Michigan Developments
Eric Rule,
Director of Governmental Affairs

MRA presents legislative agenda

MRA Chairman and CEO Larry Meyer presented retail’s legislative agenda to the House Commerce Committee. Meyer, a former Michigan Department of Commerce director, was invited by lawmakers to discuss retail’s key legislative issues and the state of the retail economy.

Among the issues Meyer addressed were the need to modernize the state’s archaic item-pricing law, proposals to restructure the Single Business Tax and the need to solve the problem of SUTA dumping. He also discussed strategies to allow in-state pharmacies to better compete with mail-order firms, as well as cost-saving proposals for the Medicaid system.

Lawmakers discuss central-fill pharmacy bill

A new bill would allow pharmacies in Michigan to use centralized prescription processing. HB 4434, sponsored by Rep. Scott Hummel (R-DeWitt), would also remove the prohibition against Michigan pharmacies participating in mail order.

At press time, the bill had received a hearing in the House Health Policy Committee but was not taken up for a vote.

MRA is working with the sponsor’s office as well as the committee chair on removing one potential problem in the bill: requiring a unique identifier to be posted on the prescription bottle. The requirement appears redundant and would put yet another item on already text-heavy labels.

Treasury to change sales tax table

Beginning January 1, 2006, retailers will be required to throw out their current sales tax collection schedule, which generally adds a penny in tax for every 16.67-cent increase in the sales price of an item.

Instead, retailers must compute the 6-percent sales tax on the actual sales price and “compute the tax to the third decimal place and round up to a whole cent when the third decimal place is greater than four, or down to a whole cent when the third decimal point is four or less.”

Notice of the change, a result of the national streamlined sales tax effort, is at the Michigan Department of Treasury website

House eliminates health care tax

The House debated and passed legislation eliminating the Single Business Tax on providing health care benefits to employees. HB 4342 then headed to the Senate, where it was expected to pass quickly.

Eight Democrats joined the entire 58-member GOP slate in voting for the bill. Once through the Senate, however, the bill may be vetoed by Gov. Jennifer Granholm. Her administration, which has proposed a complete restructuring of the SBT to make it more jobs friendly, claims eliminating the health care provision is a piecemeal approach to restructuring.

Governor's SBT proposal under scrutiny

Now that Gov. Granholm has unveiled the details of her plan to restructure the SBT, businesses and various interest groups are busy determining how it will impact them or their membership.

According to the administration, 77 percent of small businesses in the state would receive a tax cut as a result of the SBT restructuring. Various analyses of the plan, however, have raised doubts about this claim.

While some business groups are supporting the restructuring, others contend that all businesses should receive a tax cut. A new group opposing the proposal has formed, calling itself the Coalition for Tax Relief and Jobs.

Pseudoephedrine bills being discussed

Companion bills in the House and Senate attempt to restrict public access to products containing pseudoephedrine (the active ingredient used in many cold and allergy medications) as a way to combat growing methamphetamine production.

SB 189, sponsored by Sen. Patty Birkholz (R-Saugatuck), would require retailers to keep products containing pseudoephedrine within 20 feet of the counter, in view of an employee. It would also require the retailer to keep a log of each purchaser’s name, birthdate and products purchased.

The retail community is discussing various proposals with Birkholz and is trying to reduce the administrative burdens to retailers in any legislation that moves.

Update from Washington
James Goldberg,
MRA Washington Counsel

Bankruptcy reform bill close to enactment

The first major overhaul of federal bankruptcy law in more than 25 years seems headed to certain enactment.

The legislation, supported by MRA and a host of retail and financial services organizations and companies, would make it more difficult for higher-income individuals to declare bankruptcy. Under the bill, anyone earning more than the median income in his or her state ($45,176 for 2003 in Michigan) and who could repay as much as $6,000 in debt annually would have to file under a Chapter 13 reorganization plan rather than a Chapter 7 liquidation plan.

The comprehensive reform measure also makes changes in corporate bankruptcy rules.

No minimum wage hike from either side

During Senate debate on the bankruptcy reform legislation, both Democrats and Republicans offered separate amendments to increase the federal minimum wage. Both amendments went down to defeat.

Sen. Edward M. Kennedy (D-MA) offered an increase from the current $5.15 an hour to $7.25 in three 70-cent increments over 26 months. It was defeated 49-46.

Then, Sen. Mike Enzi (R-WY) offered a proposal developed by Sen. Rick Santorum (R-PA) to raise the minimum to $6.25 over 18 months, coupled with tax relief aimed at small business. That proposal fared worse than Kennedy’s bill, losing 61-38.

Among other things, the Enzi-Santorum amendment would have increased the small business exemption from the federal minimum wage law from the current $500,000 in annual sales volume to $1 million, and it would have permitted limited “flex-time” for workers by allowing employees to work more hours in one week and take hours off the following week.

Sometimes publicity isn't a good idea

Only hours after The Washington Post reported that Wal-Mart and other retailers were lobbying Congress to extend the work day for truckers to 16 hours, Rep. John Boozman (R-AR), who had planned to offer the proposal as an amendment to a pending highway spending bill, decided to back off from his approach.

Under current law, truckers are limited to 14 hours with 11 consecutive hours of driving allowed, giving the drivers three hours to eat, rest or load and unload their trucks.

The Boozman amendment would have increased the allowable workday by two hours, as long as drivers took an unpaid two-hour break.

The morning newspaper article reported that Wal-Mart employees were Boozman’s top contributors in 2003 and 2004. Boozman’s district includes Wal-Mart’s corporate headquarters.

President urges permanent expensing increase

For the last two years, qualified small businesses have been allowed to expense—rather than depreciate—up to $100,000 in equipment purchases. But under a congressional provision enacted in 2003, the limit is scheduled to revert back to $25,000 for 2005 and beyond.

President Bush’s fiscal year 2006 budget would change all that, however, proposing to make the $100,000 limit permanent.

Congress is expected to approve retention of the higher expensing limit, though budget procedures may dictate that the limit stay in effect for another short period of time, rather than being a permanent extension.

Revisions coming to family-leave law

The Department of Labor’s Employment Standards Administration has announced plans to seek public comment on proposals to amend federal Family and Medical Leave Act (FMLA) rules that apply to employers of 50 or more workers.

Among the possible modifications are (a) a requirement that employees take intermittent leave in one-hour increments, (b) allowing employers to directly contact health care providers to verify FMLA eligibility and (c) allowing employers to substitute “light duty” for leave.

The proposed rule would also react to several Supreme Court and federal appellate court decisions that have whittled away at family and medical leave requirements in the 10 years since its enactment.

Return to April Michigan Retailer Page one • MRA home