Capitol News
March 2015
The new session of the Michigan Legislature continues to be filled with presentations from agencies and organizations briefing legislators on how state government works and past history. Appropriations committees are hearing from departmental witnesses about the proposed budget for FY2016. Still, there were a few items moving along.
Proposal 2015-1
After notice and hearing, the Board of State Canvassers approved on February 26 the 100-word summary for the May 5 special election ballot proposal that would increase the sales tax. Here is what you will see on your ballot:
PROPOSAL 15-1
A proposal to amend the State Constitution to increase the sales/use tax from 6% to 7% to replace and supplement reduced revenue to the School Aid Fund and local units of government caused by the elimination of the sales/use tax on gasoline and diesel fuel for vehicles operating on public roads, and to give effect to laws that provide additional money for roads and other transportation purposes by increasing the gas tax and vehicle registration fees.
The proposed constitutional amendment would:
- Eliminate sales/use taxes on gasoline/diesel fuel for vehicles on public roads.
- Increase portion of use tax dedicated to School Aid Fund (SAF).
- Expand use of SAF to community colleges and career/technical education, and prohibit use for 4-year colleges/universities.
- Give effect to laws, including those that:
- Increase sales/use tax to 7%, as authorized by constitutional amendment.
- Increase gasoline/diesel fuel tax and adjust annually for inflation, increase vehicle registration fees, and dedicate revenue for roads and other transportation purposes.
- Expand competitive bidding and warranties for road projects.
- Increase earned income tax credit.
Should this proposal be adopted?
YES [ ]
NO [ ]
A House Fiscal Agency Analysis gives an 8-page better description of what a Yes vote would put in motion. You can find House Joint Resolution UU of 2014, the Legislative proposal to amend the Michigan Constitution (invoked pursuant to MI Const. Art. XII, §1) setting in motion the May 5 ballot proposal, on the legislative Web site at www.legislature.mi.gov.
If approved, the Constitutional Amendment raising the sales tax would produce $1.8 billion to $2 billion in additional yearly revenue. $1.3 billion will go to state, county, and city/township roads, $300 million will go to schools to make up for the loss in revenue by abolishing the retail sales tax on gasoline, and the working poor will get a larger earned income tax credit to offset the regressive nature of the sales tax. If passed, it would bring Michigan up from dead last in state per-capita funding for roads.
Recently an important potential ally of the proposal, the Michigan Chamber of Commerce, decided to remain neutral. The Lansing and Grand Rapids Chambers of Commerce joined the Detroit Chamber in endorsing the proposal. The Michigan Manufacturers Association, the Michigan Farm Bureau, and Michigan Environmental Council signed on in support also. Importantly, the West Michigan Policy Forum has endorsed Proposal 2015-1. Among the members of the forum’s board are Doug DeVos, J.C. Huizenga, Peter Secchia and Steve Van Andel, as well as a host of other top business leaders in west Michigan. Attorney General Schuette has come out against the proposal; U.S Senator Gary Peters hasn’t taken a position but sounds very critical of it.
Recent campaign finance reports indicate the Michigan Infrastructure and Transportation Association has contributed $2.3 million to the Yes campaign so far this year. Other top contributors included Michigan Energy First at $250,000, the Asphalt Paving Association of Michigan at $200,000, Consumers Energy at $125,000, the Angelo Lafrate Construction Company at $100,000 and Hoffman Brothers at $100,000.
More advocacy information about the proposal is available at www.saferoadsyes.com. An opposition Web site to explore is http://saynotohighertaxes.org.
Pension Tax Update
I testified on behalf of Michigan SERA at a March 4 hearing before the House Tax Policy Committee in support of HB 4124, a bill proposing to change the tax treatment of retirement income of a surviving spouse. Under current law, retirement income is taxed based on three tiers according to the filer’s birth year — before 1946, 1946-1952, and after 1952. The retirement income of married couples filing jointly is treated based on the age of the older spouse. If the older spouse dies, the surviving spouse has to use his or her own birth year to determine the appropriate filing status. In some cases the surviving spouse could lose a $20,000 exemption.
This bill would continue to allow a surviving younger spouse after the death of the older spouse to use the older spouse’s filing status, as long as the surviving spouse did not remarry. The language used is permissive, allowing taxpayers to choose which treatment is most advantageous in their particular situation.
The Michigan Department of Treasury testified that it is neutral on the bill. Its representatives stated that it already allows the surviving spouse to claim the deceased spouse’s filing status under its authority to make decisions where there is ambiguity in the tax law. It also pointed out that some tweaks were needed in the bill language to allow the surviving spouse to permanently use the status of the deceased spouse. The bill sponsor said he would work with Treasury officials to design better language.
The House Fiscal Agency was surprisingly not able to score the bill as to cost because there are not adequate aggregate records kept of who is claiming the age of a deceased spouse. The guess is that there would not be a great decrease in state revenue caused by passage of the bill.
AARP submitted written testimony in support of the bill. A bi-partisan group of legislators are sponsoring the bill: Jim Townsend (chief sponsor), Pat Somerville, Bill LaVoy, Sheldon Neeley, Frank Liberati, David Rutledge, Sarah Roberts, Jeff Irwin, Christine Greig, John Chirkun, Derek Miller, Jeremy Moss, Robert Wittenberg, Henry Yanez, Wendell Byrd, Tom Barrett, Fred Durhal III, Kristy Pagan, Tim Kelly, Klint Kesto, Gary Glenn, Jason Sheppard, Holly Hughes, Ray Franz, Dave Pagel, Phil Potvin, Ed McBroom, Thomas Hooker, Roger Victory, Lee Chatfield, and Winnie Brinks.
If one of these is your legislator, please thank them. If your legislator is not a sponsor, they should be encouraged to sign on when the bill gets to the floor. The Committee plans to have another hearing on the bill on March 18 or thereafter.
Other News
Film incentives — HB 4122 would eliminate the state’s film incentive program. It cleared the House Tax Policy Committee and is likely to face full chamber consideration very soon. If passed it would save the state $50 million a year but make Michigan less likely to be used for movie and TV locations with a concurrent loss of jobs.
Child placement agency protections — A package of bills (HB 4188, 4189, and 4190) to protect religiously affiliated child placement agencies from challenges regarding which potential parents are eligible for foster care or adoption placements has been reported out of House Committee on Families. It will likely receive favorable action on the House floor since it passed there last session.
It is thought that the religiously-affiliated child-placing agencies are particularly anxious to get these protections in place before the U.S. Supreme Court potentially rules to legalize marriage equality nationwide by knocking down Michigan’s anti-gay marriage law. The USSC oral argument on Michigan’s law is April 28.
Gay rights and women’s rights organizations have opposed the bills as “a license to discriminate” and not serving the best interests of children to be placed with available and willing parents. Over 3,000 foster care children currently await homes.
Concealed weapon permitting — Governor Rick Snyder has signed legislation transferring the approval of concealed pistol license applications to county clerks and the Department of State Police and abolishing the local gun boards. SB 34 will take effect December 1 and SB 35 will be effective October 1. The Governor vetoed similar legislation in 2014 over concerns the bills would have enabled a person with a personal protection order against him or her to obtain a concealed pistol license. That language was dropped from the new legislation.
Starting in 2001, Michigan became a shall-issue state, meaning that any applicant wanting a concealed pistol license, provided he or she completed training and did not have a felony or high misdemeanor conviction and had not been involuntarily committed for mental illness, automatically would receive a license. Despite the 2001 changes, some gun owners complained that some gun boards still took too long to process applications.
New Senate offices — The Michigan Senate will be moving from the Farnum Building down Allegan Street to the Capitol View Building. Bonds totaling $68.5 million for the leasing and conversion of the building for Senate offices have been sold. Current state employees in the Capitol View Building will be moved to the Michigan State Police headquarters building and the MSP staff will move to Dimondale buildings.
The move was needed because the Farnum Building contained health hazards and security concerns, presenting significantly more cost to renovate than moving to a newer building according to the move’s supporters. The Michigan Democratic Party has launched an online petition critical of the expenditure. The Senate has occupied the Farnum Building since 1978.
Campaign finance — According to the Michigan Campaign Finance Network, the top 150 political action committees brought in $68 million in the two years that comprised the 2014 election cycle, a new record that topped the $51 million for the 2006 cycle. The MCFN noted the 2014 cycle was the first in which super political action committees, which can accept funds from corporate and union accounts, could participate.
The Republican Governors Association of Michigan raised the most money, at $4.68 million, and gave it all to the parent RGA organization to spend on ads backing Governor Rick Snyder against Democratic challenger Mark Schauer. The House Republican Campaign Committee and the Michigan House Democratic Fund were second and third on the MCFN’s list, respectively.
Republican Presidential primary — The Governor has signed legislation setting March 8, 2016 for Michigan’s Republican presidential primary. The Michigan Democratic Party could hold a primary that day but historically it has opted to use a closed party-run voting system to elect delegates to its national convention.
Energy policy — In anticipation of the Governor’s energy message and appointment of an energy czar later in March, Republican and Democratic legislators have been actively engaged in putting forth their ideas. An 8-bill package was introduced that would phase out the 10% independent market and keep the current 10 percent renewable energy requirement. The Dems want to expand the renewable energy requirement to twenty percent.
Currently Michigan gets 55 percent of its electricity from coal, 31 percent from nuclear reactors, 7 percent from natural gas and 5.8 percent from other renewable sources. Its utility rates are higher than the Midwest and national averages.
Consumers Energy and DTE oppose an expansion of the renewable energy or competition requirements. They paid for the report cited in recent TV ads that say the state will need new power plants in the next three to five years. Up to nine coal-fired plants could close owing to age and new emissions standards from the federal Environmental Protection Agency, according to Lansing’s Public Sector Consultants, a policy think tank.
The utilities’ claims are disputed by pro-competition groups representing Detroit’s Big Three automakers and other major Michigan companies. Due to the money at stake and the big businesses and environmentalists lining up on all sides, the energy policy issue is going to produce a lot controversy in the coming months.
Pot proposal — A new ballot committee, the Michigan Comprehensive Cannabis Reform Committee, was recently formed to pursue a ballot proposal in 2016 that would decriminalize marijuana in Michigan, establish a tax and regulatory system for adult use of the drug, and help foster an industrial hemp market.
Editor’s note: Mary Pollock is the Lansing SERA Chapter and SERA Council’s Legislative Representative. She may be contacted at 1200 Prescott Drive, East Lansing, MI 48823-2446; Phone 517-351-7292; E-mail michigansera@comcast.net.
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