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HB-5786, As Passed House, May 30, 2006

SUBSTITUTE FOR

HOUSE BILL NO. 5786

A bill to make appropriations for the Michigan strategic fund

and certain other state purposes for the fiscal year ending

September 30, 2007; to provide for the expenditure of the

appropriations; to provide certain conditions on appropriations;

and to provide for the disposition of fees and other income

received by certain state agencies.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

PART 1

LINE-ITEM APPROPRIATIONS

Sec. 101. There is appropriated for the Michigan strategic

fund for the fiscal year ending September 30, 2007, from the funds

indicated in this part, the following:

MICHIGAN STRATEGIC FUND (THRIVING ECONOMY)

APPROPRIATION SUMMARY:

Full-time equated classified positions.......... 152.0

Administration--22.0 FTE positions..................... $ 2,451,000

Job creation services--130.0 FTE positions............. 17,496,000

Michigan promotion program............................. 5,717,500

Economic development job training grants............... 9,798,000

Community development block grants..................... 45,000,000

Human resources optimization user charges.............. 17,300

GROSS APPROPRIATION.................................... $ 80,479,800

Appropriated from:

Interdepartmental grant revenues:

IDG-MDEQ, air quality fees............................. 78,600

Federal revenues:

DOL-ETA, employment service............................ 300,000

HUD-CPD, community development block grant............. 47,387,000

Special revenue funds:

Private - special project advances..................... 700,000

Industry support fees.................................. 5,000

State general fund/general purpose..................... $ 32,009,200

PART 2

PROVISIONS CONCERNING APPROPRIATIONS

GENERAL SECTIONS

Sec. 201. Pursuant to section 30 of article IX of the state

constitution of 1963, total state spending from state resources

under part 1 for fiscal year 2006-2007 is $32,014,200.00 and state

spending from state resources to be paid to local units of

government for fiscal year 2006-2007 is $9,798,000.00 from the

entire appropriation for economic development job training grants.

Sec. 202. The appropriations made and expenditures authorized

under this act and the departments, commissions, boards, offices,

and programs for which appropriations are made under this act are

subject to the management and budget act, 1984 PA 431, MCL 18.1101

to 18.1594.

Sec. 204. The department of civil service shall bill

departments and agencies at the end of the first fiscal quarter for

the 1% charge authorized by section 5 of article XI of the state

constitution of 1963. Payments shall be made for the total amount

of the billing by the end of the second fiscal quarter.

Sec. 205. (1) A hiring freeze is imposed on the state

classified civil service. State departments and agencies are

prohibited from hiring any new full-time state classified civil

service employees and prohibited from filling any vacant state

classified civil service positions. This hiring freeze does not

apply to internal transfers of classified employees from 1 position

to another within a department or state classified civil service

positions funded fully by federal funds.

(2) The state budget director may grant exceptions to this

hiring freeze when the state budget director believes that the

hiring freeze will result in rendering a state department or agency

unable to deliver basic services, cause a loss of revenue to the

state, result in the inability of the state to receive federal

funds, or would necessitate additional expenditures that exceed any

savings from maintaining a vacancy. The state budget director shall

report quarterly to the chairpersons of the senate and house of

representatives standing committees on appropriations the number of

exceptions to the hiring freeze approved during the previous month

and the reasons to justify the exception.

Sec. 207. At least 60 days before beginning any effort to

privatize, the fund shall submit a complete project plan to the

subcommittees and the fiscal agencies. The plan shall include the

criteria under which the privatization initiative will be

evaluated. The evaluation shall be completed and submitted to the

fiscal agencies and to the subcommittees within 30 months.

Sec. 208. Unless otherwise specified, the fund shall use the

Internet to fulfill the reporting requirements of this act. This

requirement may include transmission of reports via electronic mail

to the recipients identified for each reporting requirement or it

may include placement of reports on the Internet or Intranet site.

Sec. 209. Funds appropriated in part 1 shall not be used for

the purchase of foreign goods or services, or both, if

competitively priced and of comparable quality American goods or

services, or both, are available. Preference should be given to

goods or services, or both, manufactured or provided by Michigan

businesses if they are competitively priced and of comparable

quality.

Sec. 210. The chair of the fund shall take all reasonable

steps to ensure businesses in deprived and depressed communities

compete for and perform contracts to provide services or supplies,

or both. The chair of the fund shall strongly encourage firms with

which the fund contracts to subcontract with certified businesses

in depressed and deprived communities for services, supplies, or

both.

Sec. 212. The fund shall receive and retain copies of all

reports funded from appropriations in part 1. The fund shall follow

federal and state guidelines for short-term and long-term retention

of these reports and records.

Sec. 213. From the funds appropriated in part 1 for

information technology, the departments and agencies shall pay user

fees to the department of information technology for technology-

related services and projects. Such user fees shall be subject to

provisions of an interagency agreement between the fund and the

department of information technology.

Sec. 214. Amounts appropriated in part 1 for information

technology may be designated as work projects and carried forward

to support technology projects under the direction of the

department of information technology. Funds designated in this

manner are not available for expenditure until approved as work

projects under section 451a of the management and budget act, 1984

PA 431, MCL 18.1451a.

Sec. 216. It is the intent of the legislature that all revenue

sources for funds appropriated in part 1 shall not be aggregated

into general categories and shall be specifically identified and

detailed as much as possible.

Sec. 217. (1) Due to the current budgetary problems in this

state, out-of-state travel for the fiscal year ending September 30,

2007 shall be limited to situations in which 1 or more of the

following conditions apply:

(a) The travel is required by legal mandate or court order or

for law enforcement purposes.

(b) The travel is necessary to protect the health or safety of

Michigan citizens or visitors or to assist other states in similar

circumstances.

increase state revenues, including protecting existing federal

funds or securing additional federal funds.

(d) The travel is necessary to comply with federal

requirements.

(e) The travel is necessary to secure specialized training for

staff that is not available within this state.

(f) The travel is financed entirely by federal or nonstate

funds.

(2) If out-of-state travel is necessary but does not meet 1 or

more of the conditions in subsection (1), the state budget director

may grant an exception to allow the travel. Any exceptions granted

by the state budget director shall be reported on a monthly basis

to the house and senate appropriations committees.

(3) Not later than January 1 of each year, each department

shall prepare a travel report listing all travel by classified and

unclassified employees outside this state in the immediately

preceding fiscal year that was funded in whole or in part with

funds appropriated in the department's budget. The report shall be

submitted to the chairs and members of the house and senate

appropriations committees, the fiscal agencies, and the state

budget director. The report shall include the following

information:

(a) The name of each person receiving reimbursement for travel

outside this state or whose travel costs were paid by this state.

(b) The destination of each travel occurrence.

(d) A brief statement of the reason for each travel

occurrence.

(e) The transportation and related costs of each travel

occurrence, including the proportion funded with state general

fund/general purpose revenues, the proportion funded with state

restricted revenues, the proportion funded with federal revenues,

and the proportion funded with other revenues.

(f) A total of all out-of-state travel funded for the

immediately preceding fiscal year.

Sec. 219. The fund shall not take disciplinary action against

an employee for communicating with a member of the legislature or

his or her staff.

MICHIGAN STRATEGIC FUND

Sec. 1001. (1) The appropriation in part 1 to the fund for

economic development job training shall be expended in 2

categories: the business response program for employee training

grants that maintain or attract permanent jobs for Michigan

residents and the manufacturing competitiveness program for grants

to fund collaborative efforts that increase the competitiveness of

multiple companies within a grant. The business response program is

allocated up to $6,532,000.00, and the manufacturing

competitiveness program is allocated up to $3,266,000.00 not to

exceed the part 1 appropriation for this program in its entirety.

The fund has the authority to reallocate these amounts during the

fiscal year dependent on business demand and economic conditions.

(2) Not more than $800,000.00 of the total grant may be

expended for administrative costs. Not more than 10% of the total

grant award may be expended by a recipient for administration

costs.

(3) No funds appropriated in part 1 to the fund for economic

development job training grants may be expended for the training of

permanent striker replacement workers, unless a strike exceeds 3

years and good faith negotiations are ongoing.

(4) Of the total funds appropriated in part 1 for economic

development job training grants, at least 75% of the funds shall be

awarded to community colleges or a consortium of community colleges

and other eligible applicants pursuant to subsection (5).

(5) An applicant may be a school district, intermediate school

district, community college, public or private nonprofit college or

university, nonprofit organization whose primary purpose is to

provide education programs or employment and training services or

vocational rehabilitation programs or school-to-work transition

programs, local workforce development board, the headquarters of a

federal and state sponsored manufacturing technology center, or a

consortium consisting of any combination of school districts,

intermediate school districts, community colleges, nonprofit

organizations described in this subsection, or public or private

nonprofit colleges or universities described in this subsection.

(6) On or before October 1, the fund shall publish proposed

application criteria, instructions, and forms for use by eligible

applicants. The fund shall provide at least a 2-week period for

public comment prior to finalization of the application criteria,

instructions, and forms.

(7) The award process will include a simple notice of intent

to be reviewed to see if the application merits further

consideration. If so, a full application may be submitted.

Applications for all grants shall be submitted to the fund, and

each application shall contain at least all of the following:

(a) The name, address, and total number of employees of each

business organization whose employees are receiving job training.

(b) A description of the specific job skills that will be

taught.

number of participants to be involved.

(d) A commitment to maintain participant records in a form and

manner required by the fund.

(e) A budget which relates to the proposed activities and

various program components.

(8) Priority in the fund's awarding of grants shall be based

on the following criteria:

(a) Demonstrated need for the type of training offered.

(b) Creation and/or retention of high wage and high skilled

level jobs.

(d) In addition, for the manufacturing competitiveness

program, the following criteria will receive priority: strong level

of collaboration and cooperation and demonstration of new

techniques, systems, and processes of value to the affected

companies.

(9) Participants in economic development job training programs

shall be 16 years or older and not enrolled and counted in

membership in a school district, intermediate school district, or

community college.

(10) A recipient of a grant under this section shall not

charge tuition or fees to participants in the program funded by the

grant. However, a nonprofit organization may charge tuition or fees

if the tuition plan or fees are recognized by the state and the

nonprofit organization receives additional funding from other

governmental or private funding sources for its programs.

(11) For training delivered to incumbent workers under the

business response program, the business receiving the benefit of

the training shall provide a minimum of 20% of the program costs in

matching funds as necessitated by the program. For training

delivered under the manufacturing competitiveness program, the

business receiving the benefit of the training shall provide a

minimum of 30% of the program costs in matching funds as

necessitated by the program.

(12) Grant funds shall be expended on a cost reimbursement

basis.

(13) A recipient of a grant under this section shall allow the

fund or the agency's designee to audit all records related to the

grant for all entities that receive money, either directly or

indirectly through a contract, from the grant funds. A grant

recipient or contractor shall reimburse the state for all

disallowances found in the audit.

(14) The fund shall provide to the state budget director and

the fiscal agencies by May 1 and November 1 of each year a report

on the economic development job training grants. The report due by

May 1 shall provide the information described in this subsection

for each grant or contract awarded during the preceding 2 quarters

of the state fiscal year. The report due by November 1 shall

provide this information for each grant or contract awarded during

the preceding full fiscal year. The report shall contain all of the

following:

(a) The amount and recipient of each grant or contract.

(b) The number of participants under each grant or contract

and the number of new hires who are in training under the grant.

business organizations for whom training is or will be provided.

(d) The matching funds, if any, to be provided by a business

organization.

(15) Of the funds appropriated in part 1 for economic

development job training grants, the fund shall not use these funds

to finance the startup or in any way subsidize any private

distributor of liquor products in Michigan.

(16) As a condition of receiving funds under part 1 of this

act, the fund shall not expend any of the economic development job

training grant funds to train any employee who is an officer of a

corporation in a corporation employing more than 250 employees.

Sec. 1002. The Michigan growth capital fund shall be used to

develop the technology business sector in Michigan. The Michigan

growth capital fund will be used to encourage private and public

investment in the technology business sector, and all of the

following apply:

(a) An applicant must match state funds on a 1:1 basis.

(b) Eligible uses of the Michigan growth capital fund include

investments in organizations and programs that promote the

development of new industry sectors in Michigan; inducements to

attract additional venture capital funds to finance technology

development; support organizations, initiatives, or events that

promote entrepreneurship; provide match for university federal

research grants; and support technology transfer and

commercialization programs with universities and the private

sector.

administer the Michigan growth capital fund.

(d) All funds received from repayment of loans, unused grants,

revenues received from sales or cash flow participation agreements,

guarantees, or any combination thereof or interest thereon,

originally distributed as part of the Michigan growth capital fund,

shall be received, held, and applied by the fund for the purposes

described in this section.

(e) The Michigan economic development corporation shall

provide an annual report on the status of the Michigan growth

capital fund to the subcommittees, the fiscal agencies, and the

state budget office by January 31.

Sec. 1003. Travel Michigan may establish and collect a fee to

cover the cost of materials and processing of photographic prints,

slides, videotapes, and travel product database information that

are requested by the media and other segments of the public and

private sectors. The fees collected shall be appropriated for all

expenses necessary to purchase and distribute these photographic

prints, slides, videotapes, and travel product database

information. The funds are available for expenditure when they are

received by the department of treasury.

Sec. 1004. Travel Michigan may receive and expend private

revenue related to the use of the "Michigan Great Lakes. Great

Times." copyrighted slogan and image. This revenue may come from

the direct licensing of the name and image or from the royalty

payments from various merchandise sales. Revenue collected is

appropriated for the marketing of the state as a travel

destination. The funds are available for expenditure when they are

received by the department of treasury.

Sec. 1005. The fund shall submit on or before May 1 and

November 1 to the subcommittees, state budget office, and the

fiscal agencies a listing of all grants which have been awarded by

the fund or by the Michigan economic development corporation from

the funds appropriated in part 1. The list shall include all of the

following:

(a) The name of the recipient.

(b) The amount awarded to the recipient.

Sec. 1006. (1) The fund shall provide reports to the relevant

subcommittees, the state budget director, and the fiscal agencies

concerning the activities of the Michigan economic development

corporation grants and investment programs financed from the fund

using investment or Indian gaming revenues. The report shall

provide a list of individual grants and loans made from the fund.

The report shall include, but not be limited to, the following

programs funded in part 1:

(a) Travel Michigan.

(b) Michigan business development.

(d) Small, minority, and disabled business services.

(e) Community development block grants.

(f) Strategic fund administration.

(g) Renaissance zones.

(h) Emerging business sectors and roundtables.

(i) Business and clean air ombudsman.

(j) Economic development job training grants.

(k) Community assistance team.

(l) Technology tri-corridor.

(m) Any other programs of the fund.

(2) The reports in subsection (1) shall be submitted by

January 1. The report for each program in subsection (1)(a) through

(m) shall include details on the actual spending and number of FTEs

for that program for the previous fiscal year.

Sec. 1007. As a condition of receiving funds under part 1, any

interlocal agreement entered into by the fund shall include

language which states that if a local unit of government has a

contract or memorandum of understanding with a private economic

development agency, the Michigan economic development corporation

will work cooperatively with that private organization in that

local area.

Sec. 1008. (1) Of the funds appropriated to the fund or

through grants to the Michigan economic development corporation, no

funds shall be expended for the purchase of options on land or the

purchase of land unless at least 1 of the following conditions

applies:

(a) The land is located in an economically distressed area.

(b) The land is obtained through a purchase or exercise of an

option at the invitation of the local unit of government and local

economic development agency.

(2) Consideration may be given to purchases where the proposed

use of the land is consistent with a regional land use plan, will

result in the redevelopment of an economically distressed area, can

be supported by existing infrastructure, and will not cause shifts

in population away from the area's population centers.

(3) As used in this section, "economically distressed area"

means an area in a city, village, or township that has been

designated as blighted; a city, village, or township that shows

negative population change from 1970 and a poverty rate and

unemployment rate greater than the statewide average; or an area

certified as a neighborhood enterprise zone.

Sec. 1009. The money appropriated in part 1 to the fund is

subject to the condition that none is spent for premiums or

advertising material involving personal effects or apparel

including, but not limited to, T-shirts, hats, coffee mugs, or

other promotional items, except travel Michigan.

Sec. 1010. (1) From the general fund/general purpose

appropriations in part 1 to the fund and granted or transferred to

the Michigan economic development corporation, any unexpended or

unencumbered balance shall be disposed of in accordance with the

requirements in the management and budget act, 1984 PA 431, MCL

18.1101 to 18.1594, unless carryforward authorization has been

otherwise provided for.

(2) Any encumbered funds shall be used for the same purposes

for which funding was originally appropriated in this act.

Sec. 1011. (1) As a condition of receiving funds under part 1,

the fund shall ensure that the MEDC and the fund comply with all of

the following:

(a) The freedom of information act, 1976 PA 442, MCL 15.231 to

15.246.

(b) The open meetings act, 1976 PA 267, MCL 15.261 to 15.275.

general or his or her designee.

(d) All reports required by law to be submitted to the

legislature.

(2) If the MEDC is unable for any reason to perform duties

under this act, the fund may exercise those duties.

Sec. 1012. As a condition for receiving the appropriations in

part 1, any staff of the Michigan economic development corporation

involved in private fund-raising activities shall not be party to

any decisions regarding the awarding of grants or tax abatements

from the fund, the Michigan economic development corporation, or

the Michigan economic growth authority.

Sec. 1013. (1) All funds received from repayment of loans,

unused grants, revenues received from sales or cash flow

participation agreements, guarantees, or any combination thereof or

interest thereon, originally distributed as part of the core

communities fund, shall be received, held, and applied by the fund

for the purposes described in this act.

(2) The fund shall provide an annual report on the status of

this fund. The report shall be provided to the subcommittees, the

fiscal agencies, and the state budget office by January 31.

Sec. 1014. (1) The funding appropriated in part 1 of 2000 PA

291 for the Michigan core communities fund may be used to create an

urban revitalization infrastructure program in the fund for

economic development awards to create new jobs or contribute to

redevelopment and encourage private investment in core communities.

(2) Awards may be provided to qualified local governmental

units as defined in the obsolete property rehabilitation act, 2000

PA 146, MCL 125.2781 to 125.2797, or certified technology parks, as

defined in the local development financing act, 1986 PA 281, MCL

125.2151 to 125.2174.

(3) Awards can be used for land and property acquisition and

assembly, demolition, site development, utility modifications and

improvements, street and road improvements, telecommunication

infrastructure, site location and relocation, infrastructure

improvements, and any other costs related to the successful

development and implementation of core community or certified

technology park projects, at the discretion of the Michigan

economic development corporation.

(4) Funding may be provided in the form of loans, grants,

sales or cash flow participation agreements, guarantees, or any

combination of these. A cash match of at least 10%, or local

repayment guarantee with a dedicated funding source, is required.

Priority shall be given to projects which are integrated with

existing economic development programs, and to projects in

proportion to the amount that local matching rates exceed 10%.

(5) The Michigan economic development corporation shall have

all administrative responsibility for the Michigan core communities

fund and shall establish application and application scoring

criteria and approve awards. The Michigan economic development

corporation may utilize up to 1/2 of 1% of the fund for

administrative purposes.

(6) Funds will be awarded through an open competitive process

based on criteria including the following: project impact, project

marketability, lack of adequate infrastructure or land assembly

financing sources, local administrative capacity, and the level of

local matching funds. Awardees shall agree to expedite the local

development process, such as fast-track permitting procedures,

streamlined regulatory requirements, standardized construction and

building codes, and the use of competitive construction permitting

fees.

(7) No single applicant shall be awarded more than

$10,000,000.00 per project.

(8) Fifteen days prior to the award of the funds, notification

shall be provided to the speaker of the house of representatives,

the senate majority leader, the members of the house and senate

appropriations committees, the fiscal agencies, and the state

budget director.

(9) Funds shall not be awarded for any of the following

purposes:

(a) Land sited for use as, or support for, a gaming facility.

(b) Land or other facilities owned or operated by a gaming

facility.

indirectly support a gaming facility.

(10) All funds received from repayment of loans, unused

grants, revenues received from sales or cash flow participation

agreements, guarantees, or any combination thereof or interest

thereon, originally distributed as part of the core communities

fund, shall be received, held, and applied by the fund for the

purposes described in this part.

(11) The fund shall provide an annual report on the status of

this fund. The report shall be provided to the subcommittees, the

fiscal agencies, and the state budget office by January 31.

Sec. 1015. It is the intent of the legislature that the

members of the executive committee of the corporation board of the

MEDC be subject to the advice and consent of the senate.

Sec. 1016. The Michigan economic development corporation shall

work with the office of the auditor general to implement procedures

to annually audit the number of jobs claimed to be created by firms

receiving Michigan economic growth authority grants, and all other

claims of job creation for which MEDC has provided tax credits or

other economic incentives.

Sec. 1017. The Michigan economic development corporation shall

report on the number of individuals it employs with an annual

salary of $80,000.00 or more to the subcommittees, the fiscal

agencies, and the state budget office by October 31, 2007. The

report shall include the name, the job title, and a description of

the duties and responsibilities of all such employees.

Sec. 1018. From the funds appropriated in part 1 for the

Michigan promotion program, the Michigan economic development

corporation shall contract with a state research university in

Michigan to conduct a scientific study of the return on investment

of state tourism advertising expenditures. The results of this

study shall be reported to the subcommittees, the fiscal agencies,

and the state budget office by January 31, 2007.

Sec. 1019. (1) As a condition of receiving the funds

appropriated in part 1, the Michigan strategic fund shall ensure

that the Michigan economic development corporation and the Michigan

strategic fund promulgate or create no guidelines, rules,

standards, protocols, or other similar mandates that would prevent

a firm, which otherwise qualifies for Michigan economic growth

authority tax credits, from receiving such credits because the new

employees who fill qualified new jobs as defined in the Michigan

economic growth authority act of 1995, 1995 PA 24, MCL 207.801 to

207.810, are leased from a professional employer organization.

(2) For purposes of this section, a professional employer

organization is defined as an organization that provides the

management and administration of the human resources and employer

risk of another entity by contractually assuming substantial

employer rights, responsibilities, and risk through a professional

employer agreement that establishes an employer relationship with

the leased officers or employees assigned to the other entity by

doing all of the following:

(a) Maintaining the right of direction and control of the

employees' work, although this responsibility may be shared with

the other entity.

(b) Paying wages and employment taxes of the employees out of

its own accounts.

employment taxes for the employees.

(d) Retaining the right to hire and fire employees.