PAADVISORY February 5, 2010 GOVERNOR’S FINAL SOS ADDRESS SETS TONE FOR “PATH FORWARD” On Wednesday, in her final State of the State address to a joint session of the legislature and statewide broadcast, Governor Granholm gave a somber review of the economic challenges facing “Democrats, Republicans and independents alike will have to confront this truth: We cannot turn back,” Governor Granholm said. “This plan – diversifying our economy, educating our people, protecting them along the way – this is the path forward.” The Governor stated in her hour-long, prime time address that her administration has set the foundation for a new “Where the old Granholm’s speech Wednesday was the second of three major policy addresses she is planning. She presented 29 reform proposals last Friday where she outlined plans to save around $450 million in the state budget and she will give her budget message to the legislature on February 12. (See separate story) Reaction to the Governor’s speech was, as expected, along party lines. Senate Majority Leader Mike Bishop gave the GOP a response to the SOS in a taped broadcast message immediately following Ms. Granholm’s message. “After years of one-time fixes and temporary solutions, the day of reckoning has finally arrived,” said Senate Majority Leader Mike Bishop (R-Rochester). “Senate Republicans have repeatedly pushed for reforms and enhanced accountability in state government. Now is the time to enact them. Senate Minority Leader Mike Prusi (D-Ishpeming) said the Governor properly mentioned some of the positive elements of her tenure leading the state. He stated that her accomplishments of diversifying the economy into clean energy projects, advanced battery production, and the film industry contributions to the state provided jobs and needed investment in “She is a good cheerleader,” said House Republican Leader Kevin Elsenheimer of Kewadin. “She left the impression The Governor presented four major legislative challenges to the legislature. She said that following her budget message next week she wanted the legislators to have a balanced budget presented to her by July 1. She also called on legislators to provide the funding necessary to qualify for federal matches for transportation improvements, support the Promise Grant college scholarship program, and fund the Pure Michigan tourism campaign. “You will have my proposed budget by February 12 as the law requires,” she said. “Hand it back to me by July 1.” She supported a recommendation from a bipartisan group of House freshmen that called for a constitutional amendment to have the budget complete by July 1, “or else dock our pay – yours and mine for every day we don’t get the job done.” She said that “common sense” dictates that “Without the match we lose the federal funds and 10,000 jobs each year going forward,” she stated. “You can continue to ignore this problem, or you can follow the bipartisan transportation funding task force recommendations on how to fix it.” Ms. Granholm told legislators “common sense also tells us” that investing in education is critical to training a workforce to fill the new jobs being created. “It made absolutely no sense to abandon the Michigan Promise Scholarship last year and break a promise to 100,000 The Governor stated that her budget proposal next week will restore the Promise Grant and a “creative way” will be announced to fund it. Throughout her presentation, Ms. Granholm showed that she has not lost her effective communications skills, regardless of the message. She wove through out her economic accomplishment message an imaginary trip through the state with nine stops highlighting technology advances that have created new jobs. Her most prominent stop was in mid-Michigan where she highlighted projects that are turning “the To further advance economic diversification, job creation, education, and protection of · Continuing to seek a fair share of federal funding that last year helped to bring 42,000 jobs to the state through the federal Recovery Act. · Teaming with the Michigan Credit Union League to make more than $40 million available for business start-ups through a Michigan Small Business Financing Alliance. · Asking the legislature to approve a new income tax credit for investment in small businesses. · Training 1,000 prospective entrepreneurs in 12 small business assistance centers across the state. · Opening 10 new learning labs in the metro · Starting a Project Phoenix partnership to transform abandoned auto factories into job-creating enterprises. · Demolishing or refurbishing 5,000 blighted homes and buildings through a $223 million grant from the Department of Housing and Urban Development. · Constructing a health care information system to improve patient care and reduce costs. GRANHOLM ROLLS OUT REFORM PACKAGE INTENDED TO SAVE $450 MILLION Last Friday, Governor Granholm set the tone for her budget message by announcing that she will propose a series of state government reform measures that, if implemented, could provide savings of some $450 million. Her announcement came in a speech she delivered to the Lansing Rotary Club. The presentation was the first of three major announcements on the state’s economic outlook and budget. She followed her message up on Wednesday with her State of the State address and will deliver the third message Friday, February 12, when she presents her state budget recommendation. She told the Lansing Rotarians that “government can’t be all things to all people.” She said her reforms would provide a strong foundation for addressing the state’s major budget shortfall. Administration and legislative leaders said they expect about a $1.8 billion gap between anticipated state revenue and budget expenditures. Highlights of her reform proposals include: · A retirement incentive for eligible state employees to receive a 0.1 percent pension increase to retire prior to October 1. If all eligible employees take the retirement incentive, the state would save $87 million in the first year. The Governor said the state would only replace two-thirds of the employees who chose to take the early retirement. · New school employees would have a combined defined benefit/defined contribution pension. State and school employees would pay 3 percent more to their pension fund and credit would be capped at 30 years. · State employees would pay 20 percent of their health care premium. Lifetime retirement benefits for legislators would end. Her proposal would end immunity for drug companies and would allow Medicaid costs to be recouped. · Local school districts would be encouraged to share services. · Establishing a two-year budget cycle with a July 1 completion prior to the October 1 start of the fiscal year. The business community generally praised the Governor for her reform recommendations but still expressed concerns that the budget shortfall was much greater than the savings potentially achieved through these proposals. TESTIMONY CONTINUES ON SENATE GOP REFORM PROPOSALS The Senate Reforms and Restructuring Committee continued taking testimony Wednesday on Republican sponsored proposals to create financial savings by changing the Urban Cooperation Act and arbitration process. The proposals are part of a comprehensive reform package introduced by Senate Republicans to balance the state budget without raising taxes to meet the anticipated $1.8 billion shortfall for the upcoming fiscal year. Several labor organizations testified this week that SB 1085, SB 1086 and SB 1072 would not achieve the financial savings anticipated by the Republican sponsors. Senate Majority Leader Mike Bishop (R-Rochester) said the committee would continue discussion with local governments and police and fire fighter unions to look at proposed changes to the bills. “I believe and the committee believes there is a potential for a positive outcome from this rather than push something out of committee today,” Mr. Bishop said. The Committee has not yet started discussion on proposals to reduce public employee salaries by 5 percent and require a 15-20 percent contribution to their health care benefits. HOUSE PASSES BILL TO END LIFETIME LEGISLATOR HEALTH BENEFITS The House passed HB 4194 on a 103-1 vote Wednesday to end health care benefits legislators with six years of service receive when they turn age 55. If passed in its current form by the Senate, the bill would apply to legislators who are elected to office beginning this November. In other words, currently serving legislators would not be effected by the health care coverage. The bill was discharged from its House committee and voted upon without any floor debate. Bill sponsor Rep. Dian Slavens ( “After more than 1,000 days of waiting, I’m glad this reform to end lifetime health care benefits for lawmakers is seeking action,” said House Minority Leader Kevin Elsenheimer (R-Kewadin). “ SENATE COMMITTEE CONSIDERS TOURISM FUNDING PROPOSALS The Senate Finance Committee started discussion Wednesday on proposals that would provide funding to continue the state’s Pure Michigan tourism advertising campaign. Committee Chair Senator Nancy Cassis (R-Novi) said she was concerned about how the state could afford the proposed $30 million expenditure and would continue to look at alternative funding proposals when the committee meets again, likely next week. Supporters of the tourism program, including the sponsoring state agency, the Michigan Economic Development Corporation, said the Pure Michigan campaign has directly led to an increase of tourism expenditures in the state, providing jobs and adding revenue to the state tax coffers. The MEDC officials said that the state currently has about $5.5 million budgeted for the Pure Michigan campaign, far short of the $30 million spend last year to fund a targeted nationwide campaign to encourage travel to “We want to be of help and to work with the tourism industry,” Senator Cassis said. “The state has many needs – schools, Medicaid, support to our local police and fire services – real necessities. Whether it is affordable to carve out $35 million is a tough sell at some point.” Tourism industry advocates stated that expenditures to support their industry resulted in a positive net financial gain for the state. They pointed out a recently updated independent study showing that every $1 spent on tourism promotion returned $5.34 to the economy. “Combining our national and regional advertising last spring and summer, the Pure Michigan campaign motivated two million trips to Michigan from out of state last summer and those new visitors spent more than $500 million at Michigan businesses,” said George Zimmerman, vice president of Travel Michigan, a business unit of the MEDC. ROAD LEADERS SAY LACK OF FUNDING MEANS MORE GRAVEL SURFACES The County Road Association of Michigan (CRAM) said that local commissions are allowing more paved roads to revert back to gravel because funding is not available to properly maintain the pavement surfaces. The CRAM report said that 35 miles of paved road were ground back to a gravel surface in 2009 and 100 miles in 38 counties were reverted in the past three years. The CRAM director said that local road agencies are receiving about the save level of funding now as they did in 1998. The agency’s report also said that half of the 83 county road commissions will consider some local roads be changed to gravel by the end of this year because they cannot afford needed pavement repairs. Rep. Coulouris leaving to join Dow Corning. State Rep. Andy Courlouis (D-Saginaw) announced this week he is leaving the state legislature April 30 to accept a position with Dow Corning. Mr. Coulouris will become a public affairs manager for Dow Corning and serve the company as a lobbyist in OFIR requires insurance companies to submit forms for review. Life and health insurance companies will have to submit to the Office of Financial and Insurance Regulation forms for review prior to issuing the material to customers. “Our goal is to scrub ‘gotcha’ clauses out of insurance contracts before they’re sold to Winfrey announces Secretary of State candidacy. Detroit City Clerk Janice Winfrey said this week she will seek the Democratic Party nomination to be the next Secretary of State. She joins Jocelyn Benson in seeking the Dem nomination to replace Secretary of State Terri Marlinga seeking Senate seat. |