Michigan Developments
Eric Rule,
Director of Governmental Affairs

State budget woes spark debates, new ideas
The Senate Finance Committee, chaired by Senator Nancy Cassis (R-Novi), heard testimony from business groups claiming that the tax loopholes recently proposed by Gov. Granholm were in reality new tax changes and do not meet the definition Granholm identified as a loophole.

Sen. Cassis added her two cents, stressing that some areas can be worked out cooperatively, but most will be defined as intended tax policy and not loopholes. Cassis also argued that her study of the proposed changes indicates that these supposed loopholes may put too much burden on small businesses and not spread the pain of tax changes widely enough.

The Senate Finance Committee was scheduled to hold another hearing on the proposed tax changes on April 30, with an additional hearing on May 7 if more time for testimony is needed.

Two Republican lawmakers announced a plan that will save the state millions of dollars by freezing scheduled income tax cuts.

State Reps. Mike Pumford (R-Rockford) and Doug Hart (R-Newaygo) are proposing a delay in the scheduled income tax cut for FY 2004 and FY 2005. They estimate a savings of roughly $130 million in FY 2004 and $270 million in FY 2005.

Under the proposed bill, the income tax cut of 0.1 percent scheduled for FY 2004 would be delayed until FY 2006 and remain at 3.9 percent for two years. Other scheduled tax cuts would be phased in over the next few years, until in FY 2010 the tax rate would be 3.8 percent.

The lawmakers claim that the plan is a win-win proposal, as it provides immediate saving during the state’s budget crisis, yet provides a larger tax cut down the road.

A Revenue Estimating Conference is set for May 13, where experts from the House and Senate Fiscal Analysis Offices will give their predictions on how the state’s economy is faring. With the state already having a budget deficit for FY 2004 of $1.7 billion, any more bad news will further complicate budget negotiations.

Bad news is expected, however, as rumors around town are calling for the state to be roughly $300 million more in the hole.

Retailers seek recycling solution
MRA is continuing to work with legislators and interests groups to find ways to solve the state’s current problem of a low recycling rate. The current bottle bill is often heralded as important for keeping litter off Michigan’s roadways, but Michigan consistently lags behind neighboring states in overall recycling. Current law also places severe burdens on retailers.

MRA and other groups are working through the Michigan Recycling Partnership. The group is working to identify how the state can increase the overall recycling rate through comprehensive recycling strategies, not simply expansion of the scope of the bottle bill to include other containers. Discussions with environmental groups on how best to reach the goal of increasing the overall recycling rate have recently begun to show signs of promise.

The Partnership and MRA will continue to advocate a legislative solution that does not include expansion of the bottle bill and may ultimately lead to distribution centers or curbside recycling as a better option for bottle returns.

Peters named new Lottery commissioner
Former Senator Gary Peters was named Lottery commissioner, drawing to a conclusion his three-month position with Treasury as head of investments. Peters replaces Acting Commissioner Jim Kipp, who has served in that capacity since August 2001.

Most will recall that upon being term-limited from the legislature, Peters ran for attorney general, losing in the closest statewide election Michigan has seen in 50 years.

Anti-gambling legislators and interest groups are hoping to pass a bill outlawing the use of vending machines to distribute Lottery tickets. The machines would be placed in stores currently licensed to sell tickets and would feature a remote shut-off switch allowing clerks to refuse sale of the tickets to anyone appearing underage.

The House Regulatory Reform Committee heard testimony on HB 4144, sponsored by Rep. Jack Hoogendyk (R-Portage). The bill is not expected to move in the near future, and its chances of passage could be hurt by contracts recently entered into by the state for vendors to provide the machines at certain locations.

Update from Washington
James Goldberg,
MRA Washington Counsel

Agency rejects registration card plan
The federal Consumer Product Safety Commission has rejected a proposed rule that would have required retailers to issue and collect registration cards for children’s products.

The 2-1 vote raised questions about the scope and cost of the plan, whether the agency had the legal authority to impose it and whether it would achieve the goal of improving the effectiveness of recalls of children’s products.

The Consumer Federation of America petitioned the Commission to issue the rule in 2001. MRA joined with other retailing groups to oppose the registration card requirement, whether applied to retailers or manufacturers.

Computer recycling bill introduced
A California congressman has introduced legislation requiring retailers to collect a recycling fee on each computer sold.

The National Computer Recycling Act (H.R. 1165), sponsored by Rep. Mike Thompson (D-CA), would limit the fee to $10 per computer, unlike an earlier version of the measure that had no limit. The bill would also provide for vendor compensation to help cover retailers’ costs of collecting the new fee. But it would give the Environmental Protection Agency broad authority to expand coverage beyond computers to other electronic products, and does not preempt states from imposing additional recycling fees or programs of their own.

FTC sets start date for national "do not call"list
The Federal Trade Commission has set October 1 as the effective date for its new national “do not call” list. After that date, telemarketers who contact individuals whose telephone numbers are on the list could face civil penalties of up to $11,000 per call.

Establishment of the list had been announced previously, but the effective date announcement was delayed until Congress approved funding for the project.

Telemarketers will have to pay $29 per area code accessed to determine which numbers to purge from their database. The maximum annual fee is $7,250 for all area codes.

Individuals can begin contacting the agency on July 1 to have their numbers placed on the list. There is no charge for inclusion of a telephone number.

The FTC’s “do not call” rule contains a major exemption sought by MRA: businesses will be free to call individuals with whom they have had a prior business dealing within the preceding 18 months. That means that a MRA member could call a customer up to 18 months after a sale (or final payment) to attempt to sell the individual an extended service contract or product enhancements.

Feds propose changes in overtime rules
As expected, the Department of Labor has issued a proposed revision of its rules governing when so-called “white collar” employees must be paid overtime.

Under current law, virtually all workers must receive overtime whenever they work more than 40 hours in a week, unless they fall under one of several limited exemptions. The so-called “white collar” category covers professional, executive and administrative employees.

The DOL proposal would provide that anyone earning less than $425 per week ($22,100 per year) would not be exempt from overtime. That’s substantially higher than the current $250 per week test.

If a worker makes over $425 per week, he or she would be exempt from overtime if their primary duties meet the tests enumerated in the rule. An employee earning $65,000 or more annually would be exempt if they perform one or more of the duties specified.

To be classified as executive employees, workers earning more than $425 per week would have to regularly direct the work of two or more other full time employees and have authority to hire and fire (or make recommendations on hiring and firing which are given strong consideration by the employer).

Language in the proposal suggests that it would be much easier under this new definition to classify assistant store or department managers as exempt employees, even if they also do a substantial amount of non-exempt selling.

Comments on the proposal will be accepted until mid-June. The Department of Labor is planning to issue a final rule by the end of the year in hopes of avoiding any election-year battles in 2004. The overtime pay rules have remained largely unchanged since they were issued in the mid-1970s.