Michigan Developments
Eric Rule,
Director of Governmental Affairs

MRA targeted for support on business-tax changes
Governor Jennifer Granholm is working hard to garner support for her recently unveiled plan to restructure Michigan business taxes. MRA is among the many targets of her lobbying effort: members of her administration and other supportive groups are contacting us almost daily seeking our support for the plan.

MRA’s position is that we cannot support the plan until we see specific details and until we receive comments from our members on how they would be impacted by the changes.

MRA members with views on the proposed changes are encouraged to let us know how they would be affected. Those needing additional information or wishing to respond should contact Eric Rule, Director of Governmental Affairs, at 800.366.3699 or errule@retailers.com.

Governor delivers budget-cutting Executive Order
Gov. Granholm has also unveiled her proposed 2006 budget and an Executive Order in which she attempted to solve a $773 million budget gap through a blend of spending reductions and the closing of tax expenditures.

Granholm’s plan saves $389.6 million through spending reductions. The closing of nine tax expenditures is expected to raise an additional $112 million. Among them are:
• the sales and use tax exemption for interstate motor carriers;
• the personal property tax exemption for the lease of water softeners;
• the sales tax exemption for soft drinks and food sold from vending machines.

In addition the governor proposed to increase several fees, including those on liquor licenses in order to raise $23 million to support the Liquor Control Commission entirely with fee proceeds. She noted that liquor license fees have not been raised since 1976.

GOP displeased with governor's tactics
Budget details aside, several Republicans were angry with Gov. Granholm for getting at spending cuts by including a negative supplemental budget in addition to the executive budget order. Members claimed it was wrong and didn’t include input from the GOP.

Granholm may have put the Republicans in a bad spot by forcing them to vote for or against the negative supplemental budget rather than simply approving an executive order.

A budget-cutting executive order needs only one up-or-down vote in both chambers’ appropriations committees within 10 days. A negative supplemental, in contrast, functions like a normal bill and requires approval in both legislative chambers after making its way through their respective committees.

Trash tipping fee introduced
Sen. Liz Brater (D-Ann Arbor) introduced legislation creating a $6-per-ton tipping fee for Michigan landfills. Brater claims the measure would help the state take a stand against Canadian and out-of-state waste while raising about $100 million per year that would be returned to municipalities for recycling programs.

Last session, the business community defeated similar legislation proposing a $3 tipping fee.

Michigan to join SSTP governing board
State Treasurer Jay Rising announced that Michigan has sent in the required paperwork to become an official member of the national Streamlined Sales and Use Tax Agreement.

Michigan officials expect to be granted full voting rights once admitted as a member of the governing board. Treasury officials indicate the board will be formalized by July, with a fully functional Streamlined Sales and Use Tax System in operation by October 2005.

SUTA-dumping legislation begins to move
MRA CEO and Chairman Larry Meyer called for an end to “SUTA dumping” during testimony before the Senate Commerce and Labor Committee. See page 2 for details on Meyer’s testimony.

The legislation (Senate Bills 171-174) is designed to prevent companies from dodging some of their unemployment taxes, a growing practice which state officials say costs the Unemployment Insurance Trust Fund as much as $95 million a year.

Update from Washington
James Goldberg,
MRA Washington Counsel

Internet sales tax bill faces opposition in House
House Judiciary Committee Chairman James Sensenbrenner (R-WI) recently told a group of retailers that he was “unalterably opposed” to legislation that would empower states to require out-of-state retailers and Internet sellers to collect state sales taxes.

The legislation, long supported by MRA and its retail and real estate industry allies, is expected to be reintroduced shortly in both houses of Congress.

Sensenbrenner’s opposition makes it difficult to get the measure through the House under usual legislative procedures. It’s likely that MRA and allies will first turn their attention to the Senate, where Sen. Mike Enzi (R-WY) is again expected to be the lead sponsor on the legislation..

Stabenow introduces minimum wage hike
Sen. Debbie Stabenow of Michigan and 13 of her Democratic colleagues have introduced legislation—the Fair Wage, Competition and Investment Act (S.14)—which would, among other things, increase the minimum wage and roll back last year’s revision of rules governing overtime pay.

The legislation, which has little chance of passage in the Republican-controlled Senate, would hike the minimum wage from the current $5.15 an hour in three incremental steps over a two-year period to $7.25 an hour.

The bill would also raise the minimum salary level for exemption from overtime from the current $23,660 per year to about $30,725 annually.

Third time a charm for bankruptcy bill?
Twice in the last seven years, both houses of Congress have passed legislation supported by MRA to make it harder for individuals to eliminate their debt through bankruptcy. But this year, leaders in both chambers think they can get the bill passed and signed by President Bush.

The legislation recently introduced is virtually identical to what House and Senate negotiators agreed to in the last Congress. But it lacks a controversial amendment to prevent individuals from using bankruptcy to shield themselves from fines imposed for illegal anti-abortion protests.

Even if the abortion amendment is again attached to the measure, Republican leadership hopes that, by introducing the bill so early in the congressional session, there will be time to overturn the procedural delays that opponents will try to create.

The re-introduced legislation would make it harder for individuals to go through the Chapter 7 liquidation process, so that some 30,000-100,000 consumers a year would instead have to make some repayment under Chapter 13.

U.S. re-examining trucker safety rules
The Federal Motor Carrier Safety Administration has begun a re-examination of hours-of-service rules for U.S. truck drivers that took effect early last year but were overturned by a U.S. appeals court last summer. Under the court order, the agency must issue new rules by September 30.

When first published, the rules were intended as a way of reducing fatigue and cutting down on fatalities. Among other things, the rules required drivers to take 10 hours off-duty each day instead of eight.

But a federal appeals court panel ruled that the agency failed to address the effect of the rules on driver health. They also criticized provisions of the rules, especially the section that raised the daily driver limit from 10 hours to 11 hours.

The controversial rules had caused many problems for over-the-road truckers who deliver products to retailers.

Class action reform becomes law
President Bush has signed into law a controversial class-action litigation reform bill. It creates federal jurisdiction over class actions in which the aggregate amount in controversy exceeds $5 million and any member of the plaintiff class is a citizen of a different state from any defendant.

The measure would thus strip state courts of many class actions, where critics believe plaintiffs have been favored.

The law also requires federal courts to issue written fairness decisions before approving any settlements that provide consumer plaintiffs with coupons instead of cash. And it requires fees in coupon settlements to be based on the value of coupons actually redeemed—many are not—or on the amount of time the plaintiffs’ counsel has expended working on the case.

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