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Road deal crumbles as Snyder, House GOP disagree On HICA, budget impact

August 25, 2015

Disagreements over the uncertain future of a state assessment on health care claims was the latest reason a $1.2 billion road-funding deal fell apart Wednesday.

According to three sources who declined to be named, Gov. Rick SNYDER’s administration made it known it wanted House Republicans to include a fix for the Health Insurance Claims Assessment (HICA) in the road deal lawmakers were pursuing.The assessment at its current rate hasn’t produced the revenue needed to match federal Medicaid dollars, creating problems for the state’s budget going forward. But House Republicans didn’t want to go along the administration’s request. And that disagreement played a major role in the House adjourning this evening without passing a long-sought-after plan to fix the state’s crumbling infrastructure.

House Speaker Kevin COTTER(R-Mt. Pleasant) had said it was his goal to get a deal done this week. But at about 9 p.m. Wednesday night – nearly 11 hours after the session day began – the House adjourned for the week without taking action.

Eventually, according to different estimates, the HICA shortfall will create a $120 million to $200 million gap in the state’s budget. Snyder’s team wanted a fix for the shortfall included in the roads deal as a way to alleviate concerns about dedicating $600 million in existing state revenues to roads. The idea was that without the HICA fix, HICA and the roads plan would overly strain the state’s budget going forward.

By fixing HICA as part of the deal, the strain could be resolved to a certain extent, according to the argument. Without the HICA fix as part of the deal, Snyder’s administration wanted the portion of new revenue in the deal to go from the proposed $600 million mark to somewhere around $800 million.

Multiple sources alleged that Snyder rejected the “$600 million/$600 million plan” that House Republicans were assembling without a HICA fix. But the HICA idea and the increased new revenue alternative were too much for the shaky coalition of House members that Republican lawmakers were trying to assemble to vote for the cleaner $600 million existing revenue/$600 million new revenue deal. Multiple House Republicans involved in the vote-gathering effort didn’t name Snyder specifically this evening but said items were being added to the proposal that stopped it from moving.

House Appropriations Committee Chair Al PSCHOLKA (R-Stevensville) said he believed he had the votes for the $600 million/$600 million plan the House Republicans were pursuing. That includes the needed votes for a 5-cent gas tax increase and registration fee changes to produce the $600 million in new revenue.

“In this body, in this room, I think if you put that up, I think folks wanted to go home tonight with a solution,” Pscholka said of the package. Rep. Jeff FARRINGTON (R-Utica) had a similar take. “The House put together a plan that was balanced with revenue and cuts and other people wanted to throw in non-road issues to get a deal done,” Farrington said.

Along with Snyder, House Democrats had also suggested a HICA fix as one of the items
they wanted in a deal. In the past, Snyder had proposed increasing the HICA rate, which is paid by insuranc carriers and some employers who directly pay health insurance claims, from 0.75 percent to 1.3 percent.

But House Republicans, who objected to the past attempts to increase the rate, didn’t
want HICA to be part of the roads deal. House Minority Leader Tim GREIMEL (D-Auburn Hills) blamed the failure to reach a road-funding deal tonight on House Republicans and Cotter specifically. “The Senate Republicans, the Senate Democrats, the Governor and I are all trying to address this in a reasonably responsible way,” Greimel said. “As what happened last term, it’s the House Republicans who are refusing to fix the state’s roads in a responsible way.”

Greimel said there are “bipartisan concerns” about Cotter’s attempt to “rely on General
Fund dollars to fix the roads when those General Fund dollars don’t currently exist and
the Speaker is refusing to identify where those cuts would come from.”

Opponents of the House Republicans’ plan argued that the HICA problem and upcoming costs attached to Medicaid expansion would complicate the plan of shifting $600 million within the state’s budget to roads.

According to multiple sources, Snyder’s team brought up the HICA issue after the conference committee was named on Tuesday. And it apparently caught some House  Republicans off guard.

Some House members also wanted Snyder to do more to sell his ideas Wednesday, which was his birthday.  Snyder did meet with legislative leaders on Tuesday in his Capitol office.

Sara WURFEL, the Governor’s spokesperson, said Snyder has been open to a variety of  solutions for roads, but he has expressed concerns with the level of existing revenue cuts that would have to be made under the plan that was taking shape.

“Michigan has come so far and we want to ensure we’re being thoughtful and careful  about not inadvertently creating other challenges and jeopardizing the state’s financial
stability and comeback while solving another,” Wurfel said.

The effort to solve roads began again this morning as the House opened session at 10
a.m. A conference committee on three roads-related bills was scheduled to meet at 9 a.m., but went immediately went at ease.

House members were working in the chamber until about 5 p.m. when the members went on a break until 6:30 p.m. After lawmakers returned, both caucuses met behind closed doors and the effort to try to gather 55 votes for a plan continued.

House Republicans had been working with the Detroit House Caucus, chaired by Rep. Brian BANKS (D-Detroit), and other House Democrats to collect the needed votes. Protections for revenue sharing, dedicating more transportation dollars to Oakland and Macomb counties and promises to safeguard the state’s prevailing wage were all floated as way to get Democrats on board.

Rep Fred DURHAL III (D-Detroit) said he wanted to see assurances on where the $600 million in budget cuts were going to come form. Those assurances, like votes on the road plan, never came Wednesday, he said.

“Where is this money going to come from?” Durhal questioned at the end of session this
evening. Ultimately, the efforts to gather votes stalled amid the administration’s push for revisions to the plan. Both Cotter and Pscholka reiterated tonight that they want the ultimate solution to be all about roads, not other issues.

Pscholka said he’s hopeful that lawmakers can get something done when they return to
Lansing in September. “We’ve got to just stick to a roads only package,” Pscholka said. “This has got to be all about the roads, only roads. I don’t think we can let any other issues, any other budget pressures come into play at all.”

Cotter had a similar message.

“Unfortunately, our negotiations have been a bit derailed,” as Cotter described it. “And
other things that are not roads have been attempted to be added to it.”

“We are going to continue to work to that end,” he said of reaching a solution to improve the state’s roads. “But we’re not there, yet.”

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