senate are preparing their initial budget drafts in response to Governor Whitmer’s proposal and those are expected to begin being voted on after the Legislature returns from their Spring Recess the week of April 9.  Once those documents become public, there will be a clearer picture of how much of the Governor’s recommendations have a chance to become reality.