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Legislative Report

July 2014

Legislative Report from Mark Molinaro - July 2014

April 2014

Legislative Report from Mark Molinaro - April 2014

January 2013

ROAD FUNDING FACING A BUMPY RIDE?

Senate Appropriations Committee Chair Roger Kahn (R-Saginaw) who is the legislature’s point person on road funding, says his goal is to have a $1 billion infrastructure package in place by March 7 so lawmakers can the place an alternative funding mechanism to repair the roads before voters on the May ballot.

Senator Kahn wants to place a one-penny sales tax hike earmarked for roads on the statewide ballot. If the voters were to adopt that, then the proposed, and potentially approved registration and gas tax increase put forth by Gov. Rick Snyder to raise $1.2 billion would go away.

The approach is similar to the Proposal A-type strategy used by former Gov. John Engler to sell property tax relief back in the 1990s.

However, Senator Kahn acknowledged that the ill-will left over from the raucous Right to Work needs to be resolved with Democrats, and soon, if his self-imposed March 7 deadline is to be met.

And right now all is not well with the Democrats and even some Republicans on the transportation infrastructure issues.

House Minority Leader Tim Greimel (D-Auburn Hills) believes some funding can be found within the state budget. He also suggested corporations pay a higher rate and higher vehicle registration fees for more expensive cars.

Senate Minority Leader Gretchen Whitmer (D-East Lansing) would only go so far as to say the issue deserves ”a full and fair debate.”

On the Republican side, Rep. Pete Lund (R-Shelby Twp.) said he doesn’t see himself voting for it if the extra revenue simply comes from a gas tax increase.

Rep. Joe Hune (R-Hamburg) said his preference is to find the money within the budget.

CREC: TOUGH ’14 BUDGET OUTLOOK

The Consensus Revenue Estimating Conference (CREC) is projecting a small surplus of around $125 million in the state’s General Fund (GF) for the FY 2014 budget but a flat School Aid Fund (SAF).

However, that forecast could change depending on whether the federal government unloads some of it deficit on the states and the courts reject the state’s new teacher retirement changes.

What this means is that Gov. Rick Snyder is likely to present a bare-bones budget to the Legislature when he make his recommendations on Feb. 7.

The slim surplus is a result of a $200 million surplus for the close of FY 2012 with department lapses of some $90 million, according to Budget Director John Nixon.

Economists at the University of Michigan’s Research Seminar in Quantitative Economics (RSQE) predicted the state’s unemployment rate would drop to 6.9 percent by the end of 2015 with the rate forecasted to be 8.3 percent by the end of 2013. Currently, the unemployment rate stands at 8.9 percent.

HATHAWAY TO LEAVE HIGH COURT

The attorney for Michigan Supreme Court Justice Diane Hathaway has informed the high court she will step down Jan.21.

The announcement came on the heels of a 19-page six-count complaint filed by the Judicial Tenure Commission (JTC) against Justice Hathaway and who is accused, along with her husband, of transferring a pair of homes to their children in a manner that would allow the couple to qualify for a short-sale on a Grosse Pointe property to save some $600,000 and then gifted the properties back to them by their children.

The complaint alleges fraud, money laundering, tax violations and misrepresenting facts to the JTC.

Hathaway’s departure will give Gov. Rick Snyder an appointment to the Michigan Supreme Court and likely raise the GOP-nominated majority on the court to 5-2 from the current 4-3.

JUDGE RULES ON MCCA

Ingham County Circuit Court Judge Clinton Canady III has ruled that Michigan residents have “a right to know” how the Michigan Catastrophic Claims Association (MCCA) comes up with the mandatory fee it puts on all car insurance bills. The fee is currently $175 a year per vehicle.

In his order, Canady ruled the information that should be disclosed includes the amount of money in MCCA reserves, the number of claimants, administrative costs and specific accounting for increases and decreases in annual rate charges.

Under the state’s no-fault auto insurance system, MCCA reimburses insurers for losses over $500,000 in situations where individuals have been seriously injured in accidents.

DOMESTIC PARTNER BENEFITS POLICY UPHELD

The Michigan Civil Service Commission’s (MCSC) 2011 decision to extend health benefits to some eligible, unrelated co-residents of state employees, including same-sex partners has been ruled constitutional by the Court of Appeals (COA).

In a 2-1 ruling, the COA wrote, “There is no absolute prohibition against same-sex domestic partners receiving benefits through their relationship with an employee so long as that receipt is not based on the employer’s recognition of that relationship as a ‘marriage or similar union.;’”

Attorney General Bill Schuette says he will appeal the ruling.

WHITMER FOR GOVERNOR?

Senate Minority Leader Gretchen Whitmer (D-East Lansing) says she will make a decision on whether she will run for governor in 2014 by this April…a more narrow timeline that the one she gave last month when she pledged a decision within the first half of 2013.

HILLEGONDS TO CHAIR NEW REGIONAL TRANSIT AUTHORITY

Former House Speaker Paul Hillegonds has been tapped by Gov. Rick Snyder to chair the newly established Regional Transit Authority. The authority was established last year to coordinate bus lines in metro Detroit.

HORSERACING BILL DOESN’T FINISH

Gov. Rick Snyder pocket-vetoed House Bill 5546 which would have allowed gambling on previously recorded races citing possible violation of at least one tribal compact and questioning whether the legislation was constitutional under Prop. 1 of 2004 which requires a local and statewide vote in communities interested in expanded gambling.

SNYDER SETS SPECIAL ELECTION DATE

May 7 is the date set for a special election to replace former Sen. John Gleason (D-Flushing) who has accepted a position as Genesee County Clerk.

A primary election would be held March 12 if necessary.

AG COMMISSION ELECTS NEW CHAIRMAN

Bob Kennedy, vice president of operations and general manager of Auburn Bean and Grain Company in Auburn, has been elected chair of the Commission on Agriculture and Rural Development. He replaces Valmar Green whose appointment expired earlier this month. Kennedy has been on the commission since January 2011.

Gov. Rick appointed Fred Walcott of Allendale to replace Green on the commission.

February 8, 2011

Legislation that would impose a new business tax in Michigan is expected to be introduced in the Legislature in the near future. Throughout last year’s campaign, Governor Rick Snyder called for the elimination of the Michigan Business Tax and replacing it with a 6 percent corporate tax. A draft proposal of that concept is now circulating in Lansing and according to Gongwer News Service, Michigan C Corps would be taxed 6 percent.

Michigan "C" corporations would be taxed 6 percent on their business income, with almost no deductions or credits to reduce their tax. Under the proposal, most businesses in Michigan would pay no business tax because most are not "C" corporations, and at least one business official said the proposal could actually mean a tax increase for many Michigan businesses.

The draft proposal says the intent of the tax is "improve the economic condition of the this state, foster continued and diverse economic growth in this state, and enable this state to compete fairly and effectively in the world marketplace for economic development opportunities that will provide for and protect the health, safety and welfare of this state, now and in the future."

While there is no timeframe for when the proposed tax would be introduced in the Legislature, sources said Mr. Snyder intends to have the bill introduced soon. Doing so would be in keeping with his so-called 182-day agenda to make major changes to the state's structure.

"Essentially, this is the next step in the development of the most effective and comprehensive approach to eliminating the MBT and replacing it with a 6% corporate incometax," said Snyder press secretary Sara Wurfel. "We're intending to present a plan mid-February in conjunction with the budget. The draft plan follows the Governor's overarching principles for reforming the business tax: unlike the MBT, it is simple, fair and efficient."

Forecasts of what such a tax could mean in state revenues had pegged a loss of some $1 billion to $1.5 billion over what is collected in the MBT. There were no further estimates on potential costs based on the current draft available.

The outlines of the proposed tax were issued Wednesday, January 26 to House Speaker Jase Bolger (R- Marshall) and Senate Majority Leader Randy Richardville (R-Monroe), as well as the chairs of the two chambers' appropriations and tax committees, in a session led by Lt. Governor Brian Calley and attended by Treasurer Andy Dillon and John Nixon, the governor's budget chief.

Under the proposal, only companies defined as "C" corporations under federal tax law, essentially companies that issue stock whether publicly or privately, would have to pay the tax. Partnerships, sole-proprietorships, limited liability corporations and other company types that pay business income directly to the owners and do not issue stock would not pay the business incometax.

That will mean an enormous tax break to most businesses in the state, since most are not "C" corporations but now pay both the MBT and personal incometax. Under this proposal they will now pay only personal incometax, which is now 4.35 percent and scheduled to go down to 4.25 percent later this year. The draft defines business income as federal taxable income (although it also provides more than a dozen pages of definitions of the types of sales and transactions that are counted towards income).

It will affect companies with sales in Michigan of at least $350,000, the same level as companies taxed now under the MBT.

Companies with revenues of less than $20 million, and that do not pay their chief executives more than $180,000, would be eligible for a small business tax credit. The credit would reduce the tax by the amount it exceeds 1.8 percent of the firm's adjusted business income. That is the same as the small business credit in the MBT. Aside from the small business credit, and a deduction companies could claim on a business loss that occurred after December 31 of this year, though, the proposed tax does not provide for other deductions or credits.

Legislation to repeal the Michigan Business Tax has already been introduced in the Legislature and hearings on this matter have been scheduled. Karoub Associates anticipates that both the new business tax proposal and resolution of the state budget to be at the forefront of the legislative agenda for the next six months. Governor Snyder has indicated he would like a two year budget completed by June 1 of this year. It is understood that this new tax proposal could have a direct impact on bowling center proprietors and Karoub Associates will continue to keep the BCAM legislative committee informed on this matter as developments warrant.

In the area of the Bowling Shoe Bill, the bill was stalled in lame duck committee in December due to democratic chair Jason Allen’s unwillingness to have a quorum for vote. Senator Allen decided not to have the missing principles called to the committee meeting therefore Senator Allen stalled the bill .with the change with the new governor I will push Karoub for a more aggressive position with the new committee chair which will not be Senator Allen.

Several BCAM Board Members attend the recent MLCC meeting in Lansing. This meeting was to initially take a vote for the “split case” proposal which was to make the top 25 sellers in the state be full case minimums. Opposition from BCAM, Rite Aid, Grocers Association and several other trade organizations were heard. The state has a problem with a possible work stoppage by the Teamsters due to a lack of wage increases in the past 7 years. The MLCC took a position to table the issue for further discussion.

I want to thank Karoub for there assistance.

ROGER PHILIPI

28200 Southfield Rd
Lathrup Village, MI 48076
248-559-5207

ABOUT BCAM

The Bowling Centers Association of Michigan (BCAM) is a statewide association that protects, promotes fosters and advances the interests of its members in their respective business of operating bowling centers.

The BCAM is affiliated with the Bowling Proprietors' Association of America located in Arlington, Texas.