MIRS provides comprehensive news and analysis of state government delivered in written reports detailing the activities of the House, Senate, Judicial and Executive branches of Michigan state government.
Michigan News And Capitol Report, Week Ending, May 10, 2019
House Passes Insurance Reform With Mandated Rate Rollbacks
House Republicans stuck together and, with the support of three Democrats, pushed through sweeping reforms to the state's auto insurance system for the first time since the Michigan's no-fault law was created more than 40 years ago.
Michigan's auto insurance customers would see guaranteed rate rollbacks, choice in personal injury coverage and a fee schedule for medical providers under a plan that moved 61-49 at 2 a.m. Thursday morning, 18 hours after the Senate passed similar changes.
Unlike the Senate version, HB 4397 will give the Department of Insurance and Financial Services (DIFS) the power to prevent non-driving factors from being used to set rates. It also mandates savings of between 10 and 100 percent of previous personal injury protection (PIP) costs, meaning some ratepayers can opt out of the Michigan Catastrophic Claims Association's (MCCA) unlimited, lifetime coverage.
Despite the concessions made on the two issues that Democrats and Gov. Gretchen Whitmer cited as reasons for their opposition on Tuesday, most Dems were a no vote. Instead, Democrats pivoted to talking about the people who will choose to take lesser coverage and "be left in the cold" if they get in a catastrophic car accident.
The Governor joined Democrats in the caucus room for about 10 minutes Wednesday night, but left the chamber without commenting to the media to give a reaction to the plan.
Democrats who voted in support of the bill were Reps. Sara Cambensy (D-Marquette), Leslie Love (D-Detroit) and Karen Whitsett (D-Detroit).
Rep. Jason Wentworth (R-Farwell) pointed out that the House has been trying to reform auto no-fault for more than 30 years. He contended residents across the state are talking about the broken insurance system.
"The legislation lowers rates for Michigan drivers, in some cases by thousands of dollars, and increases consumer protections," he said.
House Minority Leader Christine Greig (D-Farmington Hills) slammed Republican leadership for not working with her caucus and, instead, putting forth a proposal that watered-down consumer protections. Specifically, she questioned moving the fraud authority from the Attorney General to the Michigan State Police.
She closed her speech by accusing House Speaker Lee Chatfield (R-Levering) of lying to her face, which got her gaveled down and her microphone shut off.
House Republicans drafted its version of reform Wednesday, using Rep. Jason Sheppard's (R-Lambertville) HB 4397 as the vehicle bill. The caucus used concepts that were discussed in Wentworth's Select Committee On Reducing Car Insurance Rates, according to House Republican spokesperson Gideon D'Assandro. They voted to discharge the bill from committee Wednesday evening before taking it up on the floor. It would go into effect six months after passage.
MIRS learned that Chatfield knew he had 56 "yes" votes for no-fault reform and was going to wait until Thursday's session or next week to run the bill. However, he was told directly that Democratic leadership approached a Republican caucus member to support an opposing bill package.
Chatfield, concerned that waiting would allow opponents to pick off "yes" votes, decided to run the package Wednesday. Most of the day was spent figuring out which Democrats would sponsor the rating factor and guaranteed rate relief amendments, among the others that were adopted.
In his speech on the floor, the Speaker said this issue has been talked about for the last 30 years. The ideas from folks on both sides of the political aisle were put into the version that passed Thursday morning.
"This bill is the right answer to provide rate relief," he said. "It reduces rates and holds insurance companies accountable."
On Tuesday, the Senate voted 24-14 mostly on party lines to pass its own version of no-fault reform in a similarly speedy fashion. It's expected the chamber will support HB 4397.
Whitmer said through a statement on the Senate passage of SB 0001 that, "The action taken by the Senate creates more problems than it solves. It preserves a corrupt system where insurance companies are allowed to unfairly discriminate in setting rates and the only cuts it guarantees are to drivers' coverage. I am only interested in signing a reform bill that is reasonable, fair and protects consumers and this is not it. If this bill comes to my desk, I will veto it."
The House version would offer five levels of PIP, instead of the three included in SB 0001.
The levels would include unlimited coverage; $50,000 in coverage; $250,000; $500,000; and opting out.
Love offered the amendment on the floor to mandate rate rollbacks for five years. It will "ensure that savings are passed on to Michigan families," according to a fact sheet about the bill provided by House Republicans.
Opting out would require a 100% rollback of PIP, which would result in an average savings of $1,200 per year.
Choosing the $50,000 coverage level would result in an 80% rollback of PIP coverage, with an average savings of $960.
The $250,000 option would result in a 60 percent rollback of PIP, with an average savings of $720 per year.
The $500,000 would get a 30 percent rollback of PIP, for an average savings of $360 per year.
And even those drivers who keep unlimited coverage would get a 10 percent rollback of PIP for an average savings of $120 per year.
Rep. Jon Hoadley (D-Kalamazoo) called the rollback a legislative "pinky swear" that insurance companies would come through with the lower rates.
HB 4397 includes a fee schedule for medical costs based on that used for workers' compensation, which "prevents widespread abuse and patients being forced to pay three or four times what a medical service actually costs," the fact sheet stated.
The bill also requires new higher standards for medical care, requiring national accreditation.
It includes a prohibition against "redlining." The legislation states an insurer cannot "refuse to insure, refuse to continue to insure, or limit the amount of coverage available because of the location of the risk."
And it includes limits on attendant care to "stop one of the most common abuses and frauds that drive up costs for everyone else," the fact sheet stated.
Another floor amendment, by Rep. Michael Webber (R-Rochester Hills), added that after the five-year mandated rollbacks, insurers would be required to get future rates approved by DIFS. Current law, is "file and use" for rates. After the five-year period, it would be "file and approve."
Whitsett's amendment expanded the "tolling" deadline during which an injured person can file suit against an insurer. Currently, injured parties have one year from the day of the accident to file suit if a claim is denied. Trial lawyers testified this is a leading cause of lawsuits currently because suit has to be filed to preserve rights if the claim is not fully settled. Tolling will make the deadline one year from the date of denial.
Yet another floor amendment, also by Whitsett, will allow DIFS, already studying what "non-driving factors" should be considered discriminatory when insurers set rates, to use that information to determine what non-driving factors will be disallowed.
DIFS would be required to post a website explaining the changes to auto insurance and providing tips on ways to shop competitively for insurance.
The Michigan Catastrophic Claims Association (MCCA) would continue to operate under the House version, but would be required to undergo an audit every three years and issue a rebate if its assets are more than 120% of liabilities.
The bill would also create a 10-member Automobile Insurance Fraud Task Force.
Just before 1 a.m. Thursday, Rep. Donna Lasinski (D-Scio Twp.), complained about the late-night session, calling it "lame duck tactics."
She urged the adoption of a substitute, which she said would address non-driving factors and provide fair medical costs. She contended the Republican version of the bill would take away rights and benefits "without real rate reduction."
"We don't need to get this done tonight, we need to get this done right," said Lasinski before the amendment was defeated.
Out of the 22 House Republicans who voted no on the 2017 bill pushed by then-Speaker Tom Leonard and Detroit Mayor Mike Duggan, only nine are House members serving in the 2019-20 session. Of those nine, all of them voted for Wednesday's bill.
Of the four Democrats who voted yes on the 2017 bill, only two of them still serve in the chamber. Love voted for Wednesday's bill. Rep. Wendell Byrd (D-Detroit) voted no.
Among last year's "no" votes in the House were then-Reps. Pete Lucido (R-Shelby Twp.) and Jim Runestad (R-White Lake). Both voted for SB 0001 on Tuesday as state Senators. Sen. Sylvia Santana (D-Detroit) put up a "yes" vote for HB 5013 back in 2017 and was a "yes" on SB 0001 as a member of the Senate.
Rep. Yousef Rabhi (D-Ann Arbor) asked to have HB 4397 re-referred to committee and, because it was just recently made available to members, asked the bill be read in full. Both motions were rejected.
He urged colleagues to "put aside political differences and partisan talking points" to adopt the bill.
"Do we stand with insurance companies to give them what they want?" Rabhi said. "The insurance companies who have been screwing our constituents time and time and time again with higher rates . . . What you are doing is leaving people out in the cold. That's not OK."
"Finally, finally, finally we are lowering insurance rates for Michigan drivers," said Rep. James Lower (R-Cedar Lake). "We have been talking about this literally for decades."
He said concerns about redlining and non-driving factors are addressed in the bill, so he contended accusations that those issues weren't covered as being simply "political talking points."
Voters Reject Nearly 30% Of Requested Dollars At Polls
Last May, 85 percent of the proposals approved at the ballot box were for schools. Tuesday night, less than 60 percent of the approved proposals will be dedicated to school improvements, as municipalities and counties asked voters for help with a broader range of services.
MIRS gathered results for all of the money-raising ballot questions Tuesday night with the exception of bonding requests for the Ovid-Elsie Area Schools, which was failing, and the Vanderbilt Area Schools, which was also failing.
More requests for assistance with general operations and government buildings -- even one request for cemetery funding -- made up many of the non-school proposals. That said, voters were also more tight-fisted this time around, rejecting close to a third of the money governments asked them to pony up for.
More cash for road proposals failed than succeeded, though nine of the 11 proposals were approved by voters. The $14 million proposal from Calhoun County’s Emmett Township succeeded, but both a $12.2 million bonding request in Woodhaven and a $8.2 million bonding request in Calhoun County's Leroy Township went down. The asks still represent an uptick from the three road proposals adopted last year.
All questions related to fire service, general government operations, libraries and historical preservation passed. Only one of five police-related requests -- Hillsdale County's .75-mil, 5-year request worth $995,000 -- failed.
Still, schools still reigned supreme for dollars on the line with 95% of the money put before voters dedicated to education. Of the 85 school results reported Tuesday, 66 passed and 19 failed.
Of the 35 school bonding proposals MIRS received the results for Tuesday night, 24 passed and 11 failed. By comparison, in the May 2018 results, 24 school bonding proposals passed and 12 failed.
Sinking funds for schools went 11 for 18 while all of the millage renewals passed.
Usually, the largest school proposals pass reliably outside of major elections. That wasn’t the case Tuesday night. While $316 million for Walled Lake schools was approved, the largest proposal in the state, voters denied the third-largest, a $149 million bond for East China schools in St. Clair County, along with a $48 million bond for Alpena Public Schools.
Some of the state’s largest educational asks were also turned down at the polls. Though voters approved nearly $1.2 billion in school improvements this year, they rejected more than $450 million in proposals. That’s compared to the $1 billion that passed last year and $200 million rejected. Even just among the number of proposals, nearly twice as large a proportion were rejected.
In total, more than $500 million was rejected by voters Tuesday night, a large increase in dollars in absolute and proportional terms.
The largest non-school asks, more than $26 million for the Holland Area Community Swimming Pool Authority, was approved by voters. The $2.88 million Shiawassee County jail proposal failed. The recreational center in Kalkaska County also went down.
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Post Labor Day Start, CTE Bills Moves Out Of Committee
Public school district officials wouldn't need to get a waiver from the Department of Education (MDE) if they wanted their schools to start before Labor Day, under legislation that moved out of a House committee Tuesday morning.
Rep. Steve Johnson's (R-Wayland) HB 4369 moved without the support of a smattering of his Northern Michigan Republicans, but with unanimous support from the Democratic side of the aisle.
It now moves to the House Ways & Means Committee roughly a month after Education Committee Chair Pamela Hornberger (R-Chesterfield Twp.) railed against the post Labor Day opening requirement being adopted 15 years ago for the benefit of adults, not students.
The Education Committee didn't debate the post-Labor Day requirement or another package of bills that expands the state's high school graduation requirements to better fit students taking a career technical education (CTE) track.
The bills include:
- Rep. Beth Griffin's (R-Mattawan) HB 4269 and HB 4270, which allows students to satisfy their 21st Century Skills requirement by taking a foreign language class at any time during their K-12 experience. Sign language would fit this requirement and the student could take a foreign language class online to satisfy the requirement.
A visual arts class, computer science, computer coding or a CTE program could also be used to garner the three credits needed to satisfy the 21st Century Skills requirement.
- Rep. Gary Howell's (R-North Branch) HB 4271, which allows a statistics or financial literacy class to satisfy the state's Algebra 2 requirement.
- Rep. Roger Hauck's (R-Union Twp.) HB 4282, which allows a training course on Occupational Safety and Health Administration requirements to replace the health requirement.
The CTE bills are similar to what passed the House last year, but died in the Senate.
Members Frustrated Community College Increase Won't Match Inflation
Community colleges may be among the best places for connecting students to available jobs, but their annual state operational funding will only increase 1%, under a Fiscal Year (FY) 2020 spending bill that moved out of House subcommittee Thursday morning.
House Higher Education and Community Colleges Appropriations Subcommittee members expressed frustration that college funding from HB 4230 was coming entirely out of the School Aid Fund and was, in total, nearly $7 million less than what Gov. Gretchen Whitmer proposed.
The bill that yielded 5-2 party-line support spends $414.7 million on community colleges overall in Fiscal Year (FY) 2019-20, less than the $421.2 million the Governor recommended, for an overall increase of 1.6%.
Community college operations would go up only 1%, for total funding of $325.5 million. That is down from the $331.9 million executive recommendation. Whitmer had proposed to give community college operations $9.7 million from the General Fund to get to that number.
The Governor had proposed making those increases conditioned on restraining in-district tuition and fee increases to 3.2% or $128, whichever is greater. The subcommittee agreed to that.
"In a budget in which we do not even hold up with inflation, 1%, while it is a step in the right direction, is not far enough," said Rep. Sarah Anthony (D-Lansing). "We saw that the executive recommendation was 3%, and while I applaud that, that is not enough. We have continued to divest in higher education and until we take this seriously as a Legislature, as a state, we will continue to lag behind."
She said she did not want the state to race to the bottom.
"We are working on a budget that doesn't make the rate of inflation increase. It's 1% and we are leaving money on our balance sheet across, not only this budget, but many budgets and no one is telling us why. What we are doing is setting us up so we are unsuccessful across our budget as a whole," Rep. Jon Hoadley (D-Kalamazoo) said.
He said people can connect the dots as see what is going on. He suggested it would be better to look at the overall budget in a big-picture way if the majority would come clean on its roads plan, which is clearly taking General Fund money away from other budgets.
Committee Chair Scott VanSingel (R-Grant) was sympathetic.
"I appreciate the concerns and I personally share many of those concerns, and I'm sure the other committee members do. We understand the process. Our hands are somewhat tied as far as the targets we have. And I hate to say it, because it sounds cliché, but this the first step in the process, as we always say. This probably will not be the final product that's passed out. I personally hope that we can do better, but we are doing as good as we can with the amount of funds that we have," VanSingel said.
Anthony said the distribution formula gave six of Michigan's 28 community colleges more funding "for no apparent reason," and she offered an amendment to treat them all equally. The motion failed on a party-line vote.
Additionally in the budget bill:
- Both the subcommittee version and the Governor want to spend $12.2 million on a Normal Cost Offset to the Michigan Public School Employee Retirement System (MPSERS), but Whitmer would take $3.3 from the General Fund and the subcommittee would take it all from the School Aid Fund.
- The Governor deleted language in Tuition Rate Reports that requires community colleges to include the annual cost of attendance based on 30 credits. The subcommittee retained that language.
- The Governor deleted boilerplate language that forbids a community college from taking disciplinary action against an employee for communicating with the Legislature. The subcommittee retained it.