Gov’t Affairs News: Local food tax victory, data security and more

Gov. signs bill preventing local food taxes

MRA is thrilled to share that Gov. Snyder signed HB 4999, the food tax preemption bill into law on Thursday, as Public Act 135 of 2017. The bill has immediate effect and prevents any local excise taxes or fees on the manufacture, distribution, or sale of food and beverages. Local units of government will not be able to follow in Cook County (Chicago) or Philadelphia’s footsteps and enact a local tax or fee on food or beverages, whether for immediate or non-immediate consumption. The legislation also ensures pet food and food for animals also remains local tax-free. The legislation is a big win for retailers who faced both implementation challenges and loss of revenue/foot traffic in other states where a local tax was added to food items. Next step: None. | MRA Position: Support.

Unrealistic data security bills introduced

The chairman of the Senate Banking and Financial Institutions Committee, Sen. Darwin Booher (R-Evart), introduced legislation, SB 632633, on Oct. 17 that would make several harmful changes to Michigan’s existing data breach notification law.  The banks and credit unions helped craft the legislation. SB 632 would create a Cybersecurity Council to recommend changes to the State of Michigan’s protections and create a voluntary program to identify exemplary cybersecurity practices and recognize entities that have adopted those practices. SB 633, which if adopted, would do all of the following:

  • Require businesses keep all employee information and personally identifiable information in an encrypted format
  • Require notice of a breach within three days to financial institutions
  • Require breached businesses offer identity theft protection and mitigation services for 12 months to affected individuals
  • Allow a financial institution to bring a civil suit against another entity that has a breach that contains PII for actual damages (reissuing cards, closing accounts, opening or reopening deposits, refunds or credits made to cardholders, notification)

MRA met with Booher this week to share our concerns, which mostly revolve around the added layer of regulations and requirements. Many are not logistically possible for merchants to perform. All merchants who accept credit cards are required to follow the Payment Card Industry – Data Security Compliance (PCI-DSS) mandates regarding different levels of data security and protection, based on the risk of each transaction. These protection levels are audited by the card networks (Visa, MasterCard, etc) and merchants found in violation are subject to fines and penalties. Currently, if a breach occurs, the merchant must notify the card networks, who then notify the financial institutions. The card networks have contractual agreements with the financial institutions to cover the costs of replacing customer’s credit cards and any fraudulent charges.

It appears that the real problem the bills seek to address is that the financial institutions are not happy with the current agreements with the card networks related to payments and the type and timeliness of notification. MRA will be meeting with the bill sponsor again soon to continue sharing our concerns. Next step: Senate Banking and Financial Institutions Committee. | MRA Position: Oppose.

Committee hears unemployment fraud reforms

The House Oversight Committee met on Oct. 26 to discuss legislation that makes a number of reforms to the Michigan’s Unemployment Insurance Agency and the unemployment insurance program. The bills, HB 51655172 are the product of a workgroup made up of entities representing both unemployment claimants and employers. The workgroup met to identify reforms after news broke earlier this year that the Agency had falsely accused nearly 48,000 individuals of unemployment fraud. The bills are seen as a fair, but fragile compromise that addresses issues claimants and employers are currently facing.

Among the many reforms, the legislation seeks to:

  • Prevent imposter claims made by identity thieves by strengthening the identity verification process to flag fraud on the front end of the claims process
  • Establish a prompt and thorough process for handling imposter claims
  • Reform the Employer Noncompliance process, which penalizes employers when they fail to respond to inquiries in a timely or adequate manner, by adopting a consistent communication method
  • Adopt a sliding scale for unemployment fraud penalties to make the penalty collectible
  • Modify the interest rate when unemployment benefits are overpaid to a reasonable level
  • Allow an individual accused of fraud to receive access to UIA assistance through the hearing process and only require repayment if the individual is found to have committed fraud
  • Ensure notice of false claims and fraud determinations are delivered and allow individuals falsely accused of fraud to request a reconsideration within one year
  • Clarify the hardship waiver that allows the Agency to waive repayment and interest charges

Next step: House Oversight Committee vote on Nov. 2. | MRA Position: Support.

House committee discusses school start date

The House Education Reform Committee recently heard testimony on legislation that would allow schools to start prior to Labor Day. HB 5157 would allow schools to hold regular school days on Tuesdays-Thursdays prior to Labor Day. Currently, schools can start prior to Labor Day if they obtain a waiver from the State. HB 5157 would eliminate the need for a waiver but would restrict school days to Tuesday-Thursday, ensuring summer school weeks would contain long, four-day weekends.

The legislation is similar to SB 271, which was discussed earlier this spring and reported from the Senate Education committee but has not received a vote in the Senate. MRA shares the concerns raised at the hearing by the tourism industry of the impact a pre-Labor Day start has on seasonal businesses and the number of available school-age employees. Next step: House Education Reform Committee vote. | MRA Position: Oppose.

Other important items to note:

  • Alcohol reforms: Snyder signed SB 356358 into law on Oct. 17 as Public Acts 129-131 of 2017. The bills modify the delivery and signage requirements allowed for beer, wine, and spirits. SB 357 allows retailers to seek refunds for beer, wine, and spirits from wholesalers under certain circumstances. SB 356 takes effect on April 15 while SB 357-358 will go into effect on January 15. Next step: None. | MRA Position: Support SB 357, no position on the other bills.
  • Beer keg tag elimination: Legislation to eliminate the requirement to tag certain kegs of beer was unanimously approved by the House on Oct. 25. The bill, SB 372, removes a burdensome requirement for retailers to stick a label on a stainless-steel cylinder that is sweating and prohibits them from accepting the keg back if the label is missing. If the tag is missing the customer loses the $30 deposit and the retailer or brewer is out $100 for the keg. Next step: Enrollment and presentation to the governor. | MRA Position: Support.
  • Beer and wine license quota: HB 5127, introduced on Oct. 17, would modify the size exemption that exempts a licensed establishment that is at least 20,000 square feet from the current quota of one license to sell beer and wine for every 1,000 residents. The bill would decrease the size from 20,000 square feet to 14,000 square feet and make it retroactively effective as of January 4, 2017. Next step: House Regulatory Reform Committee. | MRA Position: Under review.
  • Gas station skimmers: Last week, the House Commerce Committee reported legislation, SB 415, that would require certain security measures to combat credit card skimmers on motor fuel pumps. The legislation includes enough flexibility for retailers to reasonably meet the requirements and for the department to approve new methods as technology improves. Next step: House floor. | MRA Position: Neutral.
  • Half-mile rule: The Joint Committee on Administrative Rules, commonly referred to as JCAR, plans to hold a hearing on the rescission of an anti-competitive rule referred to as the “half-mile rule” on Nov. 1. Next step: JCAR hearing on Nov. 1. | MRA Position: Support rescission of the rule.

  • 90-day prescriptions: On Oct. 19, the House approved SB 360, legislation that would allow pharmacists to dispense a 90-day or longer supply of medication so long as the prescription allows for enough refills to fill a 90-day supply. It ensures that pharmacists will not have to call the prescriber for approval as currently required by some insurance plans. Pharmacists will need to consult with the patient prior to dispensing more than a 30-day supply. Next step: Enrollment and presentation to the governor. | MRA Position: Support.
  • Biosimiliars: The House Health Policy Committee on Nov. 1 will take testimony on legislation, HB 4472, that would allow pharmacies to dispense a new category of drugs made with biologic components referred to as biologics, biosimilars and interchangeable biosimilars. The legislation would require the dispensing pharmacy to notify the prescriber within five business days when dispensing these new drugs. Notification may occur by making an entry in an interoperable electronic medical records system, through the use of electronic prescribing technology, through a pharmacy benefits management system, or through a pharmacy records system that is electronically accessible to the prescriber. MRA is working with the bill sponsor to include several other changes that add the correct definitions and strike outdated language in the statute. Next step: House Health Policy hearing on Nov. 1. MRA Position: Support with changes.

  • Drones: Legislation that seeks to grant local law enforcement agencies the ability to enter into memoranda of understanding with the Federal Aviation Administration to allow enforcement of federal drone regulations was introduced as HB 5118 on Oct. 17. Some experts have expressed skepticism whether the bill would have any effect since the state cannot compel the FAA to grant local law enforcement the ability to enforce its regulations. Next step: House Communications and Technology Committee.| MRA Position: Under review.

  • School supply tax credit: Educators may be able to deduct up to $1,000 from their income taxes towards the cost of purchasing school supplies under HB 5136 introduced on Oct. 18. Similar legislation has been unsuccessful in the past. Next step: House Tax Policy Committee.| MRA Position: Support.
  • Water bottler tax: Legislation that would add a five-cent-per-gallon tax on companies bottling Michigan water was introduced as HB 5133 on Oct. 18. Next step: House Natural Resources Committee.| MRA Position: Under review.

  • Credit freeze: The House Financial Services Committee heard testimony on Oct. 25 on legislation that would prohibit a consumer reporting agency from assessing fees to place or remove a credit freeze. HB 5094 is in response to the Equifax data breach and subsequent fees that are assessed to freeze or unfreeze credit reports. Committee members were supportive of the legislation. Next step: House Financial Services Committee vote. | MRA Position: Neutral.
  • Retail fraud cost recovery: SB 44, legislation that would allow recovery of law enforcement costs related to retail fraud cases, will receive a hearing in the House Law and Criminal Justice Committee on Oct. 31. The committee plans to add Organized Retail Crime to the list of crimes for which law enforcement can seek cost recovery. Other changes include exempting first offenders if the first offense involved less than $200 worth of merchandise. Next step: House Law and Criminal Justice Committee hearing on Oct. 31. | MRA Position: Support.
  • Security alarm license exemptions: Snyder signed legislation into law on Oct. 17 as Public Acts 125-126 of 2017 that would allow businesses to install and service certain security systems without needing an electrician’s permit, security alarm license, and construction code permit. HB 46544655 reflect new technology that allows businesses to remotely monitor the premises through audio, video, or sensor detection. Next step: None. | MRA Position: Support.