Options for Managing Medicaid Funding and Containing Cost Growth

Posted on May 17, 2013 by Nicole Bradshaw

As the state deliberates Medicaid expansion, policymakers are likely to discuss options for containing Medicaid cost growth as well. In 2012, CRC published Options for Managing Medicaid Funding and Cost Growth, a report that discusses revenue and expenditure trends and provides policymakers with both revenue and expenditure side options to sustain Medicaid.

The legislature is currently debating a bill that would expand Medicaid to individuals and families at or below 133 percent of the federal poverty line. The Medicaid expansion was passed as part of the federal Patient Protection and Affordable Care Act of 2010, and in 2012, the Supreme Court effectively made this component optional. Medicaid is a means tested health insurance program that is co-financed by the federal and state governments. Medicaid spending consumed 15 percent of state resources in fiscal year 2012 making this program an important element in a healthy state budget. Approximately 20 percent of Michigan’s population relies on Medicaid as a primary source of emergency and preventative health care services.

Posted in Publications, State Finances, Uncategorized | Tagged , , | Leave a comment

State revenue picture improves as final budget deliberations draw near

Posted on May 16, 2013 by Bob Schneider

Yesterday’s consensus revenue estimating conference at the Capitol provided some good news to those following the state budget.   The conference’s principals agreed to new revenue estimates that add significantly to available revenues for FY2013, FY2014, and FY2015.   The table below outlines the changes in revenue assumptions from the last January 2013 revenue consensus, on which the current Executive and legislative budgets are based.

New Picture (5)

General fund/general purpose revenues see the largest increase under the new consensus with an additional $390.7 million available in FY2013, $181.8 million in FY2014, and $200.3 million in FY2015.  The upward revision is particularly pronounced in FY2013.   State economists attributed most of this extra bump to additional personal income tax collections above levels forecast in January.  They theorize that the added revenue is due to individuals taking capital gains during tax year 2012 as protection against the potential of increased federal capital gains tax rates that were part of the “fiscal cliff” deliberations.  These revenues showed up in annual tax payments in April, which were up by more than 62% over levels forecast in January according to Department of Treasury data.

The School Aid Fund (SAF) will see smaller increases in revenues under the new forecast, with $85.7 million in additional revenue in FY2013, $37.6 million in FY2014, and $43.9 million in FY2015.   Again, the capital gains effect is a major factor here in explaining the particularly large increase for FY2013.

The new revenue estimates will present both opportunities and challenges to lawmakers and the Administration as budget deliberations wrap up (both the Governor and legislative leadership have declared their goal of having budgets finished by June 1).  The new forecast adds roughly 2 percent to the January GF/GP revenue assumptions for both FY2014 and FY2015 and a much smaller 0.35 percent to the same SAF assumptions.  Lawmakers now have a decision on how to best allocate this new baseline revenue.   Perhaps more challenging, however, will be the decision as to how to utilize the FY2013 surplus revenue given that a substantial portion of that new revenue exceeds the out-year surpluses.   How will legislators and the Administration decide to utilize the roughly $260 million in combined FY2013 revenue that will be non-recurring, particularly as deliberations over road funding, Medicaid expansion and other budget priorities continue?  And will any of the new FY2013 revenue be added to the current FY2013 budget?  Yesterday’s consensus figures clearly represent good news for Michigan, but they may also add new challenges to budget discussions – which should make for a very interesting conclusion to the month of May in Lansing.

Posted in State Finances, Uncategorized | Tagged , | Leave a comment

When voter approval is required for new local government taxes

Posted on April 15, 2013 by Eric Lupher

from: A former county commissioner
subject: PA 88 of 1913
body: Eric:  I am a former county administrator and county commissioner from a Michigan county.

After my retirement from the board, the next Board of Commissioners “discovered” PA 88 was still on the books and levied a .5 mills property tax on the property owners of the county to support the local MSU Extention office and county economic development agency.  I and several others protested that they could not levy such a tax without a vote of the people because it violated Headlee. That is, my belief is that because of Headlee, if a tax was not in place in Nov 78, you must have a vote to establish it.

The Board at the time, in 2010, sought and received a legal opinion from a local attorney who is on the board of economic development agency, that stated they had the authority to do this.  In fact, it was pointed out, that Washtenaw County was already taxing under this authority.

I do not believe this is right because of Section 31, Art IX of the Constitution.  Can you imagine the amount of money sucked from the private sector if every County in Michigan did this.  I believe it was the spirit and intent of Headlee to prevent just such actions.

We, our group of opponents are looking for help fighting this.  Can you help or steer us to someone who can?

Thanks so much for your time.

CRC’s Response

I’m afraid my response will not be helpful to your cause.

Although Michigan is a strong home rule state (Home rule cities, villages, and counties are assumed to possess a broad range of powers and do not require authorization from state law to engage in most activities. The courts are to assume general law governments (e.g., townships, most counties, school districts) have powers that are fairly implied.), state law requires the enactment of specific laws to authorize the levy of taxes by local governments.  In some other states, local governments can design and levy taxes without action or authorization from their state governments.

The Michigan Constitution requires for many (but not all) types of taxes, in addition to the authorization in state law, that voters within the local jurisdiction must approve the levy of the taxes at the ballot box.  Article IX, Section 31 of the Michigan Constitution (part of the Headlee Amendment of 1978) provides in relevant part,

“Units of Local Government are hereby prohibited from levying any tax not authorized by law or charter when this section is ratified or from increasing the rate of an existing tax above that rate authorized by law or charter when this section is ratified, without the approval of a majority of the qualified electors of that unit of Local Government voting thereon.”

A key point here is that the language says that the tax must be authorized.  It does not require that the tax was levied by the individual unit of government in 1978.

Local government taxes can be authorized in four ways.  Those four ways can be sub-divided into two groups:

A. Those requiring voter approval:
1. Charter millage. The charters of home rule cities, villages, and counties provide for the levy of property taxes and limit the rate at which the taxes can be levied.  The home rule governments can work within those limits without going back to the voters every time, but voter approval is obtained when the residents approve adoption of the charter.

2. Charter township and extra voted millages.  Charter townships can exceed the limits generally placed on general law townships, levying taxes at rates that cannot exceed ten (10) mills.  Like home rule governments, the authorization to do so is obtained when residents of the townships vote to adopt charter township status.  Other taxes may be levied only with voter approval.  Extra voted millages can be levied for a wide range of activities and must be of limited duration.

It should be noted that these vote requirements extend to other types of taxes that were not authorized to be levied by individual local governments in 1978, including: local option income taxes, utility users excise taxes, and casino taxes for cities; and rental car and hotel room taxes for counties.

B. Those not requiring voter approval:
3. Tax Allocation.  General purpose governments are authorized to levy a limited number of mills for operations within certain tax limitations.  Those limitations generally confine the number of mills to be divided among the different types of governments to 15 mills, but it can be raised to 18 mills with a county-wide vote.

4. Taxes that Pre-Dated Headlee.  A number of taxes existed in state law to authorize the levy of taxes by different types of governments.  The section of the Headlee Amendment cited above specifies that local governments are, “… prohibited from levying any tax not authorized by law or charter when this section is ratified …”  These taxes were authorized by law when this section was ratified and therefore do not require voter approval to be levied.

For cities, these include:
A tax of up to 3 mills for garbage collection and disposal.
A tax of up to 1 mill for library operations.
A tax of up to 1 mill for senior services.

For counties, this includes Public Act 88 of 1913 for economic development purposes.

Referring to the point made above, you can see that taxes may have been authorized, but not levied, in 1978 1) if charter authority existed, 2) if taxes were allocated to a county or township, and 3) because the authority existed in state law for cities and counties to levy taxes for garbage collection, libraries, senior services, and economic development.

I have purposefully avoided going into too much detail in this explanation.  If there are any details I can provide that would help to fill in holes or answer further questions, please do not hesitate to ask.

——————————————————-
Eric Lupher
Director of Local Affairs
Citizens Research Council of Michigan
734.542.8001
elupher@crcmich.org

 

Posted in Ask CRC | Comments Off

House budget action begins: Higher Education summary

Posted on March 20, 2013 by Bob Schneider

And the decision-making begins.

The Legislature took its first formal action on Governor Snyder’s budget proposal yesterday morning as several House Appropriations subcommittees reported their own budget recommendations.   Among those recommendations was the eagerly awaited proposal for the Higher Education budget.

The House Appropriations Subcommittee on Higher Education reported House Bill 4221 with no overall change to the funding level recommended by the Governor.   However, the Subcommittee included significant changes that could affect the distribution of that funding across individual universities.

Perhaps of greatest significance, the House subcommittee proposed withholding 15% of overall base funding ($186.5 million in total) from universities that do not comply with specified “fiduciary responsibility in employee  contracting” requirements that relate to efforts discussed by some universities to extend existing labor contracts prior to implementation of “right-to-work” restrictions that take effect later this month.   In order to avoid the reduction, universities would have to refrain from extending, renewing or entering into a new labor contract between December 10, 2012 (date on which “right-to-work laws were enacted) and March 28, 2013 (effective date of “right-to-work” laws) unless all of the following apply:

  • Any  extension/renewal of a non-expiring contract generates at least 10% annual      savings from the existing or expected future contact (as certified by an independent certified public accountant)
  • The term of the new agreement does not exceed the length of the contract being      replaced unless the same 10% savings requirement is met
  • The contract does not only contain terms that constitute a union security agreement, closed-shop provision, or other specified agreements related to membership in or payment to a labor organization as a condition for obtaining or continuing employment

To the extent that universities fail to meet these requirements, 15% of their FY2013 base funding is unappropriated and then reappropriated, with up to $2.2 million redirected to MSU AgBioResearch and MSU Extension; up to $7.0 million of remaining amounts to universities with retiree health care premium obligations to the Michigan Public School Employees’ Retirement System (MPSERS); and the rest to remaining universities through a modified performance funding formula.

That performance funding formula is also revised by the House Subcommittee from the model proposed by the Governor.  In particular, the House eliminates a specific tuition restraint component of the Executive formula and instead ties all other performance funding to the prerequisite that universities keep tuition and fee rate increases for resident undergraduate students at or below 3.0% for the 2013-14 academic year, slightly below the 4.0% threshold used in the Governor’s performance funding allocation.  The $6.2 million in the Governor’s proposal based on tuition restraint is then reallocated to the other performance funding factors.   Finally, the House Subcommittee combines three separate performance factors included in the Executive recommendation based on how universities compare to national Carnegie classification system peer universities.   The two formulas are compared in the table below.

U formula2

The performance funding changes result in a re-distribution of funds across the individual universities.   Below is a review of how each university fared under both the Governor’s February proposal and yesterday’s House Subcommittee recommendation, including a look at what a 15% withholding could mean to each.

U funding 3

Posted in In The News, Uncategorized | Tagged , | Comments Off

CRC paper helps to understand Detroit Zoo tax dispute

Posted on February 6, 2013 by Eric Lupher

Today, both the Detroit News and Detroit Free Press both reported that nine Wayne County communities were asking for a declaratory judgment to clarify whether they can and/or should be capturing revenues from the Detroit Zoo 0.1 mill tax levy.

A CRC paper released last week explains that the controversy stems from conflicting directions in state laws that a) direct tax increment financing authorities (DDAs, LDFAs, brownfield redevelopment authorities, etc.) to capture revenues from all taxes levied on properties within their districts and b) say that revenues that will be captured must be enumerated in the ballot question that seeks voter authorization to levy a tax.

The CRC paper is available at www.crcmich.org/PUBLICAT/2010s/2013/note201301.html

Posted in In The News, Publications | Comments Off

Potential Changes to Michigan’s Recall Law

Posted on December 5, 2012 by Jeff Guilfoyle

The Michigan legislature is currently considering a number of election reform bills (House Bills 6058 to 6053).  Among other changes, these bills would alter Michigan’s current process for recalling elected officials.  Among the changes contemplated are requiring a recall election to pit an incumbent against another candidate, limiting the recall election dates, cutting the number of days allowed for gathering recall signatures, and barring recalls in the first and last year and elected official is in office.  These changes would make it more difficult to recall an elected official in Michigan.

 CRC recently addressed the topic of recall in Michigan’s Recall Election Law. This paper discusses recent recall trends in Michigan, Michigan’s current recall model, and alternative models for recall. 

Posted in Publications | Comments Off

CRC’s Annual Meeting in Online

Posted on October 5, 2012 by Jeff Guilfoyle

CRC’s Annual Meeting is available online!  This includes the morning panel discussion on Investing in Michigan’s Future and the keynote address by State Treasurer Andy Dillon.

CRC’s 2012 Annual Meeting was taped by CDTV, City of Dearborn Television and will be broadcast in the City of Dearborn on Comcast channel 12, WOW channel 10 & in Southeast Michigan on AT&T Uverse Channel 99/Dearborn/CDTV.  Online and streaming links are also available.

CDTV will be playing the CRC meeting at the following times through November 4 (the Sunday before the election):

             – Fridays at 8 pm

             – Saturdays at 7 pm

             – Sundays at 4 pm

 The video is also available online at    http://cdtv.pegcentral.com/player.php?video=67abdea5dfe767a300e4251174e12937

 CDTV is also streaming its broadcast feed on the web, so at the times listed above you can go to http://video.discovervideo.com/accounts/play/?id=500334&type=flash  & view the meeting online. 

 CDTV is City of Dearborn Television.  It is available in the City of Dearborn on Comcast channel 12, WOW channel 10 & in Southeast Michigan on AT&T Uverse Channel 99/Dearborn/CDTV.

Posted in Inside CRC | Comments Off

Proposal 2 Question

Posted on October 1, 2012 by Eric Lupher
Question: Explain to me how opponents of Proposal 2 determine that the proposal will make buses unsafe and schools unable to fire felons as claimed in recent ads.
Answer:
Proposal 2 says that “No existing or future law of the State or its political subdivisions shall abridge, impair or limit the foregoing rights to organize together to form, join or assist labor organizations, and to bargain collectively with a public or private employer through an exclusive representative of the employees’ choosing].”  “No existing or future law of the State or its political subdivisions shall impair, restrict or limit the negotiation and enforcement of any collectively bargained agreement with a public or private employer respecting financial support by employees of their collective bargaining representative according to the terms of that agreement.”  In light of actions in Michigan and other states that are either adverse to the process of collective bargaining or limit the subjects of collective bargaining, it is expected that this proposal would remove any limitations and ensure that no actions are taken that are adverse to collective bargaining in Michigan.
Based on these provisions, opponents of Proposal 2 have been examining the laws to identify provisions that would/could be nullified with adoption of this proposed constitutional amendment.  For the sake of their political spots, they have taken some of the extreme possibilities to make their point.
Laws were enacted setting higher standards for school bus drivers or limiting the ability of convicted felons to be employed in public schools.  Prior to their enactment, school districts had the discretion to take actions relative to those subjects.  By default they could be collectively bargained in contract negotiations during this time.  Once laws were enacted on these subjects, they were no longer issues that could be raised in contract negotiations through collective bargaining.
If Proposal 2 is adopted, there will need to be a method for identifying laws that fall under those provisions.  I think it is unlikely that laws (or sections of laws) would be nullified wholesale.  It is more likely that laws (or sections of laws) will be nullified only when it is broached as a subject of collective bargaining, one party objects, and the issue is taken to court where a judge says that the constitutional amendment created by Proposal 2 of 2012 prevails and the laws are nullified.
Those subjects could then be the subject of collective bargaining.  Would a school district agree to including these provisions in a collectively bargained agreement?
The claims of the opponents are probably a stretch, but they seemed to have served the purpose of getting your attention.
Posted in Ask CRC | Tagged , , , , , , , , , , , | Comments Off

The American Community Survey is a Valuable Tool

Posted on July 16, 2012 by Eric Lupher

Organizations like the Citizens Research Council of Michigan are based on the premise that better information leads to better government.  Policymakers in Washington, D.C., are currently debating the value of the American Community Survey (ACS), an on-going effort of the Census Bureau to document the way Americans live, work, and interact.  The ACS replaced the long survey that was randomly sent to select households during the census that is performed every 10 years.  The data provided because the ACS is an on-going survey is more timely than was the long form, better reflects the communities 7-9 years out from the last census, and is valuable for a wide range of interested parties.  Specifically as it relates to state and local government in Michigan, the ACS provides needed information that can be used to make better decisions.  USA Today wrote a nice editorial supporting continuation of the ACS in the July 16, 2012 paper.

Posted in Uncategorized | Comments Off

CRC Revenue Sharing Report Subject of Detroit News Editorial

Posted on July 12, 2012 by crcforum

A July 12 Detroit News editorial cites CRC’s recent revenue sharing report and highlights the finding that the policy shift from unrestricted revenue sharing to incentive-based state funding to encourage changes in local government behavior will be of limited effect because nearly 1,200 of Michigan’s cities, villages, and townships are not eligible for the money.

Posted in Publications, State Finances | Comments Off