Governmental Affairs: February 28, 2014

Gov. Snyder calls for state action on Main Street Fairness

We have great news to report: Governor Snyder publicly stated his support for the legislature to take up Main Street Fairness legislation. The Detroit News reported the “Republican governor said recent legal opinions about the issue have persuaded him that it’s worth pursuing a state-level legislative fix.” This news comes one day after new state Treasurer Kevin Clinton expressed his strong support for a state solution and Lieutenant Governor Brian Calley told the Senate Finance Committee that it was time to take another look at the issue. MRA will be using their comments to try to accelerate the momentum for passage in the Senate and bring it to a vote in the House.

Snyder: State should require Internet firms to collect sales tax

Treasurer: Force Internet retailers to collect Michigan’s sales tax

Minimum wage proposal collecting signatures

Proposed ballot language (item IX – Raise Michigan) to raise Michigan’s minimum wage to $10.10 was approved on February 19 and organizers began circulating petitions last weekend. The proposal would raise the minimum wage to $10.10 by 2017 and phase out the $2.65 tipped wage, and increase the rate each year based on the Consumer Price Index. Early polling shows the proposal could have strong support among voters. Petition gatherers must collect at least 258,088 valid signatures from Michigan voters by July 7 in order to appear on the November ballot.

The proposal is a citizen-initiated law, so it would appear before the legislature prior to ending up on the ballot. The legislature would have 40 days to either enact or reject the proposal. If the legislature did not approve the proposal, it would appear on the November general election ballot. The legislature could offer an alternative proposal that would also appear on the ballot. If two similar proposals appeared on the ballot, and voters approved both proposals, the one receiving more votes would become law.

In 2012 there were five constitutional amendments on the ballot and one legislative referendum. Opponents were successful in defeating the slate of proposals by using the messaging “don’t mess with our constitution.” The minimum wage proposal is a voter-initiated-law, which could be more difficult to defeat.

A similar attempt to raise the minimum wage was attempted in 2006 but never appeared on the ballot after lawmakers adopted their own wage hike. The legislature tackled the issue to avoid increased voter turnout for the proposal that could have led to a change in the makeup of the then Republican-controlled legislature. Sen. Mike Nofs (R-Battle Creek) has expressed some interest in taking a similar approach this year and has asked the Senate majority leader to consider the proposal.

MRA has concerns with government-mandated wage hikes and the adverse impact this proposal could have on the workforce and economy.

Revised PPT reimbursement plan gains wide support

The Senate Finance Committee unanimously reported legislation on Wednesday that includes 100 percent reimbursement for all local services that lost revenue under the 2012 personal property tax (PPT) reforms. A large coalition of business, local government and education groups have come together to support the changes in a race to get the legislation completed by the end of March.

The revised reimbursement plan (SB 821830) earmarks more use tax revenue than previously allocated and eliminates the 2.3% lost revenue threshold previously in place for local government to receive any replacement funding. The state, instead of local governments, would levy a special assessment on manufacturing personal property to offset local essential services, resulting in an overall 80 percent reduction in taxes for manufacturers.

The 2012 plan eliminated the personal property tax on total commercial personal property worth under $80,000 and phased out the requirement on manufacturing property over 10 years. Changes were needed to ensure local governments would be fully reimbursed for the lost PPT revenue instead of the 80 percent reimbursement included in the original legislation. The shift in use tax revenue is subject to voter approval at the August 5 primary election. With local governments on board with the new 100 percent reimbursement plan, there is no tangible opposition to the proposal. MRA supported the PPT reforms in 2012 and supports the revised reimbursement plan, since retailers with less than $80,000 in personal property would no longer be subject to the tax.

HICA funding remains in limbo

There is a $114.5 million HICA shortfall in the current 2013/2014 budget, creating a $400 million matching fund issue for the state. In 2011 the Health Insurance Claims Assessment (HICA) was passed to raise funds used to leverage federal Medicaid matching funds. However, the assessment has not brought in as much revenue as expected. Further problems stem from the fact that the Senate failed to pass Medicaid Expansion until late August last year and did not give the bill immediate effect. The delay in implementation resulted in a budget hole the Senate failed to act on until last week.

The issue will likely be resolved and backfilled with general fund dollars for the current year, but the House wants more time to discuss the supplemental appropriation before taking a vote (SB 608 has only been in the House chamber for a week). A lot of the postponing and political rhetoric on the issue is heightened with it being an election year in which several members of the House plan to challenge sitting senators.

A long-term funding solution needs to be addressed, but so far plans have not been proposed. The governor did not offer a recommendation on the HICA shortfall for this year or going forward.

House committee discusses year-round school

It’s budget season in Lansing, which prompted a school aid subcommittee to take a look at funding a pilot program to test a year-round school schedule. HB 4982 would appropriate $2 million that could be used to retrofit school buildings for summer use.

Bill sponsor Rep. Andy Schor (D-Lansing) believes a year-round schedule could help improve students’ ability to retain information that is otherwise lost over the summer break. Gov. Snyder mentioned considering incentive-based funding for year-round schools in his State of the State address earlier this year. Subcommittee Chairman Rep. Bill Rogers (R-Brighton) also expressed support for a year-round schedule.

Special winter road maintenance funds debated

A Senate supplemental appropriation last week for the current 2013/2014 fiscal year included $100 million in additional funding for special winter road maintenance to help fill potholes and assist local cash-strapped transportation budgets. Policy makers on both sides of the aisle and the governor question whether $100 million is the right amount.

Uncertainty led the House to strip the language out of the bill (SB 608) when the House Appropriations Committee reported a substitute version this week. The severe winter has made it clear that a road funding solution is desperately needed, but legislators are still grappling with how to fund a long-term plan.

Other important items to note:

  • The Senate’s pseudoephedrine package (SB 535563564756) passed on a nearly unanimous vote (SB 564 received one no vote). The bills were referred to the House Criminal Justice Committee, where the House version of the package awaits changes and a vote.
  • Legislation (HB 53335334) that would require private security guards to conform to state training standards was introduced last week. The bills were introduced by members of the minority party and referred to the House Committee on Regulatory Reform.
  • Legislation to exempt over-the-counter medication from the state’s use tax, HB 5342, was introduced last week. The bill mirrors legislation from last year that exempted OTC medication from the sales tax.