Approved by Board of Directors, April 25, 2012

The Michigan Chamber of Commerce supports retaining Michigan’s Emergency Manager Law, Public Act 4 of 2011. Repeal of this important reform, through ballot initiative, legislative or legal action, would severely hinder state government’s effort to improve the fiscal health of local governments and public schools.

Background

Some of Michigan’s local units of government and public schools have been in serious fiscal distress for several years. It has been well documented by both the Michigan Department of Treasury – which tracks key indicators of local government and school fiscal health – as well as the Citizens Research Council that possible “Financial Emergencies” in numerous local governments and schools exist.

Indeed, Michigan has already had “Emergency Managers” installed in seven Michigan communities under Public Act 72 of 1990: Hamtramck (in 2000); Highland Park (in 2001); Flint (in 2002); the Village of Three Oaks (in 2008); Ecorse (in 2009); Pontiac (in 2009); and Benton Harbor (in 2010). A financial manager was appointed for the Detroit Public School District in 2009 (and most recently Muskegon Heights School District requested an Emergency Manager). Yet, the looming fiscal crisis for more local governments and schools proved that the pre-2011 statutes were insufficient to address current challenges.

Upon taking office in 2011, Governor Snyder called for revisions to Local Government Fiscal Accountability Act of 1990 in order to strengthen the existing law and allow for earlier intervention and more meaningful reform to return any local government or school district to fiscal health. Michigan has a number of statutes aimed at preventing local governments from falling into a financial crisis (Uniform Budgeting and Accounting Act, the Emergency Municipal Loan Act, the Fiscal Stabilization Act, the Revised Municipal Finance Act, and the Home Rule Cities Act). Yet, none specifically provide for a mechanism to deal with one of government’s largest cost-drivers; collective bargaining agreements, which burden public employers with overly generous employee compensation and benefit costs that are unsustainable or unaffordable going forward.

In response, the Legislature passed a package of bills to update the current “emergency manager” laws. The goal of the current law is to improve the early detection system and provide a framework for a Consent Agreement with the local government or school. The main bill (PA 4) does expand the authority of a Gubernatorial-appointed Emergency Manager; however, only in the event that one is appointed. This is the worst-case-scenario, and brought on only if all other options fail.

Highlights of the current law:

• New criteria to trigger a preliminary review which could include: a request by the governing body; a creditor owed more than $10,000; electors; failure to make pension deposits or pay wages, and failure to make a bond payment.
• If necessary, a process of “Preliminary Review” overseen by an appointed Review Team.
• If necessary, a process and framework for a Consent Agreement.
• Governor declares Receivership and appoints an Emergency Manager with broad authority
  including the ability to abrogate collective bargaining agreements, sell assets, and transfer
  local government functions.

Under the guise of “Standing up for Democracy” opponents of the PA 4 reforms have attempted to gather enough signatures to qualify for a ballot proposal that would ask voters to repeal PA 4. Led by a front group called Michigan Forward and primarily funded by the AFSCME (American Federation of State, County and Municipal Employees) union, this opposition campaign is solely focused on repeal of the Act; they have put forward no alternative to the reforms contained in PA 4. In other words – whether or not a local government or school district has been horribly mismanaged and falls into insolvency is not their concern. The rhetoric is primarily focused on the possibility that if an Emergency Manager is installed, local elected officials may be removed from decision making. Their coalition has dismissed, or ignored, the fact that the Michigan Constitution currently grants the Governor authority to remove or suspend a local official if warranted. Rather, it is clear that maintaining the status quo as it relates to unsustainable wages and benefits, and union control of local government is their priority, regardless of the consequences.

Proponents submitted 226,637 signatures to the Secretary of State. However, they chose to not submit their original petition language to the Board of Canvassers for review as to form (this step is not currently required by law, but is highly advised). On April 9, the “Citizens for Fiscal Responsibility”, led by Bob LaBrant, filed a legal challenge to the petition language citing a number of technical concerns including illegal font size, and lack of relevant corresponding references to the prior Act, effective date, and tie-barred bills.

If the petition language and gathered signatures are certified as valid, voters will be asked whether they want to maintain Public Act 4, in which case the Michigan Chamber supports a Yes vote on the November 6 ballot in order to maintain this important fiscal accountability reform measure. Repeal of this important reform measure threatens the ability of state authorities to pursue early intervention of local governments and schools who are on the brink of insolvency.

To provide further background on Public Act 4 of 2011, we have attached a Citizens Research Council memorandum summarizing The Local Government and School District Fiscal Accountability Act.

View a printer-friendly version here.

Approved by Board of Directors, April 25, 2012

The Michigan Chamber of Commerce is strongly opposed to the ballot proposal which seeks to amend the Michigan Constitution to create a new right to collective bargaining; retroactively repeal dozens of cost-saving reform laws; and prohibit lawmakers from passing right-to-work legislation.

Background

On February 28, 2012, a ballot question committee was filed with the Secretary of State entitled “Protect our Jobs”. The initiative petition would enshrine collective bargaining rights into Article I, Section 28 and Article XI, Section 5 of the Michigan Constitution. This divisive union attack on government efficiency and fiscal responsibility would permanently establish the right of all public and private employees to collectively bargain and impair the enactment and enforcement of new and existing state labor and employment laws contrary to the proposal, including right-to-work legislation.

The 432-word constitutional amendment would effectively shield unionized workers from the numerous reform measures Governor Rick Snyder and the Legislature adopted this legislative session - or may consider in the future. Although proponents of the constitutional amendment have refused to enumerate what current or future laws the amendment would affect, it is clear the language would significantly hamstring, if not nullify, legislative efforts to improve government efficiency and control spending at the state and local level.

A legal analysis of the constitutional amendment by Bodman, PLC and others suggests that, although it would not automatically abrogate existing state labor or employment laws, it would operate to diminish the enforceability of such laws which conflict with collective bargaining right and encourage future challenges to laws that do so. Recent and pending laws and reform proposals that could be pre-empted by the constitutional amendment include: future right-to-work legislation; efforts to repeal the prevailing wage law; limitations on public employer spending on health insurance costs (MCL 15.561-15.569); pension reforms that moved state employees from defined benefit to defined contribution pension plans (MCL 38.1-38.69); emergency manager powers (MCL 141.1501-141.1531); the prohibition of payroll deductions for union dues for public school employees (MCL 423.210); local government consolidations relating to collective bargaining (MCL 423.215); changes to the Teacher Tenure Act (MCL 38.71-38.191); and laws prohibiting the unionization of graduate student research assistants (MCL 423.210).

Groups supporting the constitutional amendment include: We Are The People - Michigan, Teamsters, the Michigan branch of the American Federation of Teachers, Michigan AFL-CIO, Michigan UAW, National Education Association, Michigan Education Association, Progress Michigan, Michigan Democratic Party, Michigan Nurses Association, American Federation of State, County and Municipal Employees (AFSCME), Michigan State Utility Workers Council, What About the Children?, Lecturers' Employee Organization and others. This coalition shares two common goals: First, stifle efforts to improve Michigan’s economic status through enactment of meaningful legislative reforms and, second, increase voter turn-out among traditionally liberal factions of the electorate.

To successfully place the question on the ballot in November, proponents will need to gather signatures equaling 10 percent of the total vote cast for governor in the 2010 election, or 322,609 signatures. The signatures need to be turned in by Monday, July 9, 2012 in order to qualify the proposal for the November 6, 2102 statewide ballot. The State Board of Canvassers will have until September 7, 2012 to certify sufficiency of the signatures submitted, 60 days before the general election. Teamster President James Hoffa touted the constitutional amendment petition in a column of the international union’s website, saying: "They'll sign because they've seen CEOs arbitrarily move plants to Mexico or China when their workers don't have the protection of a union contract. They'll sign because they know workers who don't belong to a union have absolutely no say when the CEO slashes wages or benefits. And they'll sign because CEOs can unilaterally fire non-union American workers just to make the quarterly earnings statement look better."

We fully expect proponents of this proposal, mainly in-state and national labor unions, to spend millions to see this question certified for the ballot and approved by the voters. However, we will not have a clear financial report of contributions and expenditures until 35 days after the qualification or non-qualification of the proposal by the State Board of Canvassers, most likely in late September or early October.

We are currently exploring the legal sufficiency of the proposal. A legal analysis by Dykema Gossett PLLC, suggests the proposed amendment may be faulty because it attempts to repeal all existing laws in conflict with the rights provided in the proposal in a blanket fashion via constitutional amendment, an argument could be made that such action should have been made through the referendum and initiative process to ensure that the public is better informed of the full effect of the proposal.

If this proposed Board policy is adopted, the Michigan Chamber will, in tandem with a legal challenge, work with others in the business community to vigorously oppose this constitutional amendment. An aggressive campaign to defeat this ballot proposal would include activities such as: an early voter information campaign, public opinion surveys and focus groups, opposition research, coalition building and paid media. Placing a competing or alternative proposal on the ballot is not recommended because it could cost millions of dollars to put another amendment on the ballot and defend that proposal, drawing financial resources away from this ballot question and other key races.

View printer-friendly version here.

Approved by Board of Directors, April 25, 2012

The Michigan Chamber of Commerce is opposed to the proposed Constitutional Amendment to require utilities to obtain at least 25% of their electricity from renewable
energy sources by 2025. The proper way to develop a Renewable Portfolio Standard (RPS) or broader energy policy is through the legislative process, not by amending the State Constitution.

Background

In January of 2012, a group called “Michigan Energy, Michigan Jobs," filed with the Secretary of State to circulate petitions for a proposed constitutional amendment that would require 25% of each electricity providers annual retail sales in Michigan to be derived from the generation or purchase of electricity produced from renewable energy resources. Facilities used for satisfying this standard shall be located within Michigan. Further, if adopted the proposal would limit rate increases to one percent a year for costs related to meeting the 25% mandate.

Very little is known about the out-of-state interest group that is pushing this constitutional amendment. Sources indicate that the driving force is a venture capitalist that is located in California. To date, the proponents have been very clandestine about their motives and strategy and have disclosed relatively little to the general public. One item that has been disclosed is a group of supporters who have been trotted out for press conferences or comments to the media regarding this issue. This group includes: International Union of Operating Engineers Local 324, Michigan Nurses Association, Sheet Metal Workers International Association Locals 7, 80, and 292, SEIU State Council, Communication Workers of America District 4, American Federation of Teachers Michigan, United Steel Workers District 2, Amalgamated Transit Union, United Food and Commercial Workers Local876 and 951, Astraeus Wind, Blue Green Alliance, and Energetx Composites.

From conversations with proponents, it is clear that one of the strategies to push for passage of the ballot proposal will include marketing the idea that jobs will be created if the amendment is adopted. To date, we have seen no evidence that this proposal will generate significant job creation for Michigan workers. Opponents of the proposal are currently working on economic analysis to illustrate the false nature of the claim.

In 2008, elected officials in a bi-partisan manner established a Michigan RPS of 10% to be achieved by 2015. The 10% renewable portfolio standard was not discussed separate from the rest of the energy policy. The RPS was generated as part of overall state energy policy because every piece of the policy is connected and changing one can create problems with other parts. As opposed to the proposed constitutional amendment, this standard was determined after significant legislative debate, extensive hearings and full inclusion of opinions by all interested parties. Unfortunately, during this election season those seeking quick financial opportunities are willing to clutter the Constitution instead of pursuing a more thoughtful approach that focuses on the legislative process open to all stakeholders.

Simply mandating a higher number will not increase Michigan’s progress in creating renewable energy. Allowing a small group of people with an agenda to force energy policy change through a ballot initiative will only create more challenges to the pursuit of expanding our renewable energy infrastructure. Passage of the 2008 energy law demonstrated that there was bipartisan agreement at that time on the direction the state needed to head regarding energy policy and a renewable portfolio standard.

The Michigan Chamber’s Energy and Environment Committee voted unanimously to recommend this policy proposal to the Board of Directors. Chamber staff is currently gathering information relating to implementation of Michigan’s 2008 energy law from both supporters and opponents of the current policy. The legislature is not expected to make energy policy a priority before recessing for the summer and few session days are planned between the August primary and November general election. Governor Snyder plans to deliver a special message on energy policy later in 2012. Given this situation, the Chamber’s Energy and Environment Committee will begin a more comprehensive review of state and federal energy policy this fall.

View printer-friendly version here.

Downloads: 

Official_Policy_25per_of_electricity_from_renewable_energy_sources_by_2025-4-25-12.pdf

Approved by Board of Directors, April 25, 2012

The Michigan Chamber of Commerce is opposed to the ballot proposal which seeks to amend the Michigan Constitution to provide collective bargaining rights to home health care workers.

Background

During the Granholm Administration, the Michigan Department of Community Health (MDCH) and the Tri-County Aging Consortium in 2004 entered into an agreement under the Urban Cooperation Act, Public Act 7 of 1967, to create the Michigan Quality Community Care Council (MQC3). The MQC3 was formally established to coordinate and give the elderly and disabled (and their families) a registry of potential home health care workers from which to choose. In reality, the MQC3 was a scheme to establish themselves as the sham “employer” of these home health care workers, even though it never did any of the work that an actual employer has to do (hire, supervise or pay wages). The MQC3 was used as a tool to organize1 and extract nearly $30 million in union dues from over 56,000 home health care workers, including relative caregivers, who were receiving state subsidies via Medicaid for their services.

Earlier this year, the Legislature passed, and Governor Snyder signed, a bill (Senate Bill 1018;Public Act 76 of 2012) to put an end to this “union skim” of Medicaid dollars. The legislation is similar to an Executive Order signed by Governor Rick Snyder in 2011 to end a similar practice involving the forced unionization of over 70,000 home-based daycare owners who accepted state subsidy checks on behalf of low-income parents needing childcare. This practice amounted to a $3.7 million annual “union skim” for Child Care Providers Together Michigan, a subsidiary of the United Auto Workers and the American Federation of State, County and Municipal Employees.

In March of 2012, SEIU Healthcare Michigan gained clearance from the Board of State Canvassers to begin circulating petitions to amend the Michigan Constitution to create a MQC3 successor, the “Michigan Quality Home Care Council”, and guarantee home health care workers, including relative caregivers, the right to collectively bargain and perpetuate the unions’ skimming of Medicaid dollars.

To successfully place the question on the ballot in November, proponents will need to gather signatures equaling 10 percent of the total vote cast for governor in the 2010 election, or 322,609 signatures. The signatures need to be turned in by Monday, July 9, 2012 in order to qualify the proposal for the November 6, 2102 statewide ballot. The State Board of Canvassers will have until September 7, 2012 to certify sufficiency of the signatures submitted, 60 days before the general election.

View printer-friendly version here.

Approved by Board of Directors, September 12, 2012

The Michigan Chamber of Commerce supports meaningful efforts to limit tax increases and control government spending. The Michigan Chamber opposes the proposal for the November 6, 2012 general election ballot to impose a constitutional 2/3 majority vote requirement to increase taxes.

Background

The Michigan Chamber has a strong track record of involvement in the tax limitation movement; both on day-to-day legislative efforts, as well as a long history of support for well-crafted constitutional tax limits. The “Headlee Amendment” limit and the 1994 “Proposal A” each provided targeted property tax limitations, among other things, yet still with enough clarity and flexibility to allow revenue increases if necessary.

Over a dozen other states across the country have constitutional tax limitations, generally by a 2/3 or 3/5 majority vote. Many of these have a much broader application than Michigan’s current tax limits on property taxes, requiring the higher vote threshold for any tax increase.

Led by a group called “Michigan Alliance for Prosperity,” paid petition circulators garnered enough signatures to place a Constitutional amendment for a proposal to require a 2/3 majority vote to increase taxes on the November 6, 2012 ballot. The petition specifically calls for:

"A Proposal to amend the Michigan Constitution by adding a Section 26a to Article IX: No new additional taxes shall be imposed by the state government, nor shall it expand the base of taxation, nor shall it increase the rate of taxation unless (a) by the vote of two-thirds of all the elected members of each branch of the Legislature; or (b) by a statewide vote of Michigan electors at a November election.

This section shall in no way be construed to limit or modify tax limitations otherwise created in this constitution."

The language provided in bold above would be directly added to the Michigan Constitution.

Clearly, the concept behind this current effort to curtail tax increases is laudable. It should not be easy for governmental units to raise taxes on citizens.

Unfortunately, the practical implications of this proposed amendment could prove extremely problematic when considering more comprehensive policy legislation. The most obvious recent example is the repeal of the Michigan Business Tax (MBT), which was replaced with a Corporate Income Tax. This was a multi-faceted effort, which included broadening the business tax base by eliminating targeted tax credits, as well as broadening the individual tax base by eliminating exemptions and deductions. This legislative effort was an important policy change for the state, but would have been almost impossible to achieve based upon language in this proposal, and Michigan’s job providers could still be saddled with the MBT.

Other examples of serious public policy decisions, which would become even more difficult to resolve, are such things as increased transportation investment, and on the opposite side of the spectrum, circumstances where the state can simply no longer afford generous tax credits, as was the case with film incentives. Any effort to modify this type of tax policy would be seriously hampered if this proposal were to pass.

Furthermore, while the language crafted by proponents is certainly succinct, it is nonetheless poorly drafted, leaving room for interpretation by bureaucrats. For example, there is no clear distinction about whether the amendment applies to local government taxes.

As public policy, “super-majority” vote requirements raise important questions over the legitimate use of power by concentrating decisions that affect many, into the hands of a minority, by encouraging potential abuse through “vote swapping” on difficult issues, and by encouraging special interest carve-outs to mandate automatic spending for a few…at the expense of many.

Finally, proponents often site both tax limitations and the need to curtail spending when promoting this type of amendment. Notably, California has this type of constitutional limitation, yet is still considered a very high-tax state and has proved to be totally incapable of controlling spending.

To be fair to proponents, Chamber staff met with staff from Michigan Alliance for Prosperity (MAP) as well as Oakland County Sheriff Mike Bouchard – who is an honorary Chair of MAP and proponent of the proposal. Proponents expressed a desire for the Michigan Chamber to Support, or remain Neutral towards, the proposal. Their main arguments to Chamber staff were the following:

• A 2/3 requirement would force real spending reductions (the Chamber committee has expressed concerns that the very plausible alternative is that special interest groups will instead simply elevate attempts to seek constitutionally-mandated spending increases.) 
• A 2/3 requirement would necessitate strong leadership and negotiation to garner the votes necessary for tax increases (the heightened potential for vote-swapping and “logrolling” is very concerning to an issue, and policy-oriented, organization).
• Had a 2/3 requirement been in place, we would never have gotten the MBT in the first place (this therefore means we would have very likely not been able to get rid of the SBT etc…). 
• That the Chamber can still accomplish two of our key objectives (an increase in transportation investment, and personal property tax reform) in the Nov/Dec Lame Duck session if the 2/3 vote requirement passes (Chamber staff continues to push for legislative action on these unfinished legislative priorities, but the practical reality is we don’t know if the November 2012 election will result in a long or short Lame Duck session that is productive or unproductive.)

The Michigan Chamber Tax Policy Committee voted overwhelmingly to recommend opposition to this ballot proposal.

Printer-friendly version