Dec. 13, 2024 | This Week in Government: Senate Passes Legislation to Reverse Part of Snyder-Era Law Opponents Dubbed the ‘Death Star’

Local governments would be allowed to enact ordinances requiring employers to pay employees wages higher than the state’s minimum wage under legislation passed by the Senate on Thursday.

The Local Government Regulatory Limitation Act would be amended under SB 1173 to enable local ordinances, policies, or resolutions to be enacted under certain conditions.

Members voted 20-15 along party lines, with Democrats saying the bills would enable local governments and businesses to work together in a way that would allow for the best use of local taxpayer dollars. Republicans countered that it would increase costs, chase away developers, and discriminate against non-union construction firms.

Under the bill, an exemption would be placed in the act allowing a local ordinance, policy, or resolution enacted after the bill’s effective date and if it required an employer, or a contractor, or subcontractor of the employer, to pay the employee a higher wage as a prevailing wage or in line with a project labor agreement.

The bill would also enable local governments to enact ordinances, policies, or resolutions limiting the hours and scheduling of an employee who worked on a project to which a project labor agreement applied.

Multiple sections of the act would also be repealed that prohibit local governments from enacting requirements for the payment of the prevailing wage, the regulation of work stoppages and strikes, requirements for education apprenticeship programs, requiring employers to pay specific fringe benefits as well as remedies for wage, hour or benefit disputes.

Sen. Jeremy Moss (D-Southfield) said he was a first-term House member when the existing act was approved under a then-Republican Legislature. He said PA 105 of 2015, which enacted the current restrictions, is a one-size-fits-all policy that does not work.

He added that he believed the 2015 act decimated the ability of local communities to protect local wages and employment through its own ordinances, including in his community.

“Nine years later, Senate Bill 1173 returns some of those decisions to the locals,” Moss said. “I hope this will again restore trust in our local elected officials to make the decisions that are best for their individual communities.”

Republicans who spoke prior to the votes begged to differ.

Sen. Roger Hauck (R-Mount Pleasant) said thousands of residents have been priced out of homes and that rent is too high for many others.

“Instead of addressing this crisis, the majority in this chamber is poised to make it worse,” Hauck said. “Passing this bill will, without a doubt, make it more costly to build homes and apartment buildings in this state, at a time when we desperately need more housing stock.”

Sen. Thomas Albert (R-Lowell) agreed.

“It could lead to significantly higher mandated costs for taxpayer funded projects with no corresponding value of return,” Albert said. “Most importantly, it could lead to investors choosing to invest elsewhere, resulting in lost investment and subsequent loss of job opportunities.”

He said it could lead to higher costs for redeveloping brownfields and lead to developers instead developing greenfields.

Sen. Kristen McDonald Rivet (D-Bay City) pushed back on Republican arguments, saying people need higher wages and opportunities to enter the middle class, and the bill before the chamber would help raise wages.

“We have seen decades of intentional efforts to tear down the rights of workers, the voices of workers, the wage of workers, resulting in one of the biggest chasms between people who do the work and the people who profit from work,” McDonald Rivet said.

Also passing 20-15 on Thursday night was SB 170, which is part of a package that would roll back PA 105 of 2015, the law prohibiting local governments from entering project labor agreements, or setting minimum wage and benefit requirements.

An exemption to the prevailing wage law for state projects paid for by bond proposals would be enacted under a bill (SB 1186) that passed the Senate 32-3.

Earlier Thursday, SB 1173 and SB 1186 were reported by the Senate Labor Committee along party lines.

Testimony before the committee on SB 1173 was similar to that of the floor debate later Thursday.

Joshua Lunger, vice president of government affairs for the Grand Rapids Chamber of Commerce, spoke against SB 1173 before the committee. He called the bill an expansive change in urban communities related to construction, particularly when it comes to remediation and brownfields.

“Where this policy doesn’t simply halt development, it will raise project costs, delay project completion, have a negative impact on housing affordability, build new barriers for smaller contractors who will have less ability to compete,” Lunger told the committee.

Robert George, director of government affairs with the Michigan Laborers District Council, said the bill would be beneficial to labor.

“It’s a very targeted and narrow approach,” George said.

Associated Builders and Contractors of Michigan President Shane Hernandez in a statement ripped Senate Democrats for passing SB 1173 and SB 170, calling it labor discrimination.

“While blue collar Michigan workers were spending the evening with their families and getting ready for Christmas, the Michigan Senate just played Grinch, sneaking through the bills that would discriminate against 85% of Michigan’s construction workers and apprentices from local job sites,” Hernandez said. “Thankfully the state House has the chance to stand up for middle class Michiganders and protect their jobs.”

A trio of bills that would amend the state’s price gouging law passed the Senate on Thursday following debate in which opponents called it unnecessary government price controls and the lead bill sponsor countered it was needed to put teeth into an unenforceable law.

Senators voted 20-16 on SB 954, SB 955, and SB 956, which collectively would set a 10% cap on price increases during a state of emergency before an individual or business would be liable for price gouging, with exceptions.

The bills focus on lodging, the cost of goods and emergency supplies as well as energy products, including gasoline. Municipal power generators and electric cooperatives would enjoy the same exemption as traditional energy producers under SB 956.

Currently, 34 states and Washington, D.C., have some form of price gouging laws in place.

Sen. Thomas Albert (R-Lowell), speaking in opposition to the bills, said there are already price gouging laws on the books and such cases can be prosecuted by the attorney general.

“The bills before us today go beyond consumer protection and stray into price controls for certain products and even businesses like hotels during declared emergencies,” Albert said. “This is another bill giving government control over economic decision-making, which we have seen time and time again in this Legislature.”

Sen. Jeremy Moss (D-Southfield), sponsor of SB 954 and SB 955, said the bills are to protect people from “anguish and high costs during an emergency.”

He said it was stated by the attorney general in 2017 after a major rainstorm resulting in widespread power outages that the existing price gouging law lacks teeth for enforcement. Moss said the bills before the chamber would address the problem.

“We have to protect Michigan consumers who find themselves in the most vulnerable time of their lives,” Moss said.

As passed, the price gouging provisions would only apply in counties, cities or townships subject to a declared state of emergency. The attorney general would also be allowed to end enforcement of the price gouging statute if the market has returned to normal conditions.

In the bills is an exemption beyond the 10% cap. If retailers previously selling products for sale below cost raised them and the increased prices would bring them up to the actual cost of the item, the exemption would be triggered.

Investigations into alleged price gouging would be confidential until a violation has been found.

The Senate also passed SB 1052, which would require the Department of Environment, Great Lakes, and Energy to develop and adopt a State Hazardous and Radioactive Waste Management Plan.

It would also enact a moratorium on licenses and permits for the operation of hazardous waste, storage and disposal facilities until EGLE adopts its plan. For reclamation purposes, certain classes of injection wells would be required to secure surety bonds. Under SB 1052, disposal of technologically enhanced naturally occurring radioactive material, or TENORM, would also be banned.

Members voted 21-15 on SB 1052, with Sen. John Damoose (R-Harbor Springs) the lone Republican to vote for the bill. An S-3 substitute he offered was adopted prior to final passage.

A provision was added providing for an exemption for language in which licensing would not be granted for the establishment or expansion of a hazardous waste treatment, storage, or disposal facility including but not limited to a Class 1 well.

The provision would not apply to the expansion of a Class 1 well if two requirements were met. The first was if the well is not and will not be used for the disposal of hazardous waste, while the other would be that its owner or operator is not and would not receive payment for the disposal of hazardous waste.

Another change was increasing the period after the bill’s effective date from 180 days to two years for operators of Class 1 and Class 3 wells to file proof of financial responsibly for each well.

A package of bills to close a tax loophole for big box stores that supporters say is draining the municipal resources of small towns received a highly anticipated hearing on Wednesday but ultimately didn’t see a vote from the House Tax Policy Committee for movement to the floor.

HB 5865, HB 5686, HB 5687, and HB 5868 are sponsored by Rep. Julie Brixie (D-Okemos), Rep. Jenn Hill (D-Marquette), Rep. Greg Markkanen (R-Hancock), and Rep. Mai Xiong (D-Warren). Together, they would disallow companies like Menards, Costco, Target, or Lowe’s from making the argument that the sale prices of vacant and shuttered properties, or “dark stores,” should be considered in determining the property tax of their fully functional operational stores.

Proponents of the bills said the companies making use of the tax loophole siphon off funds from the municipalities in which they operate, leading to loss of services in communities that can’t afford to lose tax revenue from large corporations.

“Working on this bill package this week and last week and the week before really reminds me of David and Goliath, where David is the small towns, the poor inner cities, the local schools, the senior centers, the recreation programs, the sheriff’s departments and libraries,” Brixie said during the hearing. “Goliath is the big law firms and big box stores, and caught in the crossfire of all of this is everyday homeowners, every single taxpayer and small business owner being forced to pay more taxes on their local school bonds because of the unfair tax loophole that siphoned about $2 billion from local and state revenues.”

Retailers testifying before the committee said this tax treatment, which dates to the aftermath of the Great Recession in 2008 that hammered property values, is critical to these stores being able to operate.

“Property taxes are based solely on the value of land and the buildings on the land. This does not include the value of the business activity occurring within the four walls or who owns it. It does not matter how many or how few services the taxpayer uses or doesn’t use, whether that’s a resident or a commercial business, and it doesn’t matter whether it’s vacant or occupied,” Michigan Retailers Association Vice President Amy Drumm said. “The law is crystal clear. The General Property Tax Act says that the true cash value is determined by the usual selling price. What the bills before you would do is upend the current tax appeals process by making substantial changes to how the Michigan Tax Tribunal  operates, further bogging down an already slow process and increasing costs for everyone involved, from the taxpayer who initiates the appeal to the local community defending its assessment and even the tax tribunal itself.”

Local officials said that interpretation does not justify the services they’ve had to cut to make up for the dark stores and the legal fees that come with trying to fight them. Supportive speakers for the bills included a librarian from Marquette whose high-demand libraries were forced to close on Sundays after stores began using the loophole in earnest, local leaders from the Upper Peninsula and Inkster and Pontiac and the superintendent of a small public school district in Southwest Michigan whose board is facing a 12% revenue loss after trying to fight a corporation’s use of the loophole.

Some real estate and tax experts told committee members that the current law on the books doesn’t correctly quantify the true cash value of a property, and that the bills would codify “the highest and best use” of the true cash determination by tax tribunals.

Despite sponsors’ hopes that the bills would advance to the floor, the committee was left at ease and adjourned later on Wednesday without a vote, leaving an uncertain future for the package as the lame duck session winds down.

To some, the momentum for a roads deal Thursday was like getting in a car and heading north from Lansing on U.S. 127 – a 75-mph speed limit with no traffic and real momentum.

To others, it was like driving south from Lansing on U.S. 127 – a construction nightmare routinely clogged with soul-sucking traffic.

So it goes on road funding, as it always does – some signs of hope and some signs that Lucy is once again getting ready to yank the football away from Charlie Brown and watch him flop to the ground.

There appeared to be some points of consensus among those tracking the issue.

First, House Speaker Joe Tate (D-Detroit) and House Minority Leader Matt Hall (R-Richland Township), the speaker-elect, have had productive negotiations, which has surprised some at the Capitol given the tense relationship they’ve had all term.

Second, this is the kind of enormously complicated negotiation that often collapses under its own weight – but it hasn’t yet. The general framework under discussion, as Gongwer News Service reported earlier this week, involves new revenue for roads that would require mostly Democratic support and makes changes to the paid sick time law and minimum wage laws set to take effect in February. This would make the former more workable for employers and preserve the lower tipped minimum wage in the latter. The sick time and wage law bills would require mostly Republican support.

Third, several sources claimed Senate Majority Leader Winnie Brinks (D-Grand Rapids) was unhappy with the loose framework Hall and Tate have been discussing. There’s considerable tension between the House and Senate Democrats already, given that both chambers, particularly the House, have yet to act on several key priorities of the other. Several sources in the business community were horrified at reports Brinks purportedly said she wanted the workers’ compensation bills to be included in any roads funding package that would also weaken the sick time and wage laws.

Brinks, asked as she left the Senate chamber at 5:40 a.m. Friday about roads discussions, said there was so much happening in what was a nearly 20-hour Senate session, she was not able to comment on where the road discussions stood. However, one Senate Democratic source said the descriptions of Brinks’ role and requests in any deal are inaccurate.

Fourth, the form of the new revenue is still up for debate. House Democrats may like the idea of raising the 6% Corporate Income Tax, but business groups are a firm no and prefer increases to the fuel tax, vehicle registration fees, or both.

Fifth, Gov. Gretchen Whitmer is heavily involved in trying to secure passage of her signature 2018 campaign priority.

By the time the House adjourned at 10:30 p.m. Thursday, there were some positive vibes in the House Democratic Caucus about prospects for an agreement. Hall, however, said there’s no deal yet.

Hall said Thursday night that he was committed to passing legislation on road funding before the end of the term.

“Now is the window,” he told reporters after the House adjourned. “I remain committed to getting something done on roads.”

Hall said he was not involved in any negotiations on road funding on Thursday, though sources said he has been involved in conversations this week.

He would not point fingers Thursday night about who was holding up the deal.

“Anyone who’s not committed to finding general funds and dedicating permanent general funds is holding up road funding negotiations,” he said. “Anyone who is trying to get all $2.7 billion (of the funding) that I believe we need through tax increases only would be holding up an outcome from being voted on.”

Hall said he didn’t believe the Legislature needed to increase state revenue to find money for roads.

“Affordability was a key thing on the voters mind in the last election,” he said. “All of the (Democrats’) ideas are raising costs for everyday, working people. So, that would be something that I could see that’s holding up negotiations. … Just because you’re Democrats doesn’t mean you have to raise taxes,” Hall said.

Hall said that he believes $2.7 billion is needed to fix the roads and that can be done with existing funds.

“I would ask these other leaders how much they think?” he said. “I’ve said $2.7 billion, so if you start there, I’ve shown how you can do it … putting all of the gas tax into roads, and I’ve talked about how we can use the corporate income tax.”

In addition to roads, Hall said he would like to see the Legislature take action on tip credits and minimum wage and paid sick leave before the end of the term.

“We need to … find a compromise there, separate from the roads,” he said. “I just think it’s an issue we should be working on … and I hope the Democrats have the will to help us solve it.”

Hall also said he’d like to see a bill moved to end the Michigan Business Tax to eliminate Michigan Economic Growth Authority credits.

“If Democrats are looking at ways to find more revenue, I think that’d be a great way to do it,” he said. “You’ve got eight companies that are paying these. It’s over $550 million a year right now, so if they’re looking for new revenue, that would be a place that I would be willing to find new revenue.”

Eliminating the Michigan Business Tax would also force businesses to pay more in Corporate Income Tax.

The Senate was still in session as of 5:30 a.m., focused on passing Senate-originated bills to get them into the House in time to satisfy the constitutional requirement that bills sit for at least five days after first arriving in a chamber before they can pass. The House and Senate have sessions set for December 18 and 19 next week with December 19 currently the last scheduled House session day.

The House will be able to pass next week anything that cleared the Senate before it adjourned at dawn Friday.

Meanwhile, the House will reconvene at 9 a.m. Friday where the focus will be on scores of House bills that, absent passage Friday, will likely die. If the Senate does meet on Dec. 23 – it currently is scheduled to do so – it could pass anything the House passes on December 18. However, unless the House also met on Dec. 23, the Senate would have to rubber stamp those House bills with no changes for them to go to Gov. Gretchen Whitmer.

The House has 120 bills on its tentative agenda for Friday, though it’s had similarly massive tentative agendas all week and only acted on a fraction of those bills.

Among the bills on the tentative agenda are three bills sponsored by Rep. Tom Kunse (R-Clare) that contain the House Republican plan to lift the 6% sales tax off of fuel (HB 6194, HB 6195, HB 6197 ) plus HB 6257 from Rep. Jasper Martus (D-Flushing) to increase vehicle registration fees by $100 per vehicle and HB 6258 from Rep. Alabas Farhat (D-Dearborn) to raise the fuel tax.

The House Appropriations Committee approved Wednesday the use of $297.7 million in taxpayer funds to three corporations and the University of Michigan to support four projects across the state.

The funds come from the controversial Strategic Outreach and Attraction Reserve Fund. Senate Appropriations Committee approval is still required.

Approved were:

• $120 million to the Dow Chemical Company to modernize its Michigan Operations Industrial Park and Auburn Operations facilities in Midland and Bay counties, including infrastructure improvements, building renovations, new building construction, and silicones manufacturing process equipment life extensions and capacity expansion.
• $100 million to the University of Michigan for site development, construction, and other activities necessary to build at least two advanced computing facilities in the Ypsilanti area. One will be mainly used by U-M and the other by the Los Alamos National Laboratory.
• $50 million to Copperwood Resources, Inc., to support infrastructure improvements associated with the opening of a copper mine in Gogebic County, such as transportation access, water, and wastewater and water quality analysis of the groundwater.
• $27.7 million for the Detroit Diesel Corporation to modernize its plant in Redford Township and Detroit.

A single vote was taken on all four transfers with the vote 17 in favor, 10 against and two passing.

While most Democrats voted yes and most Republicans voted no, there was some crossover.

Rep. Jason Morgan (D-Ann Arbor) and Rep. Natalie Price (D-Berkley) voted no while Rep. Phil Green (R-Watertown Township) and Rep. Bill Schuette (R-Midland) voted yes. Rep. Cam Cavitt (R-Cheboygan) and Rep. Nancy De Boer (R-Holland) passed their votes.

There was a crowd of opponents in the gallery calling for rejecting the grant for the copper mine for environmental reasons. Some committee Republicans also questioned the grant to U-M.

“The University of Michigan has the highest tuition … and they receive the most operating expense from the state of Michigan,” said Rep. Donni Steele (R-Orion). “I’m just trying to justify why the University of Michigan would need another $100 million.”

Chris Kolb, U-M vice president for government relations, said the project will cost $1.2 billion, and the university and its partners in the project are covering all but the $100 million from the state.

He said the project would assist the state’s efforts to build cybersecurity, advanced manufacturing, biomedical research, and clean energy research. It also will allow Michigan to increase its footprint in the national security sector, he said.

“We will create a large research ecosystem,” he said.

Several activists slammed the aid to the copper mine, citing environmental concerns with applause ringing through the chamber as each spoke.

Marty Fittante of Invest U.P., however, defended the mine as essential to the area. He said supporters of the mine also love the U.P. and the environment.