Vacation amidst a crisis

Believe it or not, I'm not talking about President Obama. I'm not talking about the BP CEO. I'm talking about Lansing's legislative "leaders." The Michigan House of Representatives are expected to meet twice during the entire month of July.

Now, you can make a solid argument that your businesses are safer with the Legislature not in town to reappropriate your money.  However, you can't argue that our state isn't in a jobs crisis, and that part of the reason for the jobs crisis is the failed economic policies of our state, including the job-killing Michigan Business Tax surcharge.

If we are truly serious about being competitive in job creation, this surcharge must be eliminated immediately. But that isn't going to happen on its own, and especially with lawmakers not at work.

For starters, the Legislature needs to complete a state budget that is a realistic spending plan and reflects the priorities of Michigan families. That's right - believe it or not, the Legislature again took a vacation without completing the state budget.  

As a member of the bipartisan freshman caucus, I worked diligently in Lansing to guarantee a School Aid budget by July 1, when schools are required to submit their budgets to the state. Only Lansing would require schools to complete a budget by July 1 -- but not give them any indication of the size of their budget until four months later. The Legislature has agreed on the school aid portion of the budget, but there remains a $1.4 billion structural deficit that has been smoothed over in previous years by federal stimulus funds and accounting changes.

As a business owner like yourself, I understand the importance and value of having a fiscally sound budget in place that will guide you through rough economic times. Michigan businesses can't afford to put off important decisions to the last minute, and neither should the Legislature - there’s simply too much at stake. It’s time for real leadership.

Working together for the good of the people

The benefits of government cooperation are clear, which makes it even more unfortunate that they are so rarely seen. I recently had an example of cooperation between government, business and private citizens that I'd like to share as an example of what they can be accomplished when we work together.

A group of residents led by Joan Badalucco in Springfield Township contacted my office and Springfield Township Supervisor Mike Trout regarding a devastating power surge they experienced back in December 2009. Many of the residents had fried appliances, televisions, melted wires, smoking surge protectors and a few homes even had small fires.

I immediately arranged meetings in my office with parties from the energy company, as did Mr. Trout. At that time, the energy company felt the incident was due to storm-related damage and, as such, the energy company was not responsible for the damages. 

While the electric company is not part of government, they are regulated by the Michigan Public Service Commission (MPSC). The residents took their case to the MPSC. I met with representatives of the MPSC in my office to discuss the power surge. They regarded the size and scope of the surge as highly unusual and were very determined to investigate and determine cause and responsibility for this event.

I urged representatives from the MPSC to attend the public meeting at the Springfield Township offices that had been set up by Joan, who was leading the charge and coordinating the residents' efforts to get recourse in this matter. Mr. Trout and I both attended this event, and compared notes about our meetings with the energy company and MPSC. 

The residents in attendance outlined a history of frequent outages and significant voltage swings that had been going on for years. MPSC did attend the meeting. They listened to the residents' issues and explained their processes and limitations.

Following this meeting, I met again with the energy company to personally relay what I had learned, including the history of sub-par electrical service the residents had been dealing with for years.

I was delighted to hear that the energy company ultimately recognized the unique nature of this circumstances and decided to reimburse the residents for the damages that they suffered.  Since then, the root of the problem has been discovered, voltage meters have been installed in several areas, and the electric company will be contacting customers individually about damage claims.

When doing what it is supposed to, government can be a positive force for the people. I welcome all residents of my district, and all elected officials, to contact me to see how we can help each other by working together.  

Working together, government can accomplish things that are great for the people it serves. This example is a good reminder to those serving in any unit of government what cooperation and coordination can accomplish.

Rep. Kowall can be contacted at (517) 373-2616 or by email at eileenkowall@house.mi.gov.

Teacher Retirement

The governor first announced this proposal as a part of her State of the State address in February, and based her budget recommendation upon the savings that would be realized in this reform.  However, bills were not introduced to the legislature until mid-March.  As you know, the school year begins long before the state's budget process is completed, so having an accurate assessment for how many school employees would be retiring is critical to planning for the upcoming school year.  The delay in having bills introduced contributed greatly to the delay in reaching a consensus on how to move forward.

Important context to these considerations is that Michigan is still facing a myriad of budget issues, not the least of which is school funding.  These budget issues are driven by Michigan families struggling with declining personal income and the nation's highest unemployment which lead to declining state revenues.

Some would argue that we simply need to raise taxes to continue to spend money like we have in the past.  The hard reality is that raising taxes leads to less revenue, not more.  In 2007, Michigan passed the largest tax increase we have ever witnessed.  While in the first year the state collected more money, the next two years have seen a decline in revenue; in fact, revenue collections are now lower than before the tax increase. The fact that we continue to experience budget deficits proves that the tax increase of three short years ago did not provide a long term solution to our budget challenges.

The governor's proposal would have resulted in hundreds of millions of dollars in savings had it been implemented in the way it was first introduced.  However, the version that passed the House turned a savings into a nearly $1.5 billion spending increase.  I cannot begin to describe the lack of responsibility that went into ginning up that bill.  Notwithstanding the obvious spending increases, it only served to give false hope to many public school employees who are considering retirement.

The final bills help our school districts to avoid significant teacher layoffs and keep teachers in the classroom working with our children.  Retirements and reforms will be much better than pink slips for our teachers and our students.  This reform puts our children and taxpayers first while respecting the years of service of our teachers.

No retiree's pension or benefits were reduced by this legislation.  While there is indeed a multiplier increase for teachers eligible to retire who do so this year, there is no decrease to any current teacher's pension.  Current teachers will contribute 3% into the retiree benefits system.  While the original proposal favored putting that into the pension fund, as did I, the MEA and House Democrats pressed to create a new healthcare trust.  This new healthcare trust was a compromise that does guarantee these funds cannot be raided by any future legislature for other purposes.  While these bills did not create an individual guarantee for retiree healthcare, this is not a change from how things stand today.  Further, these bills do not change current or retiree healthcare benefits for our teachers.  In fact, these bills go much further towards ensuring that the retirement system remains solvent and will be there when our teachers retire.  We do not want to see what happened to the auto companies happen to our school systems.

Legislature Cuts

Below you will find a list of cuts to the Legislative Branch I supported to control the state's spending.

• Reduce Legislators' salary by 10 percent, effective January 1, 2011 (Savings: $1.1 million)
• Reduce legislative expenses by 16.6 percent effective January 1, 2011. (Savings: $220,000)
• Reduce allotments for central office staffs.                  (Savings: $450,000)
• Conducted layoffs of House employees. (Savings: $600,000)
• Reduced and re-negotiated maintenance contracts. (Savings: $325,000)
• Cut Legislator's office allotments by 5 percent.      (Savings: $50,000)
• Eliminated House page program. (Savings: $200,000)
• Required all staff and legislators to pay $500 more a year for health care, effective October 1, 2009.           (Savings: $260,000)
• Re-financed House Office Building lease obligations and acquired the title to the building, making it a state asset. (Savings: $26 million over 15 years)

* Note: All savings are annual unless otherwise indicated.

I voted in support of House Bill 4194 which would eliminate retiree health care coverage for legislators who are elected after November 1, 2010. While this does only effect future legislators, I do support efforts to include current legislators. An amendment including current legislators failed due to constitutional concerns.

I also voted in favor of House Bill 6011 and 6012 which passed the House in April. These bills would suspend the state's 3 percent matching contribution to legislator's and legislative staff's defined contribution retirement system.

Race to the Top

The Michigan Department of Education has submitted the state's second round application for the federal Race to the Top grant, meeting the June 1 deadline. The application outlines the state's plan to use nearly $400 million in federal funds to help implement critical school reforms to improve instruction and enhance transparency and accountability.

The application received extensive and broad support from local school boards, superintendents, principals, and teacher unions. The state's application is supported by nearly 87 percent of local school districts, with 737 traditional districts and Public School Academies signing Memoranda of Understanding (MOU) to participate and be eligible for funding, if Michigan is chosen for a Race to the Top award.

The application's theme is: Accelerate Michigan and focuses on improving student achievement, closing the achievement gap, and providing enhanced professional development for teachers.

Race to the Top application

Michigan is Taxed Enough Already

 A recent study revealed only 47 percent of people actually pay any federal income tax.  Perhaps not surprisingly, 45 percent of people say the amount of taxes they pay is "about right."  It's hard to care about wasteful government spending if you don't actually pay any taxes.  Those of us who do pay taxes, however, want to make sure our tax money is spent wisely and only on the core functions of government.   Over the next few months you will hear a chorus of special interest groups loudly screaming for ever-higher taxes to support ever higher levels of government spending.  I want you to know that as your state representative, I am working to make sure the state doesn't spend any more than it can afford.

The way to solve Michigan's chronic budget problems is to solve the jobs problem.  More jobs means more money for schools, more money for police protection and more money for roads. 

Legislation  Here are two of my more recent bills I have been working on:  HB 5797 - This is part of a four-bill bipartisan package originating from the recommendations of the final report of the Legislative Commission on Statutory Mandates. The commission estimates that the state under-funded local units of government between $2.2 billion and $2.5 billion in 2009  For over 30 years state government has sidestepped Article 9, Section 29 of the Michigan Constitution, routinely shifting its burden to the local level with unfunded mandates. HB 5797 strengthens the Headlee Amendment by establishing a Local Government Mandate Panel that determines if new legislation would result in an unfunded mandate. The panel would also provide fiscal notes for pending legislation.  The House Judiciary Committee recently heard testimony on HB 5797 and unanimously adopted the proposed amendments. My colleagues and I will return to a workgroup to address concerns raised at the hearing.  HB 6092 - Introduced on April 28, 2010, HB 6092 would increase funding for Marine Safety programs. An MSU study in 2003 noted that Marine Safety Funding is far below the operational needs. Funding for marine safety is provided through watercraft registration fees, Coast Guard grants and local county funds. The MDNRE administers and controls the funding without mandates or a set accounting formula. It is estimated that only 25 percent of statewide watercraft registration dollars are actually returned to local county Marine Safety programs.  HB 6092 would require the MDNRE to annually disburse 49 percent of all watercraft registration fees collected in the previous year. It also implements a formula to disburse the funds. Lastly, the bill would increase transparency by requiring the MDNRE to post on its website the formula used to determine the amount of state aid and the total amount of watercraft registration fees collected annually by each county.

Click here to view a list of all my legislation I have introduced  

Text Message Ban Slated for July 1  Following some back-and-forth between lawmakers, the Legislature finally voted to ban text messaging while driving.  The ban allows police officers to pull drivers over for reading or writing text messages while driving and issue tickets of $100 for a first offense and $200 for a second.  However, the ban allows exemptions for drivers reporting accidents, medical emergencies and criminal activity. Ninety-one percent of Americans think that driving while texting is as dangerous as drunk driving.  Young people in particular are at danger, as 66 percent of drivers age 18 to 24 admit to sending text messages while driving. 

Constituent Service  One of my roles is to assist residents in the 44th district regarding any problems they may have with state government. I work very diligently and do everything I can to help people resolve issues. Recently a group of residents in Springfield Township contacted my office regarding a devastating power surge they experienced back in December 2009. Many of the residents had fried appliances, televisions, melted wires, smoking surge protecors and a few homes even had small fires. While the electric company is not part of state government, they are regulated by the Michigan Public Service Commission (MPSC).  I was able to arrange meetings with parties from the electric company and the MPSC. This led to investigations by the electric company and the MPSC. Since then, the root of the problem has been discovered, voltage meters have been installed in several areas, and the electric company will be contacting customers individually about damage claims. 

This is one of many situations I was able to help resolve. If you ever experience problems with state government, please feel free to contact my office.

State mandates harming local government services

              As state funding dwindles due to the poor economy, elected officials have to make every effort to assure Michigan families and businesses do not see a decrease in service.

              Many of the services we enjoy everyday - public safety, water and sewer, transportation - are provided by local units of government, that are faced with funding cuts from the state and revenue declines from the weak housing market and property taxes.     

              But there is yet another thing harming local units of government and their ability to provide these services -- state mandates. The state sets certain guidelines on conduct, procedure, and quality that not all areas are prepared to fund.  In these cases, the state is obliged, by law, to compensate the local governments for adhering to the state guidelines. 

              However, the final report of the Legislative Commission on Statutory Mandates estimates that the state under-funded local units of government between $2.2 billion and $2.5 billion in 2009.  That's 2.5 billion uncompensated dollars that local communities, across the state, have been asked to incur, no matter what their individual budget situation.

              Following the recommendations by the commission, I've introduced a package of bills to protect local units of government and school districts from this growing problem. This legislation is intended to improve the discourse between state and local officials, and protect the many great services that Michigan families depend on.

              My legislation, House Bill 5797, puts teeth into the Headlee Amendment, which obligates the state to finance costs incurred by schools and local units of government in carrying out state mandates.

              It also is part of a larger package of legislation. HB 5798 requires the State Office of Administrative Hearings and Rules to issue a report describing whether any provisions of proposed rules are unfunded mandates. The report shall specifically certify whether the proposed rules require local units of government to provide either new activities or an increase in level of any activity or service beyond that required by existing law. HB 5836 expedites cases where local units of government appeal an unfunded mandate.

              I will keep you posted as this important legislation moves through the legislative process.

              I'd like to hear the concerns and issues your business is facing. Please feel free to contact me by calling my toll free number at (866) 334-0010, from outside Oakland County at (517) 373-2616, or by e-mail at eileenkowall@house.mi.gov.

Eileen Kowall

State Representative, 44th House District

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