Round-Up of Legislative News
April 16, 2010
Early Retirement Bills Move in the Senate
A revised version of the Governor’s early retirement package for state and public school employees recently cleared the State Senate on an almost party-line vote.
Sen. Mickey Switalski was the lone Democrat to cross the aisle to support the Senate Republican version of the plan. As written, it is estimated that the package would save over $225 million in next year’s state budget. (It should also be noted that Sen. Switalski was the only Democrat to vote to reject the state employees 3 percent wage increase.)
Although the Senate bills deliver less savings than what was originally proposed by Gov. Granholm, the ten year forecast estimates nearly $3 billion in savings. The Senate Republicans led by Senate Majority Leader Mike Bishop, and Sen. Switalski should be applauded for taking action on this important step to deliver cost saving reforms.
It is still unclear if the State House will take up the Senate bills or similar bills in their own chamber. We are encouraged by this latest development and will continue to push this plan and other reform efforts.
Also this week, a Senate committee moved bills that would require public employees to pay at least 20 percent of the cost of their health insurance bill.
The bills would bring public employees more in line with what private sector employees pay for their health insurance. (Currently public employees pay less than 10 percent of their insurance costs.)
It still remains to be seen what will happen on the Senate floor. Like the state employee pay raise issue last month, one of the bills requires a two-thirds majority to pass.
SBAM testified in support of the bills last month and we will continue our efforts to support passage.
Now that health-care reform is complete, Congress needs to turn its attention to estate tax reform.
If Congress does not act, the estate tax—which is now repealed because lawmakers could not reach a policy agreement last year—reverts back to its 2001 levels in 2011—with a top tax rate of 55 percent and a $1 million exemption. This is more restrictive than the solution most Democrats support, which would keep the 2009 rate of 45 percent and exemption amount of $3.5 million.
There is also a proposal that would permanently raise the exemption to $5 million and set the top tax rate at 35 percent, with the exemption indexed to inflation. While SBAM prefers a repeal of the estate tax, the proposals that are out there will certainly be better for small business owners and their heirs than if Congress fails to act.
We will keep you updated on this important issue.