March 4 | This Week In Government: Senate Sends Tax Cut To Whitmer, Who Calls For Talks; Term Limits Reform Promises A More Robust House, But Critics Call FoulMarch 4, 2022
- Senate Sends Tax Cut To Whitmer, Who Calls For Talks
- Term Limits Reform Promises A More Robust House, But Critics Call Foul
- Port Authorities Package Draws Mostly Positive Testimony
- GOP Outsiders Win House Primaries With Regan 74th; Mekoski In 36th
- Study: Midwesterners Could Pay $5.8B Per Year If Line 5 Shut Down
Significant divisions over an acceptable level of tax reductions to provide residents and businesses remain as a divided Senate voted Thursday along party lines to concur with the House on a multibillion dollar tax plan proposal that faces a likely veto from the governor.
A separate bill also passed the Senate along party lines to lower the state’s corporate income tax.
The proposals, Republicans have stated, would provide residents relief in the face of rising inflation and economic difficulties stemming from the coronavirus pandemic while businesses would also see relief.
Pegged with an estimated state cost of $2.5 billion per year once fully implemented, the plan contained within SB 768 would lower the personal income tax rate from 4.25 percent to 3.9 percent and reduce the age for receiving an exemption on retirement income to age 62 if they qualify after exercising the standard deduction.
Removed by the House was a corporate income tax cut that was in the original Senate version of SB 768. A $500 per child tax credit that was in the Senate bill was retained in the final version of the proposal. Senators concurred with the House changes by a 22-15 vote along party lines.
Also brought forward without warning and passed was a substituted version of SB 392, a separate bill cutting the corporate income tax rate from 6 percent to 3.9 percent. The bill as substituted was also passed 22-15 along party lines.
Sen. Aric Nesbitt (R-Lawton) in floor remarks following the vote on SB 768, said current economic conditions have harmed all residents.
“It acknowledges that every Michigander needs help at this time of record-high inflation, supply chain shortages and communities struggling to recover from shutdowns,” Nesbitt said. “This bill that passed provides tax relief for every Michigander here in Michigan.”
Gov. Gretchen Whitmer, in response to Thursday’s votes, sent a letter to the Quadrant of House and Senate leadership asking to begin negotiations on both the budget and in finding agreement on potential tax cuts. In it she stated her opposition to the Republican plans being put forth while touting the targeted proposals outlined in her budget recommendations which GOP leadership has so far responded to with a cool reception.
“I have serious concerns that the legislation passed by the House and Senate this week does not meet that standard. In its current form, this bill is fiscally irresponsible, unsustainable, and could increase costs for Michigan families at a time when they can least afford it,” Whitmer wrote. “This legislation will create a massive, ongoing, multi-billion-dollar budget deficit. This would force the Legislature to either raise taxes on Michigan families, or make deep and painful cuts to public schools, road repairs, and police and fire protection.”
Whitmer added that while she will not support legislation the Republican majority has moved this week, she expressed encouragement that the Legislature agrees “that putting money back in the pockets of Michigan’s retirees and working families is a priority.”
During session Sen. Curtis Hertel Jr. (D-East Lansing) offered an amendment to SB 768 that would have reinserted the corporate income tax cut. Hertel said the Republican majority should have an opportunity to make a choice as to whether to vote on the original version of the bill again “since we’re playing a political game here at this point.”
Following the senator’s remarks both parties went to their respective caucuses.
When members returned the Republicans brought SB 392 to the floor. The bill in its original form would have lowered the corporate income tax from 6% to 4.9% effective January 1, 2022, but it was changed through a floor substitute to 3.9%.
Following the rejection of a proposed Democratic floor amendment and several procedural moves by Democrats, the substitute was adopted, and the bill passed.
From there, SB 768 came back to the floor. Prior to the vote to concur, a vote on the Hertel amendment failed 17-16 due to several Republicans not voting and therefore preventing there being a majority of members elected and serving for adoption of the amendment. The party-line vote to concur was then taken on the bill.
At least one House Democrat said Thursday she believes Whitmer could be inclined to sign a Republican tax plan into law – but only if the personal income tax reduction from 4.25% to 3.9% is dropped.
That portion of the plan is core to Republicans, with House Tax Policy Committee Chair Rep. Matt Hall (R-Marshall) repeatedly defending the move as providing a tax cut for every Michigander and not just the lowest earning individuals.
Whitmer has called for increasing the Earned Income Tax Credit, which benefits the lowest wage-earners. Republicans also have voiced support for such action, but it appears it will first take a gubernatorial veto for each side to move into a negotiation phase.
Rep. Sara Cambensy (D-Marquette), one of several Democrats who voted for the tax cut bill in the House, said the bill had both good and bad aspects and said that it still needed “many amendments before it becomes law, most notable the removal of the personal income tax reduction from 4.25 percent to 3.9%.”
“Knowing that lowering the personal income tax isn’t supported by the governor, we can work with her to replace that section of the bill with either a graduated income tax or an earned income tax credit that gives relief to our most vulnerable individuals and families,” she said in a statement Thursday. “In order to keep the most important tax cuts for our residents in these bills on the table, legislators must continue to have discussions and work together with the governor in hopes of reaching consensus.”
No Democratic or Republican legislator will jeopardize the state’s ARPA funding or leave a massive hole in our state or local budget, Cambensy continued, saying that she was “confident that we can work with the governor to get these bills done right.”
When SB 768 passed Tuesday, it was Cambensy who was the singular Democrat that broke what appeared to be an impasse between the two parties on whether the legislation would move out of the chamber.
Upon Cambensy voting yes for the bill, a slew of other Democratic lawmakers either changed their no vote on the bill to a yes or stopped holding out altogether.
Given that the Senate enrolled SB 768 on Thursday, however, changes are unlikely to happen.
When speaking with Gongwer News Service following the Senate vote, Cambensy said that the Legislature and Whitmer negotiating on the Earned Income Tax Credit could be the next step in this tax cut debate.
“I still think, even though it passed out of (the Senate), we still need to get it through the governor’s office, and we know what she’s opposed to,” she said. “We know what she likes and doesn’t like, and I think there’s room to negotiate, still, before anything is signed into law.”
As for why she, and other Democrats, voted for the move, Cambensy said it wasn’t an easy decision and that letting the tax cut fail (or to not vote yes on it) could put “our members in those vulnerable seats with really tough campaigns.”
Nearly every Democratic yes vote is running for reelection in a tough district.
Asked if she saw a future where the Whitmer administration tax cut plan could absorb portions of the Republican-backed plan from the Legislature, she seemed uncertain.
“We don’t really know specifically what (Whitmer) is looking at now that it did pass the Senate, but I do know, going into this and going into the vote, she was opposed to the personal income tax decrease,” Cambensy said.
Speaking to reporters following session, Nesbitt called the argument that the bill could jeopardize ARPA funding false, stating the Legislature is proposing the use of state resources to lower taxes, making a loss of ARPA dollars a non-issue. He also pointed to previous Democratic arguments of proposed corporate income tax cuts being larger than those of individuals as being inaccurate, stating about 80% would go to individuals under the proposal.
“They’re just making up fake numbers because they know they can’t win on the arguments on the real substantive of having hardworking Michiganders keep more of what they earn,” Nesbitt said.
When asked about the governor calling the proposed tax cuts unsustainable, Nesbitt called the governor’s budget proposal unsustainable, with large spending increases being proposed.
As to whether there is room for negotiations if the bills are vetoed, Nesbitt said: “You’ve seen legislative leaders be at the table for the last three years, and it’s unfortunate that it takes an election year for the governor to come to the table.”
Organizations quickly issued statements either urging the governor to sign or veto the proposed tax cuts.
James Hohman, director of fiscal policy with the Mackinac Center for Public Policy, urged the governor to sign.
“Lowering the income tax will make Michigan more competitive, encourage small businesses and help Michigan’s economy recover faster,” Hohman said. “Individuals should be able to keep more of their hard-earned money. It’s encouraging to see lawmakers pass reforms to make that a reality. Michigan has consistently seen strong revenue growth. It’s clear that the state can afford to reduce taxes.”
In a joint statement, AFT Michigan President David Hecker and Michigan Education Association President Paula Herbart said they agreed with the governor’s stance that the proposal is unsustainable and urged a veto.
“Michigan children, families and seniors need real tax reform that levels the playing field for everyday people and properly funds our children’s schools,” the two said, calling the legislation an election year gimmick. “SB 768 is an unsustainable approach that would cause irresponsible cuts to our schools at a time when we can least afford it.”
A letter from a coalition of more than a dozen education, environmental and progressive groups also urged a veto, calling the tax cuts fiscally irresponsible.
“Instead of providing for our communities and our people, the Michigan Legislature is poised to pass a bill giving tax breaks to the very people who got richer during the pandemic,” the coalition wrote. “When we go all in for all of us, we can make Michigan a place we’re proud to call home, with the world-class schools affordable healthcare and community services our families need.”
The most serious attempt to reform Michigan’s 30-year-old term limits law was announced Tuesday with the backing of a broad bipartisan coalition, aiming to make term limits more flexible and requiring state elected officials to file financial disclosure paperwork on their personal finances.
Some 24 years after term limits first affected the House, booting 64 of the body’s 110 members and 20 years after knocking out 80% of the Senate, after too many false starts to count, a group finally organized with the goal of changing the state’s lifetime limit of three two-year terms in the House and two four-year terms in the Senate.
No other state comes close to having such a strict limit, and term limits has been blamed for a series of problems in legislative operations, particularly in the House, with a succession of inexperienced speakers and minority leaders, first-term members chairing committees, a raft of scandals seemingly owing to newbies enjoying the perks of power too much and a general loss of expertise.
Term limits defenders have never been willing to cede that the 1992 law had any problems, so it was unsurprising when one of the designers of Michigan’s term limits cried foul, calling the move “a transparent effort to dramatically weaken our Constitution.”
Members of the newly formed committee, Voters for Transparency and Term Limits, announced the plan in a news conference with reporters. It consists of several well-known players in Democratic and Republican circles, but ones that few ever imagined would join forces, like current Detroit Mayor Mike Duggan and former House Speaker Jase Bolger, longtime former Michigan Chamber of Commerce President and CEO Rich Studley and former Michigan State AFL-CIO President Mark Gaffney, among others.
“This proposal isn’t for the political left or right – it’s for every Michiganian,” Bolger said. “This is our opportunity to drive change and accountability in Lansing and beyond. By requiring financial disclosure and strengthening term limits, we can drive a level of transparency and accountability in Michigan that will best serve the hardworking men and women across our state for years to come.”
The plan introduced Tuesday is – by far – the most serious attempt to change the term limits law put into the Constitution in 1992 by voters that sets a lifetime limit of three two-year terms in the House and two four-year terms in the Senate. There has never been a ballot question committee formed. Over the years, the Legislature considered the idea but ultimately made no move out of a fear of looking self-serving.
Instead, the proposed constitutional amendment would set a 12-year limit on total legislative service, meaning a person could serve a full 12 years in the House or Senate or some combination of the two equaling 12 years.
Organizers will need valid signatures from at least 425,059 registered voters by July 11.
Studley was adamant that the measure was meant to reform the framework for term limits, not repeal them, and to bolster transparency for voters into potential financial conflicts of interest among lawmakers and executives.
“I’ve had the opportunity to work in and around the Capitol building for 40 years, so I have seen both the positive impact of term limits and the unintended consequences of term limits on the legislative process,” he said. “If you have a car that’s 30 years old, you’re somewhere between driving a classic car and antique. If you live in an apartment building or home that’s 30 years old, may still be a nice place to live, but chances are it’s in need of some renovation and repairs. And frankly, the same thing applies to constitutional amendments.”
As it was exactly 30 years since term limits were passed, Studley said now was the time to “step back and look at the impact of term limits and see how we can work together to make state government better.”
Overall, it appears the new proposal could have the potential to stabilize the House, as electeds would not be running for speaker positions the moment they walk in the Capitol as a freshman, or gun for a Senate seat right away. It would also let House members build vital expertise in the legislative process and its various niches.
Speakers would likely now have six to eight years of experience, similar to the Senate majority leaders, and could result in few to no first-term House members chairing committees. The measure wouldn’t change much for the Senate, however, as the upper chamber was not harmed by term limits in the same way as the House. Most senators previously served in the House, meaning there is usually a group of senators who spend 14 years in the Legislature.
When asked, Bolger said he could have indeed benefitted from more time spent in the House.
“I was certainly learning new things on my first day on the job and my last day on the job. I would have benefitted from more time to understand state government better,” he said. “However, this isn’t about the elected official, this is about what it means to the people of the state and how they’re best served.”
The disclosure of financial standing would also be a large part of the proposal, requiring not just the Legislature but the office of the governor, lieutenant governor, secretary of state and attorney general to file annual financial disclosure reports and periodic transaction reports with the Department of State. It also allows backers to frame the proposal as an overall legislative reform to parry any attacks from pro-term limits organizations.
“This is good public policy. The idea here is, it’s common sense to have elected officials record their financial conditions. It’s common sense for the voters to know this kind of information from their elected officials,” Gaffney said. “Michigan government doesn’t become hampered by more information, by more disclosure from folks who are in it, it becomes better. And tightening up the ethics and fixing, amending the term limits, is a very good thing to do.”
Nia Winston, president of Unite Here Local 24, said the proposal would make sure laws like term limits were not outdated and serve the best interest of the people.
“As you see here from this coalition that we’re building, this effort is too important to let our differences stand in the way,” she said. “That’s why I will make sure that myself and my members of Unite Here will be working hard together to make this happen.”
Reported information to be required under the proposal includes:
- Assets and unearned income;
- Purchases, sales or exchanges for a security or real property;
- Earned income and liabilities;
- Positions held as an officer, director, trustee of an organization, partner, proprietor, representative, employee or consultant of any corporation, firm or business enterprise. This would also include nonprofits, labor and educational institutions;
- Agreements or arrangements with respect to future employment or current employment other than within state;
- Gifts as defined by Section 4 of PA 472 of 1978;
- Travel payments or reimbursements; and
- Payments made by others to a charity in lieu of honoraria.
Each of those changes would appear in Article IV of the Michigan Constitution.
Organizers said that they plan to submit their proposal for review to the Board of State Canvassers on March 23. They will need to collect the necessary valid signatures from registered voters by mid-July to make the November ballot.
When asked how the group would be funded, where they might find support and who has committed to providing funding thus far, Studley did not give a definitive answer. He did say, though, that the plan was to get Democratic and Republican leaders and business and labor leaders together to raise the necessary resources.
“It would be a combination of sources from across the state, and we’re determined to be successful, so we’ll do what it takes to get this proposal moving,” he said.
Commenting on the proposal was Studley’s former employer, the Michigan Chamber of Commerce, whose new President and CEO Jim Holcomb said in a statement that the group has long been a proponent of amending the state’s term limits.
“We commend the bipartisan, broad-based coalition approach to fostering public discourse on these important issues,” Holcomb said. “We look forward to reviewing the specifics of this new ballot proposal and evaluating how it may deliver better results for Michiganders.”
For years, there has been a general consensus among those who work in and around the Capitol that Michigan’s term limits law has led to a number of problems in legislative operations. But no one has wanted to take on the expensive task of pursuing a change until now.
Michigan also has ranked among the least transparent states in large part because elected officials do not have to disclose anything about their personal finances. The Legislature has so far been unwilling to act on that front.
“Michigan should be leading the way in financial transparency and disclosure, not sitting at the bottom of the list,” Gaffney said. “It’s time to change our constitution and come up with common sense requirements that will best serve Michigan. We are calling for financial disclosure, updated term limits and finally slowing the revolving door of legislators to develop leaders who are committed to working for the people.”
That said, Patrick Anderson of the Anderson Economic Group, and one of the original designers of the term limits law along with Dick Headlee and L. Brooks Patterson, was critical of the effort. Having been a part of the movement to enact term limits 30 years ago, Anderson said in a statement that more than 400,000 citizens signed the petition to put term limits on the ballot, and nearly 60% of voters supported it.
“It’s in the Constitution because ordinary citizens put it there. It remains popular in Michigan and across the country, because it works. Now we have a powerful coalition of lobbyists, labor unions, a former speaker and a big city Mayor that want to change that. It is a transparent effort to dramatically weaken our Constitution,” Mr. Anderson said. “If this powerful coalition has really been assembled for ‘financial transparency,’ they should ask the Legislature to pass such a law today. Instead, they are using their failures to adopt laws as an excuse to increase their power.”
Looking at the math, Anderson said the proposal would have the net effect of doubling the time a person could serve in the House, reopening a door “we slammed shut in 1992.”
“Speakers could once again banish upstart representatives to basement offices,” Anderson added. “Government buildings would again sprout with the name of powerful legislators. Michigan should not return to those days, regardless of how inconvenient democracy is to powerful interests.”
However, that’s simply not true. Seven years after the term limits law passed, the Anderson House Office Building was opened and each district was assigned a permanent office for that district’s member to use. A handful of leadership members have their offices in the Capitol.
It’s unclear what government buildings Anderson was referencing or how term limits is a factor. Term limited legislators – not their veterans predecessors – chose to name the Senate building after former Lt. Governor Connie Binsfeld and the House building after former Rep. Cora Anderson.
While Duggan did not directly address Anderson’s concerns while speaking with reporters, he did acknowledge the effort he and others went through to put forward a term limits measure that “was very successful.” However, Duggan said it was assumed when passed that people would serve for six years, be diligent and move on.
“It’s turned out, the House of Representatives has turned into one large revolving door, and because of the short time limit, you see even the most serious legislators in their first year thinking through, ‘what Senate seat I can run for? Which other reps are going to run for that Senate seat?’ And even the best in the House of Representatives end up looking at that House seat as a stepping-stone.”
Supporters of legislation that would expand support and dedicate more resources to the state’s port authorities said it would help expand the maritime industry in Michigan where they said spending has long been lacking.
The Senate Economic and Small Business Development Committee on Thursday took up several bills for testimony only that supporters said would make the state more competitive with the other Great Lakes states.
There was some testimony in opposition, largely centering on provisions involving environmental plans as well as the concept of growing government to meet the ends outlined in the proposal.
Before the committee was a bipartisan package consisting of SB 743, SB 744, SB 745 and SB 746, which would allow for the establishment of grant funding for port authority projects, allowing for revenue bonds for transportation projects that could help enhance ports and the establishment of a Great Lakes Maritime Office within the Department of Transportation. Another bill, HB 5291, contains similar provisions.
Under SB 744 a Great Lakes Maritime Grant Program would be established within the Department of Treasury, allowing for grants of between $10,000 and $2.5 million to port authorities. Under SB 746, port authorities would be required to develop five-year environmental impact transparency plans.
The first bill, SB 743, would create a Great Lakes Maritime Office within the Department of Transportation, while SB 745 would allow port authorities to use revenue bonds for the funding of transportation projects to enhance facilities
Paul LaMarre, director of the Port of Monroe, said he was thrilled about the proposed package and has been pushing for an expansion of the state’s support for Michigan’s ports for 10 years.
“There is a significant need for all aspects of this legislation,” LaMarre said. “It’s something that I believe will make the state more resilient and project our Great Lakes reputation even further.”
Kyle Burleson, director of port operations with the Detroit-Wayne County Port Authority, agreed. He said other Great Lakes states such as Ohio and Wisconsin have leveraged programs such as those in the package before the committee and improve their facilities.
“Michigan ports have not had similar tools to modernize facilities or remain competitive when fighting for cargo,” Burleson said.
Burleson added he found it shocking there is no maritime office within its Department of Transportation as in other states to oversee port activities.
Sen. Kim LaSata (R-Bainbridge Township) questioned the need to address maritime industry concerns in the manner the bills propose.
“Why can’t MDOT just do this? Why not add staff?” LaSata said, adding she was concerned about the prospect of creating an entire new division within state government.
LaMarre said prioritization of maritime operations outlined in the bill would make a huge difference in becoming more competitive with neighboring states. He also said the importance of maritime shipping was highlighted during the coronavirus pandemic.
Kevin Cotter with Fisher Companies said the group was opposed to SB 746, asking the committee to “understand what Michigan ports are and what they’re not.”
He referenced what he called vague terminology in the bill such as requirements for employing the “best available technology” at port facilities. Cotter said he believed it was also vague in the bill as to what would be the focus of monitoring for emissions at facilities.
Cotter said the group is supportive of the overall concept of the package but for SB 746 more work on the regulatory provisions should be considered.
Sen. Stephanie Chang (D-Detroit), sponsor of SB 744 and SB 746, said following the hearing the package is an opportunity to improve the state’s maritime industry, especially given the supply chain issues that emerged during the pandemic.
“It’s a really great bipartisan effort … to mirror what’s being done in other states to really make sure that we’re moving to the next level,” Chang said.
Sen. Wayne Schmidt (R-Traverse City), sponsor of SB 743, echoed those sentiments following the hearing.
“We’ve always had a good industry, a good shipping industry that has respected the environmental concerns of the state and of the water, but we can continue to do more,” Schmidt said.
Two Republican candidates who were not the pick of key interest groups won their primaries Tuesday with Robert Regan taking the 74th House District in Kent County and Terence Mekoski winning the 36th primary in Macomb.
Regan defeated Steven Gilbert – who had the endorsement of lawmakers and key GOP outside groups – by 81 votes. Similarly, Mekoski defeated Sylvia Grot by 328 votes.
There were two other special primaries, another Republican contest in the 43rd House District and one among Democrats in the 15th District.
The four elections which took place Tuesday were to fill seats left vacant by three resignations – Sen. Mark Huizenga (R-Walker) in the 74th, Sen. Doug Wozniak (R-Shelby Township) in the 36th and former Rep. Abdullah Hammoud in the 15th, the latter of whom went on to become mayor of Dearborn while the others were elected to the Senate – and the death of former Rep. Andrea Schroeder (R-Independence Township) in the 43rd, who succumbed to cancer in 2021.
Those who won Tuesday will go on to the May 3 general election and, should they win, keep the seat for a term ending January 1, 2023, should they not win reelection to a full term with the standard August primary/November general election.
REGAN WINS IN HD-74: In a twist few saw coming, Robert Regan is going to be the Republican to beat in the 74th House district come the May general election, toppling the supposed favorite candidate by a margin of just 81 votes.
With all precincts reporting in Kent County, Regan has won the four-way Republican primary in the 74th House district special election, securing 2,404 votes out of the 7,316 total votes cast –or just shy of 33 percent.
Regan has run for the House and lost in the primary in 2014, 2018 and 2020.
Coming in second was Walker Mayor Pro Tem Steven Gilbert with 2,303 ballots cast in his favor. In third was Granville City Council Member Justin Noordhoek with 2,102 votes and rounding out the pack was data scientist Brian Bair, who received 481 votes in all.
It’s estimated that only 15 percent of Kent County voters turned out for Tuesday’s election.
On his website, Regan lists his priorities as making English the official language in Michigan and stopping any other languages from being used on state documents, forms and ballots, wanting to “revise or repeal no-fault auto insurance laws” and reforming the state’s current tort laws.
A request for comment from Regan regarding his win was not returned in time for publication. He will go on to face Democratic candidate Carol Glanville in the general election come May.
MEKOSKI TAKES HD-36: The race which was anticipated to be a nailbiter lived up to expectations, with Republican Terence Mekoski pulling ahead of Sylvia Grot in the early hours of Wednesday morning by 328 votes.
It was also the last race to have results posted as local clerks physically brought vote totals to the county office.
With all precincts reporting in Macomb County, Mekoski saw 3,443 votes cast in his favor to Ms. Grot’s 3,115. Coming in third was Republican William Thompson, who received 1,768 votes, while Grant Golasa brought up the rear with his 399 votes.
Mekoski spent more than 34 years as a law enforcement officer at the city, state and federal level, 26 of which were at the Oakland County Sheriff’s Office, just prior to retiring in 2016. He has since returned to the field working with the U.S. Drug Enforcement Administration as a senior financial investigator for its Opioid Strike Force.
A request for comment from Mekoski on his win was not returned in time for publication.
When speaking to Gongwer last week, he said that among his priorities are wanting to demand a full forensic audit of the 2020 presidential election and pushing back on governmental overreach, which he considered to be mask and vaccine mandates.
He will go on to face Democratic candidate James Diez in the general election.
HARRIS BESTS WARRINGTON IN HD-43: In Oakland County, Republican Mike Harris of Waterford Township won the primary in the 43rd House District special primary.
Harris, a former law