June 18, 2015, Introduced by Reps. Chatfield, Webber, Kivela, Crawford, Schor, McBroom, Cox, Johnson, Iden, Sheppard, LaVoy, Cole and Runestad and referred to the Committee on Financial Liability Reform.
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 prescribe
certain powers and duties of the legislative branch; 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. (1) This act shall be known and may be cited as the
"Paul Harvey transparency act".
(2) 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 of government 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, 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) "De minimis cost" means a net cost to a local unit of
government resulting from a state requirement that does not exceed
$300.00 per claim.
(5) "Department" means the department of technology,
management, and budget.
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 except to the extent that the public or
local act or administrative rule being implemented for the first
time imposes upon a local unit of government a new activity or
service or an increase in the level of any activity or service
beyond that required by existing law.
(2) "Federal requirement" means a federal law, rule,
regulation, executive order, guideline, standard, or other federal
action which has the force and effect of law and which requires the
state to take action affecting local units of government.
(3) "Implied federal requirement" means a federal law, rule,
regulation, executive order, guideline, standard, or other federal
action which has the force and effect of law and which does not
directly require the state to take action affecting local units of
government, but will, according to federal law, result in a loss of
federal funds or federal tax credits if state action is not taken
to comply with the federal action.
(4) "Legislature" means the house of representatives and the
senate of this state.
(5) "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
activities and services for residents in a geographically limited
area of this state and has the power to act primarily on behalf of
that area.
(6) "Necessary cost" means the cost of an activity or service
provided by a local unit of government. The necessary cost is the
actual cost to this state if this state were to provide the
activity or service mandated as a state requirement, unless
otherwise determined by the legislature when making a state
requirement. Necessary cost does not include the cost of a state
requirement if it does not exceed a de minimis cost. 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 of government that existed before the
effective date of the state requirement are considered, the
requirement will not exceed the cost of the preexisting required
duties.
(7) "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
new amendment to the state constitution of 1963.
(b) A court requirement.
(c) A federal requirement.
(d) An implied federal requirement.
(e) A requirement of a state law which applies to a larger
class of persons or corporations and does not apply principally or
exclusively to a local unit or units of government.
(f) 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.
(g) 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.
(h) 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 or
services or increases in the level of activities and services
required by state law 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 after the effective date of this act unless a
fiscal note has been prepared in accordance with section 6, and the
state has appropriated and provided for disbursement of the amounts
sufficient based on the fiscal note analysis 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 or a court has determined that the legislation does not
impose a new activity or service or an increase in the level of an
existing activity or service. In the event that legislation is
enacted after the effective date of this act imposing a requirement
on local units of government without following the fiscal note
process described in section 6, local units of government are not
required to comply until that time that the fiscal note process
described in section 6 is followed or a court has determined that
the legislation does not impose a new activity or service or an
increase in the level of an existing activity or service.
Sec. 6. (1) A fiscal note process is hereby created. The
fiscal note process shall consist of all of the following:
(a) Before legislation affecting a local unit of government is
scheduled for third reading in the legislative chamber in which it
was introduced, the fiscal agencies 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
fiscal agencies shall develop a written estimate of the increased
necessary costs, if any, that will result to local units of
government if that legislation becomes effective. In developing the
written estimate of the increased necessary costs, the fiscal
agencies shall work in consultation with local units of government
and shall report their findings to the sponsor of the legislation,
the chairperson of the committee that reported the legislation, the
speaker of the house, the majority leader of the senate, and the
chairpersons of the house and senate appropriations committees. If
the legislation is modified by either house of the legislature, the
fiscal agencies shall, in consultation with local units of
government, modify their written estimate of increased necessary
costs.
(c) The fiscal agencies shall promptly inform the legislature
in writing of its determination in subdivision (b) before the
legislation is scheduled for third reading.
(d) 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.
(e) After receiving notice from the office of regulatory
reinvention that a rule may impose a new activity or service or an
increased level of activity or service is likely to occur, the
fiscal agencies shall develop a written estimate of the increased
necessary costs of the proposed rule, if any, that will result to
local units of government if that proposed rule becomes effective.
In developing the written estimate of the increased necessary costs
of the proposed rule, the fiscal agencies shall work in
consultation with local units of government and shall report their
findings to the office of regulatory reinvention.
(2) Not later than 1 year after the date of enactment of this
act, the department of treasury shall develop a standard accounting
system in a searchable format to assist the fiscal note process.
Sec. 7. 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 for failing 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 for that new activity or service or has
failed to make timely disbursement to fund the costs identified in
the fiscal note process provided in section 6 for that new activity
or service or increase in the level of an existing activity or
service.
(b) The state has prepared a fiscal note in connection with
the enactment of the state law and 1 of the following applies for
that new activity or service or increase in the level of an
existing activity or service:
(i) A taxpayer or local unit of government 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. 8. If requested by the fiscal agencies, the department
shall provide the fiscal agencies with baseline data on the net
cost of compliance if the state provided the same activity or
service and the necessary cost of compliance with the state
requirement by each unit of local government, to the extent the
department has that data regarding a particular new activity or
service or increase in the level of an existing activity or
service.
Sec. 9. Funds received by a local unit of government under
this act shall be separately accounted for by the local unit of
government to reflect the specific state requirement for which the
funds are appropriated. To facilitate monitoring and compliance
with this act, not later than October 1, 2016, 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. 10. (1) This act does not prohibit the legislature from
enacting state laws to provide for other forms of dedicated 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.
(2) This act shall not be applied retroactively.
Sec. 11. 1979 PA 101, MCL 21.231 to 21.244, is repealed.