Michigan Developments
Eric Rule,
Director of Governmental Affairs

Corrections wants lighter shoplifting penalties
In an effort to save the state approximately $76 million from the Department of Corrections budget, the department is recommending downgrading penalties for up to 235 different crimes, including felony shoplifting. The proposals come on the heels of the state’s budget woes, with the state facing a $1.8 billion deficit for next year’s budget.

The Department of Corrections estimates 11,939 fewer people would be admitted to county jails each year under the plan. In addition, 2,168 fewer criminals would be housed in the state’s prisons, resulting in 3,300 fewer prison beds over the course of three years.

The impact of the proposal on the retail industry involves shoplifting. Currently, if $1,000 or more is stolen at a retail establishment, the charge is felony shoplifting and is subject to felony sentencing guidelines.

The proposal calls for increasing the felony shoplifting threshold to $5,000 in losses. This would mean that a thief could steal two plasma televisions, or jewelry valued at $4,900, and not be convicted of a felony. A thief could steal up to five times the current amount without serious penalty. MRA finds this unacceptable.

Research from the Food Marketing Institute shows that organized retail crime is a $1-billion issue in Michigan and results in a loss of $63 million in tax dollars to the state. How much higher will these numbers be if we change from $1,000 to $5,000? In addition, organized retail crime has been shown to have some roots in the drug trade and terrorist activities.

While the proposal is backed by Governor Jennifer Granholm and appears to have some support among Democratic lawmakers, Republican legislators are not ready to support it. Sen. Wayne Kuipers (R-Holland), who chairs the Senate Judiciary Committee, has promised to move slowly and deliberately with any changes in order to determine a crime’s impact on the victim.

In all, it appears that 200 bills or more would need to be introduced and signed into law to make all the changes that are being sought by the governor. MRA will continue to remain extremely active on the bills that impact the felony shoplifting statute, showing policymakers how much of an adverse impact these changes would have on retailers and the state in general.

Legislators set weekly summer schedule
Instead of hanging around in Lansing all summer waiting for an agreement on the 2008 budget, lawmakers will only convene every Wednesday. Legislative leaders and key members of appropriations committees will continue to communicate, attempting to reach some sort of agreement on the balance between reforms and raising taxes.

The main issues of contention are two tax increases proposed by Democrats: raising the income tax from 3.9 percent to 4.4 percent, and instituting a 6-percent tax on “discretionary” services, such as sports and entertainment tickets. Republicans are loath to support any tax increase before numerous cost-saving government reforms are put in place, which would make any tax increases either smaller or unnecessary.

The deadline for passing the Fiscal Year 2008 budget is Sept. 30. If the budget isn’t in place by Oct. 1, the state could face a possible government shutdown. It’s shaping up to be a long, hot, summer.

Downtown Detroit gets retail boost
Gov. Granholm signed into law legislation to encourage a proposed 30-acre retail project at Eight Mile and Woodward, to be known as The Shoppes at Gateway Park. The bill, sponsored by Sen. Buzz Thomas (D-Detroit), creates a special designation for the area and provides economic incentives to developers.

The proposed 30-acre, $80-million, open-air development would be the city’s first large-scale retail project in many years. Developer Bernie Schrott said the General Growth Properties project will be the largest one-time retail development in Detroit’s history and will include a J.C. Penney.

Update from Washington
James Goldberg,
MRA Washington Counsel

Good news on interstate sales tax collection
The Supreme Court declined to review a pair of so-called “business activity” tax cases shortly before adjourning for its summer recess. The decision may be good news to those who favor requiring Internet and other remote sellers to collect state sales taxes, a position long supported by MRA.

The business activity cases arose in New Jersey and West Virginia. In both cases, lower courts had upheld the right of states to impose taxes on the income earned by the companies within the state even though they had no physical presence in the state. The West Virginia case, for example, involved a credit card issuer who had no banks within the state but was required to pay tax on the income earned from interest and fees paid by West Virginia consumers.

The petitioners in both cases argued that the Supreme Court should overturn the decisions and apply a requirement that the companies must have a “physical presence” in the state before a state can tax them. That’s the standard set by the Court some 15 years ago in its Quill decision, which is applicable to sales tax collection.

By the current court’s refusal to hear the business activity cases, it is implying that a physical presence standard is not the only one that should be applied in the tax area. As a result there is new hope that the court may rule the same way if it gets a sales tax case in the future.

This also provides an argument for MRA and others who are urging Congress to pass legislation to authorize states to require Internet sellers to collect sales taxes. The argument posits that there is no substantive difference between sales and income taxes that would suggest the Supreme Court should treat them differently.

House-passed ‘card check’ bill stopped in Senate
As expected, Senate Republicans prevented the Democratic majority from debating a House-passed bill that would have made it easier for unions to organize employees at work sites.

The Employee Free Choice Act was passed by the House in March, but couldn’t muster the 60 votes necessary to place it on the Senate debate calendar, falling nine votes short just before Congress’ Independence Day recess.

The top priority of organized labor—and the business community, which was trying to block it—the bill would have changed federal labor law to require employers to recognize a union for bargaining purposes if the union produced authorization cards signed by a majority of the employer’s workers.

Under current law, a secret ballot election must be held before a union can be recognized.

In mounting their opposition, employer groups expressed concern that the lack of secret ballot elections could lead to union intimidation of workers and make it easier for unions to organize in retail and restaurant work sites.

Immigration reform apparently dead
In the end, it wasn’t even close. With many Republicans bailing out on the White House, the Senate fell 14 votes short of the 60 votes needed to bring the controversial immigration reform legislation up for a vote.

Supporters still hold out a glimmer of hope that the legislation could be revived this year, but that would take a major modification of the so-called “compromise” reform bill. Given the political and legislative calendars for the balance of the year—not to mention next year’s presidential elections—it may be that immigration reform is dead until a new president takes office in 2009.

Some businesses weren’t sorry to see the bill fail to pass muster, given provisions in Title III that placed new requirements on all employers to do more to check the job eligibility status of all current and newly-hired workers.

But other businesses are lamenting the fact that the bill’s apparent demise will make it more difficult to achieve a permanent “fix” to the H-2B visa issue, which would benefit many Michigan employers.

MRA’s Washington Office had joined with others in urging that the bill contain provisions making the returning worker provision permanent and making other modifications to existing law covering the seasonal workers who utilize this special visa.

MRA will continue its work to have the H-2B visa changes enacted as separate legislation.