Michigan Developments
Eric Rule,
Director of Governmental Affairs

MRA fights Executive Order on work comp
MRA urged state legislators to reject an Executive Order issued by Governor Jennifer Granholm because it would eliminate the Workers’ Compensation Appellate Commission.

Following committee testimony by MRA and other business groups, the Senate voted down the E.O. At press time, the House was considering a similar move but had not scheduled a vote. The E.O. would take effect unless both chambers rejected it.

Granholm’s E.O. would create a Department of Labor and Economic Growth to replace the current Department of Consumer and Industry Services and restructure a significant part of state government. Republicans and business groups accepted the E.O. for the most part, but balked severely at elimination of the Workers’ Compensation Appellate Commission.

The Commission was established in 1985 under Gov. James Blanchard to replace the unwieldy system that had created a backlog of 7,000 cases. The backlog is down to 400 cases, and the business community and the nation regard Michigan’s system as a model.

MRA presented testimony to both the Senate Government Operations Committee and the House Commerce Committee, stressing that the E.O. must be rejected for its devastating effects on the workers’ compensation system.

“Today, Michigan’s workers’ compensation system is fairly and evenly administered,” said MRA’s James P. Hallan, president and chief operating officer, in his legislative testimony.

“Much of the partisanship that existed in the ’70s and ’80s has been eliminated. We now have a model system that is efficient and provides a fair venue for both claimants and insureds. We also have a workers’ compensation model that has been good for economic development.

“Unfortunately, the portion of the Executive Order that eliminates the Workers’ Compensation Appellate Commission tampers with that fragile balance between claimants and insureds. It is also a structural change that could hurt the climate for economic development in this state.

“The position of Michigan Retailers Association is straightforward: ‘If it ain’t broke, don’t fix it.’”

MRA urged members to call or write their state representatives and tell them why it was important for the House to also reject the E.O. and prevent it from becoming law.

Utility seeks to change Electric Choice
Just as many businesses finally begin to see some electric cost savings through Detroit Edison’s (DTE) Electric Choice Program, the company is seeking legislation eliminating choice for business customers using less than 1 megawatt.

No legislation has yet been introduced, but MRA and other business groups have begun an aggressive attack on potential legislation.

Opponents are letting legislators know that any legislation seeking elimination of electric choice will only harm small businesses. With retail margins as low as they are, electric choice customers would be hit very hard if relief were stripped from them.

In addition, MRA uses its ability to aggregate members’ electric use to offer members an electric choice program that provides double-digit savings. Any legislation eliminating choice would mean MRA’s electric choice participants would have significantly higher electric bills.

Legislators are hearing the message loud and clear so far. However, defeating such a proposal would be more difficult if Gov. Granholm decides to back DTE’s efforts. For more information on how you can get involved in this effort or about MRA’s Electric Choice Program, call Kathleen Wilson at 517.372.5656 ext. 1247.

Update from Washington
James Goldberg,
MRA Washington Counsel

New push for Internet sales tax collection
MRA, its allies in the e-Fairness Coalition and representatives of several state and local government organizations joined two members of Congress to launch a new push for legislation to authorize states to require that Internet and other remote sellers collect sales taxes.

Reps. Ernest Istook (R-OK) and Bill Delahunt (D-MA) have signed on as the lead sponsors of the Simplified Sales and Use Tax Act (H.R. 3184), and have committed to push aggressively for passage of the legislation during this Congress.

Less than a week after Istook and Delahunt introduced their bill, a companion measure was introduced in the Senate by Sens. Mike Enzi (R-WY) and Byron Dorgan (D-ND), and a House subcommittee held hearings at which the need for the legislation was graphically portrayed.

The new bills build on a “sense of the House” resolution authored by Istook three years ago. Arguing that states needed the additional authority to require sales tax collection, the Istook resolution passed with 289 votes, more than enough to approve an actual bill.

Since that time, more than 34 states have agreed to a new simplified sales tax system that would standardize definitions of products subject to taxation and provide for easy tax filing for multi-state retailers.

Considering the massive state budget deficits across the country, the bill’s sponsors are optimistic that the legislation can be passed during the current Congress.

MRA has long championed a “level playing field” for its members, and its Washington Office has geared up for a new effort this time around.

Individual MRA members can help: write your congressman and both senators, expressing your desire for fairness and equity in the marketplace and urging them to co-sponsor the Simplified Sales and Use Tax Act.

Send copies of any responses you receive to MRA’s Washington Office at Suite 1000, 1101 Connecticut Avenue, N.W., Washington, DC 20036.

IRS meets on vendor "build-outs"
At the request of the Internal Revenue Service, MRA’s Washington Office was represented at a recent meeting to discuss the proper tax treatment of vendor-provided “build-outs” and “image upgrades.”

The IRS invitation noted that some suppliers pay retailers to create a “unique selling area” for their products, in order to promote the image of the supplier, enhance the visibility of its products and, ultimately, to increase sales.

The payments, said the IRS, may partially or wholly offset the retailer’s cost to customize a selling area or the
supplier may purchase furniture and
fixtures for the retailers in lieu of acash payment.

The primary tax question for the retailer is whether the supplier’s payment represents gross income in the year received, a reduction of costs or a loan.

The purpose of the IRS review, conducted under what the agency calls its Industry Issue Resolution Program, is to move away from resolution on a case-by-case basis and toward solutions that apply across the board to all taxpayers.

Any MRA member who has an opinion on this issue should communicate with Jim Goldberg at MRA’s Washington Office.

'White collar' overtime regulations in doubt
The appropriations bill for the departments of Labor and Health and Human Services is usually one of the most contentious of the 13 spending measures that annually work their way through Congress.

This year, the congressional battle is over a labor, not a health, issue. It’s the proposal to revise the rules that govern overtime pay for so-called “white collar” employees, i.e., those employed in professional, executive and administrative capacities.

The rules haven’t been changed in almost 40 years, and the current proposal to do so, which is supported by
MRA and virtually all retailer organizations, has drawn union fire.

The House barely (by a three-vote margin) beat back a Democrat-led effort to deny funding to proceed with the rule, but the Senate passed the “no money” amendment by a 54-45 margin.

The battle now goes to a Senate-House conference to iron out the differences in the massive spending bill. MRA’s Washington Office has joined with other groups in strongly urging Congress to reject the Senate amendment and let the rulemaking proceeding continue.

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