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2007 House Bill 4800: Repeal dual state employee pension/salary loophole

Public Act 95 of 2007

Introduced by Rep. Lorence Wenke (R) on May 17, 2007 To repeal a provision of the state employee pension law that allows an employee to “retire,” start collecting a pension, and then return to work for state either directly or through a contractual arrangement with a third party, collecting a wage or salary while simultaneously collecting pension benefits. The bill would suspend pension payments while an individual worked for the state, directly or indirectly. The bill is part of a government pension reform package comprised of House Bills 4799 to 4809.   Official Text and Analysis.
Referred to the House Oversight And Investigations Committee on May 17, 2007
Reported in the House on May 22, 2007 Without amendment and with the recommendation that the bill pass.
Substitute offered by Rep. Steve Tobocman (D) on May 23, 2007 To "tie bar" the bill to House Bill 4500, which would increase the income tax from 3.9 percent to 4.6 percent. This means the pension reform could not take place unless the tax hike also did.
The substitute passed by voice vote in the House on May 23, 2007
Passed 61 to 39 in the House on May 23, 2007 To repeal a provision of the state employee pension law that allows an employee to “retire,” start collecting a pension, and then return to work for state either directly or through a contractual arrangement with a third party, collecting a wage or salary while simultaneously collecting pension benefits. The bill would suspend pension payments while an individual worked for the state, directly or indirectly. The bill was amended to "tie bar" it to House Bill 4500, to increase the income tax from 3.9 percent to 4.6 percent. This means the pension reform could not take place unless the tax hike also did. Note: Reps. Brown, Caswell, Caul, Clack, Cushingberry, Lindberg, Meadows, Nofs and Alma Smith all abstained because of a possible conflict of interest. They either currently receive or are vested in a government pension plan.
Received in the Senate on May 24, 2007
Referred to the Senate Local, Urban, & State Affairs Committee on May 24, 2007
Substitute offered in the Senate on September 18, 2007 To adopt a version of the bill that is not "tie-barred" to an income tax increase, and also suspends post-retirement health care benefits while the person is again working for a unit of government.
The substitute passed by voice vote in the Senate on September 18, 2007
Passed 37 to 0 in the Senate on September 18, 2007 Pension law that allows an employee to “retire,” start collecting a pension, and then return to work for state either directly or through a contractual arrangement with a third party, collecting a wage or salary while simultaneously collecting pension benefits. The bill would suspend pension payments while an individual worked for the state, directly or indirectly, and also suspend post-retirement health insurance benefits if the person was eligible for employer-sponsored coverage, or Medicare (the federal health plan for seniors).
Received in the House on September 18, 2007
Substitute offered by Rep. Steve Tobocman (D) on September 30, 2007 To replace the previous version of the bill with one that "tie bars" the bill to Houses Bills 5194 and 5198, tax hikes that total $1.5 billion.
The substitute passed by voice vote in the House on September 30, 2007
Passed 97 to 12 in the House on September 30, 2007 To repeal a provision of the state employee pension law that allows an employee to “retire,” start collecting a pension, and then return to work for state either directly or through a contractual arrangement with a third party, collecting a wage or salary while simultaneously collecting pension benefits. The bill would suspend pension payments while an individual worked for the state, directly or indirectly, and also suspend post-retirement health insurance benefits if the person was eligible for employer-sponsored coverage, or Medicare (the federal health plan for seniors). Passage of the bill occurred as part of a deal to avoid reducing state spending in the 2007-2008 Fiscal Year by imposing $1.5 billion in tax increases, including an increase in the state income tax from 3.9 percent to 4.35 percent (House Bill 5194) and imposing a 6 percent tax on many personal and business services (House Bill 5198).
Received in the Senate on September 30, 2007 To concur with the House-passed version of the bill, which tie-bars it to a state income tax hike (House Bill 5194) and a new 6 percent tax on many personal and business services (House Bill 5198), part of a deal to avoid spending cuts in the Fiscal Year 2007-2008 budget.
Passed 38 to 0 in the Senate on September 30, 2007 To repeal a provision of the state employee pension law that allows an employee to “retire,” start collecting a pension, and then return to work for state either directly or through a contractual arrangement with a third party, collecting a wage or salary while simultaneously collecting pension benefits. The bill would suspend pension payments while an individual worked for the state, and also suspend post-retirement health insurance benefits if the person was eligible for employer-sponsored coverage, or Medicare (the federal health plan for seniors). Passage of the bill occurred as part of a deal to avoid reducing state spending in the 2007-2008 Fiscal Year by imposing $1.5 billion in tax increases, including an increase in the state income tax from 3.9 percent to 4.35 percent (House Bill 5194) and imposing a 6 percent tax on many personal and business services (House Bill 5198).
Signed by Gov. Jennifer Granholm on October 1, 2007

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