TAX DEBATE CONTINUES TO DOMINATE AIRWAVES

Potential Michigan Business Tax (MBT) elimination, replacement and other associated issues were again abuzz around Lansing as policymakers continued the debate on how Michigan’s tax structure can be utilized to revitalize the State’s economic woes.

Although he has indicated he won’t move the measure prior to the Governor’s budget presentation of February 17^th, Senate Finance Committee Chairman Senator Jack Brandenburg (R-Harrison Township) held a hearing and took testimony regarding SB 1, Sen. Dave Hildenbrand’s (R-Lowell) legislation to eliminate the MBT and the 21.99-percent surcharge. Groups such as the Michigan Chamber of Commerce, Michigan Taxpayers Alliance, the Mackinac Center for Public Policy and Americans for Prosperity lined up to testify in favor of eliminating the tax, an estimated $2.1 billion hit to revenue for fiscal year (FY) 2011 and $2.2 billion for FY 2012.

The panel also took testimony on Senate Bill 34, Senator Mike Nof’s (R-Battle Creek) legislation to eliminate the State’s Personal Property Tax (PPT). While it appears all agree the tax, levied on equipment purchased by businesses, is bad for economic growth in Michigan – the roughly $880 million received by local governments would send dozens into insolvency if eliminated and not replaced.

The Senate also saw excitement when Senator Roger Kahn (R-Saginaw) introduced SB 103, legislation to eliminate the Earned Income Tax Credit (EITC). Elimination of the credit, estimated to cost roughly $340 million, will likely be the first significant fight for the new Legislature as Democrats wasted no time in attacking those in favor of the measure and characterizing it as a tax increase on the working poor. The philosophical disagreement appears not to be just along party lines as House Tax Policy Committee Chair Representative Jud Gilbert (R-Algonac) has made his position against eliminating the EITC clear, while House Speaker Jase Bolger (R-Marshall) has stated that the measure will be included in a package of tax incentives being examined by the House.

posted by PAA Online , Friday, February 11, 2011 1:11 PM
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FOCUS ON EMERGENCY FINANCIAL MANAGERS (EFMs) GROWS

Public Act (PA) 72, the portion of Michigan statute allowing for an emergency financial manager (EFM) to be put in place for a financially troubled local unit (such as a municipality or a school district), has been receiving considerable attention since Governor Snyder called for changes prior to even taking office.

State Representative Al Pscholka (R-Stevensville) has legislation (HBs 4214 – 4218) to provide very broad powers to EFMs, including entering and breaking contracts, setting minimum staffing levels, entering into service consolidation agreements and selling assets. State Treasurer Andy Dillon has called on the Legislature to pass legislation to the Governor’s desk by March 1^st. The House Committee on Local, Intergovernmental & Regional Affairs took testimony; however, they did not act on the bills while the Senate committees on Education and Local Government & Elections held a joint meeting this week, which also including testimony by Department of Treasury Legislative Affairs Director Howard Ryan.

Preparation for a spike in local units under the control of an EFM has been a visible priority for Treasurer Dillon who had previously suggested too few proper professionals were available. The answer – a training program which was launched this week and saw 65 attendees complete extensive coursework and receive certification in the first of three scheduled seminars.

posted by PAA Online , 1:11 PM
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PURE MICHIGAN FUNDING MOVES CLOSER TO REALITY

House Bill 4160, sponsored by House Commerce Committee Chair Representative Wayne Schmidt (R-Traverse City), passed the House of Representatives on a 95-13 vote with new and increased funding for the Pure Michigan promotion program.

Governor Snyder called for annual funding at $25 million during his State of the State Address last month and the Legislature, thus far, has answered the call. HB 4160 increases the regular appropriation to the program from $10 to $20 million and adds $5.4 million in new money from the 21^st Century Jobs Trust Fund.

Seven Republicans and six Democrats voted against the measure.

posted by PAA Online , 1:10 PM
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SPLIT POTENTIALLY COMING TO DELEG – MEDC GETTING ATTENTION

The huge Department of Energy, Labor & Economic Growth (DELEG) will be renamed and will focus on regulatory and licensing functions under a new Director, according to sources close to the Snyder Administration. All economic development functions will reportedly move back to the Michigan Economic Development Corporation (MEDC) where they were housed under former Governor Engler. DELEG’s current head is Acting Director Andy Levin, one of only two department heads yet to be changed by the new Governor.

The MEDC, meanwhile, was under the microscope of the House of Representatives this week as CEO Mike Finney testified before the House Commerce Committee. Republicans such as Representatives Sharon Tyler (R-Niles) and Jeff Farrington (R-Utica) called on the MEDC to exhibit more transparency regarding their strategies. Panel members also encouraged the new MEDC leadership to create new measurements for effectiveness and to focus efforts on existing or “heritage” business, claiming that, under previous leadership, a business needed to threaten leaving Michigan in order to obtain support from the State.

posted by PAA Online , 1:10 PM
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GOVERNOR ANNOUNCES CHANGES TO PAROLE SYSTEM

Governor Rick Snyder released Executive Order 2011-3 this week, eliminating the Michigan Parole and Commutation Board and the Executive Clemency Council, both created by former Governor Jennifer Granholm. The order creates the Michigan Parole Board within the Department of Corrections, a significant change as this authority was housed in the Executive Office under the previous Administration.

The new 10-member board, down from 15 members, will be appointed by the Corrections Department Director rather than the Governor. The order will take effect April 15^th and was touted by the Governor as being a cost-saving measure by removing a level of bureaucracy and also for putting the associated responsibilities in the hands of the appropriate professionals.

posted by PAA Online , 1:09 PM
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PAADVISORY BRIEFS

Repeal of Item Pricing Law Delayed

In the wake of polls showing votes are evenly split on the issue, the House Commerce Committee postponed action on HB 4158 sponsored by Representative Lisa Posthumus Lyons (R-Alto). The bill transfers any remaining necessary enforcement responsibilities to the Department of the Attorney General from the Department of Agriculture, the details of which are reportedly the reason for the delay.

Economic Alliance for Michigan Announces New Leadership

Longtime Senate staffer and former Vice President for Government Affairs Bret Jackson has been named the new President of the Economic Alliance for Michigan. The statewide business-labor coalition non-profit also announced that former State Representative Sarah Roberts will serve as Legislative Director.

Personnel Shuffle Continues

Legal Counsel to former Governor Jennifer Granholm, Steve Liedel, will be returning to Dykema in the firm’s government policy department. Deena Bosworth, most recently a policy advisor for the House Republicans, will be a legislative coordinator of the Michigan Association of Counties. Longtime Lansing Republican operative Terry Marquardt will lead the Senate Majority Communications Office under a new structure. Jessica Tramontana, most recently with the Senate Democratic Communications team, will serve as press secretary for the House Democrats. House Republican Caucus Legal Counsel will be Joseph Baumann, former DCH assistant legal counsel and Dykema attorney.

President Obama Visits UP

The Chief Executive braved bitter cold temperatures in a scheduled visit to the City of Marquette and Northern Michigan University. The President touted the community and university as examples of how his State of the Union goal of having wireless internet access to 98-percent can and should be met.

posted by PAA Online , 1:08 PM
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