Senate and House Move Forward On Income Tax Cut

The State Senate and State House have both begun to pursue personal income tax cuts this week. Governor Snyder’s tax proposal, however, will not be released until he puts forward his budget recommendation on February 5^th.

Senate

The Senate pushed SB 402 through committee on a 5-2 party-line vote that would gradually decrease the income tax from its current rate of 4.25 to 3.9 percent by 2017.

While other alternatives include increasing the personal exemption or a one-time rebate, Senate Finance Committee Chair Senator Jack Brandenburg (R-Harrison Township) has stated that he prefers a rate cut. When the rate was increased from 3.9 to 4.35 percent in 2007, the legislation called for gradually reducing the tax back to its original rate. In 2011 the rate was frozen at 4.25 percent as part of a tax overhaul, a measure that Senator Brandenburg opposed.

In the first year, SB 402 would reduce the state’s General Fund by $143.6 million, and when fully implemented in 2017 would reduce state revenue by $873.5 million annually.

Senate Democrats criticized the proposed rate cute as an election-year gimmick and believe that it will do little to mitigate the effects of the pension tax and the elimination of numerous tax credits that arose from the 2011 tax overhaul. The Democrats have proposed putting surplus revenue towards K-12 per pupil funding.

House

State Representative Jeff Farrington (R-Utica), Chair of the House Tax Policy Committee, Representative Pat Somerville (R-New Boston), and Representative Tim Kelly (R-Saginaw Township) are sponsoring a package of legislation that would reduce the income tax to 4.05 percent in 2016. The package also includes a “trigger” that, after the 2016-2017 fiscal year, would reduce the rate by an additional 0.1 percent upon any increase of state revenue of $300 million or more. Representative Farrington stated that the Senate plan to roll back the tax rate was too large.

The proposed legislation (HB 5265, HB 5266, and HB 5267) will initially reduce revenues by $180-200 million. In the second round of cuts that number would increase to $380-400 million.

posted by PAA Online , Friday, January 31, 2014 11:04 AM
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‘Main Street Fairness’ Bills Reviewed In Senate

The Senate Economic Development Committee on Wednesday took up a pair of bills aimed at requiring any business with a nexus in the state, including online stores like Amazon, to collect sales and use tax. The Senate bills, SB 658 and SB 659, are sponsored by Senator Jim Ananich (D-Flint).

James Hallan, President of the Michigan Retailers Association, asserted that the purpose of the bills is to make sure that all employers are treated fairly and the appropriate tax is collected at the point of sale.

Michigan law currently requires businesses to collect the use tax only if they maintain a “physical presence” in the state, but that definition has not been updated since 1992 and therefore predates the rise of e-commerce.

When citizens file their income taxes, they are supposed to report Internet transactions, however, proponents of the legislation claim most do not, either for lack of knowledge or “conveniently forgetting.” The Department of Treasury supported that claim, estimating that just fewer than 5 percent pay the use tax.

Meijer, Amway, Kroger, JCPenney, Home Depot, the Michigan Grocers Association, Target, Walmart, and a handful of small businesses submitted cards in support of the Senate legislation.

Senator Mike Kowall (R-White Lake Township), Chair of the Committee, said he expects to have continued hearings on the legislation.

posted by PAA Online , 11:04 AM
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House Panel Discusses Tax Reduction for Enhanced Oil Recovery

The House Energy and Technology Committee took testimony Tuesday on legislation aimed to encourage enhanced oil recovery techniques, specifically those involving liquid CO2. Supporters argue that doing so will make the state more competitive in oil recovery while at the same time reducing the amount of carbon dioxide in the atmosphere.

The first bill (HB 4885) would reduce the severance tax on oil and gas production that utilizes liquid carbon dioxide from 6.6 to 3.3 percent.

The enhanced recovery process involves pumping liquid carbon dioxide into previously capped wells in order to push previously unattainable oil to the surface. The CO2 would be stored underground rather than released into the atmosphere.

State Representative Aric Nesbitt (R-Lawton), the bill’s sponsor and Committee Chair, argued that the tax cut would encourage investment in Michigan by cutting capital costs while supplying tax revenue to either the Natural Resources Trust Fund or the State Parks Fund.

The other bills (HB 5254, HB 5255) sponsored by Representative Rick Outman (R-Six Lakes) and Representative Thomas Stallworth III (D-Detroit), would update the definition of a pipeline to include transportation of carbon dioxide. HB 5255 requires Public Service Commission oversight for the use of carbon dioxide in fuel recovery and clarifies the rules and regulations for transportation, allowing the use of eminent domain in constructing pipelines.

Representative David Nathan (D-Detroit) praised the legislation for supporting state recreational funds. He said that the funds could be used to maintain Belle Isle in Detroit, which was recently taken over by the state.

The Department of Environmental Quality (DEQ) also supports the legislation.

posted by PAA Online , 11:04 AM
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Campaign Update

State Senator Dave Robertson (R-Grand Blanc) declared Monday that he is running for re-election, as expected, in the new 14^th Senate District covering portions of southern Genesee and northwestern Oakland counties.

Jim Holtrop, Chair of the Ottawa County Board of Commissioners, announced on Monday he will run in the House 90^th House District, where State Representative Joe Haveman cannot seek re-election because of term limits. Mr. Holtrop, a Republican, served as Hudsonville mayor for 16 years. He stated that restoring funding to local governments lost due to cuts would be a top priority.

Southfield Mayor Brenda Lawrence officially announced her candidacy for the 14^th U.S. House District on Wednesday. Her entry ensures a packed Democratic primary to succeed U.S. Representative Gary Peters (D-Bloomfield Township), who is running for U.S. Senate.

Finally, Wayne County Commissioner Laura Cox announced on Tuesday she will seek the 19^th State House District where State Representative John Walsh (R-Livonia) cannot seek re-election because of term limits. Mr. Walsh and Livonia Mayor Jack Kirksey both support Ms. Cox, who is a Republican.

posted by PAA Online , 11:03 AM
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January 24th Survey Results

In the January 17^th edition, PAAdvisory asked: What do you think of the Governor’s proposal to potentially provide $350 million to the City of Detroit over 20 years?

a. I’m good with it – whatever it takes.

b. Not a penny.

c. Depends on what will be required of the City in return.

47 percent of respondents said their opinion of the Governor’s proposal depends on what will be required of the City in return (c). 38 percent answered (a). I’m good with it – whatever it takes. Only 15 percent answered (b). Not a penny.

posted by PAA Online , 11:02 AM
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PAAdvisory Briefs

Snyder Raises $5M in 2013, Spends $1 Million

Governor Rick Snyder will report a total of $5.08 million in fundraising for the year of 2013 with $4 million on hand, according to his campaign. Staff stated that the revenue did not include personal contributions from the Governor, nor did it include donations from political action committees. This figure is in stark contrast to Governor Snyder’s first two years in office in which fundraising efforts combined for a total of less than $1 million. Mr. Snyder has yet to state his intention to run for re-election.

Billboard Legislation Heading To Snyder

After three separate votes in the State House of Representatives, a bill to bring the state into compliance with federal billboard maintenance and construction standards is on its way to Governor Snyder’s desk. The bill (HB 4629) was amended in the State Senate and approved by the House to extend the decision period a company has to determine whether or not to upgrade their billboards from six months to one year.

Former State Representative Gino Polidori Passes

Former Democratic State Representative Gino Polidori died last weekend at the age of 72 after a 12-year battle with prostate cancer. Mr. Polidori served as the Dearborn Fire Chief for 22 years, on the City Council from 1997 until 2004, and then in the House from 2005-2010. Mr. Polidori was a Vietnam War Veteran. He chaired the House Military and Veterans Affairs Committee and Homeland Security Committee during his last two terms.

posted by PAA Online , 11:01 AM
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Question of the Week 1-31-14

posted by PAA Online , 10:39 AM
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