House passes service sharing bills

November 6, 2011
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The Municipal Partnership Act reportedly would make it easier for local governments and public agencies, like those at the state level, to form a joint venture to share services.

An accompanying bill would effectively exempt employee contracts in such a joint venture from the Public Employment Relations Act, the Urban Cooperation Act and Public Act 8 of 1967, a move that would supposedly reduce the cost to provide a shared service.

State Sen. Mark Jansen, R-Gaines Township, introduced the bills in January, and the state Senate passed both in June. Both passed the House late last Thursday.

When Jansen introduced SB 8 and 9, he targeted both to specifically apply to units in Kent County, but a Senate committee later expanded the bills to cover all communities. The bills also let a new cooperative endeavor ask voters for a millage to fund a newly created service arrangement. A millage request would be capped at 5 mills.

The Michigan Municipal League said the MPA would promote consolidation and service sharing. The day the Senate approved the bills, MML Legislative Associate Samantha Harkins said, “This afternoon, the Senate helped encourage consolidation and service sharing by passing SB 8, the Municipal Partnership Act. This legislation allows for the creation of joint endeavors between local units of government.”

The Michigan Townships Association said the MPA was designed to be a “universal tool” to allow two or more governments to create cooperative services. “The legislation specifies that joint ventures are decisions of the governing boards and are not subject to voter ratification,” reported the MTA.

Local county, city and township officials have said the MPA would make it easier and less costly for them to work together, with most comments coming during discussions of One Kent Coalition’s proposal to merge Kent County with the city of Grand Rapids into a new metropolitan government.

A Senate fiscal analysis said the bills would not impact state revenues or expenditures unless a state agency entered into a service-sharing agreement with a unit. But the bills had lingered in a House committee since June, when Hawkins reported that the full chamber couldn’t iron out some potential amendments to the bills. The House’s tabling action followed a House fiscal analysis that said the bills would have an “indeterminate impact on state and local revenues and costs,” primarily because of the millage provision.

The overall feeling among local officials was that Jansen’s proposal might stay in the House committee for the rest of this year. “(It) appears to be going nowhere in the House due to the tax provisions,” said Grand Valley Metro Council Executive Director Don Stypula.

But when the Business Journal spoke with State Rep. Brandon Dillon, D-Grand Rapids, early last week, he said the bills might come up for a vote in a few days and that he supports Jansen’s bills. Dillon was right, as the House approved both Thursday.

“While we were dealing with the One Kent stuff, people didn’t realize all the effort that was going into this bill, which I think is a much better model. But my understanding is there had been some concerns that have been raised by certain members of the House that they did not like the way it came out of the Senate. They were concerned about the ability to assess a millage and that would represent a ‘potential tax increase.’ There have been some negotiations. But my understanding is that’s been the main sticking point,” he said of why the bills were stuck in the House Local, Intergovernmental and Regional Affairs Committee for four months.

Dillon said the reason he believed a House vote was coming is there had been a lot of talks between the chamber’s leaders and officials from cities across the state. The latter tried to ease the former’s concerns about a tax increase.

“I think there is a good chance it will be voted on, but I don’t think there is a guarantee,” said Dillon, a former Kent County commissioner, a few days prior to the House vote.

“I’m hopeful that it will get done because Sen. Jansen did a lot of work on it the last few years, along with (State) Rep. (Roy) Schmidt. This would be a real positive way for like communities to share services and, hopefully, run their operations more efficiently.”

A representative from Jansen’s office told the Business Journal the Senator was grateful that the House and Senate supported the bills to give local governments an opportunity to share services, cut costs and better serve residents by removing the barriers that previously tied local officials’ hands.

The bills have been enrolled and now go to the governor. Gov. Rick Snyder, a proponent of service sharing and consolidation, is expected to sign both next month.

So a concern that Jansen’s current bills might be headed down the same path of one he introduced last year that failed to materialize.

Jansen and former State Sen. Bill Hardiman sponsored bills last year that would have removed a key blockade for municipalities to share services. The legislation would have amended Public Act 8 of 1967, which requires that the highest wage-and-benefits package be paid when, say, two cities agree to combine fire services. That stipulation has kept cities from forming joint ventures because doing so would raise personnel costs for one of the municipalities.

The Senate passed the bills in February 2010, but SB 1085 and 1086 died in the House last year.

The bills also would have required that all existing and expired labor contracts with an acquired system would have to be assumed by the new unit and remain in effect until a new labor agreement was in place. Another requirement was the employees of a new shared-service or consolidation agreement couldn’t be paid less or receive fewer benefits than existed before a new contract was enacted, meaning the salaries and benefits of a new contract couldn’t be lower than the smaller package of the two units.

Even though the House didn’t act on the bills, its Fiscal Agency determined the bills wouldn’t affect state or local revenue and would not have an impact on state expenditures. But the analysis curiously went on to say that the bills either wouldn’t have an impact on local government spending or wouldn’t reduce that spending by an indeterminate amount when the primary reason local governments want to share services is to cut spending.

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