KEY LEGISLATION:
Governor’s Budget Heavy on Sin Taxes
A 75-cent increase in the state’s tobacco tax and
a 9-percent increase in
the state’s liquor tax were among the most significant items included
in
Governor Jennifer Granholm’s Fiscal Year 2005 budget.
The tobacco tax is expected to generate an estimated
$295 million to fill
the projected $1.3 billion budget hole, with $154 million of that going
to
Medicaid rather than the state’s Rainy Day Fund. The increased
tax on
liquor, which does not cover beer or wine, is estimated to raise $30
million. The governor intends to allocate this revenue to fund fire
protection grants to local governments.
Overall, the governor’s budget for the fiscal year
beginning October 1
totals $39.7 billion. In order to cover the huge budget hole, Granholm
is
relying on $494 million in spending cuts and $391 million in ongoing
revenue
enhancements, including a Michigan-specific estate tax. With the federal
government phasing out its estate tax, Granholm’s plan is to "decouple"
Michigan’s estate tax from the federal program and institute its
own estate
tax. Under her plan, the state would levy a 5-percent tax on estates
over $1
million. An important exclusion is included for family-owned farms and
businesses.
MRA will lobby against the increase in sin taxes based
on the competitive
disadvantage it creates between businesses in bordering states and those
in
Michigan. Michigan already has much higher state taxation on cigarettes
than
its neighbors do, and the governor’s proposal would only exacerbate
the
problem. However, pundits and lawmakers alike believe the tax increases
stand a good chance.
The legislature will get its chance to make changes
to the proposed budget
soon. Meetings will begin in the next few weeks on setting budget targets,
and committee meetings will be held to debate the items set forth in
the
governor’s recommendations.
Detroit Edison Seeks to Repeal Electric Choice Program
The right of some commercial customers to buy their
power from sources other
than DTE or Consumers Energy—the program known as electric choice—is
in
jeopardy. Legislation is likely to be introduced next week that eliminates
this ability for customers who reside in the DTE service area and use
less
than one megawatt of power per meter.
Almost all the commercial customers in Michigan use
less than one megawatt
per meter. The proposed legislation would, in effect, kill electric
choice
in Michigan. Most customers who are "aggregating" their power
and using an
alternative supplier are saving 15 to 25 percent on their monthly bills.
Two years after Public Act 141 was amended to deregulate
the electric
industry, DTE Energy is now claiming it is losing more customers and
money
than was originally projected when the deal was struck in 2000. MRA
is
strongly opposed to any legislation curtailing or eliminating electric
choice in Michigan, as it would amount to a new cost for those businesses
saving money under the current system. In fact, MRA, acting as an aggregator
for businesses in Michigan, has saved its members hundreds of thousands
of
dollars since the program’s inception. MRA and other affected groups
have
formed the Customer Choice Coalition and are aggressively fighting DTE’s
efforts. The coalition has held a press conference and let lawmakers
know on
several occasions that small businesses will be severely harmed if PA
141 is
tampered with.
Michigan retailers who are currently participating in
electric choice, or
would like to, should let their legislators know how they feel about
this
proposed change.
Bills Give Startup Businesses a Tax Break
A package of Senate bills would exempt startup businesses
from various taxes
in certain circumstances, under a proposal passed by the Senate this
week.
The package (SBs 862-868, 870-872 and 875) is an attempt to spur job
creation in Michigan.
The bills would allow startup businesses that meet certain
criteria to claim
tax credits against various taxes, including property tax, income tax
and
SBT. In order to qualify, the business must have fewer than 25 employees,
have sales of less than $1,000,000 and not be publicly traded. In addition,
research and development must make up at least 15 percent of the business’s
expenses in the year the credit is claimed. The bills are expected to
pass
from the House Tax Policy Committee soon and receive a friendly reception
on
the House floor.
Specifics on the bills are available at:
http://www.michiganlegislature.org/mileg.asp?page=getObject&objName=2003-SB-0863.
KEY BILL INTRODUCTIONS:
HB 5435, sponsored by Rep. Scott Hummel (R-DeWitt),
to regulate pharmacy
benefit managers.
HB 5439, sponsored by Rep. Randy Richardville
(R-Monroe), to provide for
license and regulation of mail-order pharmacies.
HB 5437, sponsored by Rep. Jim Plakas (D-Garden
City), to prohibit
differential treatment for certain pharmaceutical services.
HB 5438, sponsored by Rep Paula Zelenko (D-Burton),
to provide for
provisions regulating pharmaceutical panels and networks.
HB 5444, sponsored by Rep. Leon Drolet (R-Macomb
Twp.), to elimate health
care cost from base.
HB 5502, 5503, 5504, 5505, sponsored by Rep.
Lorence Wenke (R-Richland),
Rep. Dianne Byrum (D-Lansing), Rep. Paul Condino (D-Southfield), Rep.
James
Koetje (R-Grandville), to provide for implementation of a streamlined
sales tax.
HB 5508, sponsored by Rep. Kolb (D-Ann Arbor),
to provide for unemployment
insurance for domestic violence survivors.
SB 940, sponsored by Sen. Gilda Jacobs (D-Huntington
Woods), to require
notice by employer of serious workplace accident or injury and state
investigation.
SB 972, sponsored by Sen. Bruce Patterson (R-Canton),
to create
conscientious objector policy act.
To view the content and current status of retail-related
bills, visit BillTrack,
MRA's legislative tracking database exclusively for members, at
www.retailbilltrack.com
If you are currently receiving Capitol F@cts by fax
and would like to receive
it via e-mail, please contact Kathleen Wilson at 517.372.5656 or
kawilson@retailers.com.
For back issues of online Capitol F@cts, visit MRA's main Capitol F@cts page.
Specific comments or questions regarding this bulletin
should be directed to:
Kathleen Wilson, Administrative Assistant to the Governmental Affairs
Office at
kawilson@retailers.com.
Michigan Retailers Association
603 South Washington Avenue
Lansing, MI 48933
517.372.5656
Toll-Free: 800.366.3699
Fax: 517.372.1303
govt_affairs@retailers.com
www.retailers.com
www.mallofmichigan.com
