Governmental Affairs: January 31, 2014

Senate panel takes up Main Street Fairness

The Senate Economic Development Committee held a hearing on Main Street Fairness legislation (SB 658 & 659) on Wednesday. Committee members asked a lot of questions about how the sales and use tax collection process works, why the change is needed and how the bills would impact their constituents. As expected, it did not take a vote and plans future discussion.

MRA President and CEO Jim Hallan testified and dispelled a number of myths about the legislation. He also highlighted the need for fairness, particularly in light of the significant growth by out-of-state online companies. Amazon reported record sales while Michigan retailers posted a 0.1% average increase over last holiday season, according to MRA’s Michigan Retail Index. Mr. Hallan urged legislators to remove the tax loophole for out-of-state companies that are not contributing to Michigan’s economy – by hiring employees, paying taxes and supporting local community projects – while Michigan’s home-team retailers are competing at a 6% pricing disadvantage. 

Bill sponsor Sen. Jim Ananich (D-Flint) stated the importance of having a Michigan solution to this problem and explained that if we continue to wait for the federal government to act, we could be waiting a long time. Sen. Ananich has been a great supporter of our Main Street Fairness legislation and stressed that retailers just want to be treated fairly and equally.

MRA appreciates Sen. Ananich’s strong support of the legislation and Committee Chairman Mike Kowall (R-White Lake) for his willingness to start the discussion in the Senate. Chairman Kowall said the committee would have additional hearings on the legislation. 

Similar legislation in the House (HB 42024203) is awaiting a vote on the House floor. We look forward to continuing discussions with legislators and are pushing to have the legislation signed into law this year.

House Judiciary takes testimony on animal adoption package

The House Judiciary Committee took testimony this week on the package of bills (HB 4534475550615062) designed to cut down on animal abuse by blocking adoption to an individual who has been convicted of an animal abuse offense. The legislation requires municipal-run animal shelters and private animal welfare/adoption agencies to search the Michigan State Police’s Internet Criminal History Access Tool (ICHAT) website before approving the adoption of an animal.

Currently, the ICHAT system requires a $10 processing fee per search. Animal adoption agencies would be able to search the ICHAT system for free after requesting access from the State Police. While the bill does not directly impact retailers that sell animals, we have requested that language be added to ensure that retailers that allow pet adoption agencies to use their locations for on-side adoptions would not be considered animal welfare agencies and required to search ICHAT before selling an animal. 

A similar package of bills exists in the Senate (SB 377386603604) and was voted out of the Senate Judiciary Committee last fall. Once the committee approves the House legislation, the bill packages are expected to clear each chamber quickly and be sent to the governor’s desk.

Pseudoephedrine compromise legislation to receive hearing

The House Criminal Justice Committee is planning to take testimony on Wednesday, February 5, on a package of bills (HB 50885090) that regulate the sale of pseudoephedrine. The bills crack down on “smurfing” and direct the NPLEX system to generate a stop-sale alert if an individual has been convicted of a meth offense (as reported by the Michigan State Police Internet Criminal History Access Tool). The bills do not make products containing pseudoephedrine or ephedrine prescription-only for the general public. However, an individual who has been convicted of a meth-related offense would need a prescription in order to purchase a product containing pseudoephedrine or ephedrine.

Michigan has seen debate on making pseudoephedrine products prescription-only or a scheduled drug for several years. Since the legislation does not appear to adversely impact retailers, MRA plans to support these reforms to crack down on meth abuse.

Retail fraud cost-recovery legislation moves to floor 

The Senate Judiciary Committee moved legislation (SB 729) that allows law enforcement agencies and courts to recoup the financial costs of investigating retail fraud cases. Bruce Morningstar of the Fruitport Township Police, a former loss prevention officer, brought the issue to Sen. Geoff Hansen (R-Hart). He field testified that a special assessment to help recoup lost costs associated with retail fraud was considered by Fruitport Township as a possible solution. However, the assessment idea was quickly shot down because it would put the burden back on the victims of the crime rather than the perpetrators.

This legislation seeks to reduce the financial burden on law enforcement by allowing officials to recoup the costs associated with investigating retail fraud incidents. MRA supports legislation that could encourage law enforcement to work on retail fraud issues by lessening the financial burden of these cases.

Vote near on liability reductions for hiring paroled felons

The House Commerce Committee considered a package of bills (HB 52165218) designed to help paroled felons become productive members of society. The bills would grant some immunity to an employer who hires a parolee who has obtained a certificate of employability from the Michigan Department of Corrections. The certificate would contain the vocational and educational training records of the inmate and list the jobs held while incarcerated.

The bill package also seeks to help parolees obtain licenses needed for employment, by requiring the licensing boards to consider the certificate instead of simply dismissing a parolee for his criminal records because of “bad moral character.” MRA supported the legislation because it could help limit liability for employers looking to hire a paroled individual and help that individual become a productive member of society without assuming more risk. The committee took testimony on January 22 and is expected to take a vote on February 5.

Several income tax relief plans announced

The Senate Finance Committee took a vote Wednesday on SB 402, a bill that takes a phased approach to reduce the personal income tax rate as of January 29, 2014, to 3.9% by 2017. House Republicans also introduced an income tax reduction plan on Wednesday. HB 52655267 would reduce the income tax to 4.05% in 2016 and automatically reduce the tax by 0.1% each following year if state income tax revenue increased by $300 million or more over the previous fiscal year.

Gov. Snyder is also expected to offer a tax relief plan as part of his budget proposal that will be announced next week. The governor’s plan will likely be based on what he believes the state can afford now and in the future. It is uncertain at this point which plan will move forward, but we do anticipate that some income tax relief will be approved this spring.

Bitter-tasting engine coolant requirement expected to move forward

The House Regulatory Reform Committee is expected to take a vote February 4 on legislation (SB 29) that would prohibit the sale of anti-freeze or engine coolant that does not contain bittering agents after January 1, 2015. Brightly colored engine coolant and anti-freeze can appear attractive to children and pets but may be lethal if the coolant ingested contains ethylene glycol.

Committee members discussed several concerns that the market was already adopting this precaution, making the legislation unnecessary. The bill sponsor explained that while some companies already manufacture coolant with bittering agents, the bill would ensure that out-of-state companies also would be required to produce coolants that include bittering agents. MRA did not take a position on the legislation.

Other important items to note:

  • The House Tax Policy Committee will hear a presentation on Wednesday, February 5, from the Michigan Municipal League and the Michigan Association of Counties on Downtown Development Authorities and Tax Increment Financing Authorities. MRA has learned that a workgroup has been discussing legislation that would limit the funding source for DDAs, making it difficult for them to operate and support downtown businesses.
  • Senate Finance will take up the sales/use tax audit reform legislation (HB 4288 & 4292), also on Wednesday, February 5.
  • HB 5261 was introduced on January 29 to exempt the transfer of a vehicle from the use tax act if the transfer occurs between immediate family members. Currently, a vehicle sale between immediate family members is exempt from Michigan’s sales tax. The bill was referred to the House Tax Policy Committee.
  • A Senate resolution (SR 112) encouraging Congress to raise the federal minimum wage to $10.10 an hour and increase it annually based on the Consumer Price Index was introduced and referred to the Senate Committee on Reforms, Restructuring and Reinventing. The resolution is unlikely to receive a vote in the Republican-controlled Senate.