Sept. 29, 2023 | This Week in Government: Tax Policy Commitee OKs Duggan Plan

The Detroit land tax act, backed by Detroit Mayor Mike Duggan, was reported narrowly to the full House on Wednesday after Rep. Kristian Grant initially abstained from voting on HB 4966 during the House Tax Policy Committee.

The bill is part of a larger package to create the Land Tax Equity Act, which would allow cities and local units of government to designate qualified taxes to be replaced by an equivalent land tax rate to be levied on all parcels of land not specifically exempted by the bill.

Practically, this legislation means that land taxes in Detroit would be more than doubled, and building taxes would be cut by about 30%.

Prior to session Wednesday, Grant (D-Grand Rapids) joined Rep. Greg VanWoerkom (R-Norton Shores), Rep. Greg Markkanen (R-Hancock), Rep. Mark Tisdel (R-Rochester Hills), and Rep. Mike Hoadley (R-Au Gres). Rep. Pat Outman (R-Six Lakes) voted no, and the rest of the Democrats on the committee voted yes.

That left the vote tally at 6-5-1, which was not enough to report the bill.

The vote came after lengthy testimony from several Detroit residents who were opposed to the bill.

“Primary residence is very crucial for this legislation that’s being proposed. It states that the people who have primary residence exemptions will get this property tax decrease. However, the city’s assessors said only 50% of our homeowners actually have those,” said Joanna Underwood, who testified on behalf of Detroit City Councilwoman Mary Waters. “The administration has not presented a plan to secure all homeowners in the city of Detroit. With this proposed legislation, if it goes through, they will be affected.”

Several city residents also testified in opposition to the bill.

“This is truly taxation without representation. We watch our tax dollars leave the city of Detroit every single day in the way of non-resident city employees and contractors who don’t live in Detroit. Our tax money is constantly leaving our city. So, there’s a reason why it’s decimated. There’s a reason why we have a crime problem,” said one Detroit resident who testified before the committee. “I’m just upset that you would give this mayor the opportunity to decide at his discretion who’s going to get taxed. How much? How long? With no input from the people of Detroit.”

After the initial vote failed, the committee went at ease as House session was set to begin. Members came back the following session.

When the committee returned, Grant proposed an amendment to HB 4966 that would allow the Detroit City Council to repeal the tax if it found it wasn’t working as intended.

She said to expect further amendments.

“Economic development is very important to me, and I think that there are many ways to spur development in our communities,” Grant said about changing her vote. “And in this case, maybe there’s some more direct ways, but I look forward to working further on the legislation and hopefully finding at a good point before it reaches the House floor.”

Earlier in the day, a substitute was adopted to limit the legislation to the city of Detroit.

HB 4966 was reported 7-0, with all five Republicans abstaining. The rest of the bills in the package – which includes HB 4967, HB 4968, HB 4969, and HB 4970 – were also reported 7-0 with Republicans abstaining.

Jay Rising, chief financial officer for the City of Detroit, said that he thought the residents who testified in opposition to the bill misunderstood the legislation.

“The committee got the impression that what they were saying was true, that this could happen by committee action and not by council vote or voter vote,” he said. “So, I thought it was important that the committee was able to recess … and understand a little bit that this will always require voter approval. Always require City Council approval.”

Rising said that, although it wasn’t guaranteed, the legislation should provide stimulus to development in the city.

“If I can lower property taxes and increase income taxes, I think I got a good trade,” he said. “Homeowners should pay less, big property owners and under-utilized lands should pay more, and we should make it easier to invest in the city of Detroit.”

Senate Energy and Environment Committee Chair Sen. Sean McCann said Tuesday that negotiations on a bill package to enact a state renewable energy mandate are ongoing but was unsure on the timeline for movement.”I don’t think we’re going to have a meeting this week,” McCann said in a brief Tuesday afternoon interview with Gongwer News Service. “Nothing’s finalized quite yet, but I think we’re going to let negotiations to continue and go on.”

He gave no specific timetable as to when committee votes might occur.

McCann was also asked about how confident he was that a strong product could be developed through negotiations.

“It’s going to be a challenge to bridge the gap on the spectrum of issues, but we hope to find a sweet spot that gets us down the road and towards the governor’s goals and the ones that are laid out,” McCann said.

His remarks came after a brief speech from the Capitol steps during a press conference on the renewable energy legislation introduced by Democrats. Hundreds of supporters of climate change action spent the day rallying on the Capitol lawn and cheered McCann and others for comments in support of the bills.

The package as it stands includes provisions for moving the state to move toward a 100% carbon-free energy standard, giving state regulators the ability to weigh climate and health in cases before them, phasing out coal-fired power plants in the state and increasing energy waste reduction.

McCann told the crowd that his committee expects to “vote very soon” on three bills that were before the panel last week: SB 271, SB 273 

and SB 502 (See Gongwer Michigan Report, Sept. 20, 2023).”This legislation can help make Michigan a leader in answering the call to address climate change,” McCann said. “These bills, I assure you, are only the beginning of our work, not the end. We can, and will, make changes necessary here in Michigan and I look forward to making that happen.”

Sen. Sue Shink (D-Northfield Township) pointed to widespread power outages in her district in recent months, saying the status quo is unacceptable.

Shink said the changes proposed in the renewable energy package cannot be achieved without the state’s investor-owned utilities changing the way they produce electricity and deliver power to residents.

“We’ve got to do something to hold the big utilities accountable,” Shink said.

She spoke of SB 272, which would allow the Public Service Commission to consider climate, health, equity, and affordability when it is considering integrated Resource Plans submitted by utilities.

“The Michigan Public Service Commission

has been fighting climate change with one hand tied behind its back and my bill will fix that,” Shink said. Multiple House Democrats and leaders with environmental groups also spoke about the package, urging those at the rally to push their elected leaders to act and become involved politically.

Clerks and voting advocates are hoping to make it easier to register to vote in Michigan with a new bill package.

The House Elections Committee heard testimony Tuesday on HB 4983, HB 4984, HB 4985, and HB 4986. Currently, the Michigan Election Law requires the secretary of state to automatically register all qualified voters who submit applications or change of address applications for driver’s licenses or state personal ID cards. The new legislation would require the individual’s name, residence address, date of birth, driver’s license or state ID card number, and digitized signature to be added to their qualified voter file.

The main bill in the package, HB 4983, is sponsored by Rep. Penelope Tsernoglou (D-East Lansing), who chairs the Elections Committee.

“This secure, automatic voter registration package is really taking us to the next step to update, streamline and modernize our current system of voter registration,” Tsernoglou said. “The current system still leaves hundreds of thousands of eligible Michigan voters unregistered, and we want to capture them into the voter registration system with bills.”

Tsernoglou said that the bills would increase the security of elections because it would prevent voters from missing out on the opportunity to register because they believe that they’re already registered.

Colorado, Oregon, Delaware, Nevada, Massachusetts, Alaska, Minnesota, New Mexico, Washington, and the District of Columbia have adopted similar secure, automatic voter registration models.

The system would use documentary information already collected and stored as part of the driver’s license transaction. Michigan already requires people applying for a license to provide proof of citizenship or non-citizenship.

“Their information is automatically used by the secretary of state for purposes of voter registration,” Tsernoglou said. “There is no need for customer input during the license transaction. The person receives a notice in the mail from the secretary of state, informing them of their registration and providing an opportunity to decline if they choose.”

Similarly, if someone provides proof of non-citizenship, they would be automatically filtered out of any voter registration opportunity.

Switching to an automatic system would ensure that more eligible voters are registered and save the state money on paper forms, Tsernoglou said.

The system would also be able to use Medicaid transactions and would allow Native American tribes to share information about eligible individuals.

“These bills are just expanding the current automatic voter registration system so that we can include as many people as possible, get them registered securely and efficiently, streamline the process, and expanded to other government agencies that have the proper requirements,” Tsernoglou said.

There are at least 400,000 unregistered voters in Michigan, said Neal Ubriani of the Institute for Responsible Government, testifying in support of the bill.

Ubriani said the system would streamline election registration while keeping it secure and accurate.

“When a registered voter tells a state agency like a branch office for the driver’s license or Medicaid as they move, their voter registration is updated by default to reflect this change,” he said.

The bill would also boost the number of eligible, registered voters in rural areas and among young voters.

Erin Schor from the Department of State also testified in support of the bill, though the department did have questions regarding response rates for registration and how to handle voters who are registered automatically.

“Is it, as the bill as the bill envisions, you’re registered unless you contact us? We had been afraid there might be some pushback from that, but our understanding is that other states have not seen any particular pushback from voters,” she said.

Schor also said the Department of State wanted to be careful about the status of people who are not quite in the system.

“They’re very technical questions at this point,” she said. “So, we want to be sure to get all of that right.”

If the bill passes, it likely wouldn’t be implemented until 2025, Schor said. Clerks are still working out election changes put in place by Proposal 2022-2, and adding new procedures would be too much, Schor said.

Canton Township Clerk Michael Siegrist was enthusiastic about the bill package.

“I think it’s phenomenal,” he said. “And it’s because I like clean voting rolls.”

Siegrist said that automatic registration would cut down on the need for paper registration forms, which lead to clerical errors and lengthy data entry processes. He also said that people often incorrectly fill out the forms, which forces them to vote in person the first time.

“The system has some security measures and has some protections for voters, but it’s super inefficient,” he said. “And I don’t like inefficiencies, and government has a monopoly on administering elections and so sometimes, we don’t innovate. Because we don’t look at it as a customer service.”

Automatic registration also would make it easier for young people to register and give clerks less work, Siegrist said.

“You have a driver’s license or state ID number already in the system. You have the name spelled correctly. You have an address spelled correctly. It’s automatically in there to link,” he said. “I don’t want to have to be inputting pre-registration forms into the computer. I would love it if it’s done at the DMV.”

Automatic voter registration would be revolutionary for Michigan, Siegrist said.

“It would be leading the way, and it would lead to better, cleaner voter rolls,” he said. “That’s why I’m excited about this. It’ very rare that government exceed expectations and acts proactively.”

Melanie Macey and Erica Peresman of Promote the Vote and Ricky Servantez Bicknell of Voters Not Politicians also testified in support of the legislation.

Promote the Vote put out a statement following Tuesday’s committee discussion of the legislation.

“We’ve already made incredible progress this year in improving the security and accessibility of Michigan’s elections, but we’re not done yet,” said a statement from Micheal Davis Jr., executive director of Promote the Vote. “We’re proud to support this bill that will ensure a safe, secure, and smooth voter registration process in Michigan. This will make us less reliant on antiquated paper forms and lessen the burden on our elected workers. It’s long overdue. Let’s get it done.”

The goal of the package is to enable everyone who can vote to participate in democracy, Tsernoglou said.

“Our goal should be that every citizen has the opportunity to vote,” Tsernoglou said. “Our goal should be to represent the majority of the state of Michigan who are eligible to vote, so this helps promote good governance.”

Several organizations also submitted cards in support for the legislation, including the Michigan Democratic Party, the American Civil Liberties Union of Michigan, the Michigan League of Conservation Voters, the Michigan Association of County Clerks, and the Michigan Association of Municipal Clerks. All Voting is Local Action Michigan, the National Vote at Home Institute, Protect Democracy, the Voting Rights at Campaign Legal Center, and the Detroit Regional Chamber submitted support for HB 4983, the main bill in the package.

Pure Integrity Michigan Elections, Michigan Fair Elections, Stand Up Michigan, and the Freedom Alliance opposed the bill.

No further action was taken on the package on Tuesday.

The committee voted to report SB 385, which would allow clerks to accept electronic applications for election workers. Current election law requires applicants to fill out a form in their own handwriting. The committee heard testimony on the bill last week.

It was reported 6-0, with the two Republican members of the committee abstaining.

Senate Democrats introduced legislation Tuesday that they say would address issues with access to care for catastrophically injured that arose following the enactment of the state’s 2019 no-fault auto insurance law changes.

Sen. Mary Cavanagh (D-Redford Township) told reporters after the session Tuesday following the introduction of SB 530 and SB 531 that the bills would build on what was put in place with the 2019 no-fault law. She said the proposed changes would help address unintended consequences of the 2019 auto no-fault law changes. Cavanagh said the changes improve access to care as well as affordability for those who have been injured in a crash.

“We wanted to make sure that the intent of the 2019 (law) was attainable as well as making sure that the quality of care as well as the affordability piece was there,” Cavanagh said.

Key changes in the bills deal with issues proponents of changes to the law have long pointed to as major problems: the 56 hours per week cap on reimbursement for family-provided attendant care and capping a health care provider’s reimbursement for services not covered by Medicare to 55% of the fees charged as of January 1, 2019.

As introduced, the bills would make changes to the reimbursement structure within the Medicare fee structure, establish a new non-Medicare fee schedule, make changes to the rate structure in what bill sponsors said would increase access to specialized care, and add a requirement for accreditation for agency providers.

Insurers would be required to pay benefits for up to 16 hours per day per individual personal caregiver but could contract with individual caregivers for more than 16 hours per day. Caregivers would be capped at seeking payment from insurers for up to two injured persons at the same time.

Cavanagh said the response so far has been positive among stakeholders.

“This issue is close to my heart, so I do think it is going to be something that I’m looking forward to before the end of the year, but I also want to make sure we’re deliberate,” Cavanagh said.

She explained that it is an important issue to her because she worked as a direct care worker prior to running for elected office and saw many mentally and physically disabled crash survivors.

Cavanagh was also asked why it took nine months into the new legislative session to introduce bills on the topic since the provisions of the 2019 law have been in effect for more than two years.

“I think now is the perfect time because I do believe acting a little bit too soon after the 2019 reform, it wasn’t going to show us the intended consequences as far as the affordability but also the unintended consequences,” Cavanagh said. “We also wanted to make sure that with the court case and the Andary decision that it was going to be clear that that was going to be prior 2019 and so we can take care of who has been directly affected post-2019.”

She was referring to the Michigan Supreme Court decision issued in July that struck down the retroactive portion of the 2019 law’s medical fee schedule that set limits on reimbursements in the system.

In Andary v. USAA Casualty Insurance Company (MSC Docket No. 164772), the high court upheld a Court of Appeals opinion that those changes do not apply to those injured and receiving benefits prior to the law’s effective date (See Gongwer Michigan Report, July 31, 2023).

Tom Judd, executive director of the Michigan Brain Injury Provider Council, called the proposal a positive fix that would help address those injured after the 2019 law’s effective date.

“It replaces that draconian fee schedule with a fee schedule in line with other funding sources,” Judd said.

Judd said the fix is long overdue, and he was pleased the new Legislature decided it would be a priority for them, adding the previous Legislature clearly was not going to make any changes.

He said the proposed changes would help people get the care they need and deserve, and would enable providers to again be able to accept patients that were being turned away after the effective date of the law.

Judd added he is confident the Legislature will be able to move the legislation quickly and get it to the governor’s desk despite what he expects to be significant pushback from the insurance industry.

Insurance Alliance of Michigan Executive Director Erin McDonough, in a statement, said the group is still reviewing the legislation and urged lawmakers to carefully weigh what is being put before them.

“Auto no-fault reforms have saved Michigan consumers more than $5 billion by cracking down on fraud, reining in rampant overcharging by medical providers and providing consumers more choices,” McDonough said. “We urge policymakers to carefully review policy proposals with an eye toward how it impacts auto insurance costs and how it impacts Michigan families.”

Multiple groups that have been pushing for changes to the 2019 law issued statements Tuesday praising the legislation and urging the Legislature to act quickly.

“When you’re in a life-changing auto accident, you and your family go to hell and back,” Coalition Protecting Auto No-Fault President Tim Hoste said. “Those same victims have gone through hell a second time as they have tried to contend with the havoc raised by the state’s auto reform. The Legislature can end their nightmare now, by rapidly getting these bills passed and sent to the governor’s desk.”

We Can’t Wait Founder Peggy Campbell said it is clear the 2019 law has failed, leading to a loss of care for many and attendant care agency closures or refusals to accept patients.

“For more than two years, we have begged and pleaded with legislators to introduce bills that would fix these problems,” Campbell said. “We are happy to see that lawmakers are finally taking action. Without a legislative solution, more businesses will close, more essential health care workers will be laid off, and more crash survivors will go without the care they need. … We need action, and vulnerable survivors can’t wait any longer.”

GRAND RAPIDS – Former House Speaker Rick Johnson will spend 55 months in prison for accepting more than 40 bribes as the chair of the now defunct medical marijuana licensing board, marking the official end of a long record of government service that included two terms as one of the most powerful politicians in Lansing.

Johnson was sentenced Thursday for bribery and his misconduct as the board’s chair, which included accepting $110,200 in cash, airfare to Canada, a sham loan, sports tickets, lavish meals, trysts with a commercial sex worker, and a man cave at a Detroit business location where those interactions occurred, according to details that were shared during a hearing before U.S. District Judge Jane Beckering of the Western District of Michigan.

Johnson expressed some remorse in a brief statement to Beckering prior to her sentencing decision, saying that he was sorry most to the state of Michigan, his wife, his friends, and the scores of people who put their trust in him. He said that while he has done what he perceived as much good during his time in politics, he made a monumental mistake during his time after leaving elected office.

“I am a corrupt politician, and because of that, my life will be changed forever,” Johnson said. He added that it would take time to make things right and that he would not make the same mistakes again.

The former speaker must also pay a $50,000 fine with interest waived, forfeiting the cash he collected in bribes, a $100 special assessment, and must not own any businesses in the future.

U.S. Attorney Mark Totten, in comments to reporters following the hearing, said that the sentence sends a strong message that public corruption would not be tolerated in Michigan and that the length of his sentence, a little more than four and a half years, reflected the seriousness of his crimes. He also said the investigation remains open even though no additional persons have been charged and the federal five-year statute of limitations on any criminal activities is drawing nearer.

“I want to be very clear, this was not a momentary lapse of judgment,” Totten said. “Rick Johnson received 38 payments over 21 months beginning in June of 2017 through February of 2019. He built an elaborate system to conceal these bribes that included burner phones, multiple LLCs and cover stories … and he injected corruption into an emerging and promising new industry where getting a head start could make all the difference.”

Totten added that the reason his crimes were so threatening to democracy itself is political power resides in the people the government serves, and Johnson essentially robbed Michigan residents of their own political power as he abused his own.

“That’s what happened here,” Totten said. “The results of public corruption can be corrosive. For those who play by the rules, they’re left behind or hurt. The public begins to lack confidence in our public institutions. And people kind of lose hope.”

Beckering, during the hearing, called Johnson’s activities egregious, citing repeated breaches of the public’s trust in government, saying he tore at the foundations of democracy, all to pad his own pockets and satisfy his sexual desires.

She added that his scheme was devised well before he was appointed as chair of the defunct Medical Marihuana Licensing Board by then Gov. Rick Snyder at the suggestion of then-Senate Majority Leader Arlan Meekhof, and that he started soliciting the bribes leading to his prison sentence just 13 days into his tenure.

He promised those from whom he solicited bribes an avenue to personal wealth if they just paid him and his wife, Janice, for guidance, non-public information, and access to fast-tracked licenses, all while shoveling that money through various shell companies to hide his activities.

Although his attorney, Nick Dondzila, had asked for just 12 months in prison for his client, or at the very least on the low end of the guidelines (which suggested 46 months to 57 months), Beckering said the nature of his crimes suggested that a sentence even in those guidelines was not enough to send a clear message to others who might consider abusing their stations as political insiders for personal enrichment.

Public service was about placing the people first before yourself, but Beckering said Johnson did the opposite.

Prosecutors were seeking a harsher sentence of 71 months in prison.

Beckering did consider that he saved the federal government time and money by finally coming clean about the bribes, but not before being interviewed twice by the FBI. She said that the record shows he lied about his activities and had a cover story devised with several other individuals and deflected until investigators showed him they had the evidence necessary to convict him.

His age and health were not taken into consideration, but she did consider that he had no prior criminal record, which allowed for a downward variance based on potential coming changes in federal sentencing guidelines for those without criminal histories.

That led her to sentence Johnson near the top of the guidelines but not much lower.

She allowed him to self-surrender to the Bureau of Prisons. It was not stated where he might serve his sentence, but Dondzila asked if he could do so close to his family. The bureau will ultimately make that decision.

Johnson is expected to have a heart catheter procedure on Monday for reported angina issues, Dondzila said during the hearing.

PROSECUTORS SAY JOHNSON DEVISED SCHEME EARLY ON: Beckering allowed federal prosecutors to respond to Dondzila’s requests before determining Johnson’s sentence.

Assistant U.S. Attorney Christopher O’Connor outlined Johnson’s various offenses and his work to conceal his actions, which he said called for a heavy sentence.

O’Connor said that Johnson devised and executed the scheme while he was working as a lobbyist in the years after his tenure as House speaker. He had a plan to profit from his gubernatorial appointment, which he had been jockeying for at the time, and those in the lobbying community knew that he was seeking the position of chair on the licensing board.

Johnson’s co-defendants, lobbyists Brian Pierce and Vincent Brown, who pleaded guilty to bribing Johnson and will be sentenced in October, helped him spread that message around Lansing.

He told those who had the power to elevate him to a position on the board that he did not have any conflicts of interest even though he had deep connections with potential applicants. O’Connor said that was also a lie, and that two days before his appointment was made public, he had a discussion with his wife about the new job.

O’Connor said that discussion included a lament from his wife that his new job wouldn’t pay much and was worried about their finances, to which Johnson was alleged to have told her not to worry because the money would continue flowing.

The assistant U.S. attorney said that was common criminal behavior, followed by more common criminal behavior as he set up shell companies and code words to shield discovery of his motives and actions.

One of Johnson’s code names was “Batman.”

It was not a lapse in judgment because he accepted more than one bribe, O’Connor said, and that when the FBI first approached him, he lied and failed to cooperate. The cover, O’Connor said, was that his wife was simply acting as a consultant for these companies, and those actions did not involve him.

The FBI visited him a second time in 2021, and O’Connor said that Johnson lied once more, including when presented with questions about the commercial sex worker. O’Connor said it was clear to investigators that Johnson had committed the crimes, but Johnson continued to try and hide his actions.

O’Connor said it was not until the third visit that the FBI upped the ante and showed their strongest cards, so to speak, detailing the mountain of evidence it had and proof that he had been lying. It was only then that he cooperated, unlike his co-defendants Pierce, Brown, and marijuana businessman John Dalaly, whom O’Connor said were among the first to come clean.

Johnson, O’Connor said, was the last of the tetrad to plead guilty. Those deflections showed prosecutors he had not earned the distinction of being a defendant who assisted the investigation like the others and that his assistance was not sufficient to warrant a downward variance in his sentence.

O’Connor also likened his scheme to more of a shakedown than a classic bribery conspiracy. It was Johnson who sought bribes, offering Pierce and Brown access to more clients as long as he got a piece of the action. There were no threats and extortion involved, as all three bribers agreed to pay, but he did leverage his contacts and political connections as reasons why they should.

That said, O’Connor noted that Johnson became angry when payments were not delivered on time and that he routinely bullied the three co-defendants to make them comply.

O’Connor also detailed an alleged plan to gain a 5% stake in an uncharged entity known only as Company C, evidence gathered by talking to Pierce. There was no evidence that a stake was ever given to Johnson, but the implication was that he stood to make millions of dollars more from the bribes when the process was said and done.

That explained his motives to keep the bribes going, with the hope that he could eventually profit further.

“He thought there would be a lot more money coming in,” O’Connor said.

Afterward, Beckering said it was clear Johnson had engaged in “an unfettered abuse of power for unhinged greed.”

TOTTEN SAYS INVESTIGATION REMAINS OPEN: The four defendants were charged in April, arraigned over the summertime, and now two of four have received sentences. When he announced the charges and their near-immediate guilty pleas in the spring, Totten said the investigation remained open. There was considerable speculation that others could be next. However, no additional charges have been issued, and with the final sentences upcoming in October, plus the federal five-year statute of limitations seeming to foreclose any charges after early 2024, the window is closing.

When asked about additional charges, Totten said: “When we say an investigation is ongoing, that’s not a promise for future charges.”

“But it does mean that we’ve not laid the matter to rest,” he said. “We’re still looking at it. We still may receive future evidence. We’ll review what we have. It’s ongoing and so I really don’t have anything else to say beyond that at this point.”

A reporter pressed the issue further, noting that even Beckering said that there’s been nothing more added to the case since proceedings began for Johnson, Pierce, Brown, and Dalaly.

“We speak through our public documents,” Totten said. “Given the enormous power we wield, to take away people’s liberty, to take away their property, to do so by providing with evidence beyond a reasonable doubt – when we have this, I think you can trust that we will bring these cases. But that’s the standard we face, and if we have future charges to bring, we’ll do so.”

Totten added: “You can trust that we are diligently pursing this matter in every possible direction.”