July 15 | This Week in Government: Gov. Hopes Tax Cut Negotiations Resume by Fall; Sales Tax Collections Cross $1B for the First Time

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.

FLINT – An agreement on possibly cutting taxes for residents in the wake of high inflation and the coronavirus pandemic is still possible, and hopefully more serious negotiations will continue soon, Gov. Gretchen Whitmer said Thursday.

Whitmer told reporters there is room for an agreement if negotiations resume given the historic $7 billion budget surplus the state now has following the recent passage of the fiscal year 2022-23 budget.

“This gives us an opportunity to give people some tax rebate or some sort of inflation relief,” Whitmer said prior to signing the 2022-23 education omnibus budget. “There are a lot of aspects where we could give people relief. I think the thing that I’m hopeful of is when the Legislature’s back in Lansing and we’re able to negotiate that, we can get something done that translates into relief right now.”

The Governor did not elaborate on any number where she would be comfortable in terms of dollar size for a tax cut.

Of the about $3.8 billion in General Fund and $3.3 billion in School Aid Fund monies still on the books, it is a mix of one-time and ongoing funding.

Whitmer has called for targeted cuts and an overall smaller package than Republicans, which she repeated in her remarks Thursday. Her proposals have included rebate checks to an unspecified group of taxpayers, expanding the Earned Income Tax Credit, 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.

The Governor says she supports a temporary suspension of the sales tax collected on motor fuel purchases.

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, a child tax credit, and more. Whitmer vetoed the most recent GOP tax cut package last month.

The Legislature has also pushed legislation to suspend the state’s fuel taxes and sales tax collected on fuel purchases. Whitmer vetoed a suspension of the state’s 27.2-cent per gallon fuel tax.

One area of possible bipartisan support in any tax deal could be increasing the EITC. There have been proposals to raise it from 6% of a taxpayer’s federal EITC to 20%, and other plans to raise it to 30%.

Whitmer was also asked about $1 billion in grants for special projects included in the Department of Labor and Economic Development budget and if she had any concerns over having to explain these special projects to a public that is waiting for a tax deal.

The Governor said the budget itself was a negotiation where numerous items were hashed out. She proceeded to highlight areas of common ground in the recently passed fiscal year 2022-23 budget and record spending in multiple areas.

“It also gets us the chance to get back to the table and see where we can find some common ground about giving people some inflationary relief right now,” Whitmer said.

Sales tax collections to the state’s coffers topped $1 billion for the first time ever in June, the Senate Fiscal Agency reported Tuesday in its monthly revenue report.

Total sales tax collections for June were about $1.04 billion, which the agency said was the first time the state had ever crossed that threshold in such collections.

This sales tax figure was 13.6% higher than what was collected during June 2021. It was also $126.5 million more than anticipated for the month based on the May 2022 consensus revenue estimate.

Collections from sales tax for motor vehicle sales topped $100 million for the fourth month in a row and have surpassed that figure in 15 of the last 16 months.

Use tax collections came in at $186.9 million in June, which was down 5.1% from the same period one year ago and $35 million less than projected. For the fiscal year to-date, sales tax collections were up 9.6% from fiscal year 2020-21 levels, and use tax collections were down 1.4%.

Combined General Fund and School Aid Fund collections for the month totaled $3.1 billion. This was up 10.7% from the previous June and $277.2 million higher than estimates.

General Fund collections were $210.2 million more than expected while School Aid Fund collections were $63 million higher. For the fiscal year to-date, General Fund collections have come in $345.2 million above projections and just $28.2 million for the School Aid Fund.

Net income tax revenue was at $1.3 billion for the month, which was up 12.1% from what was collected in the same period one year ago. This was also $72.4 million above estimates. Withholding payments generally representing the majority of gross income tax revenue were up 0.3% from one year ago. However, this was also $65.6 million less than anticipated.

Estimated quarter payments under the individual income tax including payments under the flow-through entity tax came in at $462 million. This was $79.3 million more than projected. Individual income tax refunds were $45.8 million below estimates.

Combined business tax collections from the Single Business Tax, Michigan Business Tax and the Corporate Income Tax were at $315.2 million during the month. This was up $149.6 million from expectations. Net Corporate Income Tax collections were at $234.6 million and were also $113.7 million higher than projected. This put Corporate Income Tax Collections 21.3% higher for the fiscal year to-date than the previous fiscal year.

The House Fiscal Agency in its June revenue report said the state saw $3.07 billion during the month, $341.2 million more than in June 2021. Year-to-date, the agency said, the state’s revenues were $3.5 billion more than the 2020-21 fiscal year.

The General Fund saw $1.56 billion, the HFA said, about $335 million more than estimated at the May revenue conference. Specifically, the Corporate Income Tax exceeded revenue projections by more than $110 million. Still, the agency said income tax refunds are expected and made up one-third of the differential.

The School Aid Fund saw $1.34 billion in June, about $69.9 million higher than May projections.

Revenue from consumption taxes, sales, use, beer and wine, liquor, and tobacco taxes, brought in $1.2 billion in June, and were collectively $812.7 million higher than in the 2020-21 fiscal year.

Collections from online gaming totaled $22.3 million and revenue from the real estate transfer tax almost doubled the May amount. Taxes from recreational marijuana sales were also $42.7 million higher than one year ago, the agency said. Lottery transfers, however, are $33.7 million lower than last year on a year-to-date basis and totaled $80 million in June.

Net income tax revenue totaled $1.28 billion in June, and for the fiscal year so far were $2 billion higher than the same period last year. This is almost solely due to withholding and collections from the new flow through entity tax, HFA said.

Finally, net business tax revenues were $344.1 million higher on a year-to-date basis with Michigan Business Tax refunds through June 2022 behind last year’s pace and Corporate Income tax collecting higher than last year’s amount.

A crowded field of nine candidates is seeking the Democratic nomination for the open 13th U.S. House District seat with little difference on priorities, such as decreasing gun violence, improving education, and increasing access to voting.

The race for the 13th is crowded but has remained friendly. Candidates agree on core issues such as abortion access and voting rights and most of them are lifelong Detroiters. The district includes Detroit and much of Wayne County, stretching from Grosse Pointe to Romulus, and while many have had to trek outside of city limits to campaign, the Wayne County residents are very familiar with the area. With three weeks to go before the primary, candidates are focusing now more than ever on getting their name out there.

Candidates vary in experience. Two lawmakers are seeking the post: Sen. Adam Hollier and Rep. Shri Thanedar – who has also pledged to spend millions of his own wealth. Former Rep. Sherry Gay-Dagnogo is also seeking the nomination.

Then there’s Michael Griffie, an attorney and educator; Portia Roberson, CEO of Focus: HOPE and chair of the state’s Civil Rights Commission; and John Conyers, son of the longtime congress member.

Rounding out the field are Sharon McPhail, an attorney who has worked for county and federal prosecutors. Sam Riddle, an attorney, and Lorrie Rutledge, who works in manufacturing.

All nine are from Detroit.

Endorsements are split mostly between Hollier and Roberson.

Detroit Mayor Mike Duggan is backing Hollier. The Detroit Regional Chamber is backing both Hollier and Roberson.

Additionally, Hollier has the backing of the American Federation of State, County and Municipal Employees, and the Michigan Chamber of Commerce.

U.S. Rep. Brenda Lawrence is backing Roberson. Part of Lawrence’s current district is in the redrawn 13th.

The Detroit News, however, endorsed Mr. Griffie as its pick for the 13th District, saying he is “best able to serve the needs of voters in both the city and suburbs.”

Hollier, a veteran, said much of downriver is filled with residents who he also once served and has heard much positive feedback and gratitude since he is able to relate to their experiences.

“People appreciate the reality that I don’t have to go ask someone what inflation is doing to my family budget,” Hollier, who also boasts being a lifelong resident of the district, said. “My kids had to deal with child care issues during the pandemic – I had a child during the pandemic – the kinds of things that families are dealing with my family is dealing with.”

Hollier joked like his colleagues that campaigning largely consists of phone calls, saying he’s logged close to 750 hours of call time. On legislative session days, he is on the phone on the drive up from Detroit and back from Lansing. He ends his days with community events and forums.

Since Roe was overturned, Hollier said the overwhelming concern among constituents is access to abortion.

“Abortion is important health care for women and that’s the way we should be talking about this issue, Hollier said. “We should not be trying to shy away from an abortion because people don’t like it or nobody wants to get an abortion, but we do have to talk about the reality about how important it is for people’s lives in this space, in this moment, in this time.”

He also said the actual cause of inflation should be discussed and should not allow the argument to be made that people got money in their pockets and were spending too much of it. Instead, he said the conversation should be focused around supply chain issues.

There is incredible economic inequality in the country and people are not making a livable wage, Hollier added.

He expressed disappointment for continuing to fight for civil liberties such as voting rights and LGBTQ rights as well as police brutality.

However, Hollier expressed a new angle to his frustration regarding police brutality, mentioning the juxtaposition of unarmed Black men killed and white mass shooters taken into custody alive by the police.

“When people talk about these weapons during gun reform, they call these things weapons of war. These are not the kinds of weapons that we take into combat,” Hollier said. “I’m a captain of the army, the weapons that they use, the way they are outfitted, are not the weapons that go into combat.”

Hollier said at a federal level, he could better address inadequate housing. At the state level, he can allocate the funds from the federal government to provide affordable housing, but at the federal level, he can change the guidelines to qualify for affordable housing.

“The definition of homelessness, you have to be homeless for 365 days consecutively and if you ever came out of the rain and someone let you sleep on their couch … you’re not not homeless because someone let you come out of the cold, but that starts it over and you are not counted as homeless,” Hollier said.

Roberson through Focus: HOPE feeds almost 42,000 seniors per month in Washtenaw, Oakland, Macomb, and Wayne counties. Speaking with seniors, she mentioned their concern for Social Security access and said a larger problem will happen down the line if there is no safety net when people retire.

Growing up, the candidate’s father, who is former Circuit Court Judge Dalton Roberson, took her on long drives, inadvertently helping Roberson become familiar with the same area she is trying to represent. Her mother worked as a social worker and both her parents inspired Ms. Roberson to work in careers centered on public service.

“It got into my bloodstream,” Roberson told Gongwer.

Roberson is the only candidate who has held a federal position. She said there were no new problems that were revealed to her when she started working at the federal level, but she did notice when she brought federal resources to the city of Detroit in 2012 through Strong Cities Strong Communities that there are other dollars that are available.

“As a congress person, you’re going to be going after the dollars that are a part of legislation and appropriations … but interestingly enough I wasn’t a congresswoman at that point, and I was still able to find federal resources to help out the city of Detroit on some projects,” Roberson said. “I do know that there’s money there that we can access to help out the district.”

Her experience accessing federal dollars could be a plus in her race for the 13th, especially since federal decisions are not immediately seen at the local level. Roberson has firsthand knowledge of directing dollars not easily accessible to cities and funneling them into the district.

“I have a really clear idea of how to get those resources, how to use those resources, in a way that people can feel why it makes a difference of who is elected to Congress and who you’re elected officials are,” Roberson said.

Looking to August, Roberson is confident that women will be the deciding factor in the Democratic primary, anticipating 60% of the estimated 75,000 voters to be women. Her first ad, titled “Protect,” is specifically targeted to protecting a women’s right to choose.

In the last few months, gun violence has also become a priority for her, saying she does not think one is an effective member of Congress if they do not try to get something done to lessen the amount of mass shootings.

“There are some big-time lobbyists who work really hard all day to prevent people from changing any laws around gun ownership, but I think I would be remised if I said, ‘hey, this going to be difficult, I’m not going to try it,’” Roberson said, saying she supports a ban on assault rifles.

Last week, Griffie wrapped up his 20 communities in 20 days campaign tour last week in Wyandotte, telling Gongwer News Service some constituents at his last press stop were interested in volunteering for the campaign. Mr. Griffie, who is an attorney and educator, is also a former lobbyist, described what a typical day of campaigning looked like for him, starting the day off with a meeting with his staff.

Griffie then hops on the phone to make fundraising calls followed by door-to-door canvassing to meet “voters where they are” and ending the day with community events. The response from voters has been largely undecided, Griffie said.

“To this day, I still feel this is wide open. Anybody could win this race. The response that I’m getting … if knock on 100 doors, one in 100 is committed to a candidate in this race,” he said. “What it shows is this electorate is not just going to buy into whoever has the most TV commercials, they’re going to do the research.”

Griffie suggested a live televised debate among the primary candidates and said he thought all of the candidates would be open to do so.

“One part that I believe separates me from the field … I’ve actually been in our communities doing the work,” Griffie said. “I haven’t been in any political bubble and I haven’t been chasing bureaucratic appointments my whole career. I’m a teacher, principal, lawyer and when you look at the throughline of my career, it touches all parts of this district.”

He mentioned his support for protecting voting rights. In light of the recent Jan. 6 hearings from the U.S. House select committee, Griffie said it was clear that the U.S. democracy is very fragile.

He also said he supported more gun reform legislation, calling the recent legislation signed by President Joe Biden a “down payment.” He supports raising the age to purchase guns.

“There should be no reason that 19-year-old can buy an AR-15 on the internet easier than he can fill out a FAFSA education or housing student loan,” Griffie said.

Gay-Dagnogo was also passionate about drastically decreasing gun violence in the city and nationwide.

“We have to take a multi-faceted approach,” Gay-Dagnogo said, adding guns linked to these crimes are often obtained illegally.

“As a former teacher, thinking about the work that has to be done in K-12 system to adequately prepare young people to be successful is one approach to addressing systemic crime,” she said. “There has to be a corrective approach to address this.”

Gay-Dagnogo also stressed the importance of mental health access, saying the way the country thinks about health must shift. People may not have ongoing depression, but everyone at some point has a measure of depression or low points in their lives, she said.

“The sooner we start thinking about the total health care needs of the person, we can help remove the stigma of someone needing to have counselling,” Gay-Dagnogo said.

When Gay-Dagnogo is meeting with her constituents, she said different communities have different needs, but better education is an overall trend. She said she is met with “energy and excitement” on the trail when she tells voters about her background as an educator.

Flooding is also a main concern for residents in several communities. Approximately two years ago, the city and the pockets of the state experienced devasting flooding that shut down expressways and destroyed houses due to infrastructure failures.

Gay-Dagnogo said the 13th congressional constituents need someone who is accessible and has given her personal phone number to senior residents.

The former state representative said during a recent July 4th parade, she was confronted by an individual who asked her thoughts on critical race theory. After a brief discussion, Gay-Dagnogo said it was clear the two would not see eye-to-eye on the issue, but he softened when she mentioned her faith.

“If you can find common ground with whatever that common ground is … that’s the kind of leadership I plan to bring,” Gay-Dagnogo said.

Thanedar told Gongwer building trust with those constituents is extremely important, emphasizing with those voters that his position on issues is no different than their old representatives.

On the road, Thanedar said he has heard quite a bit about gas prices and inflation. One father he met told Thanedar he could not drive because he used the money to pay for groceries.

“I hear a lot about infrastructure issues … about bridges downriver, water infrastructure. I hear a lot about flooding issues,” Thanedar said.

He’s also heard extensively about improving education, decreasing crime, and lowering the cost of childcare and prescriptions. Thanedar shared there is also a growing distrust of government, saying a recent survey he saw indicated only 18% of respondents trust the government.

Thanedar said there are certain issues that he can only deal with at the federal level that cannot be done so at the state level, for example, health care. He said the pandemic exposed health disparities, especially for marginalized racial and ethnic communities, and approximately 26 million Americans remain uninsured.

“My hope is to disconnect health insurance from employment,” he said. “I support the single-payer health care system and will be able to better negotiate prescription drugs – eliminate the middleman to save a lot on the administrative costs – and in the long run, the single-payer healthcare system is going to be more cost effective than the current situation.”

He also supports codifying abortion rights, paying reparations for descendants of enslaved persons and reforming the U.S. Supreme Court.

The state representative said people typically like that he is not “beholden” to any political PACs or donors because he self-funds his campaign. As a businessman, Thanedar has allocated $5 million of his own funds for his 2022 congressional campaign and in 2018, he pledged $12 million for his gubernatorial run.

Thanedar said he uses his campaign funds to communicate about his upbringing and political views, emphasizing that his constituents need to know “what he stands for.”

FLINT – Before signing the education omnibus budget for the new fiscal year, words including ‘historic’ were repeatedly used by Gov. Gretchen Whitmer and other speakers about the billions in combined spending provided for school aid, community colleges, and higher education.

Whitmer also used her veto pen to strike a handful of line items including provisions related to pregnancy health centers and aborted fetal tissue inserted by Republicans, which she said would be harmful to women’s health care.

With a $450 per pupil increase to $9,150 per pupil for K-12 schools, large chunks of funding for school safety, mental health supports, at-risk students funding, infrastructure needs, and teacher recruitment, there was much for the governor and supporters of the budget to praise Thursday during the bill signing ceremony on the campus of Mott Community College.

“We crafted an education budget after countless conversations with parents and teachers and students and administrators and experts,” Whitmer said. “In simple terms, this budget makes a historic investment in students, in schools, and in our teachers and education workforce.”

Still to be signed is the omnibus budget bill for state departments and agencies The House presented that bill to the Governor Thursday.

For K-12 school aid, $19.6 billion ($112 million General Fund) is provided for fiscal year 2022-23.

The education omnibus bill, SB 845, now PA 144 of 2022, also provides $2.02 billion ($1.55 billion General Fund) along with $530 million gross spending for community colleges.

In her remarks Thursday, Whitmer pointed to funding items that should help students and staff. These include $223 million in additional spending for at-risk students, $150 million for payments to districts for items including hiring support staff and screening tool implementation and $50 million for districts to put in place programs for increasing access to mental health services.

Another $25 million in increased spending is included for school-based health centers and there is $25 million in increased funding for ISD mental health support services.

“Students belong in school, and we know that is where they learn best,” Whitmer said. “Remote learning is not as fulfilling or conducive to a child’s well-being and growth as in-person learning. In-person learning is also critical to social development and mental health of the student. That is why we’re doing everything we can to keep kids in the classroom and to make sure that they’ve got spaces that are safe and engaging.”

To that end, she pointed to funding for infrastructure upgrades in schools. Also included is school safety funding including $168 million in grants for training on threat response and responsible gun ownership along with $25 million matching funds for school resource officers.

Efforts to help recruit and retain new teachers is also included, with $175 million in grants for districts to provide a no-cost pathway for support staff to become certified teachers, $25 million for the MI Future Educator Fellowship Program with grants for offsetting tuition costs for students who later work three to five years in Michigan, a $15 million mentorship program for veterans to become educators and $10 million for CTE teacher recruitment.

“We’re creating more opportunities for Michiganders to become teacher debt-free,” Whitmer said.

Whitmer said the funding also will help get students back on track after the challenges faced during the coronavirus pandemic. The Governor called the state’s students resilient and capable of getting back on track for the long term with the help of the funding priorities outlined in the education budget.

She told reporters disruptions in education happened nationwide and around the world due to the pandemic, with learning loss being potentially severe for some students.

“We know that in the summer in a normal time, not around a pandemic, there is learning loss that happens between the last day of school and the first day of the next year. Now that was always more profound for students who are at-risk or students with special needs, for students that are English language learners, etcetera,” Whitmer said. “This disruption of a pandemic dwarfs what we would see in a usual summer, and so the experts have recommended that we make investments that are reflected in this budget, and I think this is one important way that we can help get our students back on track.”

Whitmer vetoed a section in the community colleges budget with funding related to pregnancy health centers, with provisions barring centers from referring students toward abortion services but only to other options not including for prenatal care and delivery, infant or foster care.

A similar section in the higher education budget also dealing with pregnancy health centers and supports was also vetoed.

“These line items would create a gag rule preventing reproductive health-service providers from even mentioning abortion and otherwise make it harder for women to get the health care they need,” Whitmer wrote in her veto letter. “Any efforts to undermine a woman’s ability to make her own medical decisions with her trusted health care provider will earn my disapproval. Women and doctors should be making health-care decisions – not politicians.”

Other sections in the higher education budget were also vetoed.

One would have provided $5 million general for “ethical stem cell/fetal tissue research” and a second one would have provided $500,000 General Fund for pregnant and parenting student support services.

Finally, another section from the higher education budget was vetoed that would have created a condition for public universities receiving certain grant monies that they would not conduct any research on aborted fetal tissue.

In her veto letter, Whitmer also wrote that each higher education institution in Michigan has “general supervision of its institution and the control and direction of all expenditures from the institution’s funds” and that any provisions seeking to block institutions from budgetary independence is unconstitutional.

Another announcement from Whitmer was that she plans to soon issue an executive directive creating a Michigan Parents Council. She said it would consist of parents and allow for more voices to be heard on what is needed in Michigan schools. Whitmer did not provide many details but said the council’s appointments would be named before the school year begins in the fall.

Officials praised the budget in statements following the bill signing.

Superintendent of Public Instruction Michael Rice referred to the bill as a generational budget and said: “Kids win!”

“After years of school underfunding, the FY23 budget has the potential to be the budget to which we point in the future as the pivot point in the strengthening of public education in Michigan, the year when we made the most substantial strides toward adequate and equitable school funding,” Rice said. “Great work on the part of the governor and Legislature, and the many others who contributed to make it happen.”

Board of Education President Casandra Ulbrich (D-Dearborn) was similar in her praises.

“Michigan has the resources now to build a stronger foundation for all kids to succeed from their earliest years, and the governor and Legislature have stepped up in a big way with this budget,” Ulbrich said.

Rep. Thomas Albert (R-Lowell), the House Appropriations Committee chair, said the Legislature is committed to the priorities within the education budget including per-pupil funding, mental health supports, student safety, and teacher recruitment. He said those priorities are critical while not passing along debt to future generations.

“It’s no secret that many students across our state still have a long way to go to catch up on learning lost during the pandemic. This budget is a historic investment that will help our children succeed today and well into the future,” Albert said. “We are making investments that will help all students. Michigan has underfunded special education for years, and this new budget is an important step toward making things right.”

Debbie Brinson, executive director of the School-Community Health Alliance of Michigan, said she was pleased with the funding for school-based health centers, which she said can establish 100 more across the state.

“The increase in the capacity to help Michigan kids ages 5-21 by accessing treatment and screening right outside the classroom will have a huge impact on Michigan’s future,” Brinson said. “The signing of this budget is a first step to moving many kids off the waitlist for care, and toward a brighter future.”

The Cannabis Regulatory Agency announced last month that medical marijuana facilities seeking a new license or renewing an old one will pay less in fees for the 2022-23 fiscal year.

Last year, the agency reduced the same fees for the current fiscal year.

For growers in 2022-23 fiscal year, those in the Class A category will pay $1,500, those in the Class B category $3,000 and those in the Class C category $4,500.

Those fees are down significantly from $4,000, $8,000 and $12,000, respectively. Renewals will now pay the same as those seeking an initial license. In the current fiscal year, the agency determined renewals based on tiers determined by the size of the operation.

Processors will pay $4,500, down from $12,000. Renewals again will pay the same. In the current fiscal year, renewals were based on tiers and ranged from $14,000 to $28,000 depending on size.

The same went for provisioning centers that under the current fiscal year paid between $5,000 and $10,000 for a new license or a renewal.

In the next fiscal year, provisioning centers will pay $2,813 for a new license or a renewal.

Secure transporters will pay the same and safety compliance facilities will pay no fee.

Regulatory assessments due prior to Oct. 1, 2022, when the new fiscal year begins, will not be adjusted to the new fee schedule.

“As the market is maturing and the CRA continues to issue new licenses and renew existing

licenses, regulatory costs are now spread across more payers into the marijuana regulatory fund,” a bulletin announcing the changes said. “This has resulted in a significant reduction to the regulatory assessments.”

The medical market is smaller than the recreational, in June the Cannabis Regulatory Agency received 97 initial applications across license types and approved 90 renewal applications. There are 1,370 active licensees as of June.

For the recreational market, there are 1,600 active licenses and the agency received 114 renewal applications and 204 initial applications last month.

In June alone, the recreational market saw $165.9 million in sales and the medical market saw $21.5 million.