Michigan Developments
Eric Rule,
Director of Governmental Affairs

Governor signs post-Labor Day school bill

After months of intense lobbying of both the legislators and Governor Jennifer Granholm, the retail and tourism industries finally pulled out a victory on the post-Labor Day school issue. MRA and numerous other business groups coordinated a comprehensive lobbying strategy that ultimately led to the issue’s first-ever passage from any chamber of the legislature, and eventually persuaded the governor to sign the bill as well.

Granholm held her cards close to the end. The education community opposed the proposal, but the state’s economic woes no doubt played a role in winning her support. Supporters of the law argued that pushing the start date past Labor Day would boost end-of-summer tourism.

Under the new law, schools must not resume classes until after the Labor Day holiday. They must make up the hours of instruction either by adding minutes to days or adding days during the school calendar. The law takes effect for the next school year.

Organized labor begins minimum-wage push

The AFL-CIO indicated that organizations supporting an increase in the Michigan minimum wage would begin meeting in late October to begin the process of putting a proposal on the November 2006 ballot. The group’s goal is to get a petition initiative begun by January.

The Association of Community Organizations for Reform Now (ACORN) and the Democratic Party make up the majority of the coalition. ACORN was recently successful in winning a $1 minimum wage increase in Florida, and the group is reportedly seeking a $2 increase in Michigan.

Enviros moving to expand bottle deposit law

Environmental groups are making good on their promise to try to expand the state’s bottle deposit law by exploring the hiring of staff necessary to conduct a petition drive.

A five-member steering committee is in the process of determining how much it would cost to undertake a statewide petition drive to put the issue on the ballot. The group wants to expand the bottle deposit bill to include all juice, water and sports drink containers.

Various studies conducted over the last several years have indicated that if placed on the ballot, the public would overwhelmingly approve passage of expanding the law. Consumers reportedly see the law as an easy, effective way for them to recycle their products.

Retailers, however, know the burdens and safety issues it places on their operations and are opposed to expanding the list of items they are forced to accept. In addition, while 95 percent of pop and beer cans are recycled in Michigan, they account for less than 2 percent of the municipal solid-waste stream. Michigan currently ranks last among Great Lake States for overall rates of recycling.

‘Penny Plan’ an alternative to bottle deposit expansion

Retailers, primarily grocery stores, are investigating a proposal that would thwart expansion of the state’s bottle deposit law by charging a penny for various retail transactions and using it to fund a statewide, comprehensive recycling program. Dubbed the “Penny Plan,” legislation recently introduced by Rep. Geoff Hansen (R-Hart) is raising some eyebrows in Lansing.

The bill’s proponents claim HB 5163 would raise approximately $42 million per year to fund recycling efforts. Hansen’s legislation has earned the support of retailers such as Meijer, Spartan, Dean Foods, Country Fresh, Felpausch and the Michigan Grocers Association. Their hope is that such a plan would eliminate the desire or need for expansion of the bottle deposit law. In addition, such recycling efforts could alleviate the need for legislation requiring Advanced Recovery Fees for electronic products sold at retail to fund their recycling.

House Tax Policy Chair Fulton Sheen (R-Plainwell) has reportedly given a flat-out no to this idea; he does not think additional taxation is the answer, given the state’s economic woes. However, the issue may not be completely dead—Speaker Craig DeRoche (R-Novi) apparently believes it is an intriguing idea that needs to be investigated.

Update from Washington
James Goldberg,
MRA Washington Counsel

Alexander Hamilton gets a makeover

The $10 bill has become the third piece of U.S. currency to get a color makeover, but the newly redesigned bills won’t show up until sometime in February or March.

The redesign will be similar to the changes made to the $20 (in 2003) and the $50 (in 2004), with the addition of subtle background colors on both sides of the note to go with the traditional green and black.

In addition, the $10 note will get an added “symbol of freedom” that will appear on one side of the portrait of Alexander Hamilton, which will remain along with a drawing of the U.S. Treasury building on the reverse side.

All of the new makeovers follow a wave of changes introduced in the 1990s to strengthen protections against counterfeiters. Those changes included the addition of a plastic security thread embedded in the bills and watermarks visible when held up to the light.
Treasury officials promise that currency will undergo makeovers every 7-10 years to try and stay ahead of the “bad guys” who use technology that makes digital counterfeiting easier.

The next bill to get the color treatment will be the $100 bill, which is scheduled for redesign in 2007. At present, there are no plans to add color to the $1, $2 or $5 bills.

MRA members who want to get a “sneak peek” at the new $10 bill can check out the Bureau of Engraving and Printing’s currency site at www.moneyfactory.gov.

New card interchange fee lawsuit filed

On the heels of a lawsuit brought by Kroger and several other supermarket and drug store chains alleging that Visa has violated federal antitrust laws by the collective setting of interchange fees, four retailer associations have filed a similar lawsuit. They allege the same anticompetitive practices by Visa, MasterCard and several major banks that issue credit cards.

Plaintiffs in the suit are the National Association of Chain Drug Stores, the National Association of Convenience Stores, the National Community Pharmacists Association and the National Cooperative Grocer Association.

Interchange fees are meant to cover the cost of processing a credit card transaction and the risk taken by the issuing bank that the credit won’t be repaid. But the four associations, in a press release, claimed that fraud costs and processing costs are steadily decreasing, while the interchange rate in this country continues to increase.

“The credit card interchange system serves as a hidden tax, both on merchants and consumers and raises the costs of all products regardless of the form of tender,” said Hank Armour, CEO of the National Association of Convenience Stores in announcing the filing of the lawsuit in the U.S. District Court in New York.

A Visa spokesperson said the company “remains confident in its ability to defend interchange,” pointing to a July ruling in California that said that merchants lacked legal standing to challenge such fees because they are not direct purchasers of credit card services.

House panel targets business activity tax

A House subcommittee is considering legislation that would scale back states’ ability to impose income taxes or other business activity taxes (BAT) on multi-state enterprises.

Taking public hearing testimony on the Business Activity Tax Simplification Act of 2005 (HR 1956), the subcommittee heard business representatives note that much confusion exists between business and state taxing authorities regarding when a state may levy a BAT.

The legislation would provide what the sponsors call a “bright line” physical presence requirement in order for states to collect BAT. A similar physical presence standard—often referred to as nexus—has been in effect for many years with regard to sales taxes. Under a 1992 Supreme Court decision, a state cannot require an out-of-state seller to collect its sales taxes unless the seller has a physical presence, such as a store, a warehouse or permanently-based employees, in the taxing jurisdiction.

However, the same standard does not apply to BAT, and states have been testing the viability of an “economic nexus” standard in which a multi-state business need only have some economic connection (such as sales to customers in the state) for BAT to be applicable.

MRA has joined with state and local governments and other retailers to push for federal legislation to allow states to require collection of state sales taxes. However, it has taken no position on the BAT legislation, which strongly oppose state and local governments.