With the expiration of 14-days on the Governor’s desk this past week, the last bills presented from December’s lame duck legislative action brought the 100th Legislative Session to an official close.
All told, nearly 300 new bills were introduced between the House and the Senate during the lame duck period, following the November election. A total of 402 bills became new Public Acts (PAs) in 2020, with 158 of those PAs being finalized during lame duck, mainly during the month of December. In addition to the volume of new laws, the Governor leaned heavily on her veto pen during the final days of the 100th Legislative Session. All told, 36 bills were either directly vetoed or expired without signature, resulting in a pocket veto. The legislative action of 2020 stands in stark contrast to the activity of 2019, where only 178 new PAs were signed and no bills were vetoed.
The following updates summarize many of the main issues that League staff were engaged with during this lame duck period and those issues that we expect to see returning during the 2021-2022 legislative term.
Signed By The Governor:
- COVID Extension to Boards of Review: HB 5824 and 5825 (PAs 251 & 297 of 2020) – The League supported these two bills which codify the Governor’s now nullified Executive Order that had extended the March 2020 Boards of Review and allowed certain additional appeals and valuation changes during the July 2020 Boards of Review.
- Poverty exemption: SB 1234 (PA 253 of 2020) – This bill amends the current residential property tax poverty exemption to assist with various COVID-related impacts that low-income residents are facing as they attempt to apply for the exemption. Upon determination of the local unit of government, existing poverty exemption applications may remain in effect for up to three years to counteract personal and public facility limitations due to COVID-19. A similar, 3-year extension is also authorized for local units that choose to offer the extension for eligible residents on fixed income from public assistance. The League and the City of Detroit testified in support of these bills. Treasury negotiated a number of amendments as a condition of their support prior to passage, including requiring each local unit’s poverty exemption policy and guidelines be posted on their website and bringing uniformity to the allowance of any partial exemptions, less than 100%, unless authorized by the State Tax Commission.
- Personal Property Tax COVID Location Freeze: SB 1203 (PA 352 of 2020) – Amends the General Property Tax Act to freeze the location of all personal property being used by remote workers as assessable only at the business’s ordinary location for the 2021 tax year.
- Tax Foreclosure Proceeds: SB 676 & 1137 (PAs 255 & 256 of 2020) – These bills were passed in response to the recent Michigan Supreme Court Rafaeli decision that found that all “excess” proceeds from a tax foreclosure sale must be paid to the former owner of the property. This decision could have a long-term harmful impact on County Delinquent Tax Revolving Funds that will lead to chargebacks being assessed to local taxing jurisdictions. Communities that also leverage their right of first refusal to acquire these foreclosed properties for the minimum bid may also face a more expensive path to acquiring these parcels as the court decision also puts the ability to acquire parcels for the minimum bid at risk. Following months of work group discussions and negotiations with local units, the County Treasurers Association, and the Michigan Department of Treasury, the League secured amendments to retain a process for local units to continue acquiring some parcels for the minimum bid and language providing for an annual local fiscal impact analysis from Treasury to help evaluate and make recommendations to address any increase in chargebacks to local units.
- OMA Virtual Meetings: SB 1246 (PA 254 of 2020) – Senate Bill 1246 amends the Open Meetings Act to allow communities to continue meeting virtually due to the pandemic through March 31, 2021. The prior allowance had allowed communities to meet virtually only through the end of 2020, so this extension was a high priority for the League. This new legislation also makes technical changed requested by the League to allow a local state of emergency or state of disaster to be declared pursuant to a local ordinance (in addition to those declared under law or charter in the current law) and adds a local chief administrative officer (in addition to a local official or local governing body) as a person who may declare the local state of emergency. In addition, the bill sets requirements a public body shall follow if a meeting is held in person before April 1, 2021, including adherence to social distancing and mitigation measures recommended by the Centers for Disease Control and Prevention for purposes of preventing the spread of COVID-19 and adopting heightened standards of facility cleaning. Read this blog for additional details.
- Historic Preservation Tax Credit: SB 54 (PA 343 of 2020) – The League has fought for a number of years to restore Michigan’s state-level Historic Preservation Tax Credit program that was repealed under former Governor Snyder. The new program will provide a 25% credit on rehabilitation expenses against state income tax. For homeowners in historic districts, this credit helps offset the costs of repairing older homes while retaining their historic attributes. SB 54 caps the total number of credits per year at $5 million in order to have minimal initial impact on the State budget. The necessary $5 million for funding of the first year of the credit was already appropriated in the current state fiscal year in anticipation of this bill’s passage.
- COVID critical infrastructure worker: SB 1258 (PA 339 of 2020) – Public Act 238 of 2020, adopted earlier in 2020, established certain employee protections related to exposure to COVID-19. One aspect of that law required employees to quarantine for 14 days following certain instances of exposure. Specific classes of employees/businesses are exempt from that 14-day quarantine, like health care employees and first responders. Officials from the cities of Oak Park and St. Clair Shores joined the League in advocating for language in SB 1258, which would extend the specific employee/business exemption from the quarantine requirement to include critical infrastructure employees in the energy industry and other critical municipal service categories like water and wastewater operations. During final negotiations, the bills was amended to allow the Dept of Health & Human Services Director to designate certain categories of employees for critical infrastructure deemed necessary to preserve public health or public safety. The bill also provides additional flexibility for returning to work with negative test results and time periods for isolation and/or quarantine as determined appropriate by the CDC, as opposed to designating a specific number of days in statute. The League and other local units have submitted a letter (view it here) to the Department Director requesting the immediate designation of critical municipal operations pursuant to the language in the new law.
- Movable Bridge Public-Private Partnerships: SB 1215–1218 (PAs 353-356 of 2020) – The League and Bay City officials testified in support of this package of bills that will help Bay City address the replacement of two city-owned movable bridges. Due to the unique nature of these bridges and the extraordinarily high cost of replacement, this package will provide statutory authority for Bay City to enter into a public-private partnership that will provide for the replacement of both bridges and free up substantial city resources that can be invested in other infrastructure projects.
- Water Shut-Offs: SB 241 (PA 252 of 2020) – A new version of this bill was adopted to codify the Governor’s previous Executive Order related to water shut-offs. In early July Governor Whitmer issued Executive Order 144 that placed a moratorium on water shutoffs until December 31st of this year. Following the nullification of the Governor’s E.O.s by the Michigan Supreme Court, the Administration and the Legislature negotiated the language in SB 241 to codify the intent of that E.O. into statute. This agreement in this bill reinstates the moratorium on water shutoffs and extends the date to March 31, 2021
- Supplemental Budget Appropriation/CARES Hazard Pay Grant Extension: SB 748 (PA 257 of 2020) – Separate from the political grappling between the Legislature and Governor over state spending for COVID relief and unemployment benefits, language was included at the League’s request to extend the time period for local units to have issued first responder hazard pay premiums under the state’s Coronavirus Relief Fund grant program and be eligible for a reimbursement. The original language had required payroll be issued by 10/31/2020, this change allowed communities to issue their payroll by 12/29/2020 and still be eligible for reimbursement.
- Brownfield Redevelopment Authority Administrative Change: HB 4159 (PA 259 of 2020) – Provides technical changes and oversight to brownfield redevelopment authorities. Additional amendments were adopted to section 13b to increase the number of active projects that an authority may have at one time and also allow for a corresponding increase in expenditures for administrative and operating costs relative to the number of projects. This change is also consistent with the recently updated MEDC strategic plan and their revised Community Revitalization Program guidelines.
- Small Cell Road Commission Fix: SB 1256 (PA360 of 2020) – Late in lame duck SB 1256 was introduced and moved without a committee hearing, receiving bi-partisan support in both chambers. This bill added country roads commission to the definition of authority and clarifies the original intention of the legislation. As a result of this change, all entities within the right of way would operate on a level playing field. The League did not support this legislation but did request, and have secured a commitment from the bill sponsor (Sen Dan Lauwers), to provide additional clarification that the rate will be paid exclusively to cities, villages, and townships. A bill addressing this clarification will be introduced early in 2021 and we anticipate it being taken up shortly after committees begin to meet.
Vetoed By The Governor:
- Solar Projects Tax Exemptions: SB 1105 & 1106 – These bills were vetoed by the Governor as premature, given the State Tax Commission’s ongoing ad hoc review committee and related analysis and recommendations were not considered in the development of the vetoed language. The League opposed these bills and submitted a letter requesting the Governor veto these bills. The two bills would have exempted all utility-grade solar projects from the industrial personal property tax and replaced that lost property tax revenue with a Payment In Lieu of Tax reimbursement of $4000 per megawatt, an arbitrary value that would have amounted to pennies on the dollar for many local units. Local units would have also been required to approve every tax exemption application it received as long as the project matched the definition of an “qualified renewable energy facility”, regardless of local land use or economic development plans or support. As stated in the League’s veto request letter, which you can read here, we support additional investment in alternative energy systems in Michigan, but any PILT proposal must be developed in conjunction with local government and provide a balance between promoting solar development and maintaining the services residents rely upon.
- Meijer Warehouse Equipment PPT cut: SB 1153 – This bill, along with two other bills (SB 1149–1150) had proposed exempting consumer goods handling warehouse equipment from personal property, sales and use tax. The bills died on SB 1149 1150 1153 veto request letter 12.22.20the Governor’s desk when she declined to act on them before the 14 days expired at the end of the term. The League opposed all three bills and submitted a veto request letter to the Governor, which you can view here. These bills would have provided Meijer and other large commercial retailers with full sales, use, and personal property tax exemptions for all large-scale consumer goods handling warehouse distribution equipment. The League and all other local government and school groups, and the MI Department of Treasury testified in opposition to these bills and a separate three bill package that did not end up moving (SBs 1178, 1179, 1180) that would have provided similar sales, use, and personal property tax exemptions for so-called “micro-fulfillment” systems installed by retailers to facilitate filling online customer orders. The Governor had expressed concern publicly with SBs 1149, 1150, and 1153, questioning the unknown impact that these cuts would have on state and local revenues.
- Summer Property Tax Deferral/Penalty & Interest Relief: SB 943 – Originally introduced this summer as part of the summer tax deferral proposal that was vetoed, a substitute version of SB 943 was quickly adopted and passed targeting a select number of industries hit hardest by the pandemic. This alternative approach would have allowed for the retroactive deferral of any delinquent summer tax bills and waiver of related penalties and interest from four specific industry segments, until Feb 15, 2021. The bill also provided for state reimbursement to local units for any forgiven penalties and interest owed on any of these deferred amounts. Treasury had opposed the bill based upon concern over administering the program. The Governor declined to act on the bill before the expiration of the 14-day limit, resulting in a pocket veto.
- Rental Inspections: SB 692 – The League was neutral on this bill as the change would have only impacted certain change of ownership situations and only for a limited time period, not indefinitely. This bill was also pocket vetoed based upon a limited rationale for the legislation.
Bills Opposed By The League That Died Without Action:
- Zoning Preemption For Aggregate Mining: SB 431– The League strongly opposed this effort to preempt local units of government from virtually any zoning or other currently authorized regulation of gravel and aggregate mining. This bill is expected to be reintroduced in 2021 and the League will continue to engage League members and work with our allies to block its passage.
- Preempting Regulation Of Automated Delivery Devices: SB 892
- Zoning Preemption For Certain Large Foster Care Facilities: HB 4095
- Short-Term Rental Zoning Preemption: HB 4046
Legislation The League Will Continue To Pursue In 2021:
- Headlee/Proposal A Reform: HB 6454 – This bill was introduced to address the negative interactions between Headlee and Proposal A before any property value reductions from the current pandemic recession could impact local budgets. We are working with the bill sponsor to reintroduce this proposal in the new term.
- Public Notice Reform: HB 6440 – This was the main bill in a more than 100-bill package that proposed reforming the current, obsolete public notice requirements throughout state law. This is a reintroduction of a similar package that the League supported in the 2015-16 session.
- Speed Limits: HB 4733 – This bill would have further clarified local government’s ability to adjust speed limit below the 85th percentile speed when demonstrating a situation with hazards to public safety through an engineering and safety study.
- Stormwater Authority Creation: HB 4691 and Basement Back-Up Liability Protection: HB 4692
- Dark Store Property Assessing Reform: SB 26 & 39
- Veteran’s Property Tax Exemption: HB 4176
The League will also continue to prioritize restoration of cuts and additional protections for statutory revenue sharing, funding for municipal infrastructure at risk from high-water levels and shoreline erosion, and opportunities to improve funding for roads and underground infrastructure in the new term, among other priorities.
The 101st Legislature will officially be seated and commence action on Wednesday, January 13th. Since the House is re-forming under a new Republican Speaker (Jason Wentworth, R-Farwell), a new committee structure will be established, and new committee membership will need to be announced. At this point, only the incoming leadership team and the House Appropriations committee chairmanship (Thomas Albert, R-Lowell) have been revealed. Neither the House nor Senate leadership have revealed their policy agendas for the coming year.
Following the ceremonial first day of session on the 13th, the state’s annual Consensus Revenue Estimating Conference is scheduled for 9 am on Friday, January 15th. This revenue conference will establish the baseline that the Governor’s budget team will utilize to craft her Executive Budget Recommendation that will likely be released in early February. The Governor’s State of the State address has been scheduled for Wednesday, January 27th at 7 pm. That speech and the subsequent budget presentation will offer insight into the Administration’s legislative goals for the year.
Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].