Bill Text: MI HB5802 | 2009-2010 | 95th Legislature | Introduced
Bill Title: State financing and management; other; implementation of section 29 of article IX of the state constitution; provide for, and repeal 1979 PA 101. Creates new act & repeals 1979 PA 101 (MCL 21.231 - 21.244).
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Introduced - Dead) 2010-02-10 - Printed Bill Filed 02/10/2010 [HB5802 Detail]
Download: Michigan-2009-HB5802-Introduced.html
HOUSE BILL No. 5802
February 9, 2010, Introduced by Reps. Barnett, McDowell, Kennedy and Mayes and referred to the Committee on Judiciary.
A bill to implement section 29 of article IX of the state
constitution of 1963; to provide a process for state compliance
with its obligation to finance the costs incurred by local units of
government to provide, administer, and implement certain activities
or services required by this state; to prescribe the powers and
duties of certain state agencies and public officers; to provide
for the administration of this act; and to repeal acts and parts of
acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. For purposes of this act, the words and phrases
defined in sections 2 to 4 shall have the meanings ascribed to them
in those sections.
Sec. 2. (1) "Activity" means a specific and identifiable
administrative action of a local unit of government.
(2) "Consultation" means to seek information from a
representative sample of local units affected by a state
requirement in a manner which can reasonably be expected to result
in a fair estimate of the statewide cost of compliance with the
state requirement.
(3) "Court requirement" means a new activity or service or an
increase in the level of activity or service beyond that required
by existing law which is required of a local unit of government in
order to comply with a final state or federal court order arising
from the interpretation of the constitution of the United States,
the state constitution of 1963, an existing law, or a federal
statute, rule, or regulation. Court requirement includes a state
law whose enactment is required by a final state or federal court
order.
(4) "Department" means the department of management and
budget.
(5) "Director" means the director of the department of
management and budget.
(6) "Due process requirement" means a statute or rule which
involves the administration of justice, notification and conduct of
public hearings, procedures for administrative and judicial review
of action taken by a local unit of government or the protection of
the public from malfeasance, misfeasance, or nonfeasance by an
official of a local unit of government, and which involves the
provision of due process as it is defined by state and federal
courts when interpreting the federal constitution or the state
constitution of 1963.
Sec. 3. (1) "Existing law" means a public or local act enacted
prior to December 23, 1978, a rule promulgated prior to December
23, 1978, or a court order concerning a public or local act or rule
described in this subsection. A rule initially promulgated after
December 22, 1978 implementing for the first time an act or
amendatory act in effect prior to December 23, 1978 shall also be
considered as existing law.
(2) "Legislature" means the house of representatives and the
senate of this state.
(3) "Local government mandate panel" means 1 of the following:
(a) In the case of legislation that imposes a state
requirement, representatives of the house and senate fiscal
agencies, in consultation with the affected local units of
government.
(b) In the case of a state agency rule or regulation which
imposes a state requirement, the chief administrative officer of
the state agency that imposes a state requirement, in consultation
with the affected local units of government and the joint committee
on administrative rules.
(4) "Local unit of government" means a political subdivision
of this state, including local school districts, community college
districts, intermediate school districts, cities, villages,
townships, counties, and authorities, if the political subdivision
has as its primary purpose the providing of local governmental
services for residents in a geographically limited area of this
state and has the power to act primarily on behalf of that area.
(5) "Necessary cost" means the net cost of an activity or
service provided by a local unit of government. The net cost shall
be the actual cost to the local unit to provide the activity or
service mandated as a state requirement. Necessary cost does not
include the cost of a state requirement if the state requirement
will result in an offsetting savings to an extent that, if the
duties of a local unit that existed before the effective date of
the state requirement are considered, the requirement will not
exceed the cost of the newly required duties.
(6) "New activity or service or increase in the level of an
existing activity or service" does not include a state law, or
administrative rule promulgated under existing law, which provides
only clarifying nonsubstantive changes in an earlier, existing law
or state law; or the recodification of an existing law or state
law, or administrative rules promulgated under a recodification,
which does not require a new activity or service or does not
require an increase in the level of an activity or service above
the level required before the existing law or state law was
recodified.
Sec. 4. (1) "Service" means a specific and identifiable
program of a local unit of government that is available to the
general public or is provided for the citizens of the local unit of
government.
(2) "State agency" means a state department, bureau, division,
section, board, commission, trustee, authority, or officer that is
created by the state constitution of 1963, by statute, or by state
agency action, and that has the authority to promulgate rules
pursuant to the administrative procedures act of 1969, 1969 PA 306,
MCL 24.201 to 24.328. State agency does not include an agency in
the judicial branch of state government, an agency having direct
control over an institution of higher education, or the state civil
service commission.
(3) "State financed proportion of the necessary cost of an
existing activity or service required of local units of government
by existing law" means the percentage of necessary costs
specifically provided for an activity or service required of local
units of government by existing law and categorically funded by the
state on December 23, 1978.
(4) "State law" means a state statute or state agency rule or
regulation.
(5) "State requirement" means a state law that requires a new
activity or service or an increased level of activity or service
beyond that required of a local unit of government by an existing
law. State requirement does not include any of the following:
(a) A requirement imposed on a local unit of government by a
state statute or an amendment to the state constitution of 1963.
(b) A requirement imposed on a local unit of government by an
amendment to the state constitution of 1963, enacted or adopted
pursuant to a proposal placed on the ballot by the legislature, and
approved by the voters.
(c) A court requirement.
(d) A requirement of a state law that does not require a local
unit of government to perform an activity or service but allows a
local unit of government to do so as an option, and by opting to
perform such an activity or service, the local unit of government
shall comply with certain minimum standards, requirements, or
guidelines.
(e) A requirement of a state law that changes the level of
requirements, standards, or guidelines of an activity or service
that is not required of a local unit of government by existing law
or state law, but that is provided at the option of the local unit
of government provided that state requirement shall include any
standards, requirements, or guidelines that require increased
necessary costs for activities and services directly related to
police, fire, or emergency medical transport services.
(f) A requirement of a state law enacted pursuant to section
18 of article VI of the state constitution of 1963.
Sec. 5. (1) The legislature shall appropriate and disburse
each year an amount sufficient to pay each local unit of government
the necessary cost of each state requirement pursuant to section 29
of article IX of the state constitution of 1963.
(2) The legislature shall appropriate and disburse each year
an amount sufficient to pay each local unit of government the state
financed proportion of the necessary cost of an existing activity
or service required of local units of government by existing law
and to appropriate and disburse to local units of government an
amount sufficient to pay for the costs of new activities and
services or increases in the level of activities and services
required by the legislature or any state agency after December 23,
1978.
(3) Notwithstanding any provision of law to the contrary, no
local unit of government shall be obligated to provide a new
activity or service or increased level of activity or service
required by state law unless and until the state has prepared and
published a fiscal note in accordance with section 6, and
appropriated and provided for disbursement of the amounts
sufficient to fund the necessary cost to the local unit of
government of providing the new activity or service or increase in
the level of a required activity or service.
Sec. 6. A fiscal note process is hereby created. The fiscal
note process shall consist of all the following:
(a) Before enactment of any legislation affecting a local unit
of government, the local government mandate panel established
pursuant to section 7 shall conduct a review to determine whether
any new or increased level of activities or services is likely to
be required of local units of government by that legislation if it
becomes effective.
(b) If it is determined that a new activity or service or an
increased level of activity or service is likely to occur, the
responsible fiscal agency, working in active consultation with
representatives of local units of government, shall develop a
written estimate of the necessary increased costs, if any, that
will result to local units of government if that legislation
becomes effective.
(c) The responsible fiscal agency shall promptly inform the
legislature in writing of its determination in subdivision (b)
before enactment of the legislation.
(d) Prior to the enactment of any legislation that imposes a
requirement on local units of government to provide any new
activity or service or an increase in the level of any activity or
service, an appropriation bill shall be created and introduced in
the proceedings in the legislature to provide sufficient funding to
pay for any necessary increased costs resulting from such
requirement, as estimated by the responsible fiscal agency, and to
further create a process for disbursement of such funding to the
affected local units of government. The appropriation bill shall be
tie-barred to the bill creating the requirement.
(e) The disbursement process shall serve to disburse funds to
local units of government on a current basis or as costs to provide
the required activity or service are being incurred by the local
units of government.
(f) In the event that legislation is enacted imposing a
requirement on local units of government without following the
above requirements, local units of government are not required to
comply until such point in time that the fiscal note process
described in this section is followed.
Sec. 7. A local government mandate panel is established hereby
that shall facilitate and ensure compliance with section 29 of
article IX of the state constitution of 1963 by annually developing
and publishing all the following:
(a) A 3-year estimate of the aggregate necessary cost to local
units of government of compliance with the requirements imposed by
state law that existed on December 31, 1978 and were funded in
whole or in part at that time, and the requirements imposed by
state law that are new or first imposed after December 23, 1978, or
represent a required increase in the level of any activity or
service after that date.
(b) A 3-year estimate of the net cost of compliance if the
state provided the same service or activity.
(c) A 3-year estimate of the necessary cost of compliance with
the state requirement by each unit of local government.
Sec. 8. (1) The local government mandate panel shall develop a
process that will accomplish all the following:
(a) Annually review all statutes and administrative rules and
regulations that impose requirements on local units of government.
(b) Make recommendations to the legislature whether the
requirements described in subdivision (a) continue to be necessary
in terms of the cost/benefit to the public interest, and if not,
whether those requirements should be rescinded.
(2) If it is determined by the panel that the requirements
described in subsection (1) are recommended to be continued, report
as to whether the requirements can be provided on a more cost-
effective basis than presently provided and to recommend
legislation to achieve cost savings.
Sec. 9. The state shall not impose a penalty on, withhold
funds, or impose any other form of monetary or other sanction on
any local unit of government that fails to comply with a state
requirement under any of the following circumstances:
(a) The state has failed to follow the fiscal note process
provided in section 6 or has failed to make timely disbursement to
fund the costs identified in the fiscal note process provided in
section 6.
(b) The state has prepared a fiscal note in connection with
the enactment of the state law and 1 of the following applies:
(i) A taxpayer has filed a suit through the filing of a
complaint in the court of appeals pursuant to section 308a of the
revised judicature act of 1961, 1961 PA 236, MCL 600.308a,
asserting that the state law imposes a mandate under section 29 of
article IX of the state constitution of 1963 and that the cost of
compliance has not been fully funded by the state.
(ii) The court of appeals has either failed to issue an order
within 6 months after the complaint was filed ruling whether the
state law imposes a state requirement and whether the state has
underfunded the cost of compliance or, alternatively, ruled in
favor of the complainant.
Sec. 10. Funds received by a local unit of government under
this act shall be separately accounted for to reflect the specific
state requirement for which the funds are appropriated. To
facilitate monitoring and compliance with this act, not later than
July 1, 2010, the department shall establish standard accounting
systems which will allow local units of government and the state to
calculate and track all of the following:
(a) The costs incurred by local units in complying with state
requirements and existing law.
(b) The state financed proportion of the necessary cost of an
existing activity or service required of local units of government
by existing law.
Sec. 11. (1) No later than 12 months after the effective date
of this act, the house and senate fiscal agencies in consultation
with local units of government shall collect documents and tabulate
information as to each of the following:
(a) The state financed proportion of the necessary cost of an
existing activity or service required of local units of government
by existing law.
(b) The nature and scope of each state requirement that
requires disbursement under section 5.
(c) The nature and scope of each action imposing a potential
cost on a local unit of government which is not a state requirement
and does not require a disbursement under this act.
(2) The information described in subsection (1) shall include
all of the following:
(a) The identity or type of local unit and local unit agency
or official to whom the state requirement or required existing
activity or service is directed.
(b) The determination of whether or not an identifiable local
direct cost is necessitated by state requirement or the required
existing activity or service.
(c) The amount of state financial participation meeting the
identifiable local direct cost.
(d) The state agency charged with supervising the state
requirement or the required existing activity or service.
(e) A brief description of the purpose of the state
requirement or the required existing activity or service, and a
citation of its origin in statute, rule, or court order.
(f) A recommendation as to whether any state requirement or
activity or service required of local units of government by
existing law should be 1 of the following:
(i) Eliminated.
(ii) Redesigned to reduce the cost of compliance.
(iii) Fully or proportionately funded by the state, depending on
the date the requirement was first imposed.
(g) A recommendation as to whether required standards of
performance for optional activities and services provided by local
units of government or requirements not otherwise subject to
section 29 of article IX of the state constitution of 1963 should
be reduced, reformed, eliminated, or fully funded by the state. The
recommendation shall consider whether requirements continue to be
necessary in light of the public interest and the financial
condition of the affected local units of government and the state
should modify the requirements to reduce the cost or increase the
efficiency with which the activities and services can be provided.
(3) The tabulated information and recommendations described in
this section shall be published in a report submitted to the
legislature not later than December 31, 2010. A concurrent
resolution shall be adopted each year upon enactment of the state
budget by both houses of the legislature certifying that the state
has fully met its responsibilities under section 29 of article IX
of the state constitution of 1963.
Sec. 12. (1) The house and senate fiscal agencies, in
consultation with local units of government, shall adopt a process
for monitoring the state's compliance with section 29 of article IX
of the state constitution of 1963, including appropriations and
disbursements to fund the cost of complying with state requirements
and the state's compliance with its obligation to fund the state
financed proportion of the necessary cost of an existing activity
or service required of local units of government by existing law.
(2) Annually, the house and senate fiscal agencies shall
prepare and publish a report containing an update of the
information specified in section 9 for the legislature and the
governor. The legislature shall provide a copy of the report to the
court of appeals.
(3) The house and senate fiscal agencies shall prepare
alternative recommendations for addressing decisions by the court
of appeals ruling that the state has failed to fully fund the cost
of complying with state requirements and the state's compliance
with its obligation to fund the state financed proportion of the
necessary cost of an existing activity or service required of local
units of government by existing law.
Sec. 13. A state law shall not be enacted that causes a
reduction in the state financed proportion of the
necessary costs of an existing activity or service required of
local units of government by existing law, unless the existing law
requiring an activity or service is repealed.
Sec. 14. This act does not prohibit the legislature from
enacting state laws to provide for other forms of state aid, cost-
sharing agreements, or specific methods of making disbursements to
a local unit of government for a cost incurred pursuant to state
laws enacted to which this act applies.
Sec. 15. The department may promulgate rules pursuant to
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328, to regulate the disbursement of funds appropriated to local
units of government, to provide guidelines for identification of
funds over which the director has disbursement authority, and to
implement and administer this act, provided that the implementation
and effectiveness of this act shall not be dependent on the
promulgation of any such rules.
Sec. 16. 1979 PA 101, MCL 21.231 to 21.244, is repealed.
