June 16, 1994

Legislative Week in Review

• Lawmakers disposed of the last major departmental budget this week, as unresolved disagreement over the Department of Social Services budget sent HB 5264 to conference committee. As usual, DSS spending symbolized diametric partisan political philosophies, with the Senate passing the budget 20-11, and the House unanimously rejecting it 0-92. The $2.2-billion general fund DSS appropriation approved by the Senate is $10 million short of the spending level passed last week in the House. This spending bill is one of five major budgets on which lawmakers hope to reach final consensus when they resume session next Tuesday.
• After a long session and a string of unsuccessful amendments to Engler administration-approved bills, the House approved on Tuesday seven bills offering tax cuts totaling $155 million. Small businesses are expected to reap $85 million through measures including a 0.05-percent reduction in the state single business tax. A feet-to-the-fire amendment—reminiscent of last year’s SB 1 abolishing property tax–based school financing—to eliminate the SBT was defeated by the lower chamber 36-63.
• An additional $70 million in revenue reduction passed the House in the form of two bills offering tax relief to retirees. HB 4801 would raise income tax exemptions on private pension income, while HB 5278 permits retirees without pensions to claim more tax-exempt interest or dividends. The total package of $155 million in tax breaks reflects a painstakingly negotiated agreement with legislative quadrant leaders and the executive branch, prompted by optimistic revenue estimates that may push the state beyond the constitutional limit on total taxes that it can collect in the next year.
• A measure expanding the school aid budget continued to pick its way back and forth between legislative chambers this week, with the House concurring in Senate changes to HB 5463 that add nearly $42 million for schools in the 1994–95 fiscal year. Back in the Senate, lawmakers stripped from the bill provisions added in the House to give wealthier districts the same ability to seek voter-approved funding increases that poorer districts now have. If the House fails to concur in these latest Senate changes, the bill will end up in conference committee.

Political News

• With an offer of $291 million, Blue Cross and Blue Shield of Michigan had the wining bid in the state sale of the Accident Fund. The Fund’s 400 employees will have until mid-August to match the bid and thereby take over the company themselves. Other bidders included the Michigan Insurance Partners, created by Physicians Insurance Company of Michigan and Michigan Physicians Mutual Liability Company, both in Okemos, and The Michigan Fund Company in New York. Meanwhile, the state has requested a supreme court decision on whether the Fund’s policyholders have a right to the assets of the Fund as the policyholders allege; an affirmative opinion could undo the BCBSM deal.
• State Superintendent of Public Instruction Robert Schiller is reported to be considering a new job in New Jersey, where he worked for two decades before assuming the Michigan Education Department’s top administrative post. Schiller’s three-year tenure has been marked by tension with an executive branch eager to downsize and deemphasize the department. His contract runs through 1997.
• National women’s groups are targeting Michigan’s U.S. Senate race as one of their best shots in the fall elections. Seven women now serve in the upper chamber of Congress; of this year’s 34 U.S. Senate races, 15 have at least one woman running. Michigan’s crowded primary field for one of the Senate’s seven open seats includes Republican Ronna Romney and Democratic State Senator Lana Pollack.
• As expected, Rep. Carolyn Cheeks Kilpatrick (D-Detroit) has abandoned her House reelection campaign in favor of running for the state Senate seat vacated by the late David Holmes. Gov. John Engler signed into law a special extension of the Senate district filing deadline, facilitating Kilpatrick’s switch.