Michigan Developments
Eric Rule,
Director of Governmental Affairs

Budget compromise includes cut to SBT
The budget package state legislators signed in December includes a business tax cut and a temporary pause in the scheduled income tax rollback. The agreement followed tough negotiations between the Governor’s Office and Senate and House leaders.

The legislature reduced by 50 percent the Single Business Tax (SBT) burden employers must pay for providing health benefits to their employees. That’s 10 percent more than called for in an earlier budget deal worked out by Governor Jennifer Granholm and Senate Majority Leader Ken Sikkema (R-Wyoming), but opposed by House Speaker Rick Johnson (R-LeRoy).

In return, the legislature froze for six months the 0.1 percent drop in the income tax rate that was scheduled to take effect January 1. The rate will remain at 4 percent until July 1, 2004. Although Republicans in the House initially refused to go along with the temporary freeze, they approved it after the SBT cut was sweetened and the other parties agreed to an additional $12 million in spending cuts.

Gas pricing bill in work group
The House Transportation Committee delayed action on legislation that would require a minimum markup of 13.38 cents on every gallon of gasoline and diesel fuel sold at retail. After MRA strongly opposed the bill during hearings on the measure, the committee referred it to a work group that will study the issue in depth.

MRA said the bill, sponsored by Rep. Charles LaSata (R-St. Joseph), amounts to price fixing and would result in a tax increase of more than $200 million on consumers that would serve no public good. MRA also opposes the measure because it would interfere with market forces and establish a dangerous precedent of retail price setting.

Proponents of the bill, notably the Service Station Dealers Association and the Convenience Stores Association of Michigan, will continue to lobby hard for the legislation, and the outcome is far from certain. These proponents claim that the large, retailer-run operations are pricing their gas below cost in order to drive small “mom and pop” gas stations out of business, at which point they will be able to raise the cost of gasoline due to a lack of competition.

MRA points out that predatory pricing laws, which make it illegal to sell a product below cost, already exist, and any cases of this should be prosecuted by the attorney general.

Identity theft bills clear Senate
A package of bills seeking to implement additional protections against identity theft passed the Senate and has been sent to the House. Among other things, the bills stipulate in what situations personal identification information such as Social Security numbers can be required and how that information can be shared with third parties.

The package saw numerous changes prior to passage, and additional changes, mostly technical, are needed before passage in the House. MRA has been working with the bill sponsors to identify and correct issues and concerns in the package, especially in the area of extending credit to consumers.

Billboard-ban legislation announced
Sen. Tom George introduced four bills to further regulate billboards, and at least one of the bills appears to be a direct first step toward banning future billboards. However, the four bills are different from the proposed content of three bills George had been shopping earlier in 2003.

Nonetheless, some of the bills may be quite harmful to businesses that rely on billboards. MRA is a member of a coalition of some 220 associations, businesses and charities opposing this measure.

According to Sen. George, the proposed legislation would:

• Create a Billboard Advisory Committee in state government.

• Impose a moratorium on issuing additional state billboard permits. The moratorium would not affect the 14,000 standing billboard faces or the 2,000 permits that have been issued for billboards not yet built.

• Create a fund for taking down abandoned billboards. Its revenues would come from an increase in the billboard permit renewal fees.

While this legislation is not considered at this point to be on the Senate Republicans’ “to-do list,” Sen. George says that there is support within his caucus to approve this or something similar.

Update from Washington
James Goldberg,
MRA Washington Counsel

White House approves restrictions on "spam"
President Bush has signed the ‘Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003,” which Congress has dubbed the “CAN-SPAM Act of 2003.” The measure marks the first federal effort to deal with unsolicited e-mail, which many consumers and businesses have long complained about.

New restrictions apply to all “commercial electronic mail messages,” defined as any e-mail “the primary purpose of which is the commercial advertisement or promotion of a commercial product or service.”

Under the new law, each sender of commercial e-mail must provide:

• A “clear and conspicuous identification that the message is an advertisement or solicitation.” The notice does not necessarily have to appear in the e-mail subject line, and can be eliminated if the seller receives an “affirmative consent” from the recipient to send the e-mail.

• An ability for the recipient to “opt out” electronically from future e-mails from the same sender. The “opt-out” mechanism can involve the use of a “reply” e-mail or direction to a specific website.

• A valid postal address of the sender.

The new law also bans deceptive subject headings and false and misleading transmission information (presumably such as a false sender address).

The Federal Trade Commission will probably issue regulations implementing the new law midway through the year, and will also study whether it is feasible or desirable to create a “do not spam” directory similar to the “do not call” list initiated last year for unsolicited telemarketing calls.

Finally, the new law pre-empts existing state laws, including Michigan’s more restrictive law, passed September 1, 2003, which required the sender to include in the e-mail subject line “ADV:” as the first four characters.

MRA members who send commercial e-mails to customers—such as messages announcing sales or other events—should be sure that customers have indicated their willingness to receive such e-mails. In addition, all e-mails should contain an “opt-out” mechanism that allows customers to choose at any time to cancel future e-mails.

All's quiet on the 'white collar' reform front
At a recent meeting with key Department of Labor personnel, MRA’s Washington counsel was advised that the department is on target to finish its controversial “white collar” overtime reform regulations in the second quarter of 2004.

The department is in the final stages of reviewing nearly 100,000 comments—most from union members opposing the proposed regulations—and expects to address all substantive issues raised in the public comments.

The final rules, when issued, won’t mark an end to the process, however. Opponents of the rules, led by Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA), will likely attempt to invoke the Congressional Review Act of 1996 (CRA), which provides a mechanism for Congress to pass a resolution of disapproval that would invalidate the rules and prevent the department from issuing substantially similar regulations in the future.

Is 2004 the year for Internet sales tax collection?
Legislation to permanently extend a federal moratorium on state imposition of sales taxes on Internet access services failed last year, largely due to opposition from state and local governments. But supporters are poised to bring it back for another try this year.

Consideration of any moratorium bill may once again provide an opening for MRA and its allies to push for a long-sought goal: federal authority for state and local governments to require Internet, catalog and other remote sellers to collect sales taxes on virtually all sales.

Legislation to, in effect, overturn an 11-year-old Supreme Court decision was introduced last year by Rep. Ernest Istook (R-OK) and Sens. Mike Enzi (R-WY) and Byron Dorgan (D-ND).

The bills would authorize states that are participating in the so-called Streamlined Sales Tax Project to require sales tax collection for any business with $5 million or more in Internet or catalog sales. While the dollar threshold is higher than MRA’s Washington Office and others would prefer, it represents a compromise figure aimed at getting more lawmakers to support passage of the measures.

Continued budget woes at the state level, coupled with the success of the streamlining project, which aims to make sales tax collection more efficient for all retailers, have made many lawmakers more willing to consider the Istook-Enzi bills.

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