My question involves real estate located in the State of: Michigan

In January my wife and I bought a small house in the city to be used as a rental property. The property line to one side is only 4 feet from the side of the house where it meets property owned by the state as a right of way for a busy thoroughfare. The back yard is fenced off and encroaches onto the ROW by perhaps 5 feet and running the length of the backyard about 50 feet. I've seen similar encroachment by a number of other houses along that stretch that border the state ROW. It appears to be a situation of 'who cares?' since some of the fences (including mine) appear quite old.

This spring, I realized that a tree about 5 feet from the side of the house was dead. This tree is also on the state ROW but not within the fenced back yard. The tree has been a hazard, dropping branches on or near the house. So, in May, I contacted someone with the state asking them to cut down the tree. After following up a couple of times I finally got a response.

The state employee says that there is an issue of encroachment (presumably, with the fence, he didn't say) and that he will forward to their encroachment person to start proceedings. I'm guessing he means to make us take down that part of the fence on state property. He didn't even address my original question about taking down the tree.

Besides the fact that I probably should have left well enough alone, any advice on how to handle their response? I don't know how long the fence has been there but adverse possession or aquiescence seem to be out of the question because this is state-owned land. This almost seems to be someone who is vindictive because I asked them to cut their hazardous tree down and now they want to punish us for it. If that strip of land was important to them, why not go after it long before now...same with the other property owners? He did say they would looking at the neighbor behind me since his fence encroaches onto the ROW more than mine. Is this likely a bluff on their part so that I quit asking about the tree? Obviously, I want the tree down and don't want to have to move the fence, but realize I may not be able to have my cake and eat it too. Since I'm not sure if this is a bluff on their part I'm not sure how to proceed. Any advice?