Legislative Update 5-19-23
FY24 budget remains on track after revenue conference
State legislators now in the final phases of preparation for the fiscal 2024 budget still have the resources to cover General Fund spending in the $14 billion range, state experts told the Consensus Revenue Estimating Conference today.
While the conference finalized headline revenue figures to use for FY24 at levels substantially below their January 2023 estimates, the actual resources available to state budgeters are largely unchanged from earlier in this year, MAC is told.
This is due to the impact and timing of various tax policy changes implemented in recent months, such as the elimination of the “pension tax,” the increase in the Earned Income Tax Credit and a cut in the personal income tax rate.
In the vote Friday morning, the conference adopted a net General Fund revenue total of $13.24 billion, an apparent huge decrease from January estimates.
However, resources for FY24 and carrying over from prior budget years allow for both the House and Senate appropriations bills to be funded as they presently stand. The chambers, though, still have to reconcile differences in their budgets before the Legislature’s mandated deadline of June 30 to complete budget work.
The FY24 budget would take effect on Oct. 1, 2023.
For FY24, the state would be $12 billion underneath the constitutional revenue limit imposed by the Headlee Amendment approved by voters in 1978.
For more information on MAC’s budget advocacy, contact Deena Bosworth at email@example.com.
MAC continues to monitor solar taxation bills
Legislation to create an optional structure for the taxes levied on solar facilities was discussed this week in the House Committee on Tax Policy.
After years of participation in workgroups to ensure local options, a stable funding source, appropriate zoning considerations and adequate local reimbursements, MAC has taken a neutral position on the legislation.
House Bills 4317 and 4318, by Reps. Curt VanderWall (R-Mason) and Cynthia Neeley (D-Genesee) respectively, would allow for the creation of solar energy districts by local municipalities after a mandatory public hearing. Subsequently, solar energy developers could apply for an exemption from local property taxes and instead pay a flat rate of $7,000 per megawatt of nameplate capacity for the proposed solar energy facility, instead of ad valorem property taxes. The payment would be locked in for 20 years and distributed based on the proportions of normal taxes that would have been paid to each taxing unit.
An additional financial incentive would be offered for developers that choose to site their facilities on brownfield properties, in opportunity zones, as a secondary use on already improved real property (i.e., rooftops) or on state-owned property. In such cases, the reimbursement rate would be $2,000 per megawatt of nameplate capacity.
The impetus behind the legislation is twofold. First, this methodology for compensating locals for lost taxes will provide financial predictability for the developers and the locals, hopefully avoiding the same problems we have had with the legal challenges to the valuation of wind turbines. Second, the rate and process should serve as incentives for developers to build more renewable energy facilities in the state.
For more information on this issue, contact Deena Bosworth at firstname.lastname@example.org.
Bills introduced to create a statewide septic code
Legislation establishing a statewide septic code has been introduced in both the House and Senate. House Bills 4479–80, by Reps. Phil Skaggs (D-Kent) and Carrie Rheingans (D-Washtenaw) respectively, and Senate Bills 299–300, by Sen. Sam Singh (D-Ingham), would require homeowners with onsite wastewater treatment systems to have them inspected every five years.
As of 2020, about 30 percent of state households relied on septic systems, but many are aging and facing failure. The intent of the legislation is to protect waterways from contamination and combat illness caused by increased levels of E. coli and algae blooms. While Michigan remains the only state in the nation without a statewide septic code, the proposed policy changes may be overly burdensome.
Local public health departments will be authorized to conduct inspections, issue permits and respond to complaints of failure under the bills. A permit would be required for any installation, alteration or repair of a septic system. Additionally, a building permit may not be issued for any construction on a premises served by a septic system unless a permit by the health department is first issued.
Further, homeowners would be liable for the cost of the inspection and any repairs or replacements deemed necessary. It remains unclear how much an inspection would cost, but a $25 administrative fee will be added to each inspection to be placed in a fund used to help local health departments complete their duties. The fund also will provide some grants to homeowners who are below a certain poverty threshold.
At present, a county can adopt a point-of-sale ordinance on septic systems. Should this legislation pass, however, they would lose that ability. There are 11 counties who have such an ordinance on the books, and they would be given seven years after the bills’ effective date to phase them out.
A technical advisory committee would be created and would include representatives from various regional health departments, engineers, septic manufacturers and installers, among others. The committee will be responsible for writing the septic code and promulgating rules. They will be required to consider local soil conditions during this process, so while it may be a uniform code, it will be crafted to the needs of local ecosystems.
MAC does not yet have a position on the legislation but has many concerns. We anticipate a workgroup will be created to allow stakeholders and bill sponsors to work through the details in the coming months.
For more information on this issue, contact Madeline Fata at email@example.com.
Federal legislation introduced to revisit Medicaid Inmate Exclusion Policy
Two bipartisan bills have been introduced in both the U.S. House and Senate to address the Medicaid Inmate Exclusion Policy (MEIP). The Due Process Continuity of Care Act and the Reentry Act were introduced in March, which would amend the Medicaid Inmate Exclusion Policy.
The Medicaid Inmate Exclusion Policy is a federal statute that terminates access to federal health benefits at the time of arrest. These bills would allow continuity of care via access to critical health services for incarcerated individuals. The Due Process Continuity of Care Act would “allow pretrial detainees to receive Medicaid benefits at the option of the state and provide $50 million in planning grant dollars to states and localities for implementing the MIEP repeal, improving the quality of care provided in jails and enhancing the number of available providers to treat this population.”
The Reentry Act would “allow Medicaid payment for medical services furnished to an eligible incarcerated individual during the 30-day period preceding the individual’s release.” MAC, along with other stakeholders, has requested the Michigan Department of Health and Human Services apply for a Section 1115 waiver relating to the MIEP, allowing for Medicaid eligibility for incarcerated individuals prior to release.
MAC supports these bills and access to better care for incarcerated individuals in county jails. Should these bills pass, counties will have a streamlined process to provide effective behavioral health care and services for transitions to community care, while recidivism rates and risk for post-release overdoses should fall.
For more information on this issue, contact Samantha Gibson at firstname.lastname@example.org.
Podcast 83 discusses state budget, ongoing gravel control battle
Progress on the state’s fiscal 2024 budget continues to look promising for Michigan counties, and MAC and its allies are having success in fending off ill-considered mining legislation in the Michigan House, MAC’s Podcast 83 team said in its most recent episode.
Host Stephan Currie and guests Madeline Fata and Samantha Gibson of MAC’s Governmental Affairs staff reviewed the last week’s activity in Lansing in this episode, focusing on:
- The state budget and the May 19 Consensus Revenue Estimating Conference, which may show state resources are not as high as were once expected;
- The ongoing battle over gravel and sand mining regulation, with MAC and its allies battling against an attack on local control;
- The latest on juvenile justice reform legislation, one of MAC’s key priorities for 2023; and
- The arrival of legislation for a statewide septic code.
View the full video of the episode, recorded on May 15, by clicking here.
Previous episodes can be seen at MAC’s YouTube Channel.
And you always can find details about Podcast 83 on the MAC website.
Next ‘Fiscally Ready’ session set for May 23
The Michigan Department of Treasury and Michigan State University Extension will co-host the next Fiscally Ready Communities training webinar, titled, “Financial Best Practices,” at 10 a.m. on Tuesday, May 23.
This FREE, 90-minute training, updated for 2023, discusses the fundamental best practices for fiscal and operational planning and provides an overview of best practices in financial policies and good governance.
Training topics include:
- Multi-Year Budget Forecasting Tool
- Cash controls
- Internal controls
- Purchasing policies
Please register for webinar at https://events.anr.msu.edu/fiscalbestpractice.
For more information about Fiscally Ready Communities, please check out the Treasury Fiscally Ready Communities webpage. This webpage includes Treasury’s 32-page Fiscally Ready Communities Best Practices document, which we encourage all local officials to review.
If you have any questions, please email TreasLocalGov@michigan.gov with the subject line “Fiscally Ready.”
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