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Energy Bill Revised

Newly revised versions of the energy legislation have earned the support of the Michigan Chamber of Commerce.

SB 437 has experienced three major changes. Initially the legislation required utility buildings or acquired power plants generating 1,000 megawatts or more to go through the certificate of necessity process, more streamlined than making them go through the full integrated resource plan process the legislation would now require. The revised version of the bill drops the threshold to any plant generating over 225 megawatts. Secondly, the legislation granted automatic standing to alternative electric suppliers in a contested case before the Public Service Commission involving a new power plant with at least 500 megawatts; that threshold has been dropped to 200 megawatts. Lastly, the previous version called for a 14 percent renewable portfolio standard by 2018. The updated version now sets the standard at 15 percent by 2021.

Additionally, Republican lawmakers have agreed to raise the requirement for expendable energy by utilities from renewable sources from 10 percent to 15 percent by 2021. The new version also maintains the 10 percent of the electric market choosing a provider other than the utilities while increasing reliability.

The Senate decided to hold off on a vote for the bill. It is scheduled to be picked up during lame-duck session after the election.  

HICA Repeal

The Senate Thursday passed legislation to repeal the Health Insurance Claims Assessment and replace the critical source of Medicaid funding with a different mechanism. The bills now await Governor Rick Snyder’s approval.

SB 987SB 988SB 989, and SB 990 establish that instead of the HICA, a 1 percent tax on all health insurance claims, revenues to draw down federal Medicaid matching funds will come from the General Fund. Revenues from the reinstated use tax on Medicaid’s HMOs would go toward non-Medicaid purposes. HICA expires December 31, 2018, however the tax rate would drop to 0 percent January 1, 2017 pending the federal government agreement to reimburse the state for the Medicaid General Fund support.

The State Budget Office has voiced concern regarding the legislation. The Senate Fiscal Agency reported the bills would reduce the General Fund by $80 million to $90 million per year but increase School Aid Fund revenues by $210 million to $220 million per year. If the federal government disallows a revised tax structure supporting the state’s Medicaid program, it would cost the General Fund $255.9 million in the 2018-19 fiscal year. Business groups have urged the governor to sign the legislation as soon as possible; Jim Holcomb, senior VP for business advocacy for the Michigan Chamber of Commerce, urged Governor Snyder to sign this “common sense and bipartisan legislation” that repeals a tax that makes it more costly and difficult for individuals and employers to purchase health insurance.

Senator Ken Horn (R-Frankenmuth), one of the sponsors of the legislation, commented he has received mixed signals from the governor’s office at this point, although no specific concerns have been brought to light. 

Flint Lawsuit

A class action lawsuit was filed on Tuesday claiming that Flint Community Schools have failed to comply with federal requirements on providing special education services to its students, along with the Michigan Department of Education and the Genesee Intermediate School District.

The plaintiffs in the case are parents of 15 children in the Flint schools, and the lawsuit was filed in the U.S. District Court from the Eastern District of Michigan by the American Civil Liberties Union of Michigan and the Education Law Center. The lawsuit asserts that children were deprived of early screening and intervention services, children lacked individualized education programs (IEP) in accordance with federal law, students with disabilities have not been provided special education and related services in accordance with their IEP in the least restrictive environment, and students were not afforded the safeguards of federal law.

The lawsuit asserts that while the Flint schools and Genesee ISD must administer special education, the state is responsible for ensuring schools comply with the federal IDEA law. It asks the court to issue a declaratory judgement that the conduct of the state, the ISD and Flint schools is illegal, and order that all children in Flint receive an enhanced educational screening to identify any needs, and to order the three agencies to ensure every public school in Flint has sufficient qualified personnel to evaluate and complete IEPs.

In addition, the suit asked the court to order the state and Genesee ISD to test the water levels in all public schools on a regular basis and to implement a preschool program for all children between 3 and 5 years of age. The case was assigned to Judge Arthur Tarnow.

Wayne County Consent Agreement

The state announced Thursday it had released Wayne County from its consent agreement after it had met conditions that eliminate its deficit.

The state and county reached a consent agreement back in August 2015 after Wayne County Executive Warren Evans called for the state to conduct a financial review. This agreement meant the county would not require an emergency manager to step in, a concern looming up to the agreement. The county has since taken steps to eliminate a $52 million structural deficit and to end an $82 million accumulated deficit.

The county also restructured the health care plans and pensions of retirees and employees to eliminate an $829 million shortfall in unfunded health care obligations. The funding level for its pension system has now increased from 45 percent to 54 percent of required levels. Wayne County also paid the state all outstanding bills it owed to the Department of Health and Human Services related to the child care fund, and will not have to submit a financial plan based on the results indicated in an audited financial statement.

Mr. Evans commented the county still has much to accomplish financially as it still has $636.5 million in unfunded pension liabilities, but the consent agreement allowed the county to accomplish what it needed to fiscally. 

PAAdvisory Briefs

Jobless Rate Up

More people were working in Michigan in September, but the state’s unemployment rate increased to 4.6 percent as many entered the labor market in search of work. The total number of people working is at 4.599 million with 11,000 not finding work during the month. From September 2015 the state has seen an additional 93,000 people working. The state’s unemployment rate remained below the national unemployment rate, but still grew due to the total labor force growth.

Isaacs Retiring

Chief Deputy Attorney General Carol Isaacs will retire effective December 31st. She has served as chief deputy to Attorney General Bill Schuette and former Attorney General Mike Cox. She has also served as an advisor and legal counsel in the Senate and was a legal advisor to former Governor John Engler. Ms. Isaacs also was senior deputy director for legal affairs and policy development in the Department of Community Health.

Jen to Budget Deputy

Deputy director at the House Fiscal Agency Kyle Jen will assume the role of chief deputy in the State Budget Office early next year, Budget Director John Roberts announced. Mr. Jen has worked at the HFA for 17 years with 5 years in his current position as deputy director. He holds a master’s degree in public administration and a bachelor’s degree in political science, both from Michigan State University. Mr. Jen will succeed Nancy Duncan who is retiring.

State Support of Nonpublic School Increasing

The Citizens Research Council of Michigan published a report on Tuesday indicating that Michigan will spend nearly $100 million to support educating nonpublic school students, an increase of $43 million from 2014. In the 2015-16 school year, 11,326 shared time full-time equivalent students were additionally enrolled in public schools, a 282 percent increase from 1999-2000 school year, but public school enrollment fell by 11 percent and nonpublic school enrollment fell 39 percent. In the 2015-16 school year, the state is spending $86 million for nonpublic students in enrolling districts.

Renewable Energy Pilot Program

The Public Service Commission (PSC) has approved an energy pilot program for DTE Electric Company that allows participants to obtain more renewable energy than the mandated amount.

The new program will let participants obtain more than 10 percent renewable energy, the mandated amount in the state’s 2008 energy law. It will be limited to an additional 150,000 megawatt-hours of generation from DTE Electric Company solar and wind facilities. Participants will also remain on their current tariffed rate and will pay a fixed subscription fee for the entirety of the program, of $0.072 per kWh of usage subscribed for the billing period. Additionally, participants will receive an energy and capacity credit based on their usage and subscription level for the same period.

In the announcement, it was added that the PSC’s approval of this pilot program does not constitute an approval of DTE Electric’s method for computing the value of renewable energy. 

Snyder Grand Jury Suit

A Flint resident has filed an action in Ingham Circuit Court for a one-person grand-jury to determine if Governor Rick Snyder violated state law by arranging for the state to pay for the Governor’s potential criminal defense.

Ker Webber, who said her children, husband and pets all suffered ill effects from the tainted water, alleged the governor violated the constitutional ban on having a conflict of interest by enacting a contract that solely benefits himself. Former Michigan Democratic Party Chair Mark Brewer is Ms. Webber’s lawyer. The action also named other government officials, such as Attorney General Bill Schuette, for not taking steps to block or protest the contract.

According to Mr. Brewer, the contracts have gone above $2 million in cost and both himself and Ms. Webber commented on the outrageous notion that Flint residents are contributing to the cost of the contracts considering they are the most directly affected by the crisis. Anna Heaton, spokesperson for the governor, commented that private lawyers were necessary to assist in the volume of casework generated by the crisis itself, and is legally sound considering the lawsuits were brought in an official capacity and needed response.

The complaint asks the Ingham Circuit Court to open the one-person grand jury to conduct an investigation because no other law enforcement agency or the attorney general will do so. There was no indication of any hearings at the time of the complaint. 

Revenue Update

The House Fiscal Agency in its September revenue update said the General Fund revenue is currently above May projections with the state’s business taxes underperforming.

Michigan collected $2.436 billion in September, which is $2.6 million less than September 2015. In the current fiscal year thus far, the state has collected $19,913 billion. The General Fund revenue is estimated to be $977.4 million in September 2016, which is $8.7 million above May Consensus Revenue Estimating Conference projections. Net income tax revenue totaled $968.2 million in September, $5.3 million above target, and collections throughout the fiscal year are $384.6 million higher than one year ago.

Business taxes were $7.6 million less than anticipated, and the General Fund tax revenue is $32.7 million below the projected amount. Net business taxes are $347.9 million with net business taxes in September at $54.3 million. School Aid Fund revenue is expected to be higher than May projections and income and use tax collections were above target. Consumption taxes, which includes sales, use, beer and wine, liquor, and tobacco taxes, were also higher.

Sales tax revenue lagged estimates earlier in the year but is on pace to meet anticipated collections while the use tax continues to be stronger than projected, according to the House Fiscal Agency. 

Flint Federal Grant

The U.S. Department of Education’s Office of Safe and Healthy Students awarded Flint a federal grant to provide assistance to enhance learning to the status it was prior to the water crisis.

The grant, which amounts to $480,000, will go towards ensuring the children of Flint have appropriate support services in schools should any behavioral or learning challenges arise as a result of the lead ingestion. The district will hire three school counselors and two school psychologists to address mental health needs of the students and develop, design, implement, and evaluate a comprehensive, developmental and systematic Responsive Service School Counseling Program. Three speech therapists will also be hired. Lastly, four assistant attendance specialists will be hired to identify and support repeatedly absent students.

In response to the grant, U.S. Senators Debbie Stabenow (D-Lansing) and Gary Peters (D-Bloomfield Township) praised the Federal Government for its commitment to Flint.