Around the Dome

by Del Chenault, Senior Vice President, Government Affairs
Scofes & Associates Consulting, Inc. (S&A)

October 2003

WASTE BILLS FACE BATTLE
The Senate Natural Resources and Environmental Affairs Committee is considering a package of bills that deals with solid waste. The bills would ban additional items such as beverage containers, whole tires, used oil, lead acid batteries, and yard clippings from being placed in landfills.

The bills would also mandate that landfills be inspected at least for repeat violations. In addition, the bills would provide for the Director of the Department of Environmental Quality (DEQ) to issue an order restricting or prohibiting the transportation or disposal of solid waste originating within or outside the state if there is deemed to be a threat to public health, safety, or to the environment.

This package of bills is being lauded by environmental groups. The waste industry has expressed serious reservations.

These bills appear to be an attempt by legislators to limit out-of-state waste imports, particularly from Toronto. However, a number of concerns have been raised about the practical effect the bills would have. The most frequently voiced concern is that simply banning items will not make a difference unless there are other places to dispose of those items. Banned items will either accumulate or be illegally dumped. Although well-intentioned, it is questionable that the bills will have any appreciable impact on limiting out-of-state waste.

Many observers anticipate that if these bills become law there will then be an attempt to increase tipping fees to provide money-subsidized recycling. This, of course, would increase the lost of waste disposal space for both individuals and businesses.

NEW REVENUE FIGURES
All areas of the state budget will be open for possible cuts, with the exception of the School Aid Fund, following an October 14, 2003, revenue conference. The conference, called by legislative and administration revenue experts, marks the third straight year Michigan will be facing a fall budget adjustment as the economic recovery continues to stagger.

The "revenue estimating" conference will be held at 10 a.m., Tuesday, October 14, 2003.

What is apparent is that the School Aid Fund will end the current year with a deficit and that the new School Aid Rainy Day Fund for schools will not get an automatic $73 million deposit next year. The 2002-2003 year will not produce the surplus that was needed to begin replenishing the regular Budget Stabilization Fund, an issue that affects the phaseout of the Single Business Tax.

The budget was built from revenue forecasts set by the Department of Treasury and Senate and House Fiscal Agencies in May. However, their decision to call a conference in October shows that quick budget action is needed to deal with hundreds of millions in lower revenue.

In a memo dated September 17, 2003, House Fiscal Director Mitch Bean indicated that revenues would be down by $200 million if revenue growth continues for the next two months at the rate it did in July and August.

Senate Fiscal Agency Director Gary Olson stated that a preliminary estimate shows the General Fund will be $150 million to $200 million under estimates for the current year and the School Aid Fund will be about $50 million short.

Due to budget shortfalls, money will not be available for the new School Aid Rainy Day Fund that the Governor made a priority for the 2003-2004 budgets, and was cited by Wall Street credit agencies in maintaining Michigan's top rating.

The drop in revenues for the School Aid Fund means a deficit for the current fiscal year and no surplus in 2003-2004. Options will include deferring the current-year deficit or transferring money from the General Fund.

Governor Jennifer Granholm has stated that Michigan is slower than the rest of the country in seeing an economic recovery, due to a 7.4% unemployment rate and depressed wage employment.

Some supplemental appropriations will likely be needed for the Medicaid Program in the current fiscal year, according to Senate Fiscal Director Olson.

Michigan has already cut spending by $478.3 million. This is part of $1.8 billion in adjustments to the current fiscal year, which at the time was projected to yield a surplus of $360.6 million.

WATER POLLUTION FEE BILLS
A House Committee has added new language on the water pollution fee bill. The new language estimates the requirement of filing annual pollution discharge reports to the state.

The filing of annual wastewater discharge reports has long been a contentious issue with manufacturing. The business community maintains that the reports are time consuming to prepare and do little to protect the environment. Environmental groups and the DEQ claim they contain essential information on waste water discharge.

The water pollution fee bills would raise about $3 million per year from manufacturing and municipalities. In the past, Michigan has not charged a fee for water pollution discharge permits.

POLITICAL CLIMATE COOLS IN LANSING
The honeymoon between Democratic Governor Granholm and the Republican-dominated Legislature appears to be over. Recent political developments at the Capitol and a harsher tone in rhetoric gives every indication that the amiable days of bipartisanship have come to an abrupt halt.

Since the Legislature's return to session a few weeks ago, several events have transpired that have serve to draw a line in the sand for both sides.

First, the Governor issued Executive Order 2003-17 that aimed to create a new Department of Labor and Economic Growth. The Executive Order was one of the largest reorganizations in state history affecting nine of 20 departments. Per the state constitution, the Legislature must approve or reject an Executive Order within 30 days. Republican leaders balked at proposed changes to the Workers Compensation System. The Senate Government Operations Committee rejected it, expecting the House Committee to do the same. Instead of being the first Governor in state history to have an Executive Order rejected, Granholm withdrew it.

Next, the Governor convened with GOP legislative leaders to hammer out a compromise on a charter school bill. You may recall, the Legislature passed and sent to the Governor's desk a bill approving 15 new charter high schools in the city of Detroit. All agreed to a compromise while the Legislature began work on a new bill reflecting the changes that would be sent to the Governor's desk. The Detroit Federation of Teachers and the AFL-CIO balked at the proposal and the Governor sent a message to the Legislature that the deal was off thus angering the GOP.

Now comes the Attorney General, at the request of the Legislature, with an opinion that the original law approving 15 new charter high schools in the city of Detroit is officially law because the Governor did not veto the bill within the required 14 days. The showdown is now officially on.

This all follows closely on the heals of the biennial GOP Mackinac Leadership Conference at which GOP leaders sharpened the rhetoric for the GOP faithful by crisply criticizing the Governor for lack of leadership, substance, etc.

If that were not enough, State Employer David Fink (a Granholm appointee) is now finishing work on a proposal aimed at saving the state $250 million per year by cutting the paid hours of the state's unionized workforce-a proposal opposed by the unions who heavily backed Governor Granholm's candidacy.

Within this environment, state leaders must now face a possible $300 million additional shortfall in the 2003 budget that officially ended on September 30, 2003. With additional cuts in programs and services expected in the next few weeks, GOP leaders and Governor Granholm will have to work together on yet another budget compromise.

With winter set to officially begin in December, it appears to have already arrived in Lansing.

BOMA'S KEY STATE LEGISLATIVE ISSUES
The BOMA Governmental Affairs Committee reviewed and discussed major issues facing its membership in the state legislature. The GAC chose the following issues to be lobbied and monitored by BOMA lobbyists Steve Scofes and Del Chenault.

Service Taxes—BOMA strongly opposes any type of new service taxes in Michigan. The recently enacted budget did NOT include any new service taxes even though many fees and taxes were enacted to help offset the state's $1.8 billion budget shortfall.

SBT—BOMA supports efforts to further reduce the SBT in Michigan or maintain the tax at its current level. As indicated in the previous report, the legislature has announced a package of bills that will exempt health care costs from the SBT. The Senate Finance Committee began hearings on the package this week with passage expected soon.

MOLD—BOMA promotes high standards to protect the health and safety of building occupants. However, BOMA opposes state initiatives to write model building codes and standards regulating mold and moisture. GAC Chairman Bruce Babiarz and BOMA lobbyists Steve Scofes and Del Chenault are convening a committee to write legislation that addresses BOMA needs and concerns. BOMA lobbyists continue to monitor current legislative packages seen as hostile to BOMA interests and already introduced. At this time, no committee hearings are currently scheduled on those bills.

UTILITY DEREGULATION—PSC Chairman Peter Lark testified before the House Energy and Tech Committee this week. He stated that there may be changes needed to improve Michigan's electric transmission system and head off another blackout like the one on August 14. But what, if any, improvements could be made would not be known until the Public Service Commission completes its review of the current system.

Further, he stated the PSC will have its report on the effects of the blackout in Michigan prepared by the end of the month.

URBAN SPRAWL/SMART GROWTH—BOMA encourages the use of the Brownfield law for redevelopment of urban areas and adaptive re-use of obsolete building. The Michigan Land Use Council released its report this month: Michigan Land Use Leadership Council's Final Report. The Governor has already indicated that the recommendations contained in the report will be a high priority for her fall legislative agenda. GOP legislative leaders have begun to indicate concerns with some of the recommendations contained in the Council's report.

MEDC FUNDING CUTS—BOMA Michigan is opposed to efforts to reduce or eliminate funding for the MEDC. As stated in the October 2 Lansing Alert, Governor Granholm submitted an Executive Order creating a new Department of Labor and Economic Growth. Many of the economic development functions contained within the current MEDC would be folded into the new department. The Governor withdrew the EO after the legislature stood poised to reject it. She has since introduced a new EO that contains compromise language addressing legislator concerns.

BROWNFIELD TAX EXTENSION—BOMA applauds the Michigan legislature for extending the Brownfield Tax Credit last year through 2008. This is the type of tax law that will spark urban development and curtail suburban sprawl. We encourage the state to invest more in brownfield development as future funding allows. No new updates.

Read previous Around the Dome reports

The "Around the Dome" newsletter is written monthly by BOMA's Michigan lobbying firm Scofes-Kindsvatter & Associates (SKA) for BOMA members to be aware of key issues in Lansing. In addition, SKA is monitoring top issues identified by the Government Affairs Committee. If you have comments on the newsletter or BOMA issues, please direct them to GAC Chair Bruce Babiarz at bruce.babiarz@bartonmalow.com or Cynthia Andary of BOMA staff. We welcome your comments and questions on BOMA advocacy issues.