June 8, 2007
’07 Budget
Signed; ’08 Budget and
SBT Replacement Still in Limbo
Gov. Jennifer Granholm signed the 2007 Fiscal Year budget agreement,
as
provided in Senate Bill 436 and several companion bills. The agreement
combines cuts, reforms and additional use of the tobacco settlement
securitization to fill the ’07 revenue shortfall of $803 million.
Granholm’s signature and the legislature’s actions on SB 436
take care of a
third of the state’s problems. The ’08 budget has to be in
place by October
1, and the state’s Single Business Tax (SBT) needs to be replaced
before it
expires on December 31, 2007.
While the ’08 budget can wait until October, the SBT replacement
probably
cannot. The business community is telling the legislature it needs about
six
months to fully adjust to a new business tax. The original deadline
of March
15 slipped to April 1, then June 1; now Granholm and Senate Minority
Leader
Mark Schauer (D-Battle Creek) are proposing July 1 as a deadline. The
governor stated that no legislator should take a vacation until this
issue
is wrapped up.
Senate Majority Leader Mike Bishop (R-Rochester) has said the two sides
are
very close to a deal, taking various schemes from the GOP plan and meshing
it with some from the House Democrats’ plan. At several points
it appeared a
compromise has been reached, only to have the negotiations stall or
blow up.
It does appear inevitable, however, that a plan will be in place by
July 1
or very close to that date.
Regarding budget negotiations, Bishop and the Senate GOP were strident
in
their opposition to revenue enhancement (taxes) to balance the ’07
budget.
However, they left the door slightly open for revenue enhancements for
the
’08 budget, in exchange for various governmental reforms.
The two most probable taxes are an income tax hike—probably from
the current
3.9 percent to between 4.4 and 4.6 percent—and a 6-percent tax
on luxury
items and services. Things such as rounds of golf and theatre and sporting
event tickets would be taxed under this scenario.
When an agreement on the SBT replacement is accomplished—sometime
between
next week and July 1—its details will provide an indication of
the revenue
enhancements needed in the ’08 budget. Then budget chairs will
know their
targets and the summer will probably be spent negotiating individual
budgets.
Gift Card Regulation Bills Clear Senate
Two bills seeking to place restrictions on gift certificates and gift
cards
passed the Senate Commerce and Labor Committee as expected. Senate Bills
387
and 388 were the subjects of numerous workgroups coordinated with MRA.
Sponsored by Republicans, these bills originally called for a minimum
five-year expiration date and a requirement to escheat the remainder
of the
balance to the state at this time.
After numerous negotiations, MRA was able to win approval for removing
the
escheating requirement. As passed by the Senate, the bills would eliminate
dormancy fees and require a retailer to honor a gift card for a minimum
of
five years. If a card has an expiration date (at least five years after
purchase), any value left on the card would revert to the retailer after
the
expiration date.
The bills face an uncertain future in the House, as numerous
Democratic-sponsored bills in that chamber call for much more stringent
regulation. In all of those bills, retailers would still have to escheat
remainder balances as well as publicize all policies associated with
the
cards.
Part-Time Legislature
Linked to Changes in Term Limits
In an effort to save the state money and enact essential governmental
reforms, several high-ranking public officials are suggesting the
legislature become a part-time body. Senate Majority Leader Bishop is
leading such talks and believes the move should be linked with altering
term
limits to expand the length of time a legislator can serve.
Gov. Granholm reportedly is on board with Bishop’s proposal, saying
the
current terms are too short. She also claimed that solving the state’s
budget crisis and replacing the SBT have been more difficult because
of all
the relatively new legislators with less experience.
The current term limits law allows House members to serve three two-year
terms and senators to serve two four-year terms.
KEY BILL INTRODUCTIONS:
No Bill to Introduce at this Time.
If you would like to receive Capitol F@cts via e-mail, please contact
Kathleen Wilson at 517.372.5656 or
kawilson@retailers.com.
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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
