Print Friendly and PDF

Dec. 4 | This Week in Government: Giuliani Testifies at Michigan Election Hearing; Shirkey on COVID Relief Package

Each week, the Detroit Regional Chamber’s Government Relations team, in partnership with Gongwer, will provide members with a collection of timely updates from both local and state governments. Stay in the know on the latest legislation, policy priorities, and more.

  1. House GOP Gives Giuliani Platform to Continue Election Falsehoods
  2. Municipalities Urging Legislature to Adopt Community Stabilization Plan
  3. Income Tax Reporting Bill Moves Out of House Committee
  4. Supreme Court May Be Asked to Rule on DHHS Epidemic Order Powers
  5. Shirkey: State COVID Package Likely Will Mirror Summer Relief

House GOP Gives Giuliani Platform to Continue Election Falsehoods

At the end of a four-plus hour hearing with Rudy Giuliani, a Republican lawmaker asked President Donald Trump’s lawyer if he came to Room 519 of the House Office Building to ask Michigan’s GOP-led Legislature to hand Trump the state’s 16 electoral college votes.

Giuliani responded: “I didn’t ask that.”

Then he went on a spiel about how the Legislature should take back its power because the state’s election was fraudulent – he claimed to show the panel a sampling of evidence showing such fraud, though it was not new information and many of those speaking to the House Oversight Committee have filed affidavits in lawsuits that have not succeeded for lack of credibility – and said, “don’t let it just get taken from us.”

Jenna Ellis, a legal advisor for the president, told legislators at the beginning of the committee: “At the end of the evidence and the testimony that we present today, we are going to be asking you to take action. … We will be asking you after taking a look at the testimony presented today to take that oath you have made as legislators very, very seriously. The law is on your side.”

But the law is on the side of Michigan voters who gave Democratic President-elect Joe Biden the state’s 16 electoral votes by a 154,000-vote margin. There has been no credible evidence of fraud. Even if Republicans feel their election workers were not treated fairly at the TCF Center where Detroit counted its absentee ballots, that is not fraud. And there are other workers the GOP chairs of both Oversight panels have not brought in who say Republican challengers were agitators looking for fraud, leading to cheers when they were ejected and other potentially rude reactions from those in the room.

Wednesday night’s meeting was a bizarre event that simply appeared to give the president’s campaign another official platform to make false claims about the election. It began with Democratic Rep. Darrin Camilleri (D-Brownstown Township) seeking to put Giuliani under oath, which was gaveled down by Chair Rep. Matt Hall (R-Emmett Township). Gaveling down Democratic members was the only control Hall appeared to have over the room as he essentially turned over control of much of the meeting to Giuliani.

Giuliani spent more than an hour questioning a woman named Jessy Jacob who told stories of what she perceived as fraud, but a judge and long-time election officials described as a misunderstanding of the process. As the next witnesses spoke it went more to a traditional committee format.

Mellissa Carone, who has also filed an affidavit a judge deemed not credible, who was a contractor for Dominion Voting Systems at the TCF Center, at one point said, “Democrats want to ruin people’s lives.” She also began talking back to Republican Rep. Steve Johnson of Wayland, who asked why the pollbook in Detroit was not off by 30,000 votes if she saw ballots being recounted that many times, by responding with: “What’d you guys do, take it and do something crazy with it?”

It is virtually unheard of for someone testifying before a legislative committee to begin interrupting and hectoring a member of the committee without getting severely admonished or ejected. Hall did neither.

And while Giuliani told Rep. Beau LaFave (R-Iron Mountain), the lawmaker who asked what Trump’s attorney was requesting, he was not asking for the Legislature to hand the president the state’s electoral votes, a letter from a Trump campaign official to GOP lawmakers earlier Wednesday said quite plainly: “The time for dramatic and Constitutional measures to right this injustice is now. A joint resolution from the State House and Senate can allow Michigan to send electors for Donald J. Trump to the Electoral College and save our country.”

Furthermore, prior to Wednesday’s committee meeting, Giuliani appeared with Michigan Republican Party Chair Laura Cox via Zoom to recap what precisely the president was alleging regarding voter fraud in Michigan and what he hoped the Legislature would do in response – that is, award the state’s 16 Electoral College votes to Trump rather than Biden.

The dubious legal theory is that because the U.S. Constitution says legislatures shall direct the manner in which states award their electoral votes that the Legislature could vote to award Michigan’s electoral votes to Trump. However, Michigan has a law – passed by the Legislature and signed by the Governor – that says the winner of the popular vote in Michigan receives its electoral votes. This many legal experts say is how the Legislature directed the manner in which the state would award electoral votes.

Some Republican lawmakers seemed queasy about Giuliani’s request, though. Johnson, a lawmaker who was among the first to ask for an investigation into the state’s election, asked why the president’s campaign did not request a recount, which could have proven the claims if they were in fact true.

“Looking at the votes in Detroit. The votes that are reported. In 2016, Hillary Clinton received 234,871 votes. Biden, this year, in a high, record turnout year, 233,908. That means Biden received 1,000 less votes than Hillary Clinton, one of the most despised candidates of all time,’ Mr. Johnson said. “Trump, 2016, 7,682 votes. 2020, 12,654, a 5,000-vote increase. So, Mr. Giuliani my question to you is looking at all of the issues with Detroit, and there are a lot of them, how can we still justify that there was that mass cheating when still Trump’s numbers increased by net 5% versus the year before. If someone were cheating with those numbers not go in the exact opposite direction?”

Giuliani responded by saying maybe Trump would have received 10% more votes out of the city if it were a valid election.

Rep. Aaron Miller (R-Sturgis), who is not a member of the committee, watched the meeting and said he was “utterly embarrassed” by it.

“If Rudy Giuliani wants to come in and be a credible attorney leading this questioning, he would avoid, this is just Aaron Miller’s book, he would avoid going crazy and making all these political accusations because what it says to me as a political observer is he left the reservation and he went for insults,” he said. “He’s wrecking his credibility as an attorney who wants to talk about the facts.”

Miller credited Johnson as a hero for his line of questioning that shows the numbers simply do not support fraud occurred.

“I’d say congrats to President Trump, he did something that very few Republicans can do and that’s overperform the Detroit Republican base. Where’s the effect?” he said. “If I had the power to steal an election, I’m going to go full bore, and I just can’t help myself, I’m going to take all the categories you can possibly imagine. I’m going to get the state House, I’m going to get all the local races I possibly can. The evidence just does not point to their being an actual result that was accomplished by fraud in the first place.”

Former Rep. Martin Howrylak, a Troy Republican, called the meeting out of control.

“It’s rather sad actually,” he tweeted. “Nearly five hours of delusion.”

Clerks and election officials from around the state also tweeted along Wednesday on falsehoods they heard during the committee. Democrats attempted to push back as well, but members were limited to one question each.

Rep. Cynthia Johnson (D-Detroit) asked Giuliani at the end of the hearing if he thought he was an honest man before being gaveled down. She was also gaveled down when wanting to speak – but not really asking a question – though Giuliani had called Detroit one of the most corrupt cities in the country. Johnson has lived in the city her whole life and is a representative there.

“You’re allowing people to come in here and lie. And I know they’re lying,” Johnson said at one point.

As the case is for many hearings under a GOP-majority, Republican members were given more latitude. Their members were allowed to make statements without asking questions.

Camilleri blasted the hearing later Wednesday after it ended, saying Republicans on the committee know, “Mr. Giuliani is not capable of delivering evidence when none exists.”

“Throughout this hearing, my colleagues continued to speak in circles about ‘getting to the bottom of this,'” he said. “But we’re already at the bottom, and there’s nothing down here. There’s no evidence of what Mr. Giuliani and the president claim. Down here at the bottom of all this, it’s just a dark, empty place.”


Municipalities Urging Legislature to Adopt Community Stabilization Plan

Changes to the state’s Open Meetings Act, how income tax from at-home workers is collected and addressing property tax loss are the main areas of need municipal leaders say must be addressed by the Legislature to keep communities afloat in the coming months as the state continues to contend with the coronavirus.

During a round table with local leaders and members of the Michigan Municipal League on Monday, mayors and community partners from across the state maintained the Legislature must act in passing a COVID-19 relief package or risk pushing cities into financial distress resulting in budgetary cuts, layoffs, or more.

Of the most pressing were three areas: income tax loss, property tax loss, and amending the extended changes to the Open Meetings Act.

The ability to meet virtually and still comply with the Open Meetings Act was approved earlier this year in October, though it does have a finite end date of Dec. 31 should no further action be taken. As it is expected a vaccine will not become widely available and the pandemic will still be a health crisis after next month, local leaders are urging the Legislature to again extend the ability to meet virtually though they did not offer an expanded timeframe.

There’s also the issue of a municipality’s ability to collect local income tax. As non-essential employees are mostly working from home, and are expected to continue doing so into 2021, current state law does not allow municipalities to collect income taxes from those workers on days they are not working in an employer’s physical locations.

Coupled with the losses in tax collection from unemployment income for local governments, it is projected that Michigan’s 24 local income tax communities – which include the likes of Detroit, East Lansing, Grand Rapids, Flint and more – will lose up to $250 million in revenue this year alone, according to estimates from the Department of Treasury.

The MML is calling for the Legislature to pass a law for these communities to continue collecting income tax as if the virus were not a factor. It’s also asking for lawmakers to restore the original allowance within the Headlee Amendment for upwards and downwards fluctuations in millage rates based on actual inflationary activity and allow communities to truly benefit from increases in real estate values.

By doing this, MML believes the change will allow Proposal A and the Headlee amendment to “work as intended” by limiting existing millage and value growth to inflation but allow for the economic catch up after sales. This is largely due to the fact COVID-19 has caused permanent business closures and has reduced occupancy for retail or commercial office space, which could in turn lead to declining property values and inevitable cuts to property tax revenue.

Should that not happen, cities could be staring down the possibility of drastic cuts to public safety and delays to, or outright cancellations of, infrastructure projects.

“Cities went into this crisis, not in great shape. We’ve faced, still, aftermaths from the Great Recession (with) many communities still digging out from that crisis over a decade ago,” said Eric Scorsone, with the Michigan State University Center for Local Government Finance and Policy. “Coming into this new crisis … 2020 wasn’t as bad as it could have been because of federal aid. Federal aid did help us offset some of the higher costs of running city government during the pandemic, however 2021 looks to be quite challenging – 2022 even, as well.”

The coming years are “going to be some of the toughest times facing municipal governments, certainly since the Great Recession,” Scorsone went on to say, adding that not only was movement at the federal level necessary to combat that as much as possible but at the state level, too.

“That (aid) needs to be done soon, otherwise we are going to see the impacts coming very quickly,” he said.

Asked later if panelists – which included Grand Rapids Mayor Rosalynn Bliss, Port Huron Mayor Pauline Repp, and Westland Mayor William Wild, who also serves as the League’s board president – thought they could count on timely federal aid, hopes did not seem high.

“I don’t have a lot of high hopes that we’re going to get in another relief package that provides direct support with flexibility to cities,” Bliss said. “And so, for all of us that work in local government and who represent cities, relying on D.C. to come through with the solution isn’t … the best way to move forward. We need to act now, and we need to do it in partnership with the state. We have some real solutions here that don’t raise taxes that can have an immediate impact on our city’s positive impacts in our cities as we move forward.”


Income Tax Reporting Bill Moves Out of House Committee

A bill providing a method to report federal tax adjustments associated with partner-level audits, which changed on account of new federal legislation, was moved out of a House committee Tuesday evening.

At least one supporter of SB 1035, sponsored by Sen. Jim Runestad (R-White Lake), and Department of Treasury staff gave testimony Tuesday before legislators on the House Tax Policy Committee referred the bill to the House Ways and Means Committee.

The Senate passed the bill 38-0 in late September.

Legislators also took testimony on two others, SB 1097 and SB 970, but did not vote on either bill. Several other bills on the agenda were not addressed before the meeting was adjourned.

On SB 1035, Dan Papineau, director of tax policy with the Michigan Chamber of Commerce, said the amendments requested are lengthy but simple in concept.

Congress in 2015 enacted changes to how partnerships were audited by the Internal Revenue Service, Papineau said. The new law, instead of auditing partnerships at the individual partner level, allows the IRS to audit just one partnership as opposed to, for example, potentially 1,000 partners at the entity level.

“So due to that change at the federal level, Michigan, and all states for that matter, will need to figure out how to handle an IRS audit for a partnership that changes a tax payer’s state tax liability under this new scenario,” he said. “Based on model legislation developed by the multi-state tax commission for states to adopt, Senate Bill 1035 establishes a process to rectify situations for federal audits and changes to taxpayer state tax liability.”

The bill would be good for Michigan taxpayers, Papineau added, because it puts in place a single process they can follow when discrepancies are discovered.

“And the Department (of) Treasury likes it because it will provide an efficient way to collect taxes owed to them where one currently does not exist,” he said. “We’ve worked closely with the Department to ensure the language fits their needs and appreciate their willingness to help get this problem solved and the legislation adopted.”

David Foos, an administrative law specialist in the tax policy division of Treasury, said that he agreed, as the bill would help simplify many of the tax reporting obligations that partners may have while simplifying some of the obligations that partnerships may have to communicate that they otherwise would have to pool from individual partners.

“And then obviously, it simplifies everything on the department’s end because we’re getting one centralized return and one payment, rather than, you know, hundreds or even thousands of different returns resulting from these various partnership adjustments and administrative adjustment requests that are made at the federal level,” Foos said.

Other businesses testified on SB 970, also sponsored by Runestad, and a bill sponsored by Sen. Wayne Schmidt (R-Traverse City), SB 1097.

Runestad’s bill would require out-of-state tobacco vendors to remit tobacco excises taxes in addition to state sales tax and would also require licensure to ensure compliance.

Some out-of-state tobacco sellers are not currently licensed in order to remit excise tax and have objected to doing so even though, as Treasury legislative liaison Paul Connors noted in testimony, they should already be licensed if they’re selling products to Michigan.

Connors also noted – upon questioning from Rep. Steve Johnson (R-Wayland) – that the mechanism of licensure is the only one available in the Tobacco Products Tax Act that allows the state to collect excise tax on out-of-state cigars and tobacco products.

Johnson had called the need for licensure to pay excise tax on top of sales tax “convoluted,” but Connors said that the law was already convoluted and that Treasury would welcome conversations to rewrite what he said was an antiquated act written before the rise of mail-order catalogs and the Internet marketplace.

However, that wasn’t the conversation at hand, nor did the bill address those issues, Connors said, adding that this would make clear that such out-of-state vendors need to be licensed to pay state excise tax.

SB 1097 would modify the time frame required for the completion of certain multiphase construction projects under the Michigan Business Tax Act. The bill was inspired, Schmidt said, by contractor Great Lakes Capital, which would not be able to complete a new $25 million mixed-use development in downtown Traverse City and remediation of the contaminated site without the proposed 18-month credit extension.

Great Lakes Capital Managing Director and Principal Jeff Smoke spoke during the meeting and confirmed that the project would not move forward if the extension was not granted.


Supreme Court May Be Asked to Rule on DHHS Epidemic Order Powers

A federal judge Wednesday said he is considering sending certified questions to the Michigan Supreme Court on whether the director of the Department of Health and Human Services’ power to issue emergency epidemic orders violates the non-delegation clause of the Michigan Constitution.

The mention of sending two certified questions to the state’s highest court came in a Wednesday order from Judge Paul Maloney of the U.S. District Court for the Western District of Michigan in Michigan Restaurant and Lodging Association v. Gordon(USWDM Docket No. 20-01104).

Maloney denied the MRLA’s motion for preliminary injunction, which sought to end the temporary state-ordered closure of bars and restaurants to help curb the spread of the coronavirus.

MRLA had contended that bars and restaurants were being treated unfairly and differently than similarly situated establishments that were not closed in the Nov. 15 order issued by DHHS Director Robert Gordon that shuttered them through Dec. 8.

The judge found the department’s reasoning for the order convincing and that groups tend to linger more in those settings than transitional environments like a food court or airport dining area.

In a statement, Gordon said he was happy with the ruling and that it keeps in place measures “that will save lives by limiting specific indoor gatherings that greatly increase the risk of COVID-19 spread.”

“The science is settled: public health experts from around the nation and world say these types of actions must be taken to prevent the health care system from being overwhelmed by COVID-19 cases,” Gordon said. “These protocols on specific indoor gatherings, along with wearing face masks, social distancing and frequent handwashing, give Michigan a fact-based approach to slow the spread of COVID-19 so we can return to a strong economy and get back to normal safely as soon as we can.”

It is unclear if the order will be extended as case numbers have fluctuated since the order’s issuance from alarming record highs to cooling off following the Thanksgiving holiday.

The MRLA had also argued Gordon’s authority to issue the order and others like it under the Public Health Code was an unconstitutional grant of legislative authority.

The argument mirrors that of the Republican-led Michigan Legislature’s against Gov. Gretchen Whitmer and her use of the Emergency Powers of the Governor Act to renew states of emergency during the pandemic without legislative assent – an action that allowed her to issue executive orders to curb the spread of COVID-19.

Maloney was the judge who sent certified questions to the high court earlier this year asking whether Gov. Whitmer was within her authority under the EPGA and another law, the Emergency Management Act, to do so and if the laws ran afoul of the non-delegation clause.

The high court ruled 4-3 then that the EPGA indeed was an unconstitutional delegation.

Since that ruling, Gov. Whitmer has relied on Gordon’s authority under the Public Health Code to pick up the executive branch’s pandemic response.

As he did with the EPGA challenge, Maloney opted not to issue a ruling on Gordon’s authority because the state courts had not yet evaluated the issue. Instead, the judge said he was considering sending a new set of certified questions so the Michigan Supreme Court could examine the claims (subscribers please note: an earlier News Update erroneously reported that Maloney had ruled on the non-delegation clause claim).

The proposed questions include:

  • Is M.C.L. § 333.2253(1) an impermissible delegation of legislative authority such that it violates the non-delegation clause of the Michigan Constitution?
  • If M.C.L. § 333.2253(1) is a permissible delegation of legislative authority, does Michigan Department of Health and Human Services Director Robert Gordon possess the authority under that statute to develop and promulgate a comprehensive regulatory scheme, such as the Nov. 15 Emergency Order?

Maloney noted that he would schedule a hearing for 1:30 p.m. Thursday, Dec. 17, to consider whether certification would be appropriate. Briefs on the matter are due no later than noon on Dec. 11.

In a statement, MRLA President and CEO Justin Winslow said his group was disappointed with the order but appreciated Maloney’s understanding that the order is harming bars and restaurant owners.

“While we are disappointed with today’s ruling, it is important to note what Judge Maloney explicitly acknowledged in his ruling, stating that ‘Michigan restaurants are at risk of, or have already suffered, irreparable harm under Director Gordon’s EO,'” Winslow said. “It is in that vein that we will now transition our efforts to preventing an extension of the MDHHS Order beyond Dec. 8 and call on Director Gordon to provide clear and specific data to justify the sustained closure of restaurants across the state. Presumptions and generalizations will not suffice and should no longer be tolerated given the significant human toll they have wrought from closing restaurants for a second time this year.”

Winslow added: “Moreover, we believe this industry, like any other that has been forced to close, deserves a clear pathway to the full reintegration of their business, with reliable criteria and metrics to be met from Director Gordon to facilitate that reintegration. We have ideas and reasonable solutions to offer and reiterate our willingness to engage in a substantive dialogue with this administration should they wish to do the same.”


Shirkey: State COVID Package Likely Will Mirror Summer Relief

Senate Majority Leader Mike Shirkey said in a Wednesday television interview he anticipates any state negotiated coronavirus relief package will likely target businesses and health care workers and be similar to relief passed earlier this summer.

Speaking on JTV’s “The Bart Hawley Show,” Shirkey (R-Clarklake) also said he anticipates, at most, that the Legislature would provide one additional temporary extension of unemployment benefits from 20 weeks to 26 weeks, not a permanent move to 26 weeks as Gov. Gretchen Whitmer and Democrats have called for to be considered.

“I think we will end up sending a package to the Governor that will include additional support for supplies,” Shirkey said. “I think we will end up sending to the Governor … it will include some support for key health care workers and some of the workers associated with the industries that were, I think, misdirected and closed down, specifically restaurants and bowling alleys and theaters, for instance.”

He also expressed an unwillingness to permanently undo the previous legislative reduction of 26 weeks of unemployment insurance to 20 weeks.

“We will not extend unemployment benefits to 26 weeks for perpetuity, but we may indeed consider doing it one more time to 26 weeks because of what workers in Michigan are experiencing today with some of these shutdowns,” Shirkey said.

Shirkey also took aim at Gov. Whitmer’s administration and the Department of Health and Human Services over the recent three-week shutdown of bars, restaurants, and other facilities.

He said in Monday’s Quadrant meeting between legislative leadership and the Governor’s office, conducted via Zoom, he asked about the administration’s plan once the three-week shutdown expires at midnight Dec. 9 and was told that the administration is still weighing the data. He said there has been a slight flattening of the curve, but infection rates are still high.

“They started to try to convince me that that was a causation to the shutdown of restaurants, which is crap, because there’s no way that that order could have had that kind of effect that soon,” Shirkey said. “I think what we’re going to find is that the shutdown … had no effect, and what really needs to occur is people just do what we all know are the right things to do individually.”

He insisted, as he had on numerous occasions, said restaurants and other businesses have been following orders placed on them and are being unfairly targeted.

Shirkey added he believes DHHS does not have the authority to shut down entire industries in the state unilaterally in an attempt to reduce the spread of COVID-19. He said the Republican-controlled Legislature might send bills to the governor’s desk testing her contention that DHHS had the ability to do so but did not provide further details.

He said individual businesses could likely be shut down by DHHS in conjunction with local health authorities for violating the law or local health guidelines, adding the same was likely the case with the Michigan Occupational Safety and Health Administration.

In recent interviews, Shirkey has described details of his visit to the White House to speak with President Donald Trump. He had previously said that the meeting was about 90 minutes, during which he and the other Republican lawmakers that made the trip to Washington informed the president of the state’s election laws and said they were not asked to undermine the state’s elections in his favor.

The majority leader on Wednesday also provided further details about how the conversation went when Trump called him at home with the invitation to visit Washington, D.C. Trump has, unsuccessfully so far, raised legal challenges in Michigan and other states that voted for Democratic president-elect Joe Biden.

Shirkey said he informed the president of the state’s election laws but was convinced to come out and meet because Trump insisted he would have new information to present. He said he told the president the state’s election law is clear on how the state awards presidential electors and that he would not break the law. He said a significant court ruling would be the only way that the Legislature would even consider any other methods of awarding electors.

He was asked if Rudy Giuliani, Trump’s personal lawyer and lead lawyer in his election lawsuits, might present anything new during Wednesday’s House Oversight Committee hearing. Shirkey said he would be watching the hearing, but his expectation was it will be similar to what has been in headlines nationally in recent weeks.

Shirkey said members are now going over the information presented in Tuesday’s seven-hour Senate Oversight Committee hearing and it is possible that Chris Thomas, the former Bureau of Elections director, may be asked to testify regarding the ballot counting at the TCF Center in Detroit, which has been the center of Republicans’ complaints about the Nov. 3 elections.

So far, none of the claims of voter fraud or irregularities in the vote tabulation in Detroit presented by dozens of conservative poll challengers in Tuesday’s hearing nor those included in any of the Trump campaign’s lawsuits have been proven.