Detroit Regional Chamber > Advocacy > July 2 | This Week in Government: Whitmer Vetoes Tax Exemption for PPE; $17B for K-12 Headed to Gov’s Desk

July 2 | This Week in Government: Whitmer Vetoes Tax Exemption for PPE; $17B for K-12 Headed to Gov’s Desk

July 2, 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. Whitmer Vetoes Tax Exemption for PPE Purchases
  2. $17B for K-12 Headed to Gov’s Desk; No Deal on Other Budgets
  3. State Sweepstakes to Offer Cash, Scholarships for COVID-19 Inoculation
  4. Flood Relief Funds, Other Spending Hung Up by House-Senate Tiff
  5. AG Presses PSC on Lowering Consumers Energy Electric Rate Request

Whitmer Vetoes Tax Exemption for PPE Purchases

Gov. Gretchen Whitmer on June 25 vetoed bipartisan legislation that would have exempted some personal protective equipment purchases by businesses from sales and use taxes.

HB 4224 and HB 4225 were sponsored by Republican Rep. Jim Lilly of Park Township and Democratic Rep. Sarah Anthony of Lansing.

The bills, which passed overwhelmingly in both chambers, would have exempted from sales and use tax certain PPE and supplies for businesses that had implemented a COVID-19 safety protocol plan. The Department of Treasury would determine an exact formula on the exemption.

Fiscal estimates said the bills could have cost $18 million for the life of the exemption.

Gov. Whitmer said being a tax credit instead of a grant program for businesses meant federal relief dollars could not be used to pay for the cost if the bills were to become law.

“Small businesses that did everything right over the last year should be celebrated and rewarded. We are fortunate that the American Rescue Plan includes the federal resources we need to help jumpstart our economy. I am supportive of a grant program to help small businesses defray the cost of purchasing personal protective equipment to keep their employees safe during the COVID-19 pandemic,” Gov. Whitmer wrote in her veto letter. “Unfortunately, House Bills 4224 and 4225 fall short, because they would create a tax credit rather than a grant program, making the expense ineligible for American Rescue Plan dollars. I encourage the Legislature to send me bills that would allow us to send these federal relief dollars to hard-working business owners who’ve kept their employees and customers safe over the past 15 months.”

Further, Gov. Whitmer said any legislation with a fiscal impact should run alongside the budget process.

Conservative group the Michigan Freedom Fund blasted Gov. Whitmer’s veto of the legislation.

“Governor Whitmer ordered the longest and most severe COVID restrictions, which has caused the slowest recovery in the nation. Whitmer’s hypocrisy has been on full display for over a year so it’s not a surprise that just days after the governor’s small business summit, she vetoed bipartisan legislation that would help small businesses,” Tori Sachs, the group’s executive director, said in a statement. “The state of Michigan has massive budget surpluses with state revenue rolling in, but small businesses are still dealing with the fallout from Whitmer’s restrictions. She’s now hoarding taxpayer money that could be used by small businesses trying to reopen.”

Related: Chamber Statement on Gov. Whitmer’s Veto of PPE Worker-Safety Sales Tax Relief

$17B for K-12 Headed to Gov’s Desk; No Deal on Other Budgets

A more than $17 billion School Aid Fund budget for the 2021-22 fiscal year was agreed upon by the Legislature Wednesday and sent to Gov. Gretchen Whitmer, with appropriators and education groups lauding the realization of long-sought equity for K-12 per-pupil funding, but the rest of the budget for the upcoming fiscal year remains unfinished.

While work on the School Aid budget (HB 4411) was seen through to completion, the Legislature left several significant budget items open Wednesday for further negotiations as it departs from Lansing until potentially July 14 for the House and July 15 for the Senate.

Still to go is the 2021-22 fiscal year budget for all state departments and agencies, higher education, and community colleges, where it’s apparent no real headway has been made between the Whitmer administration and the Legislature. There’s also billions in federal coronavirus relief dollars to appropriate for the current and upcoming fiscal years as well.

With the inaction on everything other than K-12 school aid for the upcoming year and no voting planned for July 1, the Legislature formally missed the new statutory deadline to present a budget to the Governor on or before that date. PA 122 of 2020 set the deadline but with no consequence for missing it, the Legislature demonstrated what many suspected, that it was a deadline without any teeth and with the potential for being ignored.

That means the traditional deadline is in play, the start of the upcoming fiscal year on Oct. 1.

The School Aid budget cleared the Senate by a 33-1 vote. The House concurred later Wednesday in the amended version of HB 4411 by a 106-3 vote.

As amended and passed by the Senate, HB 4411 contained about $326 million more than what the House passed last week.

The Senate also retained the per-pupil minimum foundation allowance of $8,700 passed by the House.

This move would bring all districts to the same basic per-pupil foundation grant, an effort that has been ongoing for decades, and which was lauded by lawmakers and education groups alike.

“The bipartisan school aid bill makes historic investments in our children without raising taxes and will help each and every student thrive academically, mentally, and physically,” Gov. Gretchen Whitmer said in a statement. “I look forward to signing this legislation to expand the Great Start Readiness preschool program for 22,000 more children and connect more students to counselors, psychologists, and nurses in their schools. The bill also delivers on a decades-old goal to close the K-12 school funding gap.”

Still, she said she was disappointed the Legislature adjourned “without getting the job done.”

“We need to appropriate the $10 million in disaster aid for areas impacted by last weekend’s historic flooding,” she said, referring to supplemental appropriations legislation that did not clear the Legislature. “I am hopeful that the Legislature will work quickly to approve a state budget that supports small businesses, fixes our crumbling roads and bridges, expands access to childcare, and grows our economy.

Several other items included by the Senate in the School Aid budget were $155 million in federal funding for reading scholarships to be administered by Grand Valley State University and $75 million in federal funding for one-time HVAC and other capital improvements to school districts. An additional $60 million in School Aid Fund was also provided by the Senate for a 3 percent foundation allowance increase for ongoing operational cost increases for districts operating a balanced calendar.

Another addition to the budget was $6 million for a program called PRIME Schools, working in career and technical education. The program, under SME Education Foundation, builds manufacturing and engineering program in schools.

Rep. Joe Tate (D-Detroit) is a member of SME’s board of directors. Asked Wednesday if that represented a conflict, Tate said it is a volunteer position.

“I don’t think so, no,” Tate said on it being on conflict.

Tate said as far as he knew the 2021-22 fiscal year budget is the first time the group is receiving state funding.

Senate Appropriations Committee Chair Sen. Jim Stamas (R-Midland) told reporters following session he was especially pleased with the equity achieved in per-pupil funding and other supports for students, adding he believes getting school funding completed was a foundation for completing the rest of the budget.

“Letting the school(s) know where we were at, especially with an $8,700 base foundation, is a great place for them to go into their school year starting on July 1,” Stamas said. “The other parts can come later, and we’ll continue to work those out.”

Stamas said the revenue sharing budget, which the Senate substituted into HB 4410 along with some additional federal funding in the place of budgets for most state departments, was another top priority for him. He said he hoped the House will give it a look and be open to negotiations.

When asked what was important to him in the School Aid budget, Stamas pointed to closing the per-pupil funding gap, of which he said: “The largest one for me was … (to) finally eliminate that gap after 20-some years, finally finishing that and getting that done to me is a huge step forward for Michigan families and especially our kids.”

One of the main goals of Proposal A of 1994 was to narrow the chasm in per-pupil funding that existed at the time.

The House and Senate have remained at odds on completing the budget by the self-imposed July 1 deadline.

House Appropriations Committee Chair Rep. Thomas Albert (R-Lowell) in a statement on the School Aid budget praised the closing of the per-pupil funding gap.

“This is the perfect time to accomplish the mission,” Albert said. “Our kids need help like never before after the past year-and-a-half of the COVID pandemic. We are delivering resources that will help students return to normalcy and get caught back up.”

Sen. Curtis Hertel Jr. (D-East Lansing) told reporters the School Aid budget was the largest in state history and “a great bipartisan effort.” He said while he wished more could have been done Wednesday, getting K-12 funding passed was a major victory that he was glad to take.

“Certainly, we have a lot of work to do in terms of getting the full budget done,” Hertel said. “This body has an entirely large amount of work to do and we’re working to make sure we get that done.”

The Senate version of HB 4411 also contained language moving the state back to pre-pandemic online learning law. Hertel said there was also language that allows for some flexibility on that issue, so it was not something he would have wanted to blow up the budget over. He added he was willing to have further conversations on that topic in the future.

Hertel said he was also pleased with increased funding for student mental health, saying it was important before the pandemic and is even more important now.

Sen. Wayne Schmidt (R-Traverse City), chair of the Senate Appropriations K-12 and Michigan Department of Education Subcommittee, also praised the budget plan.

“This gets us in a good spot and allows us the time with those other monies to get them out in the proper manner,” Schmidt said.

Like other senators, Schmidt was pleased with the per-pupil funding agreement. Additional funding for reading and literacy programs was also a plus. Further, he was pleased with the small funding increases, like an additional $2.5 million to the 10 Cents a Meal program for school nutrition.

He repeated comments made the previous day, noting he preferred to get the budget right rather than try and meet a non-binding legislative deadline – i.e., the July 1 deadline.

Several other changes were made by the Senate to HB 4411.

Senators provided $1.1 million for isolated school districts. An additional $6 million for attendance recovery was provided, which grew from the $4 million the House provided. Senators also provided $5 million more than the House for school mental health.

For new programs, the Senate included funding for PRIME career and technical education schools ($6 million), the LETRS early literacy program ($4 million), $2.5 million for CTE programming at the COOR Intermediate School District in Roscommon ($2.5 million), funding for Jewish Federation camps and schools ($1.7 million), the Flint Early Childhood Collaborative ($1.4 million), for transportation costs for Huron Valley ($1 million) and for Mi Alma ($450,000).

The Senate also increased funding for several programs: Imagine Learning ($4.5 million), Algebra Nation ($1 million), the Boys and Girls Club ($1 million), the Michigan Education Corps ($727,000), Orton Gillingham ($500,000) and the Chaldean Community Foundation ($250,000).

Education organizations in statements celebrated the budget and the Legislature being able to meet the July 1 deadline – which there had been pressure to meet.

“This is by no means an end to the fight for adequate and equitable funding for our schools,” Michigan Education Association President Paula Herbart said while praising the budget. “After decades of inequity and underinvestment in education, we must remain committed to fixing our school funding system so it provides the resources for every student to succeed, no matter where they live or what their learning needs are.”

K-12 Alliance of Michigan President Ken Gutman said he was thrilled that the Legislature met the deadline educators had been pushing for, even if it was with one day to spare.

“We’re pleased the Legislature not only got the job done on time, but got the job done well by passing a robust plan that also distributes the remaining federal COVID-19 aid,” Gutman said. “Educators now have the funding and guidance they need to get to work on what truly matters: supporting the needs of each and every student as we work to remediate the challenges brought on by the pandemic and set our students up for success in the coming year and beyond.”

Beth DeShone, executive director of the Great Lakes Education Project, thanked lawmakers for ending “funding discrimination” that she said targeted districts for decades.

“Our kids have long deserved better,” DeShone said. “We encourage the House and Senate to come to a final agreement on the legislation, to do what’s needed to make this landmark funding a reality, including reading scholarships to help students overcome lost learning faced during the pandemic.”

Dan Quisenberry, president of the Michigan Association of Public School Academies, called the passage of the School Aid budget, particularly the per-pupil funding, a landmark day for students.

“The days of treating students differently because of where they live or the type of public school they attend are over,” Quisenberry said. “Every child deserves a quality education in a quality school and families need to be able to choose the school that works best for their child. As a state, we’ve taken a big step forward today.”

And Peter Spadafore of the Michigan Association of Superintendents and Administrators said “closing the gap in per-pupil funding is nearly 30 years in the making. It’s a huge step forward in adequately funding schools based on student needs, and we applaud the bipartisan negotiations that made this a reality.

State Sweepstakes to Offer Cash, Scholarships for COVID-19 Inoculation

A select handful of Michiganders could win tens of thousands of dollars in cash prizes or receive a $55,000 college scholarship for getting vaccinated against the coronavirus through an incentive program announced by Gov. Gretchen Whitmer Thursday.

Done in conjunction with Meijer, the Michigan Association of United Ways, and other partners, the program seeks to encourage residents to become inoculated against COVID-19 while promoting the safety and effectiveness of vaccination.

Called the “MI Shot to Win Sweepstakes,” the campaign will give vaccinated Michiganders a chance to win a combined total of more than $5 million in cash and nine $55,000 college scholarships via a lottery-style raffle.

“I know some of you must be thinking, ‘didn’t Ohio do this first?’ Well, yes they did, but in typical Michigan fashion – we wanted to do it bigger and better than they could do in Ohio, and that’s where we are,” Gov. Whitmer said. “The MI Shot sweepstakes will save and change lives.”

Ohio was the first state in the nation to launch a lottery sweepstakes in exchange for its residents becoming vaccinated. Known as “Vax-a-Million,” the state was able to increase vaccinations by 94% among 16- and 17-year-olds, 46% among 18- and 19-year-olds, and 55% among those aged 20 to 49.

Michigan’s gaming rules prevents the state from offering something like Ohio’s vaccination lottery. Protect Michigan Commission Director Kerry Ebersole Singh, however, said the $5 million funding this initiative is coming from federal relief dollars which the Legislature has already allocated for responding to COVID-19 in Michigan.

“There’s a segment of folks that do have questions about the vaccine, but there’s a whole set of folks that are willing to get vaccinated, but haven’t made it into their daily life priorities,” Singh said. “We believe incentivizing those folks are going to be able to drive (Michigan) to 70%.”

Roughly 62% of Michiganders have received their first COVID shot, and Gov. Whitmer noted the goal of the program was to boost the state’s numbers to the 70% metric long touted by the Governor. Singh added that she believes this program will boost vaccination rates, estimating that about 20% of the state’s population will not get a COVID shot no matter what is offered.

Those who have gotten at least one dose of a COVID-19 vaccine between Dec. 1, 2020, and July 10, 2021, are eligible to enter. Children and teens aged 12 to 17 who have received a shot are also able to enter for the scholarships, but must be registered by a guardian.

Michiganders can sign up online or by calling (888) 535-6136 between 8 a.m. and 5 p.m. Monday through Friday, or between 8 a.m. and 1 p.m. on the weekends.

Prizes include a $1 million prize for one individual 18 years or older as well as a $2 million prize. The other cash prizes consist of 30 daily $50,000 drawings. The $1 million is eligible for those who register between July 1 and July 10, while the $2 million drawing is eligible for those who registered July 1 through Aug. 3.

The $50,000 drawings will run from July 1 through Aug. 3 as well. A schedule of drawing deadlines can be found online. Additionally, those under 18 can enter to win one of the $55,000 scholarships, which are available to those who register between July 1 and July 30.

Vaccinations have consistently slowed in recent months with the projected date the state will reach 70% continuing to be pushed out later into 2021.

Related: Chamber Statement on New Vaccine Incentive: MI Shot to Win Sweepstakes

Flood Relief Funds, Other Spending Hung Up by House-Senate Tiff

Both houses of the Legislature on Wednesday passed similar, but not identical, supplementals but failed to reach an agreement on what to send to Gov. Gretchen Whitmer, leaving both bills stranded in the Legislature and $10 million for flooding remediation in limbo for at least two weeks.

The House discharged SB 27 from committee and amended it to include the supplemental funding the Senate inserted into HB 4410 except for $1.4 billion in revenue sharing.

The Senate, apparently unimpressed with the skeletal version of the 2021-22 fiscal year departmental budget the House last week put into HB 4410, totally rewrote that bill to make it mostly a 2020-21 supplemental appropriation other than the revenue sharing money for the 2021-22 fiscal year.

Outside of the revenue sharing, SB 27 and HB 4410 were identical.

SB 27 passed the House 106-3 and HB 4410 passed the Senate unanimously.

Like schools, local government fiscal years begin on July 1 so they often advocate for knowing what their funding allocation from the state will look like early.

Rep. Mary Whiteford (R-Casco Township) said the House just wasn’t there yet.

“We’re still working closely with the Senate and when we come back, we’ll be addressing that for sure because we believe it’s really important to fund our local communities,” she told reporters.

Outside of the revenue sharing, the bills would have provided $385.2 million with $17.2 million General Fund and the rest federal COVID relief funding.

Lawmakers from southeast Michigan pushed funding to help with cleanup efforts from the flooding in the region during the weekend.

Whiteford said all members cared about providing funding for remediation following the recent weather events, but said she wasn’t at the table for the decision on the supplementals.

Rep. Joe Tate (D-Detroit), the minority vice chair of the House Appropriations Committee, said he was disappointed the flooding funds didn’t get through on Wednesday.

“We’re going to keep working it,” he said. “All the homes in my neighborhood, just about, have flooded basements and have quite a bit of damage because of the backups. So it’s extremely disappointing that we didn’t get that out. We are going to keep working to find ways to support residents that were impacted.”

Rep. Abraham Aiyash (D-Hamtramck) told colleagues on the House floor he slept in his car as every single street leading to his house was too flooded to drive through.

“We have an opportunity to show Michiganders the very, very best of public service that when people at their lowest point, because of sometimes local government failure or nature disasters, that it was this chamber, it was this House that decided to step up and say that ‘we will serve the people,'” he said on the House floor.

Sen. Sylvia Santana (D-Detroit) also praised the funding on Wednesday, though it was not finalized.

“The storms that struck southeast Michigan this past week have shown us what we can come to expect from our rapidly changing climate,” she said in a statement. “For many Detroit, Dearborn, and Melvindale families who are still recovering from financial and human costs of the COVID-19 pandemic, the added hardship of paying for flood recovery costs is just too much for our district to bear.”

Both supplemental bills included $2.7 million for Secondary Road Patrol, $160 million in hospital payments and the $100 million for the $23 per day increase in payments to nursing facilities, $10 million for cleanup efforts from recent flooding, $7 million for the Wrongful Imprisonment Compensation Fund and $105.0 million of federal funds to provide a 40 percent rate increase to child development and care program providers beginning on Oct. 1, 2020.

Neither chamber took up the other’s version of the supplemental, indicating a disagreement on the revenue sharing piece.

AG Presses PSC on Lowering Consumers Energy Electric Rate Request

Attorney General Dana Nessel Wednesday said she disagrees with Consumers Energy Company’s pending rate increase request, including an annual increase in revenues of $225 million.

Nessel is urging the Public Service Commission to drastically reduce the request which would result in an 8.8% increase for residential ratepayers and a 5.5% increase overall for all ratepayers.

“An 8.8% rate increase during a time when people are struggling with job loss and economic hardships is too much,” she said in a statement. “I am fighting this exorbitant rate increase request and asking the MPSC to deny the request and grant a rate decrease.? As this state’s chief consumer advocate, I will continue to advocate for all Michigan customers.”

The attorney general submitted written testimony to the commission, which pans the company’s request is excessive and unnecessary. Given the current rates, Consumers Energy will receive excess revenue in the amount of $30.7 million, Nessel said.

If the PSC approves Consumers Energy’s request, Nessel said she would argue for a change in how costs are allocated so that costs are more fairly distributed among customers. Residential customers would see a 4.8% increase instead of an 8.8% increase.