LANSING - Once again, Michigan has a Department of Labor.

This time, its full name is the Department of Labor and Economic Growth (with a new acronym, DLEG), and it was formed with the signature of Gov. Jennifer Granholm on Sept. 17. Her executive order, which would result in one of the most extensive reorganizations in state government history, fulfilled a campaign promise to realign bureaucratic operations and give Michigan's workers "a seat at the table" of state government.

"Our goal is to make Michigan a magnet state for economic development and job creation, and the Department of Labor and Economic Growth will be a critical element to our success in reaching that goal," Granholm said. "The department will allow state government to be more nimble and aggressive in creating jobs, enabling us to spend taxpayer dollars more efficiently, and will create a one-stop shop for business creation and development."

But last week came a major glitch in the proceedings, as the Republican-controlled Michigan Senate voted to reject the order creating the department. A majority in both the state Senate and House (also Republican-controlled) is needed to prevent the executive order from taking effect.

Republicans say their major beef is with one part of Granholm's order: the elimination of the seven-member workers' compensation appeals commission, a majority of whom are pro-business and were appointed by Gov. John Engler. Granholm proposed replacing the commission with two-member panels of appellate magistrates who would hear appeals - one member representing employer interests, one representing employees'. In case of a deadlock, an appointee of the governor, the head of the Workers Compensation Board of Magistrates, would break the tie.

Urging on its Republican allies to veto the order, the business community conveyed its unhappiness with Granholm's plan, claiming it tilts the system in favor of the state's workers. Senate Democratic Leader Bob Emerson reminded state senators that the legislature has never stood in the way of a governor's prerogative to reorganize executive functions - but that's what's happening.

"The administration has decided to move forward with this plan without input from Republican leaders," said Senate Majority Leader Ken Sikkema.

Said David Hollister, who will head the new department, "There is no radical departure from anything. We're just taking the systems we have and making them more efficient, more accountable."

Granholm said the seven-member workers compensation appeals system is "under-utilized" - perhaps in part because workers know they don't have much of a chance of winning - and that making that change and others could save the state $1.6 million a year.

Even if the controversy over the Workers Compensation Appellate Commission quashes that part of the Executive Order, the rest is expected to stand. Granholm's order is a reversal of an executive order made by former Gov. John Engler when he merged the Department of Labor and other state functions into the Department of Consumer and Industry Services. Organized labor took Engler's move as a slap.

The Department of Labor and Economic Growth will be created by renaming the Department of Consumer and Industry Services (CIS) and merging many Department of Career Development functions along with several other key programs from other departments.

Granholm's office said most regulatory functions that relate specifically to commercial,
business, and workers' issues will be in the Department of Labor and Economic Growth, including the Construction Code Division, the Unemployment Insurance Agency, the
Workers' Compensation Agency, Workplace Safety and Health, the Michigan
Employment Relations Commission and others.

The Bureau of Worker's and Unemployment Compensation would be divided
into three agencies within the DLEG: Unemployment Insurance Agency, the Workers' Compensation Agency, and the Wage and Hour Division. The reorganization consolidates fire code enforcement and training functions within the new department. Arson investigation and related law enforcement activities will remain at Michigan State Police.