Uber, Lyft Legislation Passes

The Senate passed legislation that will regulate rideshare companies such as Uber and Lyft, along with taxicabs similarly.

HB 4839, HB 4641, and SB 392 did not see many changes from the committee versions save for HB 4637, which was amended. Senator Tory Rocca (R-Sterling Heights) amended the bill to address the ability of an airport to enact ordinances and regulations over transportation companies on airport property. Senate Majority Leader Arlan Meekhof (R-West Olive) added another amendment that would sunset the fees imposed on drivers three years after the effective date of the act.

HB 4640, another bill in the package, was amended to define a personal vehicle, prearranged ride and transportation network company digital network. It also defines transportation network company vehicle. 

Medicaid HMO Use Tax Bill Approved

The Senate Michigan Competitiveness Committee approved a bill that sets up provisions when the use tax on Medicaid HMOs would and would not be collected.

SB 1172 was introduced earlier this month by Senator Ken Horn (R-Frankenmuth) and addresses concerns of HMOs in finances. Current law does not have an expiration date for the use tax, however the federal government may disallow the tax. If a plan is not enacted before December 31, HMOs are forced to count this as a loss in annual financial filings in the state and will serve as a premium deficiency reserve, according to Dominick Pallone, the deputy director at the Michigan Association of Health Plans.

The committee adopted a substitute to the bill before unanimously reporting it to the full Senate. 

PAAdvisory Briefs

Cotter Chief-Of-Staff to Appeals Court

Brock Swartzle has been named to the Court of Appeals by Governor Rick Snyder. He will succeed Judge Donald Owens who is resigning at the beginning of the year. Mr. Swartzle is currently serving as the chief of staff to House Speaker Kevin Cotter (R-Mt. Pleasant) and has been in that role since 2015. He previously served in the majority caucus counsel and was a partner at Honigman, Miller, Schwartz and Cohn.

Utilities Exceed Energy Efficiency Goals

Utility providers met 121 percent of their electric energy savings target and 117 percent of their natural gas energy savings target, according to the Public Service Commission’s 2015 report on utility energy optimization programs. The savings targets account for 1 percent of retail sales for electric providers and .75 percent for natural gas providers. Electric savings totaled more than 1.1 million megawatt hours and natural gas more than 4.58 million Mcf.

 Trump Objects to Recount

Green Party presidential candidate Jill Stein’s petition for a voter recount has been placed on hold after President-elect Donald Trump filed an objection. In response, the Board of State Canvassers will meet today and potentially tomorrow to discuss if the recount will take place. The Electoral College is meeting on December 19, and as such, all results must be finalized by December 13.

Minimum Wage Increase

The Department of Licensing and Regulatory Affairs issued a reminder that the state minimum wage will increase in the new year. The minimum wage will increase from $8.50 to $8.90 an hour. By law, the minimum wage will rise again in 2018 to $9.25 an hour, then rise according to inflation. Tipped employees will increase to $3.38. 

Flint State of Emergency Extension

Flint Mayor Karen Weaver signed an extension of the State of Emergency in Flint on Tuesday. Even though work has continued since both the federal and state emergencies expired in August, Ms. Weaver feels there is much work to be done and Flint cannot do it alone.

Additionally, U.S. Representative Dan Kildee (D-Flint) introduced the National Opportunity for Lead Exposure Accountability and Deterrence Act (NO LEAD Act). The act aims at improving lead testing procedures and providing more information to the public regarding the safety of their drinking water. It also seeks to lower the level of lead contamination needed to trigger a public water system notice. The EPA would also update the Lead and Copper Rule (LCR) within nine months under this legislation.

The State also filed a request for an emergency stay on water bottle delivery in the city, pending appeal. Anna Heaton, a spokesperson for Governor Rick Snyder, commented the resources needed to accomplish a full water bottle delivery service could potentially strain the State’s efforts that could otherwise be focused on pipe replacement. Several entities disagreed with the governor’s office. U.S. District Judge David Lawson is presiding over the case and can rule at any time. 

State Receives $28M Program to Expand Lead Abatement

The Department of Health and Human Services received approval from the federal Centers for Medicare and Medicaid Services to allocate nearly $24 million toward lead related projects.

The funding will go toward preventing lead exposure across the state and prevent lead’s short and long term health effects. The money stems from an amendment on the Michigan’s Children’s Health Insurance Program (CHIP). The amendment provides CHIP funding for lead abatement services such as permanent removal, enclosure, or encapsulation of lead-based paint and lead dust hazards to applicable areas. In the city of Flint, the program also includes the replacement of the exterior lead service lines that provide drinking water to homes.

Residents anywhere may also be eligible for expanded abatement services if there is a Medicaid or CHIP eligible child younger than 19 or pregnant woman living in the residence. Flint homes will receive priority status. The total amount available for the program in fiscal year 2017 is $23.8 million. The federal match is 98.61 percent. Michigan would contribute about $330,000 in General Funds.

U.S. Economy Projected to Grow

Economists at the University of Michigan announced Thursday the U.S. economy should continue to grow for another two years at least. Uncertainty surrounding President-Elect Donald Trump’s economic policies does provide some risk, however.

It is uncertain what Mr. Trump’s tax proposals will be, how the cost of an infrastructure program would affect national debt, and what specific trade policies will be implemented. Whether or not Mr. Trump reappoints Federal Reserve Chair Janet Yellen when her term ends in January 2018 will also factor into the uncertainty surrounding economic performance during his presidency.

Depending on those issues, the economy should continue to grow marking an upward growth for almost 10 years. The growth will be slow, with the Gross Domestic Product projected to rise in 2017 and 2018.  In 2017 the economy is projected to grow at a rate of 2.3 percent and in 2018 by 2.1 percent. Job growth is also projected, to grow albeit at a slow pace again. The Research Seminar in Quantitative Economics (RSQE) is projecting a 3.7 million job growth in the combined years of 2017 and 2018. If thie projections hold true, this will push the seasonally adjusted unemployment rate down to 4.7 percent in 2017 and 4.6 percent in 2018.

In terms of the Michigan economy, motor vehicle sales are expected to remain stagnant for the next few years with a possible decrease. 

PAAdvisory Briefs

Cox Appointed to Appropriations Chair

Representative Laura Cox (R-Livonia) has been selected as the first female chair of the House Appropriations Committee for the 2017-18 term. Representative Cox currently serves on the Appropriations Committee where she chairs the General Government Subcommittee. Additionally, she is the vice chair of the Judiciary Subcommittee and serves on the Community Health and Higher Education subcommittees.

 

Investment in Michigan

Following Governor Rick Snyder’s trade mission to China, SF Motors, Incorporated confirmed it will build a new research and development facility in Washtenaw County. The company will spend $10.7 million for the facility in Pittsfield Township and is projected to create 150 jobs. The company will receive a $1 million grant from the Michigan Economic Development Corporation.

 

Unemployment Increased for October

The Department of Technology, Management and Budget in a report released Tuesday announced the state’s unemployment rate increased in October as the workforce grew. The unemployment rate was 4.7 percent, a 0.1 percent increase. The national unemployment rate is 4.9 percent. Key in the raise was the addition of 22,000 people into the workforce, bringing the total number in Michigan to 4.84 million. Employment in the state increased by 14,000 to 4.62 million. 

Election Results

Republicans won largely in Michigan on Tuesday as President-elect Donald Trump won the state by 15,600 votes with 98.3 percent of precincts reporting.

This election marks the first time since 2000 that Democrats failed to gain seats in a presidential cycle. Republicans in Michigan’s U.S. House delegation won reelection and Republican Jack Bergman won the 1st U.S. House District in Northern Michigan. The two Republican nominees to the Michigan Supreme Court, Justice David Viviano and Justice Joan Larsen, won. U.S. Representative Candice Miller won the public works commissioner post in Macomb County.

Republican Diana Farrington of Utica defeated Democrat Michael Notte of Shelby Township in the 30th District. In the 99th District, Roger Hauck of Mount Pleasant defeated Democrat Bryan Mielke, and in the 101st District former Democratic Representative Dan Scripps lost to Republican Curt VanderWall. Representative Holly Hughes (R-White River Township) won her re-election, being the first incumbent to win in the 91st District since 2008. Representative John Bizon (R-Battle Creek) was also able to hold his 62nd District seat.

Other Republican victors include Republican Jeff Noble of Canton in the 20th House District, Steve Marino in the 24th House District, Representative Klint Kesto (R-Commerce Township) in the 39th House District, Representative Jason Sheppard (R-Temperance) in the 56th House District, Bronna Kahle of the 57th House District, Representative Brandt Iden (R-Oshtemo) in the 61st House District, Beth Griffin in the 66th House District, Representative Tom Barrett (R-Potterville) in the 71st District, Sue Allor in the 106th District, and Beau LaFave in the 108th District.

U.S. Representative Mike Bishop maintained his 8th U.S. House District seat against Democrat Suzanna Shkreli. U.S. Representative Tim Walberg (R-Tipton) defeated Representative Gretchen Driskell (D-Saline).

Energy Package Passes Senate

The Senate on Thursday reported Senators Mike Nofs and John Proos’ energy proposal, sending it to the House to await discussion.

SB 437 and SB 438 became finalized in an S-6 form distributed last month. Key changes to the legislation included a renewable energy provision increasing the 2008 energy law’s 10 percent renewable standard by 2015 to 15 percent by the end of 2021, excluding certain net metering customers from a grid charge. Senator Peter MacGregor (R-Rockford) proposed an amendment to request a third-party auditor to inspect all costs to protect the consumer. It additionally would have eliminated the ability for the Public Service Commission to set the planned reserve margin and eliminated the utilities from seeking decoupling for revenue shortfalls. This amendment was defeated by voice vote.

SB 437 was passed with a vote of 26-11, and SB 438 with a vote of 26-10. This legislation would require utilities to competitively bid for new generation projects, would expand the role of the Utility Consumer Participation Board and Attorney General on behalf of rate payers in rate cases, would require all electric providers adhere to resource adequacy rules to ensure long-term capacity, would require customers moving to electric choice to pay a capacity charge, would require the Public Service Commission to undertake a study of performance based rates, would add 21 new FTEs, and would require utilities to demonstrate they have at least 15 percent in renewable resources.

Senator Nofs is hoping to have the package on Governor Rick Snyder’s desk by the end of the year.

General Fund Up, School Fund Down

The House Fiscal Agency’s monthly analysis released on Tuesday showed the General Fund increased from projections while School Aid Fund was lower than projections.

Year-to-date General Fund for the fiscal year 2015-16 which ended on October 1 was $700,000 below its projections. In October, the General Fund revenue came in at $967.4 million, $31.5 million above projections. The School Aid Fund revenue for October netted $1,784.4 million, about $10.9 million below estimates. Year to date School Aid Fund revenue for fiscal year 2015-16 is $2.2 million below May projections.

In October the Single Business Tax, the Michigan Business Tax, the Corporate Income Tax and insurance company taxes netted $180.2 million. Collections from the sales tax, use tax, beer and wine taxes, liquor taxes and tobacco taxes totaled $831.5 million in October and were $56.3 million higher in FY 2015-16. Net income tax revenue totaled $815.2 million in October 2016.

Revenue from the state education tax and real estate transfer tax was $936.9 million and $31.2 million, respectively.

PAAdvisory Briefs

New Leadership

As expected, the Republican caucus voted for Representative Tom Leonard III (R-DeWitt Township) to serve as speaker of the House for the 2017-18 term. Representative Dan Lauwers (R-Brockway) was elected as majority floor leader, Representative Lee Chatfield (R-Levering) as speaker pro-tempore, Representative Robert VerHeulen (R-Walker) as the caucus whip and Representative Eric Leutheuser (R-Hillsdale) as caucus chair. The Democratic caucus voted Representative Sam Singh (D-East Lansing) to serve as minority leader for the 2017-18 term. Representative Christine Greig (D-Farmington Hills) will serve as minority floor leader.

 Heise Resigning

Representative Kurt Heise (R-Plymouth) will resign from his position in the House at the end of next week. His resignation comes following his win in the Plymouth Township supervisor race. His resignation will officially take effect November 18. The House passed HR 356 on Wednesday to honor him and his work.

 SEIU Contract

The three bargaining units in the Service Employees International Union Local 517M saw more than 80 percent in favor of the new two-year pay and benefits contract with the state. It provides 3 percent raises for 2017-18 and 2 percent for 2018-19. The union announced 52 percent of members returned ballots. The Technical unit had 93 percent support among the returned ballots. The Scientific and Engineering unit had 92 percent approved and the Human Services Support Unit had 82 percent. The new contract provisions will take effect with the 2017-18 fiscal year budget on October 1, 2017.

Health Endowment Grants

The Health Endowment Fund Board approved thirty-three projects on Wednesday to share $13.77 million in grants.

The funds were split into two categories: Healthy Aging, and Special Projects and Emerging Ideas. The Health Aging grants were tailored for more specific and local services whereas Special Projects and Emerging Ideas received more and larger grants. The Area Agency on Aging 1-B received the largest grant in the Health Aging category with $499,913 going towards expansion of existing programs and development of new ones.

Among all thirty-three grants, only seven received the $500,000 maximum. Among those included are the Community Foundation of Greater Flint for the Flint Child Health and Development Fund. Additionally, three of the maximum grants were awarded to the Department of Health and Human Services (DHHS) for an infant mental health home visiting project, an integrated service delivery portal, and the Michigan Infant Safe Sleep Program. DHHS also received $400,000 for secondary trauma assessment and training.

Kildee Requests Investigation

On Wednesday, U.S. Representative Dan Kildee (D-Flint) requested from several members of Congress to use their oversight authority to investigate a pharmaceutical company that created a price surge for lead poisoning treatment drugs.

The pharmaceutical company, Valeant, increased the price of their drug Calcium Disodium EDTA from $900 to $27,000 per treatment, a 3,000 percent surge. This drug is deemed needed and almost necessary as Flint, Representative Kildee’s hometown, works towards removing lead from the water and combating lead poisoning. In the letter, Mr. Kildee added the World Health Organization has included Calcium Disodium EDTA on its list of Essential Medicines because it is used to save children’s lives. In his opinion, the increase in price is unconstitutional.

The letter was sent to the U.S. House Committee on Oversight and Government Reform chair, U.S. Representative Jason Chaffetz (R-Utah) and U.S. Committee on Energy and Commerce chair U.S. Representative Fred Upton (R-St. Joseph). The letter was also issued to the ranking members of each of those committees, U.S. Representative Elijah Cummings (D-Maryland) and U.S. Representative Frank Pallone (D-New Jersey), respectively.

Developmental Disabilities Council

Governor Rick Snyder in an executive order created the Developmental Disabilities Council on Tuesday to ensure continued coordination of resources to individuals with disabilities. This executive order abolishes the Michigan State Planning Council for Developmental Disabilities. The administration believes this will help the new council better align with state and federal law.

The new council will be established within the Department of Health and Human Services. The members will be individuals with disabilities and advocates or representatives of organizations supporting those with disabilities. Twenty-one members will serve in total. The members will include an individual from the state agency administering funds provided under the Rehabilitation Act of 1973 and an individual representing the protection and advocacy system in Michigan.

Of the members, at least one-third are to be individuals with developmental disabilities and one third shall be parents or guardians of an individual with developmental disabilities, or of an adult with mentally impairing developmental disabilities who cannot advocate for themselves. Seven members will be appointed for terms expiring September 30, 2017; five expiring September 30, 2018; five expiring September 20, 2019; and five expiring September 20, 2020. Appointees will be announced in December.

Third Phase of Pipe Replacement in Flint

Flint Mayor Karen Weaver kicked off her third phase of her FAST Start pipe replacement initiative on Wednesday. The expectation in this phase will be to replace service lines to 788 more homes.

The state has provided the city $25 million to pay for the pipe replacements through September 2017. An additional $170 million will potentially come from Congress in December to assist in replacing the remaining pipes in Flint and other cities. There are an estimated 30,000 homes in Flint that need replacement.

Goyette Mechanical Incorporated began the replacement of the lead and galvanized steel service lines leading from the water main to the water meter of each home on Tuesday. W.T. Stevens Construction Company Incorporated already began replacing lines for Phase 3 homes. Both companies were involved in Phase 2 as well, which included replacing service lines in 218 homes and capping lines at abandoned homes.

PAAdvisory Briefs

Engelman Heads Women’s Commission

Governor Snyder announced Thursday that Mary Engelman will be the new executive director for the Women’s Commission. Ms. Engelman’s previous positions include the director of government affairs and public relations for OpTech LLC and the executive director for the Greater Farmington Area Chamber of Commerce. She succeeds a retiring Suzy Avery.

Quarantine

The Department of Agriculture and Rural Development announced Thursday that Baraga County is infested with emerald ash borer and has been placed on the state’s quarantine zone. This announcement restricts movement of firewood and other wood products due to its proximity to infested areas meaning the Asian beetles were likely present. Of the 83 Michigan counties only Gogebic, Iron, and Ontonagon counties remain unquarantined.

 Lori Acting DHHS Deputy Director

Former Representative Matt Lori was announced as the new acting senior deputy director for policy, planning, and legislative services at the Department of Health and Human Services. Mr. Lori previously served in the House where he chaired the health policy subcommittee and played a key role in passing the Healthy Michigan Medicaid Expansion in 2013. He additionally worked for the department as the health care administrator, working to improve the state’s health care systems. Mr. Lori succeeds Elizabeth Hertel, who left her position to join Trinity Health.

Judge Rules on Flint Lawsuit

Court of Claims Judge Mark Boonstra allowed parts of the Flint lawsuit to go forward against the state for its decisions leading up to the Flint water crisis. This decision will allow for the merits of such a case to be argued in court for the first time.

Judge Boonstra granted the state’s motion to dismiss two of the claims in the case, but denied two others. The case, Mays v. Snyder, can now move to the discovery and deposition phase, pending a state appeal which seems highly likely. It is a class action lawsuit involving 6,000 plaintiffs that names Governor Rick Snyder, the state of Michigan, two state departments and two of the appointed emergency managers, Darnell Earley and Jerry Ambrose.

The case represents possible a major financial judgement against the state. It is unlikely the cases in federal court under the U.S. Constitution will see a financial judgement, and most of the cases in the Genesee Circuit Court target the private firms that assisted the water source switch from the Detroit system to the Flint River.

Judge Boonstra dismissed the constitutional claims that involved a state-created danger and fair and just treatment. He allowed the claim regarding “a violation of the protection afforded to an individual’s bodily integrity by the substantive component of the due process clause” to proceed as well as the claim of inverse condemnation to proceed. He also rejected the state’s contention that the plaintiffs failed to satisfy the six month statute of limitations and the argument that Mr. Ambrose and Mr. Earley were city officials and therefore subject to litigation in the Court of Claims. 

Spanish Auto Supplier Stays

Corporacion Gestamp, an international supplier of complex structural stampings and assemblies for automobiles, plans to expand its Chelsea and Mason facilities the Michigan Economic Development Corporation announced on Wednesday.

The company received $1.575 million in Michigan Business Development Program grants from the Michigan Strategic Fund. In total, Corporacion Gestamp is investing $158 million at the Chelsea and Mason facilities, bringing 235 jobs. The company also plans to invest an additional $700,000 and create 60 new positions at its North American Headquarters in Troy. Chelsea is expected to have a new chassis assembly line, electronic coat paint line, and a press-hardening line with an integrated laser cutting cell in Mason.

Governor Rick Snyder commented Gestamp’s decision to expand in Michigan keeps improving the state as the global automotive capital and at the forefront of the next chapter in transportation. Michigan is also home to Lightweight Innovations for Tomorrow (LIFT), a company that finds ways to build high tech, safer, cost effective, and fuel efficient vehicles for Michigan based automakers and manufacturers. Michigan is home to 63 of the top 100 North American automotive suppliers with the highest concentration of research and development facilities in the nation. 

Energy Legislation

With the 2008 energy law being revamped in the Legislature, the question of energy choice has become a topic of conversation.

Last week, the Michigan Chamber supported a substitute version of SB 437 that includes an increased renewable energy standard of 15 percent by 2021. Electric choice advocates are not as supportive, speculating whether the bills sustain choice. Electric choice in the 2008 energy law limits 10 percent of the electric market for alternative electric suppliers or those not considered to be traditional utilities like DTE Energy and Consumers Energy. Major utilities argue alternative electric suppliers are not paying their fair share for the electric grid.

Senator Peter MacGregor (R-Rockford) intends to propose an amendment that may alleviate the tension and secure choice sustainability. The amendment will provide ratepayer protections and set up a process for the Public Service Commission (PSC) to ensure ratepayers receive the best value when new electric generation is being brought online. It additionally eliminates the language of a proposed capacity tax. The capacity tax refers to the tariff the PSC could charge under a proposed deal between the state and the Midcontinent Independent System Operator on AESs to purchase power if no contracts have been reached by other suppliers.

Senator MacGregor’s amendment has yet to be proposed. It is likely the Senate will take up the energy issues following the election. 

PAAdvisory Briefs

Snyder Vetoes HICA Replacement

Governor Rick Snyder has vetoed legislation that would have ended the 0.75 percent tax on health insurance claims and established a way to replace the lost revenue. Senator Ken Horn (R-Frankenmuth), lead sponsor of the bills, commented it is now up to the Snyder administration to create a new proposal. This veto marks Governor Snyder’s 54th veto during his almost six years in office.

DEQ Files Emergency Rules

The Department of Environmental Quality filed emergency rules on Thursday following the discovery of dioxane contamination near an existing plume outside Ann Arbor and a few other areas around the state. The rules package still needs to be presented to the Joint Committee on Administrative Rules before promulgation. The water standard will then be set at 7.2 parts per billion and the residential vapor intrusion standard at 29 ppb.

Absentee Ballots Up

The number of completed absentee ballots are up compared to 2012 along with the number of applicants and ballots issued, state officials confirmed. The number of absentee ballots completed is up 36 percent, or roughly 165,000 more completed with 12 days before the election.

Appeals Court on Fetus

A fetus can be considered a victim in a ruling on Wednesday by the Court of Appeals. The case People v. Ambrose, the majority decision written by Judges Mark Boonstra and Kirsten Frank Kelly, held the law refers to “victims” and establishing a fetus as a person is unnecessary in order to consider it a victim. The case found Samuel Ambrose guilty of felonious assault after attacking his pregnant girlfriend, punching her in the abdomen, threatening her and holding her head under water. Mr. Ambrose challenged the sentence based on the law saying “threatening injury or death to between two and nine victims” with the fetus counting towards that number.