Minimum wage debate heats up
Efforts to find a compromise on the minimum wage issue and prevent the ballot proposal from moving forward have ramped up rapidly over the last week. As we reported last Friday the Michigan Senate passed legislation, SB 934, that repeals Michigan’s existing minimum wage law, replaces it with a gradual increase to $9.20 an hour by 2017 and indexes the rate to the lower of inflation or 4%. The bill’s intent is to kill an expected ballot proposal that would raise Michigan’s minimum wage to $10.10 an hour by 2017, index the rate to inflation and eliminate the tipped wage for restaurant employees.
MRA sent a memo to lawmakers on Tuesday morning expressing our concerns for the provision in the bill that ties the $9.20 rate to inflation. The House Government Operations Committee held a hearing on Wednesday and MRA’s President and CEO Jim Hallan testified in opposition to the inflation indicator and the $1.80 increase that occurs over less than three years.
We were encouraged by reports Wednesday evening that the House was planning to remove the index to inflation and reduce the overall rate increase. However, the House, Senate, and Governor must agree on the final version of the bill and a second hearing that had been scheduled for yesterday morning was postponed until Tuesday. MRA continues to follow the issue very closely and work with legislative leaders to come to a compromise that protects the retail industry from dangerous increases. Simply put, a legislative solution that does not include inflationary increases is a much better alternative than the proposed ballot initiative.
Senate proposes higher gas tax to generate transportation funding
The Senate Infrastructure Modernization Committee reported the revenue generating pieces of a transportation-funding package this week with several amendments. The largest change was an increase in the wholesale gas tax from the 6% the House suggested to a gradual increase to 15.5% by 2018. The wholesale gas tax would replace the existing 19 cents per gallon of gasoline and 15 cents per gallon of diesel fuel. Estimates equate the revised 15.5% wholesale gas tax with a 45-cent per gallon tax under the current system.
Another change was the elimination of a 10% reduction in registration fees for purchasers of new vehicles over three years. Senate Majority Leader Randy Richardville (R-Monroe) believes that with the Senate’s changes, the bill package will now generate $1.4-1.5 billion a year by 2018.
As with any tax increase, the proposal was met with a mixed response from both Republicans and Democrats many of whom had concerns with the new plan. The revenue generating bills are expected to come up on the floor next week as the budget nears completion. The Senate Infrastructure and Modernization Committee plan to tackle the remaining portions of the transportation package soon.
Sales tax increase discharged from committee
On Wednesday, Senate Majority Leader Randy Richardville (R-Monroe) unexpectedly discharged from committee SJR J, a joint resolution that would increase the state’s current 6% sales tax to 8%. By sending the bill straight to the Senate floor, Sen. Richardville keeps alive a sales tax hike as an option for transportation funding. The joint resolution did not see any movement this week and continues to be met with concern from both sides of the aisle.
Any increase in the state’s sales tax has a high threshold for adoption. SJR J would need to receive a two-thirds affirmative vote in each chamber and would then be placed on the ballot for voter approval. MRA continues to express strong opposition to any sales tax increase that widens the competitive disadvantage Michigan retailers face from online out-of-state retailers who are not required to collect the state’s sales tax.
Sales Tax holiday legislation introduced
Legislation was introduced in the Michigan Senate last week that would create three sales tax holidays in 2014.Senate Bill 943 applies to sales made at a physical location and specifies the price limitations and items eligible under each sales tax holiday.
The bill includes the following sales tax holidays:
- Pure Michigan tourism sales tax holiday would occur over the Memorial Day weekend (May 30 – June 1, 2014) for camping and fishing equipment and supplies;
- Back-to-school sales tax holiday over the Labor Day weekend (August 29 – September 1, 2014) for back-to-school clothing and school supplies; and
- Hunting sales tax holiday the weekend before opening day of regular deer season (November 7-9, 2014) for firearm equipment and supplies.
The bill is before the Senate Finance Committee and did not receive a hearing this week, meaning the Pure Michigan tourism sales tax holiday would need to be removed or pushed to next year.
On August 5, vote YES on Proposal 1
Yesterday, the Michigan Board of State Canvassers met and assigned the August ballot proposal that seeks to cement the Personal Property Tax reforms passed in 2012 as Proposal 1. On August 5, voters will be asked to approve an alternative funding source for any lost revenue that is a result of the reforms. Businesses with commercial personal property worth less than $80,000 will no longer have to pay personal property taxes.
MRA’s board of directors unanimously adopted a resolution in support of the proposal and supports efforts to encourage a YES vote on August 5. A “YES” vote on Proposal 1 at the August 5 election will remove Michigan’s Personal Property Tax and replace it with an alternate funding source. If Proposal 1 is defeated, the recent reforms will be repealed and the tax will be reinstated.
Stay connected to the efforts to encourage a YES vote on Proposal 1 by liking the Michigan Citizens for Strong and Safe Communities Facebook page and follow the campaign (@StrongSafeMI) on Twitter today.
Make sure to show your support for the campaign by signing up directly with the campaign and sharing your story of how the PPT has impacted your business.
Between now and the August 5 election, help spread the word to Vote YES on Proposal 1!
Other important items to note:
TAXES/REGULATIONS
- Legislation that exempts the transfer of a vehicle from the use tax act if the transfer occurs between immediate family members (HB 5261) passed the House and was referred to the Senate Finance Committee. Currently, a vehicle sale between immediate family members is exempt from Michigan’s sales tax.
ENERGY
- Legislation that would require utility companies to provide the Public Service Commission with its cost allocation information and rate design methods (HB 5476) passed the House on May 13. The bill was referred to the Senate Energy and Technology Committee.
GROCERY/CONVENIENCE
- HB 4997, a bill that prohibits sales of e-cigarettes to minors that passed the House two weeks ago was never referred to a committee and remains on the Senate floor.
PHARMACY
- SB 656, the MAC price reconsideration bill unanimously passed the House on May 21. The bill returns to the Senate for enrollment and will be presentation to the governor.
- The House Judiciary Committee reported amended legislation (HB 5404–5407) that would allow prescribers to prescribe and pharmacists to dispense opioid antagonists, used to treat overdoses of pain medication, to friends and family of individuals who may suffer an overdose.
- Legislation regulating pharmacy technician licensing (SB 92) was put on third reading. The bill will likely receive a vote next week.
- The HICA shortfall fix which includes a return to a HMO tax and a new, reduced HICA rate was reported by the House Appropriations Committee on May 14 and has been placed on third reading. SB 893 & 913 will likely receive a vote next week as the budget and budget-related bills are approved.
- Legislation that would allow substitution of FDA-designated biosimilar drug products for brand-name drugs by pharmacists was introduced on May 22. The bill, HB 5598 not been referred to a committee and is not yet available online. More details should be available on Tuesday.
- Legislation regulating compounding pharmacies and designating a pharmacist-in-charge for those pharmacies (SB 704 & 904) passed the Senate on May 13 and has been referred to the House Committee on Regulatory Reform. Please note that the Senate Health Policy debated the bills.
OTHER
- Legislation that modifies existing scrap tire regulations (SB 941–942) was introduced on May 15 and referred to the Senate Natural Resources Committee.
- The House and Senate named budget conferees on May 20. Conference committees will likely meet next week in order to meet Gov. Snyder’s June 1 budget deadline. Budgets take effect October 1, which is the beginning of the state’s fiscal year.
