MIRS provides comprehensive news and analysis of state government delivered in written reports detailing the activities of the House, Senate, Judicial and Executive branches of Michigan state government.
Michigan News And Capitol Report, Week Ending Fri., May 17, 2019
Rep. Inman Indicted On Extortion, Bribery Charges
Rep. Larry Inman (R-Williamsburg) was indicted Wednesday on attempted extortion and bribery for allegedly offering his "no" vote on the prevailing wage citizens initiative for $30,000 in campaign contributions, according to the indictment filed in the U.S. District Court's Western Division.
The term-limited House member proclaimed he's innocent of the charges, which stem from text messages that appear to show him trying to coordinate campaign money for 12 other members who could vote against the measure last June.
An indictment handed down Tuesday and filed Wednesday in U.S. District Court's Western Division alleges the Grand Traverse County lawmaker solicited contributions from the Michigan Regional Council of Carpenters and Millwrights (MRCCM) union, who opposed the initiative. His arraignment is May 23 and he faces up to 20 years in prison if he is convicted as charged.
"I am innocent of these charges. I have never compromised the integrity of my vote," Inman said in a statement released around 3 p.m. Wednesday. "I have always represented my constituency honestly and legally. I intend on vigorously fighting these charges and defending my reputation."
By 2:30 p.m. Wednesday, House Speaker Lee Chatfield (R-Levering) removed Inman, who also is accused of making a false statement to an FBI agent, from all of his subcommittees and ordered the House Business Office to take control of Inman's office to ensure Grand Traverse County residents receive constituent services.
About 90 minutes later, Chatfield said he had asked Inman to resign, and the House member said he "is considering it." The charging document can be found here.
The U.S. Attorney General's office declined to comment beyond a statement the office issued Wednesday that announced the indictment.
The indictment alleges Inman solicited money through text messages between June 3, 2018, and June 5, 2018.
In a June 3 text, Inman is alleged to have sent similar texts to both a MRCCM representative and a carpenters' lobbyist that they have "only 12 people to block it." Inman is accused of texting:
- "You said all 12 will get $30,000 each to help there [sic] campaigns. That did not happen . . . I have heard most got $5,000, not $30,000 . . . I am not sure you can hold 12 people for the only help of $5,000."
- "People will not go down for $5,000, not that we dont [sic] appreciate it. Please get with all the trades by Monday. I would suggest maxing out on all 12, or at least doubling what you have given them on Tuesday, asap, we never had this discussion, Larry."
- "Its [sic] not worth losing assignments and staff for $5,000, in the end. They will give you the check back."
- ". . . I have Breakfast event on Wed morning at Karobe, Governors room . . . hope you can make it :) and see if there are checks you can get, thanks! Larry Inman."
The indictment noted that the MRCCM donated $6,000 to Inman's campaign committee between October 2017 and May 2018, but didn't make additional donations after his June 3 text message.
Mike Jackson, MRCCM executive secretary-treasurer, issued a statement to media saying: "Our members deserve elected officials who vote on the merits of a bill, and how it will affect us as taxpayers and hardworking people."
In 2017, ballot-question committee Protecting Michigan Taxpayers (PMT) circulated a petition to repeal the prevailing wage law and in April, the Board of State Canvassers (BSC) deadlocked on whether to certify the petition.
The case eventually went to the Michigan Supreme Court before it returned to the BSC who unanimously approved the ballot measure.
Inman eventually voted to repeal the law, which guaranteed union wages and benefits for workers on government-funded construction projects. The Republican-led House approved the measure in a narrow 56-53 vote and the Senate approved it 23-14.
The indictment alleges an FBI agent asked Inman if he communicated with the union or its representative before his vote and the agent said Inman "denied having any such communications and specifically denied soliciting $30,000 from Person A."
Progress Michigan Executive Director Lonnie Scott called for Inman's resignation and also asked Chatfield and Senate Majority Leader Mike Shirkey (R-Clarklake) to "investigate and identify 'Inman's Dirty Dozen' so the public knows" which lawmakers sought to sell their votes.
Voters Not Politicians Executive Director Nancy Wang and Michigan Democratic Party Chair Lavora Barnes each agreed in the call for Inman's resignation, with Barnes calling the charges "incredibly disappointing and concerning."
"Not only is Inman accused of violating the trust of his constituents, the oath of his office, and the law, but his actions, if true, show a deeply troubling pattern of Republican disdain for the working people of our state," she said in a statement. "This is a stark reminder that elections have consequences."
Inman, a former Grand Traverse County Board of Commissioners member and retired vice president of the Huntington National Bank branch in Traverse City, was first elected to the House in 2014 and was re-elected in 2016 and 2018.
AG Would Need To Report To Legislature Before Suing Feds
The Attorney General (AG) must personally appear before the House and Senate general governments subcommittee and explain the findings that would lead to a suit against the federal government, according to a Fiscal Year (FY) 2020 spending plan that moved out of a House committee Tuesday along partisan lines.
In moving the House General Government Appropriations Subcommittee budget Tuesday morning, the panel approved a new provision that the AG would need to submit, personally, the cost of suit to legislators before moving forward on it.
The suit could be something where Michigan is going solo or joining with other states on a broader issue. While in front of the legislative panel, the wording requires that the AG provide a cost estimate on the impact the lawsuit will have on the state.
The provision comes after Attorney General Dana Nessel joined in a suit with other states' Attorneys General over President Donald Trump's emergency border wall declaration in February.
HB 4234 moved to the House Appropriations Committee along a 6-3 partisan vote. As reported Tuesday morning, the Attorney General's administrative office would take a 15% cut on top of a 3% "administrative efficiency" paring next fiscal year.
In all, the Democratic AG would get $5.7 million less from the General Fund than what it received this year, a nearly 14% overall reduction that caused panel Democrats to call the move "political."
House General Government Appropriations Subcommittee Chair Mark Huizenga (R-Walker) said the panel identified pockets of money where the Attorney General can access funds from lawsuit settlements and awards.
House Republicans carved 3% out of the administrative lines and 15% out of the information technology lines for nearly every department. The Attorney General's office is the House's only Fiscal Year (FY) 2020 budget that took an extra 15% "administrative reduction."
By comparison, the Senate's proposal scaled back the AG's office $3.64 million or 8.8% from the current spending.
"We just want to make sure there's efficiency in government," Huizenga said. "If you look across the entire budget, we did take cuts from both an efficiency standpoint and the IT. We want to make really sure people work hard for those dollars . . . The idea is not to be pejorative about it, but to make sure they work very hard for the hard-working Michigan taxpayers."
Rep. Jon Hoadley (D-Kalamazoo) challenged Huizenga on the cut, noting that neither the chair or anyone else from the subcommittee had worked with Attorney General Dana Nessel's office to understand the impact the cuts would have on defending residents' rights.
If adopted, the "arbitrary and capricious" cuts would have "significant" ramifications for the people of Michigan considering the number of investigations the office is conducting.
"If it walks like a duck and talks like a duck, it's probably an overly partisan and political move targeting one office," Hoadley said.
HB 4234, the House's General Government bill, also moves the oversight of the new $3.216 million Independent Legislative Redistricting Commission from the Secretary of State's budget to the Legislature's budget. It also requires the new commission to report to the Legislature quarterly.
Huizenga said the ballot proposal calls on the commission to report to the Legislature and the provision is following the law. The operational side of things will stay with the Secretary of State, he said.
However, the executive director of the ballot committee that created the Independent Commission, Nancy Wang, said the proposed shift "defies the will of the 2.5 million Michiganders who amended the state Constitution specifically to take redistricting out of the hands of politicians and place it with an independent citizens redistricting commission."
The bill also requires quarterly expenditure reports from the Secretary of State on the cost of implementing Proposal 2 and Proposal 3.
Other highlights of the House General Government bill include:
- No deposit into the Rainy Day Fund. The Governor recommended $150 million
- $1.8 million less to local governments than what Gov. Gretchen Whitmer recommended. Whitmer wanted a 3% increase for $7.7 million. The House is going with a 2.3% increase for $5.9 million. "Distressed" counties, cities, villages and townships must spend whatever increase they received to increase their payments into their unfunded pension liabilities, if they have a fund.
"We're not taking anything away from them at this time. This is targeting taxpayer dollars toward good stewardship across the state," Huizenga said.
- Deletion of the $14.1 million for the Michigan Public Safety Communications System (MPSCS) upgrades the Governor wanted.
- Deletion of the $134,000 increase the Executive Office wanted for itself.
- A $4 million cut to Pure Michigan instead of the $5 million cut the Governor wanted.
The Democrats put forward around 10 amendments, all of which were defeated on a party-line vote. Rep. Terry Sabo (D-Muskegon), the ranking member on the subcommittee, called it a "horrible budget" with "political implications" that "does not serve residents as they need to be served."
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House Subs Out SB 1 With Its Auto No-Fault Reform Bill
The contents of the House no-fault auto insurance reform bill, HB 4397, were substituted into SB 0001, Wednesday afternoon by the House's Select Committee on Reducing Car Insurance Rates without changes.
Rep. Karen Whitsett (D-Detroit) attempted, without success, amendments to ban insurance companies from using postal ZIP codes and credit scores in setting rates. A third would have capped insurance company profits. That, too, failed along party lines.
Still, Whitsett joined Republicans in reporting out the substituted version of SB 0001 while her other three Democratic colleagues voted no. SB 0001 is now on the House floor.
The motion to adopt the substitute was unanimous. The House bill includes rate relief language on the personal injury protection line, something the Senate bill does not. The House bill also gave the Department of Insurance and Financial Services the power to prevent non-driving factors from being used to set rates.
Rep. Terry Sabo (D-Muskegon) praised Chair Jason Wentworth (R-Farwell) with the way he had run the process of collecting information on how to lower the country's highest auto insurance rates and "trying to find something that we could agree on."
"Unfortunately, I don't know what happened last week," said Sabo, referencing the hasty passage of HB 4397. "We had such a good process led by you and I really wish that could have continued."
Rep. Donna Lasinski (D-Scio Twp.) tried to move a substitute that encompassed the House Democrats' plan, which preserves the unlimited lifetime benefit while guaranteeing a 25% rate reduction off the total auto insurance bill for 5 years.
It failed along partisan lines with Whitsett passing on the bill.
"This will reform auto no-fault insurance, not repeal it, not throw it out," Lasinski said.
Slowing Economy Flattens Projected State Revenues
There was a mix of good news and bad news at Friday's biannual Consensus Revenue Estimating Conference (CREC).
Michigan's economy is slowing to a snail's pace, causing economists to wave the caution flag about the amount of money the Governor and lawmakers can expect to spend this year and at least the next two.
The CREC principals agreed on state revenues up a combined $83.3 million for this fiscal year, but down a combined $27.8 million for Fiscal Year (FY) 2020 and $17 million for FY '21. Essentially, it means policymakers don't have a lot of extra money to throw around, but there isn't a need for massive budget-balancing cuts, either.
"What we saw is that revenues are going to be essentially flat," said state Treasurer Rachael Eubanks. "From our perspective we're relatively stable."
The revenue forecast numbers are so stable, the Budget Office and fiscal agencies are projecting neither a pay-in to the Budget Stabilization Fund or a pay-out from FY '19 to FY '21. In her initial Fiscal Year (FY) 2020 budget, Gov. Gretchen Whitmer suggested a $150 million rainy day fund deposit. The Senate recommended a $50 million deposit. The House isn't recommending any deposit.
Income tax review payments are ticking along at historic highs. That's good news for the state government's General Fund, but sales tax revenue is down, which is hurting the School Aid Fund (SAF).
The agreed-to numbers show FY '19 General Fund revenues coming in $151.5 million more than what was expected in January. School Aid Fund numbers are coming in $68.2 million less for the net gain of $83.3 million.
SAF revenues, however, are expected to come in $86.9 million and $84.9 million less than expected in FY '20 and FY '21, respectively, which is the reason for the overall decrease in projected revenue.
Eubanks said she saw nothing troubling in the numbers, but said the Department of Treasury will continue to monitor international trade negotiations to see if there's a "potential to impact our economy in a meaningful manner."
Michigan's modest economic growth is continuing, but revenue estimates are slowing to numbers not seen in the last five to 10 years.
Slower but steady growth in Michigan's economy is the forecast for the next three years, economist Gabriel Ehrlich said at Friday's CREC, but he's also "more worried" that usual because of "uncertainty that is currently surrounding economic policy."
"Michigan's economy right now continues to look strong. Those are the numbers. Things are looking pretty good right now. We expect continued job growth over the next three years along with low unemployment and pretty decent real income growth," he said, noting that he has given the outlook from the University of Michigan Research Seminar in Quantitative Economics (RSQE) to the conference now seven times.
"We've been consistently optimistic about the economic outlook in that time and so far the numbers have cooperated with us. That's nice. As an economic forecaster, it is my job to worry about what can go wrong and I have to admit that I'm more worried than usual today than I typically have been . . . so I hope you will join me in keeping your fingers crossed that Michigan's economic luck will continue," he said.
Unemployment nationally is still trending down, but in Michigan is expected to hold steady under 4% over the next three years, he said.
Personal income is expected to grow 3.39% this year, 3.91% next and 3.78% in 2021. Real disposable income will go up 2.19% this year, 2.12% next and 1.81% in 2021.
Some 36,000 jobs are expected to be added this year in Michigan, for 0.8% growth; 26,200 in 2020 for 0.6%; and 25,600 in 2021 for 0.6%.
"Early on in the recovery, it was really on the demand side that people wanted to work and employers didn't want to hire. At this point, we think, to a large extent, employers do want to hire. Job openings actually exceed the number of unemployed workers now," Ehrlich said.
One risk to watch out for is the possibility of a national recession. He noted this is also a contract year for the United Auto Workers.
The biggest risk is trade negotiations with China, Canada and Mexico.
"Watch the tone from China," Ehrlich said. "If China starts talking in a very combative way, it is going to be harder for the United States to back down or to find neutral ground . . . There is no question we need to expect a response from the Chinese government. They've already announced it will happen. What I worry about is if you start seeing really bellicose language; I think that leads to things starting to spiral. You get tit-for-tat behavior, and it's a lot harder to come to a compromise."