Democratic gains in House could shift debate on infrastructure funding

LANSING — In January, more than a third of lawmakers in the Michigan House will be new.

If Democrats pick up seats, as they often do in presidential election years, Republicans could be forced to reach across the aisle more often to pass legislation with a slimmer majority. Democrats have to win nine seats to flip control of the House, something they haven’t had since 2010, and a scenario pundits say is possible but unlikely.

The combination of term-limited turnover and a wild-card presidential race will influence how big-ticket policy items are handled in Michigan as lawmakers head into a new term in 2017, though in ways that won’t be clear until after the Nov. 8 election, political watchers say.

It could mean the difference between a frenzied post-election lame-duck session or the pitching of some items into the new year, and between bipartisanship or gridlock once next year’s session begins. Currently, Republicans control the state House, Senate and the governor’s office.

What makes predicting the outcome harder than in other years is uncertainty about voter turnout due to a polarizing presidential race and its impact on down-ticket races, as well as the lack of statewide ballot issues this year.

“If the Democrats are able to retake majority, I think (it) could completely change the dynamic in Lansing,” said TJ Bucholz, a Democratic communications consultant and president of Lansing-based Vanguard Public Affairs. “I also think that you would have one doozy of a lame-duck session.”

In all, 42 state House seats are open this year, 38 of them due to term limits. Four seats are up for other reasons. Michigan limits state representatives to three two-year terms.

Republicans hold a 62-45 edge in the House, which has three vacancies. If the Democrats win the two empty seats they previously held, they would need to pick up nine more to gain the required 56 seats for a majority.

Susan Demas, editor and publisher of Lansing-based political newsletter Inside Michigan Politics, said she gives Democrats a 25 percent chance of winning the state House and “a good shot” at picking up four to six seats.

Yet if Democratic presidential nominee Hillary Clinton is elected and Michigan Democrats ride her wave into Lansing, “you could see them get to nine. It’s not an outside chance,” Demas said. “Regardless, if the Democrats do pick up seats, that does make the Republican calculus on a lot of issues a lot more tenuous, because then you have to have some of your marginal members take very unpopular votes.”

In the queue for 2017: Addressing Michigan’s poor infrastructure has been at the top of some business groups’ wish lists this term and will carry over into the next session.

Republican lawmakers have proposed tax credits for brownfield projects, angel investing and charitable giving that have not come up for a vote; Democratic leaders in the House say the state needs more tools to encourage economic development, though Gov. Rick Snyder is reluctant to use incentives.

And no-fault auto insurance reform has stalled, as has a rewrite of Michigan’s 8-year-old energy law. Let’s review some of the major legislative issues remaining in 2016:

Road funding

Snyder last year signed a $1.2 billion road-funding package that includes the diversion of some existing state spending and some new revenue from raising the gas tax and registration fees. It won’t be fully phased in until 2020-21.

The Michigan Department of Transportation is hoping to gain traction in the new session on a complete revision to the state’s road-funding distribution formula that allocates a percentage of road dollars to the state, counties and cities based on population.

MDOT’s conceptual proposal would instead award municipalities and counties a new base funding amount, based on the amount they received in 2015. Any extra road revenue collected then would be granted based on several factors, including the type of road — interstates, major county roads or local streets — population and, for bridges, their size.

Kirk Steudle, MDOT’s director, said the proposal reimagines road funding from scratch, as if the current formula didn’t exist, and reduces the importance of population in determining where money goes.

Snyder called for the Legislature to revisit the formula in 2011, early in his first term. He reiterated the call this year, when he vetoed a bill that would have eliminated a local funding match for state trunkline projects.

“I have no preconceived notion that this will be the final version, but it starts the conversation,” Steudle said, adding that the Michigan Municipal League and the County Road Association of Michigan also are working on the issue. He hopes a proposal could go before the Legislature early next year.

Tim Greimel, the House Democratic Leader and likely speaker if Democrats win the House, said whether the political will exists to tackle road funding again will depend on which party has control.

“If you look at the failure of the state to fix the roads, we have been much more aligned on those issues with the governor and with Senate Republicans than the House Republicans have been,” Greimel said.

Gideon D’Assandro, a spokesman for the House Republican Caucus, said of the road funding formula: “It’s too early to say what could come up next session. We’re not even sure who’s going to be in office at that point. Obviously, it’s something the administration would like to talk about.”

He added that the House GOP is “very confident” it will keep its majority.

Other infrastructure

The bigger infrastructure issue, Greimel said, is making sure adequate funding also exists for such systems as water and sewer lines and energy transmission.

Snyder’s appointed 21st Century Infrastructure Commission is expected to release a report of its findings by Nov. 30, which likely will include recommendations on what projects to prioritize.

Flint’s ongoing lead-poisoning crisis has renewed attention on infrastructure needs, particularly drinking-water systems. Snyder proposed budgeting $165 million for a new state infrastructure fund this year, though lawmakers added just $5 million in part because of the need for aid for Flint and lower-than-anticipated state revenue estimates. The funding issue could be raised again during next year’s budget debates.

Business is paying attention: The Detroit Regional Chamber listed “infrastructure for business and residents” as its top legislative priority this year, including addressing the Flint water emergency, pursuing a Southeast Michigan regional transit millage and improving last year’s road-funding package. Chamber leaders want to revisit the idea of creating a dedicated funding stream rather than drawing so heavily from the general fund, said Brad Williams, its government relations vice president.

Energy

There is speculation that lawmakers will push hard on energy policy in lame-duck session, though it will be difficult to move in a short time. Both chambers have been working for two years on an overhaul of Michigan’s 2008 energy law.

The Senate’s leader on energy policy, Mike Nofs, a Battle Creek Republican, has been working throughout the summer and fall to drum up support, though lawmakers remain split on issues such as electric choice and mandates for renewable energy and energy efficiency programs. Critics say the bills favor Michigan’s large utilities, while supporters say the legislation would address concerns about long-term reliability and affordability.

Senators are not up for re-election in November. But the House is losing a key energy leader in Rep. Aric Nesbitt, R-Lawton, the term-limited energy committee chairman.

“If you do see Republicans lose their majority, I’m not sure that you’re going to see the will to take on something this complicated,” Demas said. “Frankly, Republicans might be happy to let a Democratic speaker deal with this mess next session rather than perhaps paying some sort of political price by doing it before the end of the year.”

But Bucholz said Democrats winning the House could be the catalyst to get an energy bill passed by December, in order for the GOP to capitalize on what’s left of its majority: “You would very much see a push by the energy community of biblical proportions to pass the bill as they’d like.”

No-fault auto insurance

Reforming Michigan’s no-fault auto insurance system could be harder.

Lawmakers have debated ways to lower the state’s highest-in-the-nation driver premiums given that Michigan’s no-fault system provides lifetime medical benefits for crash victims. Provisions in a bill that passed a House committee in 2015 would cap the amount that medical providers could charge for services and that could be spent on family-provided in-home care. The bill also would restructure the entity that covers the costs of lifetime care.
On the surface, the debate pits the insurance industry against health care, Demas said, particularly when crash victims testify in support of the current system. In addition, a proposal by Detroit Mayor Mike Duggan to limit medical benefits in an effort to bring Detroiters’ insurance rates down got no momentum.

“They’re going to have to look at it next year, no matter what, and rework the legislation as it’s proposed,” said Tom Shields, a Republican consultant and president of Lansing-based public affairs communications firm Marketing Resource Group. The draft that cleared the Senate “was just too 
drastic.”

Business tax incentives

Some business leaders, particularly those who work in economic development, have argued that Michigan doesn’t have the tools it needs to compete with more generous states when it comes to attracting companies or new development.
Term-limited Rep. Jeff Farrington, R-Utica, proposed restoring a tax credit for angel investors on a limited basis. A group of GOP senators proposed bringing back income tax credits for charitable giving that Snyder eliminated in 2011.

More recently, Detroit businessman Dan Gilbert’s Rock Ventures LLC has teamed up with regional economic development agencies across the state to advocate for a sweetened brownfield incentive that would capture state sales and income taxes on large projects. That legislation is pending in the Senate.

“We believe that tax incentives have a role to play in job creation in the state,” Greimel said. “We certainly don’t think every tax credit or every tax incentive is necessarily appropriate, but we do believe that many tax incentives merit support where the benefits outweigh the costs.”

About The Author

Lindsay VanHulle

Lindsay VanHulle covers business and Lansing for both Bridge and Crain's Detroit Business. She can be reached at lvanhulle@bridgemi.com

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Comments

John Sullivan
Mon, 10/24/2016 - 10:35am
The State Historic Tax Credit would be one worth starting up again.
Rick
Mon, 10/24/2016 - 12:38pm
Pretty unbelievable that in a GOP controlled legislature they can't really get much of anything accomplished. I guess the national GOP 'obstruct' disease is transmittable to states. Time to vote the clowns out and get some adults in to clean up the mess.
John Q. Public
Mon, 10/24/2016 - 11:37pm
“We believe that tax incentives have a role to play in job creation in the state,” Greimel said. “We certainly don’t think every tax credit or every tax incentive is necessarily appropriate, but we do believe that many tax incentives merit support where the benefits outweigh the costs.” What a load of hooey. Name a tax credit or incentive you don't think is appropriate, Tim. The legislature doesn't have a clue as to whether benefits outweigh costs on any credit or exemption they give, because nobody keeps track of the costs, and they don't even have a definition for what constitutes a success. For instance: the MEDC approves lots of loans. Out of all the loans they make, how many are paid back on the original terms? How many pay back less than 50%? How many don't pay back anything? How many tax dollars are a bet on a loser? Even if someone pays back everything, is that sufficient to be called a success? What if they promised to "create" 200 jobs but only employ 50, and then two years later move the entire operation to Texas, North Carolina or Alabama to take advantage of the government largesse being offered there? Is that a success? When a developer tears up a park and builds a "mixed-use development" with condos that will "attract hundreds of young professionals and empty nesters willing to pay market rates", but those condos turn instead into apartments that attract primarily college students and lower-income subsidized tenants, is that a success? When the commercial units that he promises will be filled with "unique, one-of-a-kind (yeah, they really say that) boutique shops" turn into Starbucks, Subway, Dunkin' Donuts, a cell-phone store and a bank branch that used to be in a now-vacant building six blocks away, is that a success? When you're passing out other peoples' money up front with no demands for a specific outcome from the recipients, there's no such thing as a failure.