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Jul 2014
11
July 11, 2014

From the Capitol - July 2014


Prior to adjourning for the summer, the Legislature addressed a number of key issues, including setting the framework for a financial rescue of the City of Detroit and enacting a budget for fiscal year 2014-2015.  However, left undone was finding a funding mechanism for repair and maintenance of the state’s crumbling infrastructure. Legislative leaders have scheduled one session day in July and August, but the regular session does not resume in earnest until September 9. Thereafter, the Legislature is scheduled to break once again in early October so that members seeking reelection can gear up for the final lap of their campaigns before the November 4 general election.

In this “off year,” or mid-term non-presidential election year, all state elective offices are up for grabs. Republicans now control state government, having incumbents eligible to run again in all statewide elective positions. The GOP currently has solid majorities in both Houses of the Legislature, and with a favorable reapportionment plan passed in 2011 it hopes to maintain and possibly expand those majorities. What will make this election unique will be the absence of a number of familiar names on the ballot who wielded a lot of clout in Congress. Choosing not to run again are U.S. Senator Carl Levin, a veteran of 36 years in the Senate and Chair of the Armed Services Committee; Congressman John Dingell of Dearborn, serving his 30th term in Congress; Congressman Mike Rogers of Brighton, the current Chair of the House Intelligence Committee; and Congressman Dave Camp of Midland, the current Chair of the House Ways and Means Committee. That is a lot of influence in Congress for the state to lose.
 

In an effort to save some of Detroit’s most treasured assets from claims by creditors, Governor Rick Snyder and several private foundations devised a plan which would have the state and those foundations contribute toward alleviating the most pressing obligations and most significantly, the pressing problem of the pension liability. In return, the state would require oversight and some control over the City’s finances for years to come. However, the plan, labeled the “Grand Bargain” would require legislative authorization.  An 11 bill package (HBs 5566-5576) was introduced and ultimately wended its way through the Legislature.  The bills:
 
  • Authorize the payment of $194.8 million from the State’s Budget Stabilization Fund, through a newly created Settlement Administration Authority, to the City’s retirement systems.
  • Create a 9-member Financial Review Commission to make sure the City was meeting statutory requirements which include the review of a 4 year financial plan, and approval of contracts for goods and services in excess of $750,000.
  • Require the City to create the position of chief financial officer.
  • Allow the City to offer retirement plans as long as the City does not contribute more than 7% of the employee’s base pay.
  • Require the health insurance benefits for new employees after July 1, 2023 could not receive a City contribution of greater than 12% of the employee’s base pay.
  • Require the Detroit public employee retirement system to establish an investment committee.

The Grand Bargain passed with bi-partisan support. Governor Snyder and legislative leaders hailed the agreement as a step forward toward Detroit’s economic resurgence. Whether or not the Grand Bargain is implemented is up to City pensioners and those entitled to the same. Currently, a vote by those affected is underway to determine whether they are willing to have their pensions cut somewhat and waive any right to recourse in order to make the plan work.  Kevin Orr, the Detroit Emergency Manager, has said that if the vote fails pensioners could lose up to 30 cents on the dollar.  Retirees and City workers had until July 11 to vote on the proposal.
 
For the fourth year in a row, the Legislature was able to complete work on a state budget and transmit it to the Governor by the middle of June. The Governor signed the K-12 and higher education bill on June 24 and the omnibus departmental budget bill on June 30 with minor line item vetoes.  Due to reduced revenue estimates from those made in January, spending was somewhat curtailed, but nevertheless exceeded $53 billion gross (federal and state dollars), nearly $10.1 billion GF/GP total and $12.3 billion for the School Aid Fund. The following are some of the highlights for a number of the state’s most expensive departments and functions.
 

By far, the largest budget, the DCH Budget, was expanded with an appropriation of $18.2 billion gross, $3.2 billion GF/GP. Much of the increase in spending is due to the Healthy Michigan Plan, an expansion of the Medicaid program enabled by the Affordable Care Act and which was implemented on April 1. Unlike Medicaid, which requires the state to contribute its own revenue toward the program to meet a generous federal match, Medicaid expansion for the first few years at least, is totally funded by federal money. With an anticipated 350,000 enrollees in the Healthy Michigan Plan during the upcoming fiscal year, federal spending enlarges the DCH budget.

Other highlights of the DCH Budget include:
 
  • Creation of a $30 million reserve to cover the cost of the new federal managed care taxes imposed on for-profit Medicaid health plans.
  • A requirement that the Department work with Michigan based medical schools to create a Graduate Medical Education consortium to be known as MiDocs.  The Legislature also appropriated $500,000 for that purpose.
  • Recognition of Medicaid caseload adjustments and gross costs for the Healthy Michigan Plan, commonly referred to as Medicaid expansion.
 

The Michigan Department of Transportation (MDOT) was appropriated just over $3.7 billion, most of which comes from the federal government’s match for highway funding and restricted state funds. Highlights include:
 
  • $144.5 million for state and local road and bridge maintenance and repair.
  • $10 million for transit and rail infrastructure to match federal transit and rail funding.
  • $1.5 million for a pilot project to test devices at high speed rail crossings.
  • A return to the current year prohibition on the use of state funds for the New International Trade Crossing (NITC) over the Detroit River.  This was done after the Senate had inserted boilerplate language which prohibited MDOT from acquiring property for the crossing.

 

The Legislature appropriated just over $500 million gross to the Department and for its programs.  This budget is a slight decline from the current budget. Other highlights include:
 
  • A reduction of $9 million for Strategic Water Quality Initiative Loans.
  • A reduction of $15 million in the Environmental Cleanup and Redevelopment Program which was based on the needs of the program.
  • A one-time appropriation of $2.5 million to convert the Department’s paper files into an electronic format.
 

The Department of Human Services (DHS) is charged with a number of duties, including supervision of child adoption and child care and enrolling individuals into the Medicaid Program.  For the FY 2014-2015 budget, the conferees agreed to a gross appropriation reduction of approximately $263 million, attributable to departmental savings. Other highlights include:
 
  • Additional funding for adoption support services and a Healthy Michigan Call Center.
  • Increased funding for Centers for Independent Living and Michigan Rehabilitation Services.
  • Requiring DHS to work with other state departments to coordinate lead abatement and weatherization of dwellings and to give priority to homes of a child with high lead blood levels.
  • For Kent County, a requirement that transfers child welfare cases to private agencies by October 1.
  • Allowing adoptive parents to claim supplemental payments for children with special needs after an adoption agreement has been finalized and prohibits adoption payments from being less than 95% of the foster care rate.
 

The Department of Licensing and Regulatory Affairs (LARA) is charged with, among other things, regulating the professions and businesses of this state.  It also houses agencies such as the Liquor Control Commission, the Workers’ Compensation Commission and its Funds and the Bureau of Construction Codes.  The Department was given a $39.5 million increase over the current fiscal year. This was due in large measure to $15 million GF/GP being dedicated to the Delphi Workers’ Compensation Fund, which is used to pay workers compensation liabilities related to the bankruptcy of Delphi Corp. Other highlights include:
 
  • An appropriation of $18 million for one-time unemployment insurance operation for FY 2014-2015.
  • An additional $1.066 million to pay for online database development and permitting of demolition in Detroit.
 

Traditionally, the General Government Budget is one that wraps up a number of state departments such as Attorney General, Civil Rights, Treasury and Technology, Management and Budget. It also is the vehicle used to provide funding for the Legislative Branch, the Governor’s Executive Office and such items as Revenue Sharing and the Strategic Fund.

The conferees agreed to a gross appropriation of just over $4.7 billion, coming in less than a percentage point of what the Governor recommends. The Department of Attorney General receives nearly a $4.7 million increase over the current year. The Department of Civil Rights receives a $1.44 million increase. An increase of $4.43 million for the Budget Office was agreed upon. The Department of Technology, Management and Budget got a whopping $72 million increase, due in large measure to $25 million being spent toward the Michigan Public Safety Communications System Lifecycle and Radio Replacement.

 
The School Aid Budget is one of the state’s largest.  Nearly $12 billion is derived from the School Aid Fund, a dedicated tax for that purpose.  In fact, the conferees increased the School Aid budget by $548 million, making total funding $13.87 billion. Much of the increase ($268.8 million) went to the Michigan Public School Employees Retirement System (MPSERS). The payment is statutorily mandated so that school employers pay no more than 20.96% of payroll toward unfunded accrued liabilities. Other highlights for the budget include:
 
  • Additional funding for a foundation allowance to school districts so that minimum operational funding would increase from $7,076 to $7,251 per pupil.
  • An additional $108 million for the MPSERS liability payment; $3 million for bus conversion; $1.8 million for teacher certification review and $6.2 million for additional assessment costs.
  • Allowing intermediate school districts the ability to provide slots to children in families with incomes at or below 300% of the poverty level in a Great Start Readiness Program.
  • Use of “At Risk” funds to include as an allowable use ensuring that third graders are proficient in reading by the end of third grade and that high school graduates are career and college ready.
 

The Legislature increased funding to Michigan’s colleges and universities by nearly $86 million to reach over $1.5 billion in a gross appropriation. Other highlights included:
 
  • A restoration of $500,000 to Michigan State University after the Senate had cut that amount because the University had operated and taught a labor relations course involving union activity in the face of a mandate to do otherwise.
  • A 5.9% increase in tuition grants.
  • The setting of a maximum of 3.2% for tuition and fee increases.
  • Grand Valley State University received the largest increase in funding of all schools, a 9.5% increase over the previous year.  Next came Central Michigan and Ferris State at 7.8%.
 

Once boasting one of the best highway and road systems in the country, Michigan’s transportation infrastructure has been crumbling for over a generation. Moreover, the state is falling behind in its obligation toward achieving federal matching funds even to maintain a status quo toward maintenance and repair. In 1997, the Engler Administration proposed and the Legislature reluctantly agreed to a modest 2 cent per gallon tax hike on fuel for this purpose.  The gas tax increase of 1997 was not tied to inflation and it soon became apparent that the revenue generated would not be able to sustain the need. In 2011, newly elected Governor Rick Snyder proposed an increase in revenue by indexing the tax retailers pay to wholesalers for fuel and by significantly increasing vehicle registration fees. A newly elected conservative Legislature that was loathe to raise taxes of any sort sent signals to the Governor that his proposal would be dead on arrival. The problem festered until it came to a head with the winter of 2013-2014, the most severe winter in decades. The toll on roads was unprecedented in modern history. A state revenue surplus, which conservatives wanted to offer to taxpayers in the form of a rebate or long term tax rate cuts, soon was said to be dedicated to road repair and improvement.

It was becoming apparent that the public was more interested in road repair than tax relief and it was thought as the spring season wore on that the Legislature would respond.  In April, Speaker Jase Bolger (R-Marshall) proposed a plan which would increase road funding by nearly $450 million. Highlights of the package included:
 
  • Raising an additional $47 million by repealing the diesel tax and replacing it with a 6% wholesale tax, providing parity with unleaded fuel. The current tax on diesel fuel is 15 cents per gallon versus 19 cents for gasoline.
  • Increasing oversize/overweight permit fees.
  • Closing loopholes in vehicle registration for special uses.
  • Permanently dedicating all available state sales tax dollars on fuel towards roads while preserving all amounts from that tax that go to schools and local government.
  • Permanently dedicating 1% of the existing state use tax to roads.

The latter two parts of the plan would increase funding by approximately $379 million. On a bipartisan vote, this package passed the House in substantially the same form as introduced.  However, once the package was received by the Senate, Majority Leader Randy Richardville indicated he wanted a comprehensive solution, one that would address the $1.5 billion need.  Under this plan, a resolution to place a constitutional amendment on the November ballot increasing Michigan’s sales tax from 6% to 7% with 1% being dedicated to roads would have to pass both Houses of the Legislature. Not only would the Resolution have to pass, it would have to pass by a two-thirds majority in both Chambers. Even though Democrats hold only 12 seats out of 38, they were needed in order to obtain the requisite two-thirds needed, as a number of conservatives would not support even placing the proposal on the ballot.  In order to gain Democratic support, Republicans approved some tax relief measures for lower and middle income people, including restoring the Homestead Property Tax Credit which they had repealed in 2011. However, even with support from Democrats, the resolution to place before the voters the question of a sales tax hike was defeated 24-14, two votes short of the two-thirds majority needed. Once that happened, both the entire comprehensive proposal and the Bolger proposal unraveled. The Senate defeated a bill to increase registration fees and to increase permit fees from overweight trucks.

Next came the final attempt at a comprehensive solution – an increase in the wholesale fuel tax, which would be set at 7% to 9.5% starting in 2015 with increases over the next 4 years and amounting to approximately 25 cents per gallon increase at the pump.  Democrats, who had supported a 1-cent increase in the sales tax because they had gained a measure of tax relief, this time voted against the measure. They believed the tax hit the poor disproportionately hard. In addition, they were not getting the tax relief measure which had been obtained with their vote in favor of the sales tax ballot resolution.  In the end, this measure was defeated 17-20 and in frustration, the Senate adjourned for the summer. Facing a considerable amount of criticism from the public and press alike, the Majority Leader announced he would be creating a task force over the summer to try to find a solution to the road funding dilemma. This won’t be easy, especially in an election year where several GOP Senators already face primary challenges from the Tea Party faction of the Party.

In the interim, on July 2, the House Speaker announced the release of $115 million in funding for roadwork during the summer and fall construction season for “priority” projects. The funding had previously been approved in March when the Legislature approved a supplemental appropriation bill for the current year budget. The $4 million to repair University Drive over I-75 in Oakland County received the most funding of any other project.

However, a long term funding solution to Michigan’s road and infrastructure situation will have to eventually be addressed.
 

In May, the Department of Insurance and Financial Services (DIFS) agreed to allow people who had been insured by health policies that are not in compliance with the Affordable Care Act (ACA) to keep the same coverage for the next 2 years.  Previously, President Obama had issued an Executive Order that allowed states the option of accepting the 2 year extension. The move by DIFS, a/k/a the Snyder Administration, is viewed as a smart one, lest thousands of people lose their health insurance in an election year.

 

Early in the session, SB 2 was passed by the Senate on a very close vote and sent to the House.  This was done over strong objections from the physician lobby that sees it as usurping the practice of medicine. It was contended that the effort was being made to address an upcoming shortage in primary care physicians. According to the bill, not only could Advanced Practice Registered Nurses (APRN)s practice independent from physician supervision, but they would be authorized to conduct a wide variety of tests in order to form a diagnosis.  For instance, a nurse practitioner would be authorized to order, perform, supervise and interpret imaging studies. According to the clear wording of the bill, this would include performing and interpreting sophisticated MRI and PET tests. That is well beyond primary care and APRNs (nurse practitioners, nurse midwives and clinical nurses) have neither the training nor education to engage in such activity. Yet, SB 2 as passed the Senate allows them to do that and more. The bill has remained with the House Health Policy Committee for nearly a year and a half.  Proponents of the bill will make every effort to obtain a hearing, or have the bill reassigned to a more favorable committee. Opponents are wary this legislation will surface during “lame duck” session as part of legislative horse trading.

 

A national movement calling itself “Are you Dense?” has been instrumental toward passing legislation in 16 states which requires the provider of mammography services to notify a patient if the testing indicates the patient has dense breast tissue. In addition, the notification states that the patient may wish to consult with her physician about additional testing because dense breast tissue is a risk factor for cancer. Potential or actual problems are also much more difficult to detect through mammography testing when breast tissue is dense. The legislation is well meaning, but the medical community has a number of concerns:
 
  • Doctors insist it is never a good idea to legislate best practices for any profession, especially medicine.
  • Breast density is not the highest risk factor for cancer and by placing emphasis on this factor without giving the patient all the information does that patient a disservice.
  • In the legislation as it was introduced, there was wording that there is more “advanced” testing than mammography that can be performed. That just isn’t true. 

Legislation was introduced on the subject in both Houses of the Legislature. At first, the physician community opposed the bills as written for the 3 reasons mentioned.  However, the opposition changed to a position of neutrality when wording was changed from advanced screening to “supplemental” screening alternatives. While the physician community does not believe the legislation is the best approach to fully inform patients, if this approach is to be used, the wording in the notification should be accurate. The Senate version of this legislation (SB 879) was passed by the Senate and has now been referred to the House Health Policy Committee.

 

Since the cost of pharmaceuticals can fluctuate significantly over a short period of time, concerns have been raised for some time about the availability of drugs from wholesalers at the prices set by pharmacy benefit managers (PBM)s. Pharmacists may even request pricing reconsiderations, but there is no requirement that PBMs provide pharmacists with maximum allowable costs (MAC) pricing procedures. SB 656, sponsored by Sen. Bruce Caswell (R-Hillsdale), was introduced to at least partially address the concerns. It requires DCH and Medicaid health plans to use a process for MAC pricing reconsiderations that would include identification of three national drug codes for the drug if there were at least 3 available. If fewer than three were available, the reconsideration policy would have to include all available codes. Late last year, the bill passed the Senate by a vote of 34-2.  In May, the House passed the measure and the Governor signed the bill (now Public Act 167 of 2014) last week. The legislation takes effect in March 2015.
 

Early in the session, legislation was introduced which would establish PBM audit procedures involving pharmacies.  That legislation has been adamantly opposed by PBMs and it has remained in the Health Policy Committee.  Just prior to adjourning for the summer, a package of bills was introduced which would establish a comprehensive audit procedure (SB 1000), creates a detailed MAC pricing procedure, (SB 1001) prohibits a PBM from self-referral to a pharmacy in which it has an interest.  The final bill (SB 1002) states that any qualified and willing provider of pharmacy services cannot be excluded from the PBM network.  The bills have been referred to the Senate Committee on Insurance.

 

In response to an episode of contaminated drugs reaching the public, the Legislature enacted strict new mandates regarding their compounding.  SB 704, now Public Act 280 of 2014, defines the term compounding to include the preparation, mixing, assembling, packaging and labeling of a drug or device by a pharmacist upon receipt of a prescription.  Among other things, the bill also requires:
  • A person providing compounding services be licensed as a pharmacy or manufacturer.
  • An applicant for a pharmacy license that would provide compounding services for sterile pharmaceuticals submit verification of current accreditation with a national accrediting organization.
  • A pharmacist to maintain records of compound sterile pharmaceuticals.
  • A pharmacy, manufacturer or wholesale distributor has to designate a licensed pharmacist in charge proscribing his/her duties.

SB 904, now Public Act 249 of 2014, amends the Code of Criminal Procedure by adding felonies to violations of SB 704.

 

Late this spring, HB 5598 was introduced.  The bill defines “biosimilar drug product” as a biological product that the federal Food and Drug Administration has determined to be biosimilar to a reference product so that it is interchangeable with the reference product.  The bill then mandates a pharmacist who receives a prescription for a brand name drug to dispense a generically equivalent drug or a lower cost biosimilar drug product if it is available in the pharmacy.  This legislation has been referred to the House Health Policy Committee and has been met with significant resistance by consumer groups.

 

Each Party’s standard bearer for the office of Governor and the Legislature are determined by the voters in a state-wide open August Primary election. Candidates for the offices of Lt. Governor, Secretary of State, Attorney General, the Supreme Court and the governing boards of Michigan’s three largest state universities are selected by delegates to each political party’s convention. The Republicans will hold their state party convention on August 23 in Novi. Democrats will hold their state party convention in Lansing also on August 23.

 

Incumbent Republican Governor Rick Snyder and his Democratic Party challenger, former legislator and U.S. Congressman Mark Schauer, are unopposed in their Party’s primary and have a free ride to nomination. Governor Rick Snyder has had a busy three and a half years in office. A successful businessman with no true political experience prior to 2010, Snyder led the way toward an overhaul of Michigan’s tax policy, confronted the City of Detroit’s financial woes head on, successfully urged the Legislature to put the state’s retirement and health care systems on sounder financial footing and bucked many members of his own party toward enactment of Medicaid expansion, a child of the Affordable Care Act or Obamacare.  His political vulnerabilities are that change in tax policy which shifted $1.8 billion in tax obligation from business to individuals, the fact that given the tax shift the unemployment rate in Michigan has not dropped as anticipated, the perception by some from the education lobby that per pupil K-12 and higher education funding has not met the need and the fact that the Governor signed a right to work law galvanizing the state’s major labor unions against him.

In contrast to Snyder, Mark Schauer has spent most of his adult life in politics. After serving as state representative and state senator from Battle Creek, he ran and won a congressional seat in 2000, thanks in large measure to the Obama landslide which swept the state.  In 2010, Schauer was defeated for reelection by conservative Tim Walberg in the Republican tidal wave of that year. Since 2010, Schauer has been active with nonprofit organizations, most notably the Blue/Green Alliance which is a partnership between unions and environmentalists whose purpose is to expand jobs in a green economy.

Snyder has consistently lead Schauer in the polls, but not by an overwhelming amount. A June 6 poll by Mitchell Research & Communications revealed the Governor has only a 5 percentage point lead over Schauer (46-41). Just two weeks earlier, a poll conducted by EPIC-MRA revealed Snyder had a 9 percentage point lead (47-38). Schauer’s consistent problem appears to be name recognition. According to the Mitchell poll, only 63% of voters recognize his name, which is not good news for a statewide major party candidate less than 5 months away from Election Day.

 
Much in the same way Presidential nominees pick their running mate, the gubernatorial nominee normally selects the Lieutenant Governor candidate who then is officially nominated by the convention delegates.  In 2010, Republican nominee Rick Snyder chose Representative Brian Calley of Portland. Since his election in 2010, Calley has played a major role in pursuing the Governor’s policies regarding tax policy revision, health care and the need for a new international bridge linking Michigan with Canada. Challenging Calley at the convention will be Tea Party activist Wes Nakagiri, who claims Calley is too liberal. Another name that has surfaced recently is former State Representative and current National Committeeman Dave Agema from Grandville. Agema upset incumbent Committeeman Saul Anuzis two years ago for the post.  Knowing that it would be next to impossible to defeat Governor Snyder in a primary election, candidates from the more conservative wing of the party are seeking support at the convention from grass roots delegates. However, since his election as National Committeeman, Agema’s public statements on gay marriage and immigration have come under great criticism.  Nakagiri and/or Agema will seek the nomination from GOP delegates at the convention even though Calley is the Governor’s choice for the nomination.  Calley will win re-nomination.
 
On the Democratic Party side, Schauer has chosen former state representative and current Oakland County Clerk and Register of Deeds Lisa Brown as his running mate. While serving as a state representative, Brown gained some national notoriety during debate over legislation involving barriers to obtaining an abortion. Schauer’s pick of her for Lt. Governor is an attempt to firm up the Democratic Party’s base of support with women, especially in the state’s second most populace county.
 

The race to replace retiring U.S. Senator Carl Levin will be between former Secretary of State Terri Lynn Land, the Republican, and Congressman Gary Peters, the Democrat, since neither Land nor Peters faces a primary opponent. This race is a key one as both national political parties are watching it closely and prepared to spend huge sums for their party’s nominee. For the Republicans, this race could be the key toward the GOP regaining control of the Senate. For the Democrats, a Peters’ win is a must for their hopes of retaining control. Earlier in the spring, Land held a slight lead but recent polls reveal Peters has passed Land and is up by at least 5%. In fact, at this stage the Peters’ campaign has some momentum, recently receiving the endorsement of the Greater Detroit Chamber of Commerce. Of course the November election is still far away, anything can happen. However, one thing is certain: if the race remains close, this campaign will be the costliest Michigan U.S. Senate campaign ever.
 
 
The U.S. House races will be the most interesting group of races in both the August primary and the November general election.
 
1st District: This district covers the entire Upper Peninsula and much of the Northern Lower Peninsula. Two-term incumbent Dan Benishek, a medical doctor, has token primary opposition, but will in all likelihood be facing Democrat Jerry Cannon, a retired Army Major General and Sheriff of Kalkaska County. This seat is highly competitive and was previously held for several terms by Bart Stupak, a Democrat.
 
3rd District: This district has a 56% Republican base, so the winner of the GOP primary will be elected in November.  The race pits two term incumbent Justin Amash, who has a strong libertarian leaning against Grand Rapids businessman Brian Ellis. Much of the Republican establishment supports Ellis, but Amash is a tough campaigner and has shown significant strength in recent polling numbers.

4th District: Like the 3rd District, the 4th is heavily Republican, having base strength at 55%.  The district is large, taking in most of north central Lower Michigan and having Midland, the home of Dow Chemical, as its hub. The race is to replace retiring Congressman Dave Camp and the GOP primary pits Midland State Senator John Moolenaar against businessman Paul Mitchell and Peter Konetchy of Roscommon. This race will also be very expensive as Mitchell will be devoting a significant amount of his own funds toward the effort.

7th District: Even though the current Congressman has primary opposition, the 7th District race will be decided in November. Three-term incumbent Tim Walberg faces former State Representative Pam Byrnes in November’s general election. The district has a 53% Republican base (so GOP strength is marginal). Yet, in an off-year election, the incumbent will be favored.

8th District: With the retirement of incumbent Republican Mike Rogers, a number of candidates gave serious consideration to a run. The district stretches from Rochester Hills in Oakland County on the east to the City of Lansing on the west, approximately 90 miles away. The Republicans have a 54% base strength, so that party’s nominee will be the odds-on favorite in November. Two candidates have emerged on the Republican side. They are former Senate Majority Leader Mike Bishop of Rochester Hills, who is endorsed by most of Oakland County’s if not the district’s Republican establishment, and current State Representative Tom McMillin, also of Rochester Hills. McMillin is very conservative on both fiscal and social issues and has the support of the more conservative wing of the Party. On the Democratic side, Ingham County Treasurer Eric Schertzing appears to be the leading contender. Right now, it appears Bishop is the favorite to be the next congressman from the 8th District.

11th District: The 11th Congressional District consists of the affluent western Oakland County and Detroit suburbs of Plymouth, Northville, Novi and White Lake. It also has a base Republican strength of 55%. The current congressman is Republican Kerry Bentivolio, who won in 2012 after a bizarre series of events which included an incumbent congressman being denied his place on the ballot due to the falsification of petition signatures. That led to the prosecution and conviction of his campaign aides. Bentivolio just happened to be on the Republican ballot to challenge the incumbent. His candidacy survived and he was elected, overcoming a concerted write in campaign waged by the Republican establishment and eventually beating his Democratic Party opponent in the general election. Bentivolio has been affiliated with the Tea Party faction of the Party. He is challenged in the primary by David Trott, an attorney who has made a fortune in real estate law, specifically by representing mortgagees in foreclosure proceedings.  The Democratic Party nomination is still a horse race among Anil Kumar of Farmington, Bobby McKenzie of Canton, Bill Roberts of Livonia and Nancy Skinner of Birmingham.  Trott has the backing of the Republican establishment and the resources needed to win.

12th District: After serving 30 terms, 86-year-old John Dingell, the Dean of the House, is retiring. The district stretches from the Detroit River on the east to beyond Ann Arbor in the west. And it has a 66% Democratic base. Even though she has a primary opponent, John Dingell’s successor will be his wife, Debbie Dingell, who is accomplished in her own right, being an executive with General Motors, a Governor on the Wayne State Board of Governors and a board member for a number of non-profit entities.

13th District: Serving his 25th term, Congressman John Conyers almost didn’t see his 26th.  Two petition circulators were not registered voters, as required by law, when they collected signatures. In fact, both the Wayne County Clerk and Secretary of State Ruth Johnson were of the opinion he should not gain access to the ballot. This appeared to give his Democratic Party primary opponent, Horace Sheffield, the nomination by default. However, in an action brought by the Congressman, a federal district court ruled Conyers back on the ballot, stating failing to comply with the voter registration requirement for petition circulators was the result of good faith mistakes. The court also ruled that the First Amendment rights of the Congressman and the signature collectors were severely burdened by the Michigan law. The Attorney General decided not to appeal the decision and it now appears the Congressman will see his 26th term representing this district that has a base Democratic strength of 86%.

14th District: Incumbent Democratic Congressman Gary Peters’ run for the U.S. Senate leaves an open seat in this 80% Democratic district. It stretches from Pontiac in the north, winding through the southern Oakland County communities of Farmington Hills, Southfield and Royal Oak, going south of 8 Mile Road into Wayne County and the City of Detroit, then east through Harper Woods and the Pointes and finally south in the City almost all the way to River Rouge.  Three candidates have emerged as contenders to win the Democratic Party primary and hence, the election. Hansen Clarke, a former state legislator and U.S. Congressman had to run against Peters in 2012 due to redistricting. He lost the 14th badly to Peters, but has solid name identification, especially in the City of Detroit. State Representative Rudy Hobbs, from Southfield, has been endorsed by the Levin brothers (he once worked for Congressman Sander Levin) and he recently received the endorsement of the AFL-CIO and the Greater Detroit Chamber of Commerce. Southfield Mayor Brenda Lawrence has a base of support in southern Oakland County and was the Democratic nominee for Lt. Governor in 2010. Depending upon which candidate poll you read will determine who you believe will be the nominee. A case can be made for each one of the three. However, at this stage, a slight edge goes to Hobbs who is beginning to rack up endorsements among traditional Democratic Party support groups.

 

Secretary of State Ruth Johnson will be re-nominated by the Republicans at the August convention.  Due to her statewide name recognition, she will be the heavy favorite against whomever the Democrats nominate, which as of this date in unclear.

 

In 2010, Bill Schuette received almost 57% of the vote in the race for Attorney General.  Schuette is well known statewide, being a former congressman, state senator, Director of the Department of Agriculture and Court of Appeals Judge.  The Attorney General has maintained his conservative credentials with his construction of Michigan’s medical marijuana laws, and his strong defense of a Michigan ballot initiative that was approved by the voters in 2006, defining marriage as being only between a man and a woman. Unseating Schuette will be a longshot at best for the Democrats.

 

In the 2010 election the Republicans flipped 20 House seats. Not since the 1940s had there been such a turnaround. Even though the Democrats gained 6 seats in the 2012 Presidential year election, they still are a ways from the majority as the current breakdown is 59 Republicans, 50 Democrats and 1 Independent, who was once a Democratic Caucus member. In 2011, the Republicans redrew district lines in their favor. In addition, Democrats have a number of first term members who represent politically “marginal” districts. A smaller turnout usually means fewer Democrats come to the polls than do Republicans, and in off-year or non-Presidential elections that is very true. Typically, the voter turnout drop off in an off year election ranges from 800,000 to 1 million voters and that drop off hurts Democrats most. Based upon principally these factors, it does not appear at this stage that Democrats will make any gains and may end up losing a few seats.

 

The 2010 disaster for Michigan Democrats did not stop at the House of Representatives.  Republicans gained a supermajority of 26 out of 38 seats.  Of those 26 Republicans, 4 are term limited and 7 face primary challenges. Even with the 2011 reapportionment favoring Republicans, the Senate, much like the stock market, may go through a “market correction,” for it is unlikely the GOP will return 26 members. Instead, for as badly out-funded and out-organized as the Democrats are, they still may capture 2 to 3 seats.

 

Candidates for the Michigan Supreme Court are nominated by the political parties at the state convention, but for the November election, they run as non-partisans. This year there are 3 spots on the Court that will be up for election and 2 of those who will be nominated by the Republicans are incumbents. Justice Brian Zahra was a Court of Appeals judge when he was appointed in 2011 by Governor Snyder to fill a vacancy created by the resignation of Justice Maura Corrigan, who was appointed by the Governor to become the Department of Human Services Director. In 2012, Justice Zahra successfully ran for the remainder of Justice Corrigan’s term and is now running for his own term which, if he is successful, will be for 8 years.

The other Republican incumbent is Justice David Viviano. Justice Viviano was appointed by Governor Snyder in February 2013 to fill the vacancy created by the resignation of Justice Diane Hathaway. Prior to being appointed to the Supreme Court, Justice Viviano served as Chief Judge of the 16th Judicial Circuit in Macomb County.

The only other announced candidate for the Republican nomination to the Supreme Court is Kent County Circuit Court Judge James Robert Redford. Judge Redford served in the Judge Advocate General’s Corp for the U.S. Navy. He was also an Assistant U.S. Attorney and a partner in a major Michigan law firm prior to becoming a judge in 2003.

The Republicans currently hold a 5-2 majority on the Court and one of the two incumbents nominated by the Democratic Party, Justice Michael Cavanagh, is constitutionally prohibited from seeking a 5th term because he is now past 70 years of age. Like the Republicans, the Democrats will select their nominees at their state convention. At this stage, the only candidate whose name has surfaced is trial attorney Richard Bernstein. Bernstein is a member of a very prominent plaintiff’s law firm, a firm which engages in a significant amount of television advertising.  He would be a formidable opponent due to his name recognition and financial resources.

The Republicans have the inside track on at least maintaining their 5-2 majority because the only incumbents running this year will be nominated by the Republicans.  In judicial races in Michigan, a sitting judge has the benefit of the incumbency designation on the ballot, a huge advantage. At this stage, look for the Republicans to at least maintain their 5-2 advantage on the Court.

 
PROVIDING GUARANTEED INCOME TO LOCAL GOVERNMENT

In March of this year, the Legislature passed SB 882 and accompanying legislation. That legislation funds replacement revenue for that which was repealed by the Legislature earlier in the session, the personal property tax (PPT). The PPT taxes the equipment and machinery used in the business. The PPT has been a long-term source of revenue for local government services such as police, fire, schools and local roads. In its stead and to guarantee a revenue stream for local government, the state’s share of use tax, which is 6%, would be altered to provide for a “local community stabilization share tax” and a “state share tax.”  The local use tax rate is based on the amount of revenue it may generate each year according to an income schedule. The state share tax would be determined by subtracting the local share from 6%. The legislative package is in effect tie-barred to SB 822, which places the question of creating the local use tax before voters via a referendum on the ballot for the August 5, 2014 primary election. A broad coalition of interest groups is supporting the proposal, led by the Michigan Manufacturers Association whose members have long complained about the PPT.

 
OPPOSING SIDES ON WOLF HUNT

Last year, the Legislature, citing a problem with wolves diminishing the domestic animal population, especially in the Upper Peninsula, passed Public Act 21 of 2013. That Act authorizes the Natural Resources Commission (NRC) to add wolves to the list of game species.  In sum, wolves can now be hunted according to rules specified by the NRS. A group called “Keep Michigan Wolves Protected” began a petition drive for a voter referendum on Public Act 21. The petition circulators obtained enough valid signatures and the Board of State Canvassers certified them in May. This referendum question will be on the November ballot.

Not to be outdone, on May 27, a pro-hunting coalition turned in more petition signatures than required in order to protect the wolf hunt from being overturned by the “Keep Michigan Wolves Protected” coalition. This proposed initiative by “Citizens for Professional Wildlife Management” is put forth in an effort to nullify the referendum proposed by those who oppose wolf hunting in the event the referendum passes as proposed. If these signatures are approved, the initiative would either have to be approved by the Legislature or go on the November ballot for the voters to decide. In addition to having the effect of continuing the wolf hunt, the proposed initiative provides a $1 million appropriation for the control of aquatic invasive species such as Asian carp. By having an appropriation within the proposed initiative, if it does become law it will not be subject to referendum by the people. The Secretary of State is currently conducting a canvass of the signatures, but all indications are the proposal will be certified.
 

REPUBLICANS LED THE WAY FOR HIGHER MINIMUM WAGE, BUT WHY?
 
A proposed initiative pushed by labor unions to increase the minimum wage from $7.40 per hour to up to $10.10 per hour by 2018 was rendered moot when the Legislature passed its own version. The legislative enactment occurred just one day prior to the filing of petitions by labor.  Why did a Republican controlled legislature pass legislation the GOP traditionally opposes?  Politics. There was a real concern the proposed initiative would pass, but also that it would attract many more Democratic Party leaning voters to the polls in November, making it tougher on Republican candidates. So, Senate Republicans negotiated a statutory minimum wage hike with the Democrats. The legislation repeals the legislation referenced in labor’s ballot proposal, thus making the proposal moot. In addition, the measure also calls for an increase in the minimum wage to $10.10 per hour on January 1, 2017. Thereafter, any increases would be indexed for inflation.

 
  • Look for a concerted effort at no fault auto insurance revision in the lame duck session.
  • Another lame duck issue will more than likely be finding a mechanism for road maintenance and repair.
  • Yet another issue for lame duck session will be the effort to enact some form of oral chemo-parity insurance coverage legislation for the treatment of cancer. That is, requiring parity in insurance coverage for cancer medicine whether administered intravenously or taken orally.
  • When the Legislature comes back in session in September, expect a supplemental appropriation bill to be pursued to fund the for-profit Medicaid health plan tax liability due to the Affordable Care Act’s imposition of a provider fee.
  • Will DCH opt to “carve out” a new line of very expensive drugs which cure Hepatitis C from the Medicaid health plans? Probably not, at least at this time. This issue was up for discussion at the July 8 meeting of the Pharmacy and Therapeutics Committee within DCH and will be discussed at its next meeting in September. One such drug costs between $80,000 and $90,000 for a 90-day treatment.
  • Right after the general election in November, each of the four Caucuses of the Legislature will gather to elect its leadership for the next session. Right now, the odds on favorite to be the next Senate Majority Leader is current Floor Leader Arlan Meekhof (R-West Olive). Those in the hunt to succeed Sen. Meekhof as Floor Leader are Sen. Mike Kowall (R-White Lake), Sen. Jack Brandenburg (R-Harrison Twp.) and Sen. Patrick Colbeck (R-Canton Twp.). The race for Democratic Leadership seems to be narrowing between Sen. Jim Ananich of Flint and Sen. Rebekah Warren of Ann Arbor.  Look for current Ingham County Register of Deeds Curtis Hertel, Jr., who is the odds on favorite to be the next Senator from Ingham County, to be somewhere in the leadership mix as well. Across the rotunda, the leading candidates to be the next Speaker should Republicans retain control of the House are Rep. Al Pscholka of Stevensville, Rep. Lisa Lyons of Alto and Rep. Kevin Cotter of Mt. Pleasant.  For the Democrats, Rep. Tim Greimel from Auburn Hills will likely be reelected Leader.

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