Jan. 12, 2012 — Shortly after 9 p.m. on Thursday, December 15, 2011, the legislature wrapped up its work and adjourned until mid-January. Thus ended one of the most active legislative sessions in recent years, one hailed as historic by Republican leadership and a disastrous by the leadership of the Democratic caucus.

Here’s a look at the legislation passed in 2011, and what’s to come for 2012:

Senate committee wants to authorize voters to transfer control to county boards

Dec. 19, 2011 — Legislative action before the holiday break resulted in drastic changes in House Bill 5125 (Rep. Jon Switalski, D-Warren) and House Bill 5126 (Rep. Dale Zorn, R-Ida), part of the road commission reform package.

The Senate Transportation Committee amended the bills, adding the requirement that a county board of commissioners could only assume the duties of a board of road commissioners (either an elected or appointed board) after the approval by a vote of county residents. The Senate passed the bills as amended, while the House of Representatives then rejected the change, creating a stalemate.

The legislature adjourned for the year without passing the legislation. It is likely the issue will resurface when the legislature returns for the 2012 session in early January.

The Michigan House of Representatives passed two series of bills Nov. 30 that would have granted some county boards the powers of county road commissions, House Bills 4029, 4030, 4031 (Rep. Wayne Schmidt, R-Traverse City), and House Bills 5125 and 5126.

At the present time, only the Wayne and Macomb county boards of commissioners control the powers and duties that are normally reserved for the county road commissioners. In most cases, transferring those duties to the county board of commissioners can only be done by a vote of the electorate in a county.

The concept of allowing the transfer of control by simply passing a resolution by the county board of commissioners was suggested by Governor Rick Snyder as part of his transportation reform proposal.

Stay tuned to this site for further updates.

Dec. 9, 2011 — The Michigan House of Representatives passed two series of bills Nov. 30 that would grant some county boards the powers of county road commissions.

House Bills 4029, 4030, 4031 (Rep. Wayne Schmidt, R-Traverse City), House Bill 5125 (Rep. Jon Switalski, D-Warren) and House Bill 5126 (Rep. Dale Zorn, R-Ida) were sent to the Senate for their consideration.

HB 4029–4031 would allow the establishment of single-member county road commission districts, while HB 5125–5126 would pave the way for a county board of commissioners to pass resolutions to assume the powers and duties of a board of county road commissioners.

At the present time, only the Wayne and Macomb county boards of commissioners control the powers and duties that are normally reserved for the county board of road commissioners. In most cases, transferring those duties to the county board of commissioners can only be done by a vote of the electorate in a county.

Governor Rick Snyder — as part of his transportation reform proposals — originally suggested this concept.

The Senate is expected to begin consideration of the package in the near future.

Upgrades for MERS Defined Contribution Plan, MERS Hybrid Plan, and MERS Health Care Savings Program participants

Dec. 1, 2011 — Improvements have been made to the MERS Investment Menu, which means participants of the MERS Defined Contribution Plan, the MERS Hybrid Plan and the MERS Health Care Savings Program will notice some new funds to choose from.

MERS Health Care Savings Program participants can look for informational packets in the mail this December, which will include the new Understanding the MERS Investment Menu book and MERS Health Care Savings Program Handbook. Employees in the MERS Defined Contribution Plan and MERS Hybrid Plan will notice only minor changes to their fund lineup, which is available here.

We’ve also updated the respective Enrollment Kits for each of these programs. Employers can download the new enrollment kits in the Employer Portal. For more information or to request new printed kits for your municipality, please call us at 800.767.2308.

Nov. 22, 2011 — The state pension tax got a governmental green light Nov. 18 — at least most of it.
In a split 4-3 decision, the Michigan Supreme Court ruled that the legislature has the constitutional right to impose an income tax on public pensions, as outlined in PA 38. This means any MERS retiree born on or after Jan. 1, 1946 must pay 4.35% state tax on their pensions starting Jan. 1, 2012. We will send retirees letters with more information soon.

While the court cleared the way for the tax in general, in another decision, the court ruled unanimously that the provision in PA 38 basing a pensioner’s eligibility for exemptions and deductions on the basis of a pensioner’s “total household resources” violates Michigan’s ban on a graduated income tax, and is unconstitutional. The act would have phased down certain tax exemptions for taxpayers that had total household resources of more than $75,000 for single and $150,000 for joint filers.

The court said the bill can be made constitutional simply by deleting the portion of the bill dealing with total household resources. The court also ruled unanimously that using a pensioner’s date of birth as a basis of eligibility for income tax exemptions did not violate either the state or federal constitution.

The ruling is a huge victory for Governor Rick Snyder, but it may create some legislative issues because

Read the report outlining the direction for our legislative efforts

Nov. 21, 2011 — Have you wondered how MERS determines which pieces of legislation to respond to? Wondered about how we react to important issues, and what that means for our members? Wonder no more.

These Legislative Guidelines have been developed to provide a transparent view of MERS objectives when supporting, opposing or remaining neutral on proposed legislation.
Click here to read the guidelines.

Nov. 18, 2011 — Have you been reading about MERS foreclosures and Supreme Court rulings in the news? Unfortunately, it's a common headline nowadays.

If you're wondering what your retirement system is doing handling foreclosures, we have an easy explanation:

It's not us.

It’s an easy mistake to make, of course. But the MERS the articles refer to is actually the Mortgage Electronic Registration System (of Virginia), which is also abbreviated as "MERS." That service is a prominent foreclosure filer whose name appears in a large percentage of mortgage foreclosures nationally.

While your MERS, the Municipal Employees' Retirement System of Michigan, does own real estate, we have no mortgage debt and any taxes that may be owed are paid when due. So there's no connection to the foreclosure notices and the Municipal Employees' Retirement System.

It's a classic case of right acronym, wrong organization.

MERS Legislative Team responds to Annual Meeting questions

Nov. 10, 2011 — At MERS Annual Meeting, members raised a number of questions about legislation — both enacted and pending. The answers required additional research and/or clarification. The questions are listed below, along with answers or updates on tracking down the answers.

1. What, if any, will be the effect on municipalities of the recently approved 1% health care excise tax?
   
   The excise tax was implemented by 2011 PA 144 (HB 4734) to replace the “QAAP Tax” (Quality Assurance Assessment Program) that was paid by hospitals, nursing homes, HMOs, and some prepaid inpatient health plans. The tax was used by the state to increase the amount of Medicaid reimbursements to those groups and the state for services provided under the Medicaid program.
   
   The federal government will no longer allow programs like the QAAP Tax to be used for local Medicaid matching funds, so the state had to find another source of revenue or risk losing considerable federal funding in the Medicaid program.

Nov. 3, 2011 — As the Legislature shifts its attention back to the interests of local governments, the House Appropriations Committee reported HB 4701 (Rogers, R-Brighton), legislation that would amend that state employee pension system (SERS) as follows: 

• Eliminate the current 3% employee contribution to retiree health care, which was recently found unconstitutional by the Michigan Court of Appeals
• Require employees that choose to remain in the SERS defined contribution pension plan contribute 4% of pay
• Eliminate retiree health care for all new employees  and establish a health care trust account for those employees
• Exclude overtime pay from the definition of compensation for the purpose of pension calculations

The House of Representatives has started debate on HB 4701  and it is almost certain that some form of post retirement health care reform will pass the legislature. The bill will have no effect on local units of government. However, MERS is monitoring the legislation because the administration has made it clear that reforms to both the school employees and municipal systems are agenda items.

Record crowd gathers at Grand Traverse Resort, elects Board members

Oct. 4, 2011 - A popular place, an all-star speaker lineup, and a host of hot legislative topics all added up to a capacity crowd for the 65th MERS Annual Meeting, Sept. 27-29, 2011 at Grand Traverse Resort. 

This year's Annual Meeting numbers show a record response from our members, who also elected two MERS Retirement Board members.

A record attendance of 550 made the trip to Acme, beating last year’s 415 total in Kalamazoo, and the previous record of 533 at Grand Traverse in 2008. Employee and Officer Delegates at the MERS Annual Meeting elected two members to the Retirement Board. Both will serve a three-year term beginning Jan. 1, 2012 and ending Dec. 31, 2014.

Oct. 4, 2011 - Governor Snyder signed Senate Bill 7 into law on Sept. 24, 2011, legislation that requires the following for public active employees:

• An annual employer payment limit of $5,500 for single employee, $11,000 for an employee and spouse and $15,000 for a family
• Annual adjustments in the payment limit based upon the medical care component of the US consumer price index

OR, by a majority vote of its governing body, a public employer could adopt the following:

• Health insurance coverage with an employer payment limit of no more than 80% and an employee contribution of at least 20%.

The new law, Public Act (PA) 152 of 2011, does not affect current retirees. Current collective bargaining agreements would remain in effect until they expire, but any agreement executed on or after Sept. 15, 2011 must comply with the new limits. A local unit of government could exempt itself from the requirements of the legislation, but to do so would require a 2/3 vote of its governing body and also the approval of the chief executive of the entity. Failure to comply could result in a reduction in economic vitality incentive program (revenue sharing) payments.

The legislation has an effective date of Jan. 1, 2012.

Aug. 24, 2011 — On Wednesday, Sept. 7 at 9:30 a.m., the State’s Attorney General’s office will present the oral arguments before the Michigan Supreme Court regarding the constitutionality of 2011 PA38, the pension tax amendments. The argument will be carried live on Michigan Government TV – www.mgtv.org. Channels may vary based on the cable television provider in your area.

Over the past several months, MERS has closely followed the issues leading to the passing and signing of this law. Upon signing the bill on May 25, Governor Rick Snyder requested a fast-track Advisory Opinion from the Michigan Supreme Court regarding the law’s constitutionality.

On June 15, the Court granted the Governor’s request and stipulated the State’s Attorney General address four questions in separate briefs in support of constitutionality and in opposition to constitutionality. These briefs were to be filed by August 10. The four questions:

1.  Whether reducing or eliminating the public pension tax exemption impairs accrued financial benefits (Michigan Constitution, article 9 section 24);
2. Whether reducing or eliminating the tax exemption impairs a contractual obligation (Michigan and United States Constitution, article 1 section 2);
3. Whether income tax exemptions based on total household resources (including age) create a graduated income tax (contrary to Michigan Constitution, article 9 section 7); and
4. Whether income tax exemptions based on date of birth violates equal protection of the law (Michigan Constitution, article 1 section 2 and the 14th Amendment of the United States Constitution).

Interested parties were invited to file Friend of the Court (Amicus Curiae) briefs. The purpose of such briefs is to aid and assist the Court in deciding a case. After reviewing the filed briefs, including two by the Attorney General, MERS is satisfied the legal issues on taxation of state and local government pension benefits are thoroughly and sufficiently addressed. Click here to read the briefs, and check this site often for further updates.

Aug. 9, 2011 — On July 12 , the National Institute on Retirement Security (NIRS) director Diane Oakley testified before the Senate Committee on Health, Education, Labor and Retirement in Washington DC. Her remarks pointed out the major impact well-funded pensions have on the country’s economy, as well as the individual states where retirees live and spend their pension income.

Public pension plans are being hotly debated in Washington DC, especially in the House of Representatives. New legislation would allow, for the first time, the federal government to intervene into the management of state and local public pension plans. This legislation has received a number of committee hearings.

Ms. Oakley’s testimony paints a drastically different picture than the testimony offered supporting the action by the federal government. View her testimony.

Hearing Resources:

• View Full Committe Hearing. (Video)
• NIRS Director, Diane Oakley, Read Testimony. (pdf)
• David M. Marchick, Read Testimony. (pdf)
• Christopher T. Stephen, Esq., Read Testimony. (pdf)
• Edmond P. Bertheaud, Read Testimony. (pdf)