Detroit Regional Chamber > Advocacy > Sept. 18 | This Week in Government: PPE Tax Relief Legislation, State Budget Updates

Sept. 18 | This Week in Government: PPE Tax Relief Legislation, State Budget Updates

September 17, 2020

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. See below for this week’s headlines.

  1. Peters, James Outline Visions During Detroit Chamber Event
  2. Treasury Opposed, But Talking With Stakeholders on PPE Tax Exemption
  3. Dems, Labor Oppose COVID-19 Liability Bills as They Clear Committee
  4. State Opens ‘Spread Hope, Not COVID’ Ad Campaign
  5. House Gets Budget Ball Rolling; Passes Other Bills

Peters, James Outline Visions During Detroit Chamber Event

Health care and the new coronavirus pandemic took center stage Wednesday during a U.S. Senate town hall featuring U.S. Sen. Gary Peters and Republican challenger John James.

Held by the Detroit Regional Chamber as part of its series of MPC20 Conversations: Respond and Rebuild discussions, Peters (D-Bloomfield Township) and James appeared in separate conversations to provide an outline of their views on several topics. Few barbs were tossed by either candidate in their respective remarks.

Peters, when asked about what additional COVID-19 relief is needed from Congress, said the Democratic-controlled U.S. House had passed a comprehensive package but the Republican-controlled U.S. Senate then pushed a much smaller package unsuccessfully that does not meet the needs of the public or economy.

He was also asked about how to pay for another significant relief package and how to reconcile that with the large increase in the national deficit.

“You do need to put money into the system. But then you’re going to have to take a look after we get through this crisis as to how that we can get back on a sound financial footing,” Sen. Peters said. “We’ve got to first deal with the public health aspects … and then we’ve got to focus on the economy to make sure that we’re helping families get through this, making sure small businesses get through this.”

James, an executive at his family’s business, was asked about what the business community needs from the government to recover from the damages caused by COVID-19.

“What government needs to provide business is certainty,” James said. “I think we can do that with common-sense, science-based tax reform, regulatory reform, tort reform, so that we can have positive, sustainable, inclusive economic growth that incentivizes businesses to come back and thrive in Michigan.”

When asked about the recent unsuccessful U.S. Senate COVID-19 relief package, he said he would have supported it as well as relief that is directly tied to COVID-19 related shortfalls. James added that efforts need to be made to broaden the tax base rather than raising taxes on certain individuals or businesses.

“We’re not going to be able to tax our way to prosperity,” James said. “We need to grow our way to prosperity, but make sure more people can gain access to it.”

With health care taking center stage during the pandemic, Sen. Peters was asked what changes he would support to the Patient Protection and Affordable Care Act.

Sen. Peters said the ACA state exchanges should have been opened for an extra enrollment period months ago by the president, which has not happened.

The senator said that he believes talk by Republicans to repeal the ACA is unacceptable especially during a pandemic. He also took a jab at James.

“People who say that we’ll still protect pre-existing conditions but have no plan. You actually have to have a plan,” Sen. Peters said. “You can’t have hollow words. Shallow talking points aren’t going to deal with the immensity of this problem with healthcare.”

Sen. Peters also said he does not support Medicare for All, a proposal being pushed by the Democratic Party’s more liberal wing. He did say he would support people being able to enroll at a younger age, such as 50, which has been proposed in legislation. He also would support adding Medicare to the state exchanges as an option for individuals.

James said that since his 2018 campaign he has supported a market-based, patient-centered system that covers those with pre-existing conditions while also supporting tort and regulatory reforms to lower costs and expand competition.

“We need to keep the parts of Obamacare that work, and we need to fix the parts of Obamacare that don’t, and the part of Obamacare that works is covering pre-existing conditions,” James.

On police reform, James said he would support increasing spending, not defunding, law enforcement and public safety. He said increased training and recruiting better officers is important, as well as finding more individuals willing to work in law enforcement who live in the communities they serve.

Regarding a police reform bill that the U.S. Senate rejected earlier this year from even coming up for debate, he accused Sen. Peters of putting politics before progress by not voting for a bill related to a topic he has spoken in support of in the past.

“He chose his party,” James said. “He voted against further debate on police reform to improve that bill, and I think that was wrong.”

On trade, Sen. Peters said providing a level playing field is extremely important as well as holding other countries, such as China, accountable for reneging on aspects of trade deals. Sen. Peters also took aim at the president’s trade policies, which he said have been harmful to agricultural producers and the manufacturing sector.

“You certainly shouldn’t be doing things like punishing friends, which is what we have seen from this administration,” Sen. Peters said. “We should not go after friends, and make sure we have allies when we’re dealing with those folks who violate trade agreements.”

Treasury Opposed, But Talking With Stakeholders, On PPE Tax Exemption

A trio of bills exempting personal protective equipment purchased by businesses from sales and use tax – while also creating an income tax credit for employers that increased their workforce during COVID-19 – was discussed in the House Tax Policy Committee on Tuesday with the Department of Treasury opposed, but willing to continue work with stakeholders.

HB 6033 and HB 6034 would exempt personal protective equipment and supplies, like disinfecting cleaners, from sales and use tax when purchased for business use. The exemptions under the bill would be retroactive from March 10, 2020, and last until Dec. 31, 2021.

Employers that qualify for the exemption would have to adopt a COVID-19 safety protocol plan that complies with laws or executive orders providing safeguards for COVID-19.

The House Fiscal Agency estimates the bills would reduce revenue by $4 million to $5 million in the 2019-20 fiscal year, $8 million to $10 million in the 2020-21 fiscal year and $3 million to $4 million in the 2021-22 fiscal year.

More costly is HB 6035, sponsored by Rep. Joe Tate (D-Detroit), which would provide a tax credit for employers for money spent on personal protective equipment and supplies if the employer increased its employees by 10 percent during the tax year. The increase in employees would be based on how many people were working for the employer on February 10, 2020.

This bill would cost an estimated $35 million to $40 million in Corporate Income Tax revenue, according to HFA. It would cost an additional $2 million to $3 million in individual income tax revenue from sole proprietorships, HFA said.

“We all know the challenges small businesses continue to face during the COVID-19 crisis. The added expense of enhanced workplace cleaning and providing PPE their employees is an unforeseen expense that many employers didn’t account for when planning their budgets for 2020 and beyond,” said Rep. Michael Webber (R-Rochester Hills), one of the bill sponsors. “These bills would exempt PPE and workplace disinfecting products from the … sales and use taxes. Similar tax breaks already exist for PPE in manufacturing. PPE is used to slow the spread and protect employees from COVID-19 should be included in this tax exemption.”

Rep. Tate said the bills would assist employers as they seek to keep employees and customers safe.

Committee members also had questions on the specific definition of personal protective equipment in the bill, how the retroactivity piece would work and how businesses would show how much they spend in sales tax on the equipment.

Reps. Tate and Webber said conversations on ongoing to determine some of those specifics.

Rachel Richards with Treasury said the department opposes the bills as written but is continuing conversations. She noted the cost of the bills would have to be worked out during the budget process and is at “top of mind” when discussing concerns with the bills.

Other concerns were more technical, like figuring out how to make the retroactive piece of the bills work and how to ensure the state complies with other sales and use tax agreements.

Matt Patton, with the Detroit Regional Chamber, supports the bills and said they assist in continuing the conversation on how to address the economic and health crisis COVID-19 created.

“The goal of these bills is straightforward to make PPE more affordable. Right now, in our state, PPE is only exempt for industrial processors. Meaning if your business does anything other than manufacture goods for retail, but still deals with the same challenges to stay open, you pay taxes on PPE,” he said. “These bills are an opportunity to change that. … As long as we live with COVID-19, businesses will be purchasing the items named in these bills because they want to stay healthy and stay open. These bills recognize that reopening sectors of our economy … safely means businesses should not be punished by taxes for simply and courageously doing what is needed to stay open.”

Patton also said while there will be a fiscal impact, the dollars come from those who took risks to open their business or keep their business operating safely.

Dems, Labor Oppose COVID-19 Liability Bills As They Clear Committee

Legislation providing liability protections for Michigan employers cleared the House Judiciary Committee on Wednesday with Democratic members voting no or abstaining and the AFL-CIO asserting labor is united in opposition to the bills.

HB 6030, HB 6031, HB 6032, and HB 6101 were sent to the House floor on 8-3 votes with Rep. Vanessa Guerra (D-Saginaw), Rep. Tenisha Yancey (D-Harper Woods), and Rep. Kyra Bolden (D-Southfield) voting no. Rep. Brian Elder (D-Bay City) and Rep. David LaGrand (D-Grand Rapids) abstained.

While Rep. LaGrand abstained, he also said it was a collaborative process and worked with the Michigan Chamber of Commerce and others on changes to the bills. The legislation did see various changes before being reported.

“I have been incredibly impressed with how collaborative this process has been,” Rep. LaGrand said.

Changes to the bills clarify various definitions, including the kinds of sanitizers businesses are using, ensuring businesses are complying with state and federal COVID-19 regulations to see the liability protections and eliminating the “clear and convincing” evidence threshold employees would have to meet to bring a claim.

The bills outline employers’ immunity from certain COVID-19-related civil actions. HB 6032 codifies certain employee protections if they test positive for the virus or come into close contact with someone who does. The bill specifies when employees should not report to work due to COVID-19 exposure and allow civil action for aggrieved employees.

Still, while Republicans, business groups, and university groups have indicated support of the bills, the state’s unions said Wednesday they remain united in their opposition.

AFL-CIO President Ron Bieber said in a statement the bills would give special treatment to businesses that “infect their workers or customers” with COVID-19.

“Passing this proposed legislation would destroy accountability and responsibility for the negligent actions of the bad employers and it would create special classes of individuals and businesses who receive special treatment,” Bieber said. “It would allow corporations, businesses, and nursing homes to act recklessly, with no way for them to be held accountable for failing to take the necessary precautions to protect people from the risks of COVID-19. This lack of accountability creates an incentive for businesses to behave badly – essentially rewarding them for cutting corners at a time when we should all be sacrificing to help quickly get back to something like what we used to call normal. It would also provide no remedy for workers, even if they themselves have taken all the necessary and appropriate precautions to keep themselves safe and healthy.”

Proponents of the legislation have said the bills would help ensure employers are not inundated with frivolous lawsuits related to COVID-19 even while taking all precautions required to keep establishments safe.

Under the bills, employers would not be liable from an employee’s exposure to COVID-19 if the exposure happened during the COVID-19 state of emergency and the employer was in compliance with federal or state law or regulation, executive order or public health guidance. This language was changed from the original requirement that employers be in “substantial compliance.”

There was some concern that the “substantial compliance” language could allow employers to cherry-pick what they are in compliance with when potentially fighting a lawsuit.

Immunity would not apply if the employer willfully exposed the employee to the disease.

The committee also reported HB 6159, which would provide immunity for health care providers and facilities providing services in response to COVID-19 between March 9 and July 15, 2020.

Rep. Elder offered an amendment, which was adopted, that would ensure worker’s compensation claims are not included under the bill. Rep. Elder said he thought the bill was in line with what Gov. Gretchen Whitmer had in place earlier in the pandemic and what she outlined in a veto letter of a different immunity bill.

HB 6159 was sent to the House floor on a 9-3 vote with Rep. Elder joining all Republican in voting yes. Reps. LaGrand, Guerra, and Bolden voted no. Rep. Yancey abstained.

State Opens ‘Spread Hope, Not COVID’ Ad Campaign

A new series of public service announcements sponsored by the Department of Health and Human Services urges residents to wear masks to protect each other from the new coronavirus with different messages to target different audiences.

“The virus has taken so much away from us, but every action that a united Michigan takes to contain the spread moves us closer to resuming normal, to moving our economy and lives forward,” Gov. Gretchen Whitmer said in a statement. “While some of the actions we must take are personally uncomfortable and inconvenient, there is broad consensus that they will contain COVID-19 cases to levels that will enable us to safely reopen our economy, our schools and other institutions – and keep them open.”

The campaign was designed based on a survey of 2,047 Michigan residents 18 and older conducted July 8-13 to identify and quantify behaviors and attitudes related to wearing masks and facial coverings.

One spot features a combination of empty entertainment venues, a restaurant, a high school football stadium, and a school hallway as a narrator says what’s happening now is just an intermission. Two other spots feature one or more military veterans discussing how masks protect freedom.

DHHS Director Robert Gordon in an interview said it is important with college resuming, children in many districts going back to school and cooler temperatures sending more people indoors to underscore the need for people to wear facial coverings to prevent the spread of COVID-19.

“Broadly, there’s two groups that we really want to reach,” Gordon said. “There’s folks who usually wear masks but not always and we want to get them to always and offer that reminder that wearing your mask every time matters and the one time that you don’t could be the one time that you get COVID or transmit COVID.”

The other group is those who do not wear masks, Gordon said.

“We have a specific ad and a set of messages with veterans speaking and folks who have served the public in the military, believe profoundly in American freedom and they believe that masks protect freedom,” he said. “It’s our hope that that will resonate with a lot of folks who aren’t wearing masks right now. We want them to see that masks are not a threat to freedom, but a way to protect freedom.”

The state will spend $5 million on the campaign, which runs to December.

The survey found that 72% of respondents say they always wear a mask in public. Eighty-eight percent said they were aware of Gov. Whitmer’s executive order requiring masks to be worn indoors in public.

Black Michiganders were more likely to always wear a mask. While 81% said they always wear a mask in public spaces, 69% of all others answered the same. This was the case even though 81% of Black residents responding to the survey said they were aware of Gov. Whitmer’s mask order compared to 90% of others.

Of those who said they never or only sometimes wear a mask, the group was 69% female. Sixty percent were parents. The most popular reason this group gave of what would motivate them to wear a mask was being denied entry or service for not wearing a mask. In explaining their reasoning, 33% said they don’t believe a mask helps and 31% said it was their right to decide.

The ad with the veterans is designed to appeal to those who rarely or never wear masks, Gordon said.

“How can we connect with people who are skeptical about masks and acknowledge their concerns and still speak to them in a way that is respectful and compelling,” he said. “Even if we only increase the number of people wearing masks by 5%, 10%, 20%, that’s going have a very real impact on the number of COVID cases and the number of lives lost.”

House Gets Budget Ball Rolling; Passes Other Bills

The House on Tuesday acted on omnibus appropriations bills without any real substance just yet to get the budget process moving as lawmakers hope to finalize the process next week.

SB 927 passed 58-51 with $100 placeholders. The House also did not concur in the Senate substitute to HB 5396, setting up the beginning of the conference committee process.

The moves come as lawmakers and the administration announced Monday an agreement on the 2020-21 fiscal year budget framework. Lawmakers plan to finish up budget action next week (See Gongwer Michigan Report, September 14, 2020).

The House also unanimously passed HB 5298, which would require the Department of Health and Human Services (DHSS) to establish psychiatric residential treatment facilities for Medicaid patients under 21 years old. The bill stipulates this would depend on getting sufficient funding via the appropriations process.

DHHS indicated support for the bill during the committee process.

The House also unanimously passed substitute versions of HB 4954 and HB 4955, which would modify the protest process and procedures for unsuccessful bidders for state contracts. The Department of Technology, Management, and Budget (DTMB) supports the bills.

The first bill would require DTMB to develop a process for an unsuccessful bidder to protest an award decision. The second bill would require DTMB and all agencies delegated procurement authority to publicly announce all procurement contract awards resulting from publicly posted solicitations within 48 hours of awarding the contract.