Friday, December 19, 2014

Thus Endeth the Session

The lame ducks are returning to their lair after concluding a post-election session that could have been worse. A review of some of what passed, and did not pass...

Transportation: More Taxes for Working Families

Update – Michigan Chamber of Commerce President Rich Studley, who actively supported a gas-tax increase, first tweeted this morning the Chamber's opposition to the ballot proposal; an hour later, backed down by saying the Chamber won't take a position on the sales tax increase until next year.
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Early this morning an all-night legislative session wrapped up with the foundation of a transportation funding package. Final approval of some of the pieces is planned for later today. (If one piece of the puzzle is pulled, the entire deal collapses.)
The good news: there's a chance that Michigan's roads will finally begin to heal through the infusion of more than $1-billion in additional maintenance money.
The bad news: it only happens if voters, in a special election, agree to raise the income tax by 16.7%, adding a penny to every item dollar spent on goods. And, if passed, the bulk of the tax falls on the shoulders of middle-class families while the top 20% and business pay significantly less (in terms of their total income).
The key elements of the package jammed through the Legislature in the closing minutes of the 2013-14 session:
  • The sales tax on gasoline will, over time, be earmarked completely for transportation. Currently the sales tax on gas goes to schools and local government.
  • Public transportation will get a $112-million increase in funding, something urban Democrats love and most Republicans despise.
  • Voters will be asked in May to raise the sales tax from 6% to 7% to replace the money lost to schools and local government. 
  • Higher registration fees will be assessed against trucks weighing more than 26,000 pounds.
  • Owners of electric and hybrid vehicles will face additional fees (The Curmudgeon owns a Chevrolet Volt)
  • Services will remain immune from sales tax, so those tickets to MSU and UM football, along with tanning parlor fees and ski lift tickets, will be tax-free.
  • The state Earned Income Credit, which benefits lower-income working families, will be restored (after being gutted by the Snyder administration three years ago).
The compromise is being hailed by the Governor and legislative leaders:
  • "I feel good." - Rick Snyder
  • "This is a victory for Michigan residents." - House Democratic Leader Tim Greimel
  • The package deserves "enthusiasm and support" - Term-limited Senate Democratic Leader Gretchen Whitmer
  • "Days like today make it easier to say good-bye." - Whitmer again, on the sometimes rancorous  negotiations with legislative Republicans
Democrats were needed to get the 2/3 vote necessary for a constitutional amendment raising the sales tax, and leveraged that into critical guarantees: the EITC restoration, and guaranteed increased funding for K-12 education. Republicans hated that part of the deal but Greimel and Whitmer held strong.
So the roads will get fixed. But at what price?
The sales tax is, without question, the most regressive tax around. It falls most heavily on those with the least: the bottom 20% of income-earners pay a much higher percentage of their income as sales tax as those with higher incomes.
Source: Institute for Tax and Economic Policy
And, beginning next year, sales tax isn't deductible on your individual income tax returns (individuals who itemize currently have the option of deducting either state sales or income tax). Businesses pay fairly little in sales tax as a percentage of their gross revenues, and the expense is fully deductible on federal returns. 
The other problem with the package: it all hinges on voters agreeing to raise the sales tax to 7%. That would be tied for the second-highest state sales tax in the nation (along with Indiana and Mississippi), trailing only California's 7.5%. (Several states have local sales taxes which, combined with the state tax, bring the total to more than 7%. In Missouri and Oklahoma you can be taxed a whopping 10.85%.)
And there is no "Plan B." If the sales tax is defeated (and you can bet the Koch-funded Americans for Prosperity will campaign mightily for a 'no' vote), the new Legislature has to start all over again.

In Other News...

This portion of today's post will be updated as details trickle out of the capital.

Legalized Bigotry Bites the Dust

The deceptively named "Religious Freedom Restoration Act", which gave the official state okey-dokey to bigotry founded in "sincerely held personal beliefs" expired without a Senate vote. But count on it reappearing next session with the Legislature tilting even further right.
Ditto for another bill allowing adoption agencies to refuse to allow same-sex partners to adopt, a bill built on Attorney Bill Schuette's belief that orphans are better off in foster care than being exposed to The Gay.
A lot of credit goes to Senate Majority Leader Randy Richardville for keeping the cuckoo out of the final deliberations. Never thought I say it, but we're going to miss Richardville (term-limited) in the coming session. 

Medical Marijuana

Legislation which would have clarified the voter-approved medical marijuana law didn't make it, leaving uneven enforcement across Michigan and more opportunities to anti-pot Attorney General Bill Schuette to continue thumbing his nose at Michigan voters.

The Amazon.com Tax

The state will more aggressively collect sales tax on internet sales by companies that have a physical presence in Michigan (a.k.a. Amazon). It's called the "Main Street Fairness Act" because brick-and-mortar stores which pay all sorts of Michigan taxes start with a 6% price disadvantage when competing with non-tax-paying online retailers. 
Michigan law already requires consumers to voluntarily report online purchases, and pay the 6% tax, when filing their state tax returns. The law is unenforceable and generally ignored.

Election Rigging Bills Die

Two bills designed to make it more likely Republicans win elections have died ... for now.
  • Changing Michigan's presidential votes from "winner take all" in the electoral college to a plan awarding some of Michigan's votes to the second-place candidate
  • Moving the election of the Oakland County Executive from presidential election years to mid-term election years, when Democrats typically show up in smaller numbers
Also defeated was a bill which would have banned local communities from negotiation "community benefits packages" with developers who receive local tax incentives or grants. The bill was seen by many as the first step towards outlawing prevailing wage agreements between developers and local governments, something that would result in lower wages for construction workers.
All three bills were considered "toxic" to Democrats who made it clear passage of any of the three would likely have resulted in Democrats refusing to support the transportation package.

Teacher Evaluation Bills Die

Bipartisan legislation reforming the process for evaluating K-12 teachers died in Senate committee. The bills were supported by both school administrators and the Michigan Education Association. The bills would have beefed up professional development requirements for teachers, increased in-the-classroom evaluations by principals, and reduced reliance on standardized testing results.

Science Loses Out to Loggers

A bill which would prohibit the Department of Natural Resources from protecting natural resources is on its way to the Governor.
Pushed by Sen. Tom Casperson (R-Escanaba), whose family runs a logging business, the bill tells the DNR it cannot made land use decisions based on protecting biodiversity. Casperson's problem: protecting the ecosystem gets in the way of his family's profitable harvesting of timber.
From the Michigan Environmental Council's Brad Garmon:
"it's an anti-science bill that sends exactly the wrong message about the state's priorities and values, and threatens Michigan's reputation as a state that promotes and protects our forests, wildlife and outdoor recreation."
The best hope now is that Governor Snyder gets lobbied by former Governor William Milliken, a champion of environmentalism. Milliken's endorsement of Snyder played a major role in the latter's election four years ago. Legislation like this is anathema to his legacy, and should be vetoed.
Here's a click here for MEC's statement following Senate passage of the Casperson bill earlier this year.

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