Michigan Developments
Eric Rule,
Director of Governmental Affairs

Legislators introduce gas-pricing bills
Legislation aimed at stopping large retailers from pricing gasoline below cost was introduced in both the House and Senate. The bills, sponsored by Sen. Mark Schauer (D-Battle Creek) and Rep. Charlie LaSata (R-St. Joseph), seek to set a minimum markup on the sale of gasoline.

They are being introduced at the request of the Michigan Petroleum Association, the Michigan Association of Convenience Stores and the Service Station Dealers Association.

Supporters claim the bills would help independent gas station owners compete with larger retailers selling gasoline on site. No matter what the intent, MRA opposes the legislation because it believes free-market forces should dictate how a product is priced.

The Federal Trade Commission (FTC) has been involved in other states that have tried similar measures. In North Carolina, the FTC stated that federal and state laws already protect citizens and businesses from price gouging and that legislation of this kind is actually anti-consumer and will only lead to higher gasoline prices.

Streamlined sales tax bills being developed
The Treasury Department is working on draft legislation that would put Michigan in compliance with the Streamlined Sales and Use Tax Agreement. Michigan was part of a coalition of 33 states and the District of Columbia that voted in November 2002 to approve the multi-state agreement.

The goal of the Streamlined Sales Tax Project, formed in 2000 by the coalition, is to design, test and implement simplified sales and use tax systems across state lines. States would then provide software free of charge to retailers that would calculate, collect and remit the taxes owed on remote sales.

This process is designed to level the playing field between brick-and-mortar retailers and remote sellers, as well as to simplify the process for businesses that operate in more than one state.

Michigan now needs to ratify the agreement in order for the changes to take effect here. MRA strongly supports this initiative, as do Governor Jennifer Granholm and various legislative leaders. When enough states participate in the project, Congress may be spurred to action requiring this approach nationwide.

Slight changes to Michigan’s current tax code may result but would not expand the tax base. Instead, new revenues from collecting taxes owed on remote sales should bring in an additional $300 to $400 million when the project is fully underway, and this will continue to increase as Internet and other remote sales continue to increase.

Small-market reform bills sent to conference
The package of bills designed to help reform small-market health care has been sent to a conference committee to work out differences between the House and Senate.

There are currently two versions of the package—one passed by the House and another passed by the Senate. Both would implement rate bands for Michigan’s health insurance market. Rate bands, in essence, would require setting mid-point index rates. The major differences between the two versions involve the percentages the insurance companies (BCBSM, HMOs, and commercial carriers) would be allowed to stray from the mid-point when setting prices.

Since this is one of the most hotly debated issues of this legislative session, the negotiations between conferees and leadership should be intense.

Update from Washington
James Goldberg,
MRA Washington Counsel

House leaders delay comp-time bill pulled
On the eve of a scheduled House vote on a bill to allow private-sector employers to offer compensatory time in lieu of overtime to their workers, the House Republican leadership pulled the measure from the calendar. The leaders realized they simply didn’t have the votes to pass it.

Many House Republicans, including freshman Rep. Candice Miller (R-Shelby Township), had made it clear that they side with organized labor on the controversial issue. The AFL-CIO and other unions had strenuously objected to the bill because they believed that employers would use the workweek flexibility to “undermine” the 40-hour workweek.

Under the bill—called the Family Time Flexibility Act—private sector employers could offer “non-exempt” workers (i.e., those covered by overtime pay requirements in the federal Fair Labor Standards Act) the option to waive overtime pay and instead take compensatory time. Comp time would be at the rate of 1.5 hours for every one hour of overtime worked during a workweek.

The bill has been co-sponsored by more than 110 members of the House and garnered support from a broad coalition of business interests, including MRA.

Panel okays permanent Internet moratorium
A House Judiciary subcommittee has approved legislation to make permanent the federal ban on state taxation of Internet access. However, the bill as approved does not address the issue of state-mandated collection of sales tax on Internet and other remote transactions, an issue strongly supported by MRA and other retail and real estate interests.

In fact, Rep. Ernest Istook (R-OK) has told the e-Fairness Coalition (of which MRA is a member) that he plans to introduce legislation shortly to authorize states to require sales tax collection.

The Istook plan follows a positive report from the National Conference of State Legislatures on the progress of the Streamlined Sales Tax Project, a model bill adopted last year that would significantly modify state sales tax law definitions and general collection procedures in an effort to make them uniform throughout the states that adopt the SSTP bill.

More than 30 states have participated in the SSTP project, and the e-Fairness Coalition and the National Retail Federation are working to get as many states as possible to adopt the SSTP bill.

Congress to free banks from cancelled checks
Congress is on the verge of passing legislation that will free banks from the necessity to return cancelled checks with monthly bank statements. The banking industry and the Federal Reserve Board had urged the electronic processing authorization after the 9/11 disasters shut down air service for several days.

Under the legislation, banks would no longer have to return checks, but would have to make paper copies available on customer request.

Elimination of the paper check-clearing requirement is expected to save the industry several hundred million dollars annually.

Visa, MasterCard eye lump-sum payout
Formal settlement papers filed with a federal court in the Visa/MasterCard credit card litigation indicate that the $3 billion settlement agreed to by both card issuers might be available in a lump sum, rather than being paid out over 10 years.

If the retailer plaintiffs in the case can find a bank or banks willing to put up the money—in exchange for receipt of the 10-year payout—the funds could be distributed late this year or early next year to more than five million retailers included in the class action lawsuit.

Of course, the lump sum would be less than $3 billion in total, but more than $100 million in payment administrative costs would be saved, according to lawyers familiar with the case.

In any event, a lead attorney for the retailers who brought the suit has estimated that eligible retailers could receive “several hundred dollars” each.

Sears, Wal-Mart and others filed the suit alleging that Visa and MasterCard violated antitrust laws by requiring retailers to accept their debit cards as well as credit cards. As part of the settlement reached in late April, both card issuers agreed to rebrand their debit cards to make them distinguishable from credit cards.