October 8, 2013, Introduced by Reps. Kowall, Walsh, Schor, Kivela, Jacobsen, Pettalia, Crawford, McCready, Rogers, Forlini, Pagel, Heise, Daley, Lauwers, Rendon, Lund, Haugh, Nathan, Zemke, Singh, Outman and MacGregor and referred to the Committee on Appropriations.
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
"prevention of unfunded mandates 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.
(4) "Department" means the department of technology,
management, and budget or a successor department or agency.
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
local units of government to take action affecting them.
(3) "Legislature" means the house of representatives and the
senate of this state.
(4) "Local government mandate panel" means the local
government mandate panel created in chapter 7c of the legislative
council act, 1986 PA 268, MCL 4.1101 to 4.1901.
(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 net cost of an activity or
service provided by a local unit of government. The net cost shall
be the actual cost to the state if the 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 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 and which do not entail new or additional costs for
affected local units of government; 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 and which do not entail new or additional
costs for affected local units of government.
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 federal requirement imposed directly on local units of
government and not indirectly through the state by operation of
federal law.
(c) 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.
(d) 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 if the state requirement pertains to
any standards, requirements, or guidelines that require increased
necessary costs for activities and services directly related to
police, fire, or emergency medical transport services, they shall
be considered to be a state requirement.
(e) A requirement of a state law enacted pursuant to section
18 of article VI of the state constitution of 1963.
Sec. 5. (1) Notwithstanding any provision of law to the
contrary and subject to subsection (2), a local unit of government
is not obligated to provide a new activity or service or increased
level of activity or service required by state law unless and until
the local government mandate panel has prepared and published a
fiscal note in accordance with section 6.
(2) If a local unit of government refuses to provide a new
activity or service or increased level of activity or service under
subsection (1), the local unit of government shall file suit for a
judicial determination under section 32 of article IX of the state
constitution of 1963, within 1 year of the date on which the local
unit of government is required to begin implementation of the
activity or service. If the local unit of government does not file
suit within 1 year of the date on which implementation of the state
law is required to begin, the local unit of government shall comply
with the state law. If this state determines that a local unit of
government is refusing, or may refuse, to provide a new activity or
service or increased level of activity or service under subsection
(1), this state may file suit at anytime for a judicial
determination under section 29 of article IX of the state
constitution of 1963, subject to the local unit of government
having the right to assert as a defense in that suit that the state
has or may fail to provide funding for the full cost of the
activity or service as the costs for those activities and services
are incurred. The local unit of government may also in response to
that suit seek to recover the necessary costs of the activity or
service without limitation as to the timing for asserting that
claim.
Sec. 6. A fiscal note process is created. The fiscal note
process shall consist of all of the following:
(a) Not later than 30 days after notice is provided that a
bill will be considered in a legislative committee and before
legislation affecting a local unit of government is scheduled for
third reading in the legislature, the local government mandate
panel 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
local government mandate panel 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.
(c) The chairperson of the local government mandate panel
shall promptly inform the legislature in writing of its
determination in subdivision (b) before the legislation is
scheduled for third reading.
(d) In the event that legislation is enacted imposing a
requirement on local units of government without following the
requirements described in this section, local units of government
subject to section 5(1) and (2) are not required to comply until
that time that the fiscal note process described in this section 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. 7. The local government mandate panel shall develop a
process that will accomplish all of the following:
(a) A review of 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 repealed, rescinded, or
modified.
(c) If it is determined by the local government mandate panel
that the requirements described in subdivisions (a) and (b) 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. 8. 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.
(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 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 issued an order that the state
has underfunded the full cost of compliance and ruled in favor of
the complainant.
Sec. 9. If requested by the local government mandate panel,
the department shall provide the local government mandate panel
with estimated data on the net cost of compliance if the state
provided the same activity or service rather than the local units
of government affected by the state requirement.
Sec. 10. (1) The local government mandate panel, 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) The local government mandate panel shall prepare and
submit recommendations to the legislature that address court
decisions that determine 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. 11. 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.
Sec. 12. 1979 PA 101, MCL 21.231 to 21.244, is repealed.