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.
July 1 | This Week in Government: Detroit Chamber Endorses Meijer, Stevens in U.S. House Races; Groups Urge Leaders to Raise EITC to 30%July 1, 2022
Detroit Chamber Endorses Meijer, Stevens in U.S. House Races
The Detroit Regional Chamber PAC released a set of endorsements Thursday, including two hotly contested U.S. House races, opting to support U.S. Rep. Peter Meijer and U.S. Rep. Haley Stevens.
The Chamber describes Meijer (R-Grand Rapids) as “the kind of leader Michigan needs in Congress” and praised his efforts to “craft positions with conservative principles that have broad bipartisan appeal.”
Brad Williams, vice president of government relations for the Chamber, said, “Rep. Meijer represents a new and effective breed of Congressional representatives that will benefit his district, the state, and the nation.”
Stevens (D-Waterford Township) is facing off against U.S. Rep. Andy Levin (D-Bloomfield Township), who is further to her left on several issues and recently received an endorsement from U.S. Sen. Bernie Sanders (I-Vermont).
The Chamber said in its statement that “with two qualified candidates and friends of the Chamber in the race for the 11th District, this decision came down to who is more pro-growth and job creation-friendly.”
Williams said that Stevens’ “commitment to Michigan’s manufacturing industry and insight into business issues on a national and local level” earned her the Chamber’s endorsement in this contested race.
The Chamber notably declined to weigh in on the race in the 8th U.S. House District, where Rep. Dan Kildee (D-Flint) is facing an effort from local and national Republican resources to unseat him.
The Chamber also released endorsements for state Legislature races, split evenly between Democrats and Republicans. The House endorsements include:
- Reggie Davis in the 5th District;
- Rep. Helena Scott of Detroit in the 7th District;
- Mike McFall in the 8th District;
- Ricardo White in the 11th District;
- Rep. Stephanie Young of Detroit in the 16th District;
- Caprice Jackson in the 18th District;
- Noah Arbit in the 20th District;
- Rep. Alex Garza of Taylor in the 29th District;
- Kevin Whiteford in the 38th District;
- Rep. Pauline Wendzel of Watervliet in the 39th District;
- James Johnson Jr. in the 47th District;
- Joshua Shriver in the 66th District;
- Rep. Philip Green in the 67th District;
- Rep. Michael Mueller of Linden in the 72nd District;
- Rep. Kara Hope of Holt in the 74th District;
- Rep. Angela Witwer of Delta Township in the 76th District;
- Jon Horford in the 77th District;
- Rep. Greg VanWoerkom of Norton Shores in the 88th District;
- Rep. Bryan Posthumus of Cannon Township in the 90th District;
- Rep. Graham Filler of Greenbush Township in the 93rd District;
- Rep. Curtis VanderWall of Ludington in the 102nd District;
- Rep. Jack O’Malley of Lake Ann in the 103rd District;
- Rep. John Roth of Interlochen in the 104th District; and
- Rep. Ken Borton of Gaylord in the 105th district.
In the Senate, the Chamber endorsed:
- Sen. Sylvia Santana of Detroit in the 2nd District;
- Sen. Stephanie Chang of Detroit in the 3rd District;
- Rep. Darrin Camilleri of Brownstown Township in the 4th District;
- Sen. Dayna Polehanki of Livonia in the 5th District;
- Sen. Jeremy Moss of Southfield in the 7th District;
- Sen. Michael MacDonald of Macomb Township in the 11th District;
- Sue Shink in the 14th District;
- Rep. Joe Bellino of Monroe in the 16th District;
- Sen. Kim LaSata of Niles in the 17th District;
- Rep. John Cherry of Flint in the 49th District;
- Sen. Mark Huizenga of Walker in the 30th District;
- Sen. Roger Victory of Georgetown Township in the 31st District;
- Sen. Jon Bumstead of North Muskegon in the 32nd District; and
- Rep. Roger Hauck of Mount Pleasant in the 34th District.
Groups Urge Leaders to Raise EITC To 30%
Tax cut negotiations are ongoing as the Legislature is poised to pass a fiscal year 2022-23 budget Thursday, and a group of proponents of raising the Earned Income Tax Credit is continuing to push for such a change to be part of any final deal between lawmakers and the governor.
In a Tuesday letter to officials including Governor Gretchen Whitmer and the Republican leaders of both legislative chambers, members of a group called the Michigan EITC Coalition urged leaders to expand the credit from six percent to 30 percent as part of any tax deal.
The coalition includes the Michigan Catholic Conference, the Detroit Regional Chamber, the Grand Rapids Chamber and the Small Business Association of Michigan.
“As you work to find common ground, the EITC is a bipartisan proposal that is simple, effective and one that will have the most positive, significant impact,” the groups wrote. “From our view, increasing the EITC will provide a large mutual benefit for kids, workers, businesses and the local and state economy.”
The group went on to call the EITC a “pro-family, pro-work policy” that can provide assistance for people who can then move up to a higher income level.
At least one legislative proposal, SB 417, has been taken up for hearings recently in the Senate, which calls for raising the EITC to 30 percent by 2024. The original fiscal analysis of the proposal put the estimated reduction in General Fund revenue at $460 million per year beginning in fiscal year 2025-26 and in subsequent years if enacted.
The proposal received strong support during committee testimony but has not been reported to the Senate floor.
Raising the EITC has also been an area that appears to have bipartisan interest. How it may factor into a final deal remains to be seen.
Earlier this week it was reported that while the Legislature is expected to move on the budget, no tax cut votes would be taken.
Where Senate Majority Leader Mike Shirkey (R-Clarklake) and House Speaker Jason Wentworth (R-Farwell) are in negotiations with the administration is not clear.
Whitmer has called for targeted cuts and an overall smaller package than Republicans. Her proposals have included rebate checks to an unspecified group of taxpayers, expanding the EITC and repealing the so-called pension tax. What the rebates would cost is unclear, but the other proposals are estimated to be in the ballpark of $800 million.
Republicans have wanted more broad-based cuts on a larger scale, twice passing packages without negotiations of more than $2 billion in yearly costs. Their packages have included an income tax rate cut and a child tax credit and more. Whitmer vetoed the most recent GOP tax cut package earlier this month.
The Legislature has also pushed legislation to suspend the state’s fuel taxes and sales tax collected on fuel purchases.
In its letter, the coalition said an increase in the EITC would provide families with an estimated $750 and spur an estimated $443 million in spending on essential needs at local businesses.
“The billions of dollars in state revenues provides a major opportunity for you to define your respective and collective legacies,” the group wrote. “As future Michiganders look back at the decisions you will be making in these next few days, weeks or months, increasing the EITC would be a major win for bipartisanship, kids and parents, and workers and businesses. The benefits will immediately pump through our economy. And the direct boost to parents’ incomes will benefit our children for decades to come, creating a better future for the state as a whole.”
Budget Moves Without Tax Cuts; $7B Left on Balance Sheet
The Legislature took it down to the wire during a marathon session Thursday where most of the day was spent waiting for budget language to be drafted so lawmakers could approve the 2022-23 budget.
Convening at 10 a.m., lawmakers did not vote on the budget until 2 a.m. Friday. Conference committees did not meet on SB 845 and HB 5783, until shortly before and after midnight Friday, pushing the release of budget details until just hours before final votes.
Both bills passed overwhelmingly. SB 845 was adopted in the Senate 35-2 and 99-7 in the House. HB 5783 passed the Senate unanimously and 97-9 in the House.
The budget passed with little drama – other than the House Fiscal Agency putting the total spend at $75.7 billion and the Senate Fiscal Agency at $76.7 billion. The House is not counting intradepartmental grants as new spending and the Senate is.
Either way, the roughly $76 billion overall budget includes $19.6 billion in School Aid Fund spending and $15.3 billion in General Fund. It also makes a $180 million deposit into the Budget Stabilization Fund.
Officials also took the opportunity to provide more than $1 billion in various special grants for a smattering of in-district projects.
The budget also pays down $2.6 billion in debt, something House Appropriations Chair Rep. Thomas Albert (R-Lowell) said he was most proud of in the budget.
“I’m not aware of any state in the history United States making this level of commitment to reducing liability,” he told reporters. “So, I think this is putting us on a good foundation going forward.”
Lawmakers and the administration are leaving an astonishing $7 billion on the balance sheet, with roughly $3.8 billion in General Fund and $3.3 billion in School Aid Fund. The leftover money is a mix of what is thought to be one-time surplus dollars and ongoing funding.
As lawmakers wrap up the budget before their self-imposed deadline of July 1 – just barely as both chambers passed the budget after midnight – conversations will continue on tax cuts and other spending with the leftover cash.
“This is our fourth collaboration on a fiscally-responsible budget delivers on the kitchen-table issues that matter and lowers costs for families struggling with inflation,” Governor Gretchen Whitmer said in a statement. “I am proud that the budget will grow Michigan’s economy and workforce, make record investments in every student and classroom, protect public health and public safety, expand mental health resources, and empower working families and communities.”
Whitmer called on all parties to continue “in this spirit of collaboration,” in spending the available dollars on the balance sheet.
Budget Director Chris Harkins called the budget financially sound and responsible.
“In addition to prioritizing funding for our students, schools, public health, natural resources, and communities, we are paying down debt, shoring up pensions and setting money aside for a rainy day,” he said in a statement. “I am proud to have a budget that invests in both our current needs and looks toward our future as we continue to move Michigan forward.”
All sides have been clamoring for some kind of tax change with varying costs. Whitmer’s administration has pushed for an expansion of the Earned Income Tax Credit, a repeal of the so-called “pension tax,” and a $500 rebate for undefined taxpayers.
The Legislature, meanwhile, has thrown several proposals to Whitmer, which she has vetoed. Those plans would have cut taxes by more than $2 billion annually and were anchored by an income tax reduction and a child tax credit, among other things.
Whitmer has also been pushing for more money to be deposited in the state’s new economic development fund, House Republicans want more debt relief and Senate Republicans are pushing for a fuel tax pause.
“A budget is a statement of priorities, and this budget prioritizes education, safe schools, road repairs, and job training,” Senate Majority Leader Mike Shirkey (R-Clarklake) said. “It also sets aside a substantial sum that Republicans are ready to return to Michiganders struggling with record-high inflation and gas prices.”
House Speaker Jason Wentworth (R-Farwell) said lawmakers and the administration “absolutely had to nail this budget,” to give residents the support they need.
“I’m glad we were all able to take our time and work together across party lines to build a real plan and move Michigan forward,” he said. “Our budget prioritizes school funding, road repairs, healthcare access, job training, and even sets aside billions for tax relief. This plan has everything Michigan families need to get ahead and stay ahead in the coming year.”
Thursday’s budget plan also includes $2.2 billion in supplemental spending for the current fiscal year.
That immediate spending includes $10 million for a new state psychiatric hospital complex and $7 million to help courts with current backlogs.
Finally, the Independent Citizens Redistricting Commission will see $2.2 million for its ongoing litigation.
Tax Credit Deals Must Be Public, Supreme Court Rules
Details about tax credits the state has awarded to businesses as incentives to locate or remain in Michigan must be made public under the Freedom of Information Act, the Supreme Court unanimously ruled Wednesday in a significant victory for public records access.
David Sole requested the tax credit agreement between the Michigan Economic Development Corporation and General Motors LLC via a FOIA request. GM, however, did not want the agreement disclosed, and the MEDC rejected his request.
In 2015, during the administration of Governor Rick Snyder, the MEDC and the three Detroit automakers rewrote their Michigan Economic Growth Authority tax credits to provide greater certainty about their total value (See Gongwer Michigan Report, December 15, 2015). Ford Motor Company and Fiat-Chrysler Automobiles (now Stellantis) agreed to make public key details of their agreement, but GM refused, leading to Sole’s FOIA request.
For years, the MEDC refused to disclose its tax agreements with companies like GM unless the company agreed to do so, saying that the FOIA section in the Michigan Strategic Fund Act allows for the redaction of records that related to financial or proprietary information.
The Supreme Court, ruling unanimously, held that while that is true, the Michigan Strategic Fund Act carves out an exception.
Documents to which the MSF is a party in an agreement, under the Michigan Strategic Fund Act, are not considered financial or proprietary information that can be exempted from disclosure, the court ruled in Sole v. Michigan Economic Development Corporation (SC Docket No. 161598).
The MEDC argued it could hand over the agreement but redact all the information in it, an argument the Supreme Court rebuked.
“Here, defendant’s preferred construction of MCL 125.2005 raises serious doubts about its constitutionality under Const 1963, art 9, § 23,” the per curiam opinion from the court said. “Under the statute, defendant cannot ‘disclose financial or proprietary information not subject to disclosure pursuant to subsection (9)’ without the applicant’s approval. Thus, if MCL 125.2005(9) applies, the unredacted tax credit agreement is not available to the public absent GM’s approval. This potentially conflicts with Const 1963, art 9, § 23, which commands that “[a]ll financial records, accountings, audit reports[,] and other reports of public moneys shall be public records and open to inspection.”
The decision reversed the Court of Appeals and the Court of Clai The Supreme Court remanded the case to the Court of Claims for further proceedings.
Asked about the MEDC’s reaction to the decision and whether it had transmitted the document to Sole, MEDC spokesperson Otie McKinley said only that the organization’s attorneys are reviewing the opinion and had no further comment.
The Mackinac Center for Public Policy, which fights many FOIA cases in court, hailed the ruling as a win for taxpayers and transparency. It submitted an amicus brief in the case in which the Michigan Press Association participated.
“Taxpayers deserve to know who is receiving their money,” said James Hohman, director of fiscal policy at the Mackinac Center for Public Policy, in a statement.
After Huge Court Loss, Attorney General Vows Flint Cases Not Over
Public officials charged with crimes in the Flint water crisis won a resounding and massive victory Tuesday when a 6-0 Michigan Supreme Court ruled that the Department of Attorney General misused the one-person grand jury system to charge them.
The court, in one of its most significant rulings in the past 25 years, held that a one-person grand jury cannot issue indictments, and anyone charged under the system must have the opportunity for a preliminary examination. The ruling throws into question the future of the cases, which Solicitor General Fadwa Hammoud insisted would continue despite major statute of limitations questions, that include former Governor Rick Snyder, the first known current or former governor to be charged with a crime for actions while in office.
For some of the Flint defendants, like former Department of Health and Human Services Director Nick Lyon, the ruling represented an emotional triumph after six years of being under criminal charges. They have long contended it was wrong to charge them for policy decisions leading up to and during the Flint water crisis.
For Flint residents, the ruling was the latest kick in the face some eight years after a state-appointed emergency manager switched the city’s water source to the Flint River without corrosion control treatment. That unleashed a large amount of lead from the city’s lead pipes into the drinking water. It also may have – and this point is hotly disputed – caused a deadly Legionnaires’ disease outbreak in 2014-15 that killed 12, sickened scores and prompted involuntary manslaughter charges against Lyon and former DHHS Chief Medical Executive Eden Wells in early 2021.
The opinion written by Chief Justice Bridget McCormack, in People v. Peeler, People v. Baird and People v. Lyon (SC Docket Nos. 163667, 163672 and 164191) directly affects just three of several defendants in the state’s prosecution of former state actors accused of willful neglect of duty and other charges related to actions taken and not taken during the Flint water crisis. But it seems likely the other defendants will echo the same arguments at the Genesee Circuit Court to have their cases dismissed.
Justice Richard Bernstein wrote a separate concurring opinion to highlight what he stated was the significant interest in the case and the need to get the preliminary examination function right in criminal proceedings large and small.
The appeals were filed by Lyon, former DHHS subsection manager Nancy Peeler and Richard Baird, a top aide to Snyder. Also charged in the prosecution were Wells, Snyder director of communications Jarrod Agen and ex-Flint director of public works Howard Croft.
Each had questioned the use of a single judge to issue the indictments, but it was Baird and Peeler who directly challenged the grand jury’s ability to do so without first giving them a chance to poke holes in the evidence or have the case dismissed for lack of probable cause.
Lyon had appealed the denial of a motion to dismiss from the Genesee Circuit Court, where the trial is taking place. The others wrote amicus briefs essentially proffering similar arguments as they were all indicted by the same judge.
The high court granted those appeals in full, with McCormack and the entire bench (save for Justice Elizabeth Clement, who did not participate because she was once legal counsel for Snyder) ruling that the trial court erred by denying motions to remand the case for preliminary examination – or rather, a hearing to weigh evidence and determine probable cause.
In a statement, Lyon – who has been under criminal charges in some form for six years – said he was grateful that the court “took the extraordinary step of finding time to hear our case, and I am particularly satisfied that the decision to dismiss all the charges against me was unanimous.” He also thanked his family, various “supporters” and friends “from across all parts of the political landscape for their steadfast belief that the only just and right result was dismissal which has now occurred.”
While the Department of Attorney General initially said it was reviewing the opinion when it was released Tuesday morning, Hammoud later said, “The citizens of Flint should know that these cases are not over.”
“Public commentary to the contrary is presumptive and rash. Our reading is that the court’s opinion interprets the one-man grand jury process to require charges to be filed at the district court and include a preliminary examination,” Hammoud wrote. “Our team is prepared to move forward through that process. We relied upon settled law and the well-established prosecutorial tool of the one-man grand jury, used for decades, to bring forward charges against the nine defendants in the Flint water crisis. We still believe these charges can and will be proven in court.”
McCormack stated that the prosecution in this case “chose to proceed … using what have become known as the ‘one-man grand jury” statutes” and that by doing so, the department and Genesee Circuit Court that authorized the indictments were considered “in secret, a Star Chamber comeback.” The reference is to proceedings that occur privately, behind closed doors or generally not in public view.
The legal reasoning there was that that previous precedent from the Court of Appeals regarding one-person grand juries was wrongly decided to the extent that it states that the process serves the same function of a preliminary examination and must therefore be overruled.
“We agree with Peeler and Baird that the statutory language provides a right to a preliminary examination,” McCormack wrote. “We have said so before, although in dictum: In People v Duncan, overruled in part on other grounds by People v Glass, we identified (the Criminal Code Procedure) as a statute with ‘specific statutory language’ providing for a preliminary examination. (The Code) refers to a ‘hearing on the complaint or indictment’ and disqualifies the judge who conducted the inquiry from being the ‘examining magistrate’ at that hearing. It is unclear what ‘hearing’ that language could be referring to other than a preliminary examination. Moreover, ‘examining magistrate’ is a term of art used in other statutes, so we need not guess what it means – an examining magistrate is a judge who conducts a preliminary examination.”
The chief justice further explained that the Code requires that once apprehended, the accused must receive proceedings that follow in like manner to a formal criminal complaint.
“In other words, the judge should treat the one-man-grand-jury-charged case the same as a case in which a formal complaint has been filed” she wrote. “We know how that process works too: When a formal complaint is filed, an arrest warrant is issued, the accused is apprehended, and the court holds a preliminary examination before an information may issue. … There is more evidence in historical practice. We see in our cases evidence that preliminary examinations were routinely conducted after a one-person grand jury returned an indictment.”
Although the Department of Attorney General argued because the statutory scheme requires the judge to make a finding of probable cause that the defendant committed the crime, the chief justice continued, a preliminary examination “would be redundant, after all, as a preliminary examination’s main function is for a court to determine whether there is probable cause.”
“But the argument confuses some basics,” McCormack wrote. “Probable cause to arrest (which the Criminal Code requires and authorizes the judge to order) is different from probable cause to bind over (which must be found at a preliminary examination to bind the defendant over on felony charges). So, the Court of Appeals was wrong in People v Green when it held that the one-person grand-jury procedure ‘serves the same function’ as a preliminary examination. We overrule Green.”
As to Lyon’s motion to dismiss, the high court reasoned the trial court erred when it denied the motion and remanded the case for further proceedings in line with the ruling. McCormack wrote that the bench parsed two sections of the Code of Criminal Procedure (MCL 767.3 and MCL 767.4) and found that while those two sections authorize the use of a one-man grand jury to investigate, subpoena witnesses, and issue arrest warrants, those statutes do not authorize that one-man grand jury to issue an indictment initiating a criminal prosecution.
“Perhaps not surprisingly, the statute never says a judge may issue an indictment, in specific contrast to the statutes governing citizens grand juries,” the chief justice wrote. “Indeed, the Legislature amended the statutory scheme to authorize judges to issue indictments, but later removed that authority. In 1949, the Legislature amended the statute to provide for three-judge grand juries and gave them express authority to issue indictments. But it repealed that provision several years later.”
The statute is also clear about what it does authorize judges to do, McCormack added.
“In other words, the judge may authorize an arrest warrant. The statute didn’t authorize the judge to issue an arrest warrant explicitly and issue an indictment at the same time implicitly,” she wrote. “The circuit court and the Attorney General’s office have emphasized the purported parallels between the one-man grand-jury and the citizens grand-jury procedures. Thus, the argument goes, because the citizens grand-jury statutes authorize the issuance of indictments, so too must (the Criminal Code). But we find the differences between the statutes more important.”
Thus, it appears that Lyon is en route to having his indictment dismissed and that Peeler and Baird could have preliminary examinations scheduled soon which would determine whether the cases move forward. Or their attorneys will move to have the Genesee Circuit Court judge dismiss the cases based on the reasoning the court used in the Lyon case.
In concurrence, Bernstein wrote the department invoked obscure statutes “to deprive these defendants of their statutory right to a preliminary examination.”
“Clearly, and as this court’s decision aptly recognizes, a preliminary examination serves a crucial function for criminal defendants in our adversarial system. It allows defendants to learn about the specific criminal charges they face, confront allegedly incriminating evidence, and prepare a defense,” he wrote. “The prosecution argues that the Legislature, through the statutes in question, has given it the discretion to opt out of a preliminary examination, as the prosecution did here. This assertion is quite alarming, and were it true, the prosecution would have the power to decide whether to grant a defendant permission to probe and challenge the charges against them before being formally indicted. Such a result runs afoul of the basic notions of fairness that underlie our adversarial system. I do not believe we can tolerate such a procedural offense.”
Attorneys for Baird and Lyon expressed also gratitude to the high court following the ruling.
All of this, however, amounts to a major loss on the part of the department and the legal strategy put together by the team Attorney General Dana Nessel put in charge of the Flint water criminal cases.
A spokesperson for the department said early Tuesday that the office was still reviewing the ruling when asked if this completely upends the state’s second attempt to seek criminal accountability for the Flint disaster. The spokesperson also did not respond to when asked if the state would or even could bring charges back to the table for Lyon, or if it was confident that it could move the cases to trial again after preliminary examinations for Baird and Peeler.
However, Hammoud said in a statement issued Tuesday afternoon that the department was “prepared and determined to prove the allegations against the defendants in court and are committed to seeing this process through to its conclusion.”
Hammoud also quoted a more favorable portion of Bernstein’s concurrence, which said: “If the allegations can be proved, it is impossible to fully state the magnitude of the damage state actors have caused to an innocent group of people – a group of people that they were entrusted to serve. The Flint water crisis stands as one of this country’s greatest betrayals of citizens by their government.”
Some stated that the ruling was a stunning turnaround for the Supreme Court, as less than three years ago, the court unanimously declined to hear an appeal in the Green case McCormack referenced. In that case, a defendant out of Wayne County challenged the one-person grand jury system but the Court of Appeals ruled in favor of that system.
The department cited that case, People v. Green, within its own arguments before the high court ruled Tuesday that the Court of Appeals wrongly decided the case and overruled it in total.