Michigan Developments
Eric Rule,
Director of Governmental Affairs

Bill preempts living-wage ordinances

The House was able before its spring break to get to legislation that preempts local living-wage ordinances. The House concurred with the Senate version of House Bill 4160, which amends the Minimum Wage Law to prohibit a local unit of government from enacting, maintaining or enforcing a minimum wage greater than that prescribed by state law.

With the changes, however, the bill would not prohibit a local minimum-wage requirement that governs compensation paid by the local unit to its employees. Nor would it prohibit it if the rate applied to a procurement contract for goods or services that the local unit awarded to a private vendor with more than 25 employees.

While passage is a significant victory for businesses in the state, Governor Jennifer Granholm is expected to veto it.

Income-tax cap unsuccessful in House

House Joint Resolution T, sponsored by Rep. Leon Drolet (R-Clinton Twp.), failed to garner the 73 votes required to place it on the November ballot. The resolution would have given voters the chance to cap Michigan’s income tax rate at 3.9 percent.

While the vote on the resolution was not recorded, it appeared that it was roughly 10 votes shy of the 73 necessary to achieve a two-thirds majority. It also appeared that approximately seven Republicans joined the Democrats in voting no on the proposal. The Republicans voting no are all term-limited and were able to vote against their caucus.

Two Democrats supporting the measure are both potentially vulnerable in the upcoming election. Had the dissenting Republicans voted with their caucus, these Democrats could have been forced into a difficult situation. Drolet insisted the measure could come up again after business and anti-tax groups are able to apply more pressure for yes votes.

Cigarette tax increase up in air

Despite the defeat of the proposed tax increase on liquor in mid-April, the fate of the proposed tax increase on cigarettes—75 cents per pack—is far from certain. A vote appears imminent at press time.

Although news reports have suggested that defeat of the liquor tax increase bodes ill for the tax increase on cigarettes, there is one crucial difference between them: Speaker Rick Johnson has already said he strongly supports the cigarette tax increase.

Getting a tax increase passed is always tough; however, since public support for the cigarette tax increase runs high, its supporters may not have the usual struggle getting it passed.

The recently formed coalition, Michigan Business Alliance for Fair Taxes, of which MRA is a part, continues to work hard on defeating this tax increase that would harm many retailers, particularly those along Michigan’s border.

Petroleum-pricing bill resurfaces

A bill to mandate the price a gas station must charge for gasoline is being revived. House Bill 4757 seeks to set a mandatory minimum price that retailers must charge for gasoline, even when gas prices are at an all time high.

The bill was referred to a subcommittee workgroup for study as a result of MRA’s opposition to the bill during committee debate several months ago. A recently released revision of the bill is the impetus for the impending action.

MRA has reviewed the revision and believes the legislation remains anti-consumer and over-regulates businesses through price setting.
Even worse, it replaces the previously proposed fixed mandatory minimum markup with a needlessly complex system of calculating the costs of doing business. Retailers who sell motor fuel would have to quantify and document their costs of doing business and use that amount as the mandatory minimum markup.

MRA will continue to oppose this and any other bill that tries to set prices for unregulated products in Michigan.

Update from Washington
James Goldberg,
MRA Washington Counsel

SBA proposes size-standards overhaul

The Small Business Administration has proposed a sweeping overhaul of its rules regarding size. The rules define which businesses are eligible for such programs as disaster relief and SBA loans.

Under current rules, virtually all retail companies with an annual sales volume of $6 million or less are defined as small businesses.

The new rules would base the definition on the number of employees. Retailers in most categories would be defined as small businesses if they have 50 or fewer employees. The standard for supermarkets, convenience stores, department stores, discount department stores and warehouse clubs would be 150 employees. The standard for gasoline stations with convenience stores and all other general merchandise stores (NAICS Code 452990) would be 100 employees.

The agency now believes that employment is a more stable measure of business size and provides a less complex measure of the wide variety of businesses falling within the agency’s purview.

Bioterrorism recordkeeping rules now due in May

Food and Drug Administration regulations imposing new recordkeeping requirements on businesses that handle food products have been pushed back until mid- to late May.

The rules are mandated under the federal Public Health Security and Bioterrorism Response Act of 2002.

Conversations with FDA officials indicate that the agency will want restaurants and retailers to keep records of incoming shipments but not of sales to customers.

The degree of detail that would be required in the business records is still unclear. Some FDA officials are known to want such detail as lot and batch number of each food product in order to aid in product recalls, but many in the business community have balked at detail greater than what is now maintained in the ordinary course of business.

Battle looms over overtime rules

A major election-year battle is brewing in Congress over the Department of Labor’s attempt to revise rules governing overtime pay for so-called “white collar” employees—those employed in executive, professional and administrative categories.

For MRA members and other retailers, the regulatory rewrite means more clarity in determining just who is exempt from overtime pay mandates. For many large businesses, the rules could mean an end to a recent spate of costly litigation alleging misclassification of workers.

The fight will not be easy. MRA and the business community strongly support the proposed changes; labor unions and many democrats in Congress oppose them.

Supreme Court may rule on Michigan wine case

The Supreme Court is expected to be the final arbiter regarding the extent to which Michigan and other states can restrict or regulate out-of-state shipments of wine and other alcohol beverages.

Gov. Jennifer Granholm, joined by the Michigan Beer and Wine Wholesalers Association, has asked the high court to review a recent federal appeals court decision. The state’s brief argues that the Twenty-First Amendment, which repealed Prohibition, gives Michigan and the other states the ability to regulate interstate shipments in alcohol beverages, free from other constitutional restraints.

More than 10 similar cases have been filed across the country, and the Michigan decision conflicts with one issued by a New York appeals court. The conflict makes it more likely that the Supreme Court will take the case.

The court is expected to decide by the end of June whether to take the Michigan case. If it does proceed, arguments would be scheduled in the fall, with a decision likely in early 2005.

While Michigan’s and other states’ cases involve direct shipping to consumers, any Supreme Court decision could also impact interstate shipments to retailers. “Big box” retailer Costco recently filed a suit against the Washington Liquor Control Board alleging, among other things, that state rules barring it from buying beer and wine from out-of-state sources lead to higher consumer prices.

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