Lame duck recap - Michigan Retailers Association

Legislature wraps up, heads home for the year

Around 8 a.m. Friday morning the legislature wrapped up a marathon four weeks of lame duck session – the longest in Michigan history. In total, 408 bills were sent to the governor’s desk – nearly double the average number approved in lame duck. As we’ve noted in previous messages, many of the issues MRA was watching were resolved early. Below is a tally and review of the items we were following in lame duck and whether those issues were approved or failed. All of the 2018 legislative action will be recapped in our annual Legislative Year-End Report, which also previews 2019 issues. Look for that report in early February.

The new legislature will convene on Jan. 9 under new leadership and with 53 new lawmakers out of a total 148. After the legislature adjourned, Gov.-elect Whitmer promptly released a list of key new administration officials. Of note, Rachael Eubanks, a current Michigan Public Service Commission member, will be the new state treasurer and Chris Kolb, president of the Michigan Environmental Council, will be the new state budget director. Eubanks worked in public finance for 13 years and was appointed to the Michigan Public Service Commission by Gov. Snyder.

From all of us here at MRA, we wish you a happy new year!

**APPROVED*:**

(*Unless otherwise noted, these bills were approved by the legislature and are now headed to the governor’s desk for approval.)

GROCERY

Alcohol reforms including retail coupons – (SUPPORT) SB 1154-1168 make several changes to tasting room operations and allow retail sales at multiple tasting rooms operated by manufacturers. SB 1181 would prohibit cooperative advertising (joint efforts between retailers, wholesalers, out-of-state sellers, and manufacturers) and also allow a retailer to offer instant rebate coupons on purchases of alcoholic liquor.
Beer and wine license quotas in rural areas – (SUPPORT) A bill introduced to correct an oversight in current law, now clarifies cities, villages and townships with less than 1,000 residents can assign one SDM (beer and wine) license to a retail business. HB 5719 was signed into law as Public Act 386 of 2018 on Dec. 19.
Benefit eligibility – (NO POSITION) A bill that would extend the timeframe government assistance benefits are available to an individual after the individual gets married was approved by the Legislature. SB 752 would allow an individual to continue receiving benefits for an additional 18 months effective on Jan. 1, 2019.
Cage-free eggs – (NO POSITION) SB 660 will require all eggs sold in Michigan meet certain “cage-free” standards by Oct. 12, 2025. The bill was sponsored by the Senate Majority Leader.
Cigar tax cap – (SUPPORT) SB 304 removes the current sunset on the 50-cent per cigar tax cap. The tax cap is important to keep prices at Michigan retailers competitive with out-of-state retailers and online sales.
Water sales at wineries – (NO POSITION) HB 5606 clarifies confusion in certain communities that had interpreted special-use permits for wine tasting rooms to mean the business can only sell the alcohol they produce and no other beverages. The bill clarifies that businesses can sell pop or water to customers who choose not to drink alcohol.

LABOR

Minimum wage changes – (SUPPORT) SB 1171 revised the earlier adopted minimum wage ballot proposal to increase the minimum wage to $12 over 12 years ($9.45 by 2019 then increase 23-cents per year until it reaches $12.05 by 2030 instead of by 2024). The state’s current minimum wage is $9.25. The bill also removes the (current) inflationary increase each year after $12.05 is reached. Tipped wages remain a percentage of the state’s minimum wage. Gov. Snyder signed into law as Public Act 368 of 2018 on Dec. 13.
Paid medical leave changes – (SUPPORT) SB 1175 modifies the paid leave act to reflect the federal, Family Medical Leave Act (FMLA) definitions which only covers employers with more than 50 employees and reduces the number of hours earned from 1 hour for every 30 hours of work to 1 hour earned per 35 hours. It also reduces the minimum number hours of earned time that employers must allow employees from 72 hours to 40. Finally, seasonal workers, part time workers and variable hour workers would not be covered by the requirement. Snyder signed into law as Public Act 368 of 2018 on Dec. 13.

REGULATIONS

Ballot proposal reforms – (SUPPORT) Legislation that aligns Michigan with other states that require geographic disbursement of signatures was quickly approved by the legislature in the last two weeks of session. HB 6595 changes how signatures are gathered for ballot proposals or legislative initiatives by requiring that not more than 15 percent come from any one congressional district. It would also require a 100-word summary of each proposal to help inform voters, indicate whether petition signature circulators are paid or volunteering, and set penalties and guidelines for misconduct. The bill seeks to prevent petition signature fraud and add transparency to the ballot proposal signature collection process.
Dog sales from breeders – (NO POSITION) HB 5916-5918 would set stricter standards for pet shops selling dogs while prohibiting local bans on the sale of dogs that drive pet sales underground. The bills will not affect pet adoptions that occur at stores.
Drones – (NEUTRAL) A package of bills, HB 5494-5496, SB 917 and SB 922, that seeks to codify several of the recommendations made by the Unmanned Aerial Taskforce was approved before the legislature adjourned. They clarify that a drone is an extension of self for purposes of any crimes committed, prohibit using them in a manner to interfere with key facilities (certain manufacturing facilities, refineries, utility facilities, water treatment facilities and others as defined under the Michigan Penal Code) and establish an aeronautics commission. Knowingly using a drone to interfere with the operations of a key facility would be a felony punishable by four years in jail and/or a $2,500 fine.
Fireworks – (NEUTRAL) Bipartisan legislation approved as HB 5939–5941 adds several new requirements on sellers of both consumer-grade (large) fireworks and low-impact fireworks. A new, $5,000 bond would be required for retailers selling fireworks from a non-permanent structure. Locations selling only low-impact fireworks would be required to pay a new $50 per location license fee (not to exceed $1,000 for retailers with multiple locations) and lowers the penalty for failing to report fireworks safety fees (the six percent fee on all fireworks sales) for a first offense from $10,000 to $5,000. If the fees are reported and paid within 30 days, the fine would be waived. The bills would also prohibit the transfer of a location between June 1 – July 31, require the installation of an automatic sprinkler system in permanent locations, add a new posting requirement, modify the days and hours local ordinances can limit fireworks usage, prohibit the use of sky lanterns, and allow the governor to place weather-related bans on the use of fireworks. MRA went neutral on the bills after the fees and fines were reduced.
Gift cards – (NEUTRAL) SB 729 clarifies that third-party gift cards sold often on kiosks near checkout lanes, just like gift cards sold directly by retailers to be used at their store, are not subject to the regulations under the Money Transmission Services Act. The bills were introduced after a state department attempted to regulate them under the act.
No stricter than federal rules – (SUPPORT) HB 4205 would prohibit a state agency from promulgating a rule, except an emergency rule, that is stricter than the applicable federal standard unless the agency director determines there is “a clear and convincing need to exceed” that federal standard.

TAXES

Federal tax decoupling – (SUPPORT) SB 1097 would modify the state’s Income Tax Act to exclude the IRS limits on business interest expense deductions that came into effect after the Federal Tax Cuts and Jobs Act. The bill would be retroactive and effective January 1, 2018 and would apply to all business activity occurring after Dec. 31, 2017. Business interest expenses are generally deductible in the year in which the interest was paid or accrued. After January 1, 2022, the federal adjustment for depreciation, amortization, and depletion is eliminated. By excluding the federal requirements, state income taxes will retain the deduction.
Principal shopping district assessment areas – (SUPPORT) HB 5325 & 5720 will allow residential real property located in a Principal Shopping District (PSD) to be included in special assessments that benefit the PSD and those properties. This will increase revenue for PSDs.
Prohibiting special assessment districts based on public safety call volume – (SUPPORT) SB 1235 will prevent local governments from making businesses pay more for public safety based on the number of calls a business makes or has made from its location. This became an issue in West Michigan where local units of government created special assessment districts to raise fees on certain businesses that had more calls to police made from their location. The bill instead requires city councils and township boards to obtain voter approval annually for special assessments.
Property assessing practices – (NEUTRAL) HB 6049, approved by the legislature in mid-December, is designed to improve the quality of property tax assessments by allowing contiguous cities or townships to form a single board of review and requiring audits by the State Tax Commission to ensure they meet certain requirements.
Tax Tribunal procedures – (NO POSITION) Before adjourning, the legislature approved a bill that seeks to make various revisions to the Michigan Tax Tribunal. HB 4412 would modify tribunal membership, current compensation for tribunal members, limit tribunal members’ other business activities, clarify the disqualification process from hearings, change deadlines, increase the taxable value that can be reviewed in the small claims division, and allow the tribunal to promulgate rules regarding ethical standards.
Voluntary city income tax collection (NEUTRAL) – HB 4618 and HB 5025 outline a voluntary city income tax collection process for employers. If the employer volunteers to remit, employees cannot opt-out. It only applies to the City of Detroit.

FAILED:

GROCERY

Pregnancy and alcohol warning posting requirements – (NEUTRAL) HB 6086 would require retailers selling alcohol to post a warning of the potential problems of drinking alcohol during pregnancy. The bill was introduced to raise awareness of fetal alcohol syndrome and would add the warning to an existing poster. MRA became neutral upon learning it would not be a new posting requirement.
Voluntary retail discounts/returns of spirits for special licensees – (NEUTRAL) Legislation that would have allowed fairs and festivals with a special alcohol license to receive discounts from retailers and return unopened, unused product to retailers died in the Senate. The bills would have allowed retailers to voluntarily offer discounts and accept returns from certain special license holders.

REGULATIONS

Comprehensive recycling – (SUPPORT) Legislation to repeal Michigan’s 40-year old bottle deposit law never gained traction in the final weeks of session. HB 6532-6536 were introduced to start the conversation about much-needed changes and review of the law.
Data breach notification changes – (SUPPORT WITH SENATE CHANGES) After weeks of negotiations, MRA had successfully added several amendments to legislation updating Michigan’s notification requirements in the event residents’ information is compromised as a result of a data breach. The addition of the amendments got MRA and nearly all other stakeholders to be supportive of HB 6405-6406 but the bill sponsor objected to the changes and the bills died.
Emotional support animal limits – (NO POSITION) Legislation that would have established a process for certifying the need for an emotional support animal by health care providers based in Michigan never got committee approval. SB 663 defined an emotional support animal as an animal that assists a person who has a disability-related need for that support.

PHARMACY

Manufacturer drug cost transparency – (NO POSITION) HB 5223 would have required drug manufacturers to file an annual report detailing their expenses related to producing drugs that cost $10,000 or more for an annual course of treatment. The bill was never reported from committee.
PBM regulation – (NO POSITION) Legislation that would have added new regulations on Pharmacy Benefit Managers (PBMs) never received a vote in the House and died.

TAXES

“Rain tax” – (OPPOSE) MRA joined other business advocacy groups in opposing legislation, SB 756, that would have removed the legal obstacles to storm water utility taxes/fees. Storm water utility taxes or fees are seen as a way to increase taxes without having to overcome the hurdle of a public vote and are essentially a “rain tax.”
Waste disposal fee increase – (NO POSITION) SB 943 would have increased trash-disposal fees in an attempt to raise funds for environmental cleanup and other underfunded environmental issues. The legislation was a priority for Gov. Snyder but never received serious consideration in either chamber. Instead, the legislature shifted funds from the increase in sales tax revenue towards cleanup activities.