Detroit Regional Chamber > Advocacy > Feb. 19 | This Week in Government: PPE Sales Tax Exemption Progress; Restaurant Group Shares Reopen Plan

Feb. 19 | This Week in Government: PPE Sales Tax Exemption Progress; Restaurant Group Shares Reopen Plan

February 19, 2021
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. PPE Sales Tax Exemption Up Before House Panel
  2. Senate Could Vote on COVID Relief Next Week; Gov Wants Negotiations
  3. Whitmer Rebuffs Evans, Hackel Criticism on Vaccine Distribution
  4. Restaurant Group Pushes for Plan to Fully Reopen
  5. UIA: Borrowing Not Needed in 2021 to Restore Michigan’s Trust Fund

PPE Sales Tax Exemption Up Before House Panel

Bipartisan legislation providing businesses a sales and use tax exemption for personal protective equipment purchased to help protect employees and for other uses was discussed by the House Rules and Competitiveness Committee on Thursday.

HB 4224 and HB 4225 are sponsored by Rep. Jim Lilly (R-Park Township) and Rep. Sarah Anthony (D-Lansing). Under the bills, businesses would be exempt from paying sales and use tax from March 20, 2020, through Dec. 31, 2021, on PPE designed to protect employees and customers from the coronavirus.

For businesses to qualify for the retroactive piece, which would come from a refund issued by the Department of Treasury, they would have to submit a COVID-19 safety protocol plan.

“Businesses around our state are facing unprecedented hurdles to stay open and the unexpected expense of PPE and sanitation equipment is certainly among those challenges,” Lilly said. “These bills are aimed at providing some relief to employers who are keeping their employees safe while continuing their business activity.”

Anthony said she has been impressed with employers and businesses that have persevered and kept their doors open during the pandemic.

“The reality is there is a significant cost in order to actually implement those changes needed to operate in a global pandemic,” she said. “They are doing everything they can. They are doing it right. They are following the rules. And I feel like it is now our responsibility to extend support.”

Business groups, including the Detroit Regional Chamber, the Lansing Regional Chamber, and the Michigan Chamber of Commerce, were in support of the legislation.

The Department of Treasury does not have a position on the legislation, Aaron Keel told the committee.

He said given the price tag of the bill, which Treasury put at $18 million for the entirety of the exemption, it should be part of a larger budget conversation. He said the concern is around the price tag and not necessarily the policy being proposed.

“Treasury wants to be a partner in identifying and assisting businesses that need the most relief,” he said. “And we fully recognize the economic struggle that many are going through right now.”

Keel said the agency looks forward to continuing the conversation.

The House Fiscal Agency said the bills would cost up to $5 million in the 2019-20 fiscal year, up to $10 million in the 2020-21 fiscal year, and up to $4 million in the 2021-22 fiscal year.

Rep. John Damoose (R-Harbor Springs) said the state of Michigan should not be looking at the sale of PPE as a money-generator for the state.

“To me, this seems like…these bills seem like the biggest no-brainer I’ve ever heard,” he said.

Lilly said he would be encouraging House Republican leadership to include payments for these bills on the budget side and called on Gov. Gretchen Whitmer to do the same as her administration works on the budget and supplemental spending bills.

The committee did not act on the legislation on Thursday.


Senate Could Vote on COVID Relief Next Week; Gov Wants Negotiations

Gov. Gretchen Whitmer again called on the GOP-controlled Legislature to fully release federal dollars to help the state respond to the coronavirus pandemic and negotiate with the administration while the Senate Appropriations Committee chair said the legislative chambers are working out their differences first.

Sen. Jim Stamas (R-Midland) said conversations are still ongoing with House Appropriations Committee Chair Rep. Thomas Albert (R-Lowell) and some areas of difference still need to be hammered out on the supplemental.

Stamas declined to provide specifics on what areas are still being negotiated.

“My hope is on this supplemental is to kick something out of the Senate next week,” Stamas said.

Whether it will be the Senate supplemental or a substituted version of the House legislation has not yet been decided, he added.

“We’ve not had a lot of discussions with the administration on this one,” Stamas said.

He said his hope is to begin to ramp up those discussions prior to the vote in the Senate next week.

Stamas explained that each supplemental is different and in this case with the differences between the House and Senate, he believed it was best to work to get both chambers more in sync prior to entering final negotiations with the administration.

At a news briefing, Gov. Whitmer again implored the Legislature to begin negotiations with her on the COVID-19 relief bill. She praised House and Senate Republicans for putting out their own proposals to spend some of the federal relief.

“It’s time that we figuratively get in the room and negotiate the details and get it done. Because every day that goes by is $5 billion that could be infused into our economy and our efforts to protect people,” she said. “Let’s invest the dollars that have been given to us. Let’s invest them in us, in our state, our schools, our health, and our infrastructure. So I’m once again appealing to the Legislature to let’s get to the table and negotiate these details and get it done and not waste another precious moment.”

Gov. Whitmer said Budget Director Dave Massaron has had individual conversations with some legislators. And she said she continues to host meetings of the Legislative Quadrant in hopes that will ignite negotiations.

“We are eager to find some common ground here,” she said. “Every minute that goes by that we are not deploying those resources threatens our ability to get back to normal. That’s precisely why I’m continuing to call on them, ‘Let’s roll up our sleeves and get this done.'”

Albert said in a statement negotiations have progressed – the Governor “just isn’t personally part of them.”

“As I have said before, we will afford the governor as much input on the budget as she has afforded the people of Michigan during this pandemic,” he said. “But I have meetings every day on this issue – talking to our partners in the Senate, Democratic members of the House, and the State Budget Office to continue to advance the budget supplemental to the finish line.”

While the House has passed its COVID relief bill supplemental spending bill, which includes an ultimatum for Gov. Whitmer tying funding for education to a separate bill that would allow only local health departments to close schools and halt school sports, the Senate plan does not include that provision.

The House plan also includes General Fund dollars for business assistance and spends about a quarter of federal money designed for things like vaccine distribution, rental assistance, and testing.

On the Senate side, Stamas’ legislation also does not spend all of the federal funding available. It includes about $2 billion.


Whitmer Rebuffs Evans, Hackel Criticism on Vaccine Distribution

Gov. Gretchen Whitmer Wednesday, in response to criticism from two county executives that they are getting fewer COVID-19 vaccines per person than other areas of the state, said the problem is the total number of vaccines available – not how the state is distributing them.

In recent weeks, Macomb County Executive Mark Hackel and Wayne County Executive Warren Evans have questioned why their counties are getting fewer vaccines per person than other parts of the state.

“The math’s pretty simple to me. I don’t know how many doses we should have, but I know it’s far more than we’re receiving,” Evans told WDET-FM’s “Detroit Today” earlier this month.

Asked about a meeting he had with Dr. Joneigh Khaldun, the state’s chief medical executive, Evans told the program: “There was no answer as to why we are receiving fewer doses. They gave us the factors – age, population, social vulnerability index – are the factors that somehow they put in the hopper and come out with a number but they couldn’t explain why our number using those factors was less than surrounding counties. … When the question is asked, I’m not getting a logical response.”

A chart published Wednesday by the Senate Fiscal Agency using Department of Health and Human Services data as of Sunday showed that the northern Lower Peninsula region was seeing a seven-day average of 299 people per 100,000 receiving the first dose of the vaccine compared to 187 in the region encompassing Monroe, Washtenaw, and Wayne counties.

Gov. Whitmer was asked at a news briefing about the criticism and deferred to Khaldun but not before offering comments that sounded displeased with how Evans and Hackel have characterized vaccine distribution.

“I’m going to have Dr. J walk you through what the numbers are so we can have a conversation based on what the state has actually done,” she said. “But what we have seen I think is that there just simply are not enough vaccines to meet demand right now. Every state in the nation has that story, and every local municipality is confronting that as well.”

Khaldun said the state has analyzed the number of people eligible for the vaccine in each county – those 65 and older, health care workers, frontline workers, and other classifications – to determine how many vaccines to send to each county.

The northern Lower Peninsula has a far greater percentage of residents 65 and older than counties Downstate. Washtenaw and Wayne counties have the fourth- and eighth-lowest percentages of seniors making up their population among the state’s 83 counties.

“We’re as eager to get more vaccines into Michigan as they are at the county level as well,” Gov. Whitmer said. “And that’s what we’re working toward, and we’re seeing increases.”

Evans spokesperson Bill Nowling, asked about the Governor’s and Khaldun’s explanation of where the numbers stand, said he had nothing to add beyond what Evans has already said about the situation.

Michigan now stands at 13.7% of those 16 and older having received their first dose of the vaccine, up from 11.7% last week with 514,000 people fully vaccinated. Of those 75 and older, 35.4% have had at least one dose and of those between the ages of 65 and 74, 29.3% have had at least one dose.

“We are seeing Michigan making great strides,” Gov. Whitmer said.


Restaurant Group Pushes for Plan to Fully Reopen

If the state’s coronavirus positivity rate is lower than 3%, restaurants could be open at 100% capacity with no restrictions under a plan proposed by the leading industry group Wednesday that saw support from other business advocates.

The plan comes as restaurants remain limited to 25% capacity and a 10 p.m. curfew until March 29 under the current epidemic order.

There are six categories of restrictions in the plan proposed by the Michigan Restaurant and Lodging Association, which stipulate:

  • If the positivity rate is lower than 3%, no capacity restrictions and no limitations on meetings or other events. The seven-day average would need to remain lower than 3% for 14 consecutive days to move into this category;
  • If the positivity rate is between 3 and 7%, restaurants would be limited to 50% capacity and meetings and events limited to 50 people per square foot with a hard cap of 250 indoors and 500 outdoors. The positivity rate would have to remain at this level for seven consecutive days to move into this category;
  • If the positivity rate is between 7 and 10%, restaurants would be limited to 50% capacity and subject to a 10 p.m. curfew with contact tracing requirements. Events and meetings would be limited to 25 people per square feet with a 150-person cap indoors and 250 outdoors.
  • If the positivity rate was between 10 and 15%, restaurants would be limited to 25% capacity, subject to a 10 p.m. curfew and contact tracing requirements. Meetings and events would be limited to 15 people per square feet and a hard cap of 50 people indoors and 150 outdoors; and
  • If the positivity rate was between 15 to 20%, restaurants would close for indoor service but meetings and events could occur for fewer than 10 people from no more than two households. If the rate was more than 20%, restaurants would be closed to indoor service, and meetings or events would not be allowed.

The proposal also calls for hospitality workers to be categorized as other essential frontline workers in category 1b for coronavirus vaccinations.

“We have long advocated the need for a more comprehensive strategy for the economic reintegration of our restaurants, banquet centers and entertainment venues in Michigan,” MRLA president and CEO Justin Winslow said in a statement. “Through this plan, we are putting our metrics where our mouth is and hope it proves a useful tool to elected leaders as we enter a new phase of the pandemic.”

Gov. Gretchen Whitmer said her administration welcomes input but also did not seem overly enthusiastic about what was proposed.

The Governor said the restrictions her administration issued in November, like closing dine-in service at restaurants and bars through Jan. 31, put Michigan in a better position than most other states.

“The burden’s been greater for the restaurant industry, there’s no question. I understand the desire to raise the voice and to give some input and we will always take that input and make it a part of the conversation that we have. We’re also going to though stay very clearly focused on the numbers and the data and monitor where we are,” she said. “I will always take input but what we really need right now is partnership to focus on the pathway out of the pandemic and that is through this COVID relief plan.”

Small Business Association of Michigan President Brian Calley said in a statement the plan provides a strong, data-driven approach to reopening some of the hardest-hit industries.

“Restaurants, lodging, and event/meeting-based businesses need to know what the standards are that keep them closed or limited in their operations, and when restrictions will be eased,” Calley said in a statement. “These metrics establish those standards in an objective way, keeping public health and safety front and center.”

The Northern Michigan Chamber Alliance also signaled support for a “comprehensive reopening strategy for bars and restaurants.”

“The Alliance is willing to safely meet with any leader who wants to formulate a plan for reopening so our bars and restaurants can anticipate what happens next,” Sarah Hagen, the vice-chairperson of the Alliance and president of the Charlevoix Area Chamber of Commerce, said in a statement. “It’s time to provide this industry with a timeline and metrics to fully reopen.”


UIA: Borrowing Not Needed in 2021 to Restore Michigan’s Trust Fund

The need to borrow and restore Michigan’s trust fund is unlikely in 2021, officials with the Unemployment Insurance Agency said in a statement Thursday.

Current unemployment claims activities and economic conditions have led to the UIA believing the agency will not need to borrow from the federal government to ensure unemployment benefits are disbursed in 2021.

It was a sentiment UIA Acting Director Liza Estlund Olson also conveyed to the Senate Economic and Small Business Development Committee Thursday.

There, she told senators a vast majority of the potential fraud Michigan incurred while relaxing security to divvy out benefits faster occurred among federal programs. Because of that, there is “little to no impact on the Trust Fund.”

Michigan continues to have one of the healthiest trust funds in the country at $600 million available for UI benefits, as of the beginning of this month, Olson added.

“Michigan is one of the few states that has yet to borrow federal dollars,” she said. “States like Ohio, Texas, and California had to start borrowing in the spring of 2020. Based on our current economic conditions and forecasting, the UIA does not anticipate the need for Title 12 borrowing in calendar year 2021.”

She did say, however, that the UIA would “continue to monitor the fund closely.”

Both Olson, and the statement put out by the UIA earlier Thursday, credited Michigan’s Work Share Program as the reason behind the trust fund’s success which saved more than $80 million. The program allows job providers to retain skilled employees, avoid layoffs or bring back workers at reduced hours while employees collect partial unemployment benefits to supplement lost wages.

Work Share has helped 2,700 businesses in-state and almost 97,000 employees at the peak of enrollment, Olson added, outpacing the combined totals of larger states like New York, Texas, and Ohio.

Mike Johnston, Michigan Manufacturing Association vice president for government affairs, said in a statement that he was encouraged the fund would not need to borrow as “employers will avoid increased employment costs.”

“One of the best solutions to solvency is getting people back to work, through Work Share, and filling open positions in manufacturing through work search,” he said.

Olson also confirmed that during her hearing in response to a question as to why she supported Gov. Gretchen Whitmer’s veto of a temporary 26-week unemployment extension.

“The trust fund is designed to be an employer-paid trust fund, and employers have not been charged for benefits since the start of the pandemic, and they continue to not be charged for those benefits. That’s going to have an impact on the trust fund long term,” she said. “Employers did not see an increase in their taxes in general. They should have stayed about the same for this new tax year.”