Michigan Developments
Eric Rule,
Director of Governmental Affairs

Item pricing reform targeted for lame duck session
Legislation to remove general merchandise from item pricing requirements will be brought up during the lame-duck legislative session following the November 5 elections. The bills, which set a standard for scanning accuracy and require various technology investments, stand the best chance of passage during the period after the general election and prior to end-of-the-year adjournment.

Historically, the state attorney general and consumer groups have ignored retailer and consumer savings by labeling reform efforts as anti-consumer. With term limits ousting so many legislators from office, however, this may be the best chance in years for legislators to vote for reform. If Republicans lose control of the House or Senate or Governor’s Office, it could be a long and lively lame-duck session.

Lawmakers override Engler veto of community funds
Lawmakers returned to session for one day on August 13 to overturn Governor Engler’s veto of $845 million in revenue sharing appropriations for local communities. It marked the first time in 25 years that the legislature overrode the governor’s veto.

Engler, who cannot seek re-election, vetoed the language in response to three ballot proposals on the November ballot that he claims threaten the state budget.

Lt. Gov. Posthumus and other Republican leaders led a coalition to overturn the veto. Senate Minority Leader John Cherry described the veto as the “official declaration” of Engler’s lame-duck status.

Robbery reserved for those who succeed
The Supreme Court threw out the unarmed robbery conviction of a man caught shoplifting $120 of merchandise from a Meijer store because security thwarted the attempted theft before he could get away.

The court found that the suspect could only be convicted of larceny in a building, a lesser charge than unarmed robbery, because he never got away with the crime. The suspect had been charged with the original offense for punching a security guard as he tried to escape with a rotary tool, a battery, a battery charger and a thermostat under his coat.

In a strongly worded dissent, Justice Stephen Markman wrote that by agreeing with the Court of Appeals, the Supreme Court is now adopting the “transactional approach” to robbery and is overruling more than 30 years of precedent. A person who uses any force when the stolen property is in the person’s possession can be charged with robbery, under law, regardless if the accused makes it to a temporary “safe place.”

One-cent tax hike proposed for infrastructure
State Rep. Keith Stallworth (D-Detroit) said that in exchange for signing the Department of Transportation budget conference report August 13, House Speaker Rick Johnson agreed to the introduction of a one-cent sales tax referendum for Southeast Michigan infrastructure projects, specifically for the new Detroit Area Regional Transportation Authority (DARTA), road improvements and sewer upgrades.

The increase would generate an estimated $222.5 million a year for regional public transportation, $74.2 million for road construction and $74.2 million for sewer improvements.

‘We Card’ coalition schedules training sessions
The Coalition for Responsible Tobacco Retailing has scheduled four “We Card” training sessions to help retailers prevent tobacco sales to minors.

Troy
Tuesday, September 24
Hilton Northfield
5500 Crooks Road
9:00am - 11:00am

Novi
Tuesday, September 24
Hilton Novi
21111 Haggerty Road
3:00pm – 5:00pm

Lansing
Wednesday, September 25
Best Western Governor’s Inn &
Conference Center
6133 South Pennsylvania Avenue
9:00am – 11:00am

Flint
Wednesday, September 25
Holiday Inn Gateway Centre
5353 Gateway Centre
3:00pm – 5:00pm

Update from Washington
James Goldberg,
MRA Washington Counsel

Congress returns to full agenda
Congress has returned to Washington after its month-long summer recess, and, as usual, there will be a rush to the legislative finish line. Clogging the House and Senate calendars will be action on virtually all of the 13 appropriations bill and a new measure for the proposed Department of Homeland Security.

Among the bills that MRA’s Washington Office will be monitoring is a measure to reform the federal bankruptcy law to make it more difficult for individuals to file for bankruptcy protection. The measure has actually passed the last two Congresses, but did not reach the president’s desk because it got lost in the last-month rush to adjourn.

This time around, the bankruptcy bill sailed through both chambers early in the session. But it was hung up in a House-Senate conference committee because of wrangling over a provision to prohibit abortion clinic protesters from declaring bankruptcy to shield damages due to their acts.

That stalemate was resolved just before the August break. MRA is joining with other retail organizations in a concerted effort to get the bill through this time around.

Other bills that are still in conference include measures to provide for federal government support for terrorism insurance, which the business community strongly supports, and to adopt a comprehensive national energy strategy. The House-passed energy bill, however, contains a few provisions dealing with energy conservation for appliances and consumer electronics products that could impose a significant burden on retailers and manufacturers.

Democrats to push health insurance
Sen. Edward Kennedy (D-MA) has provided a “sneak peek” at his legislative agenda for 2003, which may get a boost if the Democrats, as expected, retain control of the Senate and gain enough seats to take over the House.

Shortly before Congress’ summer break—the lawmakers prefer to call it a “district work period”—Kennedy introduced a bill to increase access to health insurance by requiring large employers (those with 100 or more workers) to provide health coverage and pay at least 75 percent of the total premium cost for each participant.

Mandated plans would have to provide benefits that are actuarially equivalent to or greater in value than benefits offered under the standard plan for federal employees.

House committee adopts federal rental bill
The House Financial Services Committee has approved legislation to establish a federal disclosure standard for rental-purchase plans. Currently, those transactions are governed by state laws, which exist in 46 states, including Michigan.

However, the absence or complexity of laws in four states—Minnesota, New Jersey, North Carolina and Wisconsin—makes the typical rent-to-own (RTO) transaction difficult, if not impossible, to conduct.

The main thrust of the legislation originally introduced by Rep. Walter Jones (R-NC) is to provide a federal disclosure standard throughout the country and to override state laws that attempt to characterize RTO transactions as credit sales.

While there’s a chance that the bill could pass the House before adjournment, there’s virtually no chance the Senate will take up the measure this year.

IRS issues guidance on health reimbursement
The Internal Revenue Service has issued guidelines on the tax-favored treatment of so-called health reimbursement arrangements (HRA), which are employer-funded plans to provide for the payment of employee health care costs, including health insurance.

In order not to be considered income to the employee, an HRA must be entirely funded by the employer and not paid for by a salary reduction program, which is typically used for so-called “flexible spending accounts” (FSA) or cafeteria plans. The HRA may not provide greater benefits to one or more highly compensated individuals, like store owners or managers.

The IRS guidelines (Rev.Rul. 2002-41, Notice 2002-45) also provide that participants can carry unused credits in their HRA accounts over to subsequent years.

Meanwhile, Reps. Jim DeMint (R-SC) and David Phelps (D-IL) have introduced legislation to allow up to $500 of FSA accounts to be rolled over to the next year without violating current “use it or lose it” rules.

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