Feb. 14, 2025 | This Week in Government: Bipartisan Senate Coalition Takes Action Limiting Tipped Wage Increase; Negotiations to Continue Ahead of Deadline

Legislation scaling back the phaseout of the lower minimum wage for tipped workers cleared a bipartisan Senate with less than half of the majority caucus supporting the change businesses and Republicans have been calling for since the summer.

The Senate – with eight Democrats and 12 Republicans providing the votes for passage – passed a bill that would set the tipped minimum wage to 50% of the regular minimum wage – up from 38% – by 2031. Although it is an increase compared to the current wage, a law set to take effect next week following a court order would have begun the complete phaseout of the lower minimum wage.

It took a majority of the Republican caucus to provide enough votes for passage of a bill introduced by a Democratic member, while more than half of the Democratic caucus voted in opposition.

Members passed SB 8 by a 20-12 vote.

As passed, the S-10 substitute version of SB 8  would keep the tipped minimum wage at 38% of the regular minimum wage for the rest of the year. From there, it would rise to 40% on Jan. 1, 2026, and rise an additional 2% on Jan. 1 of each subsequent year until it reaches 50% effective Jan.1, 2031. It would then be capped at 50%.

The bill from Sen. Kevin Hertel (D-Saint Clair Shores) originally would have increased the tipped minimum wage to 60% of the regular wage by 2035.

The regular minimum wage would still increase to $15 an hour beginning Jan. 1, 2027. From there it would be adjusted yearly based on the consumer price index for the Midwest region.

Language was also included that would set a fine of $2,500 to be assessed to employers who fail to ensure tipped workers get paid at least minimum wage. The wage law has long said that if employees’ tips combined with their wage mean they are earning less than the minimum wage, their employer must make up the difference.

As passed, the bill was also tie-barred to HB 4002, the House paid sick leave bill that is still sitting in a Senate committee.

The Legislature faces a Feb. 21 deadline to pass changes to the minimum wage and sick paid time laws before they go into effect.

Hertel told reporters that the bill as passed would move the increase in the minimum wage forward, which is important to workers across the state. He added that he was hopeful productive conversations can continue with SB 8 and on paid sick time to come to a bipartisan resolution.

“I think we have a framework to get this done, but we’re going to have to see how that plays out,” Hertel said.

A frequent occurrence more than 20 years ago, it is now rare for a majority caucus to allow a vote on a bill with the idea it will pass with more than half the majority caucus opposing it.

When asked what the takeaway was from Republicans providing more than half of the votes for SB 8, not Democrats, Hertel said it shows it’s a tough issue.

“I think this shows that in a divided Legislature, we’re going to have to agree to disagree sometimes, but move important issues forward,” Hertel said. “This is a good start to a divided Legislature. This is a really important policy, I think, but we did it in a bipartisan way.”

Hertel said he has heard significant feedback from workers and business owners in his district that some change is needed to the laws.

“While it does increase wages for them, it helps them operate in the way they’ve operated historically here in the state, and be successful, and that was important,” Hertel said.

Businesses have been urging changes with a key focus on the lower minimum wage phaseout for tipped workers. But Democrats also felt the pressure from union and other advocates, who support the laws the Supreme Court ordered take effect and oppose changes.

Twelve Republicans voted yes on SB 8: Sen. Thomas Albert of Lowell; Sen. Joe Bellino of Monroe; Sen. John Damoose of Harbor Springs; Sen. Roger Hauck of Mount Pleasant; Sen. Michele Hoitenga of Manton; Sen. Mark Huizenga of Walker; Sen. Dan Lauwers of Brockway; Sen. Jonathan Lindsey of Coldwater; Senate Minority Leader Aric Nesbitt of Porter Township; Sen. Lana Theis of Brighton; Sen. Roger Victory of Georgetown Township, and Sen. Michael Webber of Rochester Hills.

Eight Democrats voted for the bill: Senate Majority Leader Winnie Brinks of Grand Rapids; Hertel, Sen. Veronica Klinefelt of Eastpointe; Sen. Jeremy Moss of Southfield; Sen. Dayna Polehanki of Livonia; Sen. Sue Shink of Northfield Township; Sen. Sam Singh of East Lansing, and Sen. Paul Wojno of Warren.

Of the 12 no votes, 10 were Democrats: Sen. Sarah Anthony of Lansing; Sen. Rosemary Bayer of West Bloomfield; Sen. Darrin Camilleri of Brownstown Township; Sen. Mary Cavanagh of Redford Township; Sen. Stephanie Chang of Detroit; Sen John Cherry of Flint; Sen. Jeff Irwin of Ann Arbor; Sen. Sean McCann of Kalamazoo; Sen. Mallory McMorrow of Royal Oak, and Sen. Sylvia Santana of Detroit.

Two Republicans, Sen. Jon Bumstead of North Muskegon and Sen. Jim Runestad of White Lake, also voted no.

Republicans prior to the vote on SB 8 said it was an improvement on the law set to take effect next week, but more work is needed.

“I am not opposed to a minimum wage, but we should not be setting the bar to a point of eliminating opportunities,” Albert said. “I would greatly prefer to save 38%, but the 50% rate is better than a complete elimination, which would devastate the restaurant industry and lead to losses of thousands of jobs.”

He said his vote for SB 8 was based on the expectation that a deal can be reached on HB 4002, the sick time bill.

Lauwers said while he was voting for the bill, he was concerned over the bill tying the minimum wage to the consumer price index after it reaches $15 an hour.

“It’s built-in inflation,” Lauwers said. “We’re going to guarantee the minimum wage goes up forever and ever and ever. … We really need to start reviewing our use of this connection of price increases, of tax increases, wage increases, to CPIs. It’s a dangerous philosophy.”

The minimum wage law in the 2010s had a similar inflation adjuster. That was removed when Republicans overrode the 2018 initiated law with a new statute.

Nesbitt told reporters it is unfortunate that it’s coming down to the wire to find agreement on amending the two laws.

“So you saw Senate Republicans, we carried the day today in the Senate,” Nesbitt. “Now hopefully we can come up with a consensus over the next week to solve both of these issues.”

Nesbitt was asked how the bipartisan vote was obtained. He said after there was consensus on an agreement, there were conversations with Brinks as to how many votes there were for the bill.

Movement on Senate bills comes a day after House Speaker Matt Hall (R-Richland Township) announced a proposed deal on amending both laws (See Gongwer Michigan Report, Feb. 12, 2025).

“I knew we would never all agree on a plan that delivered wins just for big labor lobbyists or big businesses. It had to be a solution that prioritized the working people caught in the middle and where everyone gave a little. I’m glad the Senate Democrats ultimately agreed,” Hall said in a statement. “Now it’s time for the Senate Democrats to meet me in the middle one more time on the needed changes to the sick time court order and get this agreement across the finish line.”

Justin Winslow, president and chief executive officer of the Michigan Restaurant and Lodging Association, in a statement thanked legislative leadership for making progress on a solution.

“Today marks a significant victory for Michigan’s hospitality industry and the tens of thousands of servers, bartenders, and restaurant workers who depend on the tip credit system for their livelihoods,” Winslow said. “Through exemplary bipartisan cooperation, our legislative leaders have demonstrated their commitment to preserving both jobs and businesses across our state.”

Save MI Tips spokesperson John Sellek in a statement also thanked lawmakers for their work on SB 8.

“Tonight, Michigan servers and bartenders can sleep a little easier knowing a bipartisan legislative solution to the impending tip credit crisis is a big step closer to reality,” Sellek said. “There is more to be done but we tip our hats to legislators who came together to make this a reality. Now let’s get this done!”

Earlier Thursday, the Senate Regulatory Affairs Committee narrowly reported SB 8. McCann and Santana expressed concerns to reporters over the tipped minimum wage following the hearing that later led to their votes in opposition on the floor.

McCann said the tipped wage provisions in the bill have come a long way from the Michigan Supreme Court’s ruling last year on the law and that “we should continue to talk about where we land on that.”

Santana said the minimum wage and paid sick time laws should have gone to the ballot in 2018. She too was concerned with the tipped wage provision.

“I think that we do have a lot of members on our floor who still want to see something better,” Santana said. “I think there’s a lot of good things with the bill, but I think that the tip piece needs to be cleaned up.”

Democratic angst over the proposed changes also drew condemnation from Rep. Dylan Wegela (D-Garden City). In a statement he said the legislation being proposed in both chambers would undermine what he called gains for working class residents.

Wegela in his statement went after Gov. Gretchen Whitmer for her proposal to delay the implementation of the laws until July 1 if a deal could not be reached in the coming days.

“The governor should be standing with the Michigan Supreme Court and the working class, by threatening to veto any changes to the One Fair Wage legislation,” Wegela said. “Every elected official has the duty of upholding the Constitution and protecting democracy. Instead of Governor Whitmer fighting for democracy and the working-class of Michigan, she is caving to the business class.”

House Speaker Matt Hall on Thursday said money for roads can be found without an increase in taxes or fees.

Hall, in a press briefing to reporters, argued that the more than $3 billion needed to develop a long-term road funding solution can be done through cuts, as he proposed in his road funding plan.

That’s in contrast to Gov. Gretchen Whitmer‘s proposal introduced earlier this week which, in addition to $500 million in cuts, suggested multiple avenues for increased revenue, including a Corporate Income Tax increase.

“If Gov. Whitmer wants to have a separate conversation about how we do incentives moving forward? I think corporations should pay for it, not working people,” Hall said.

Hall criticized Whitmer’s budget presentation for not including a roads plan, saying it misrepresented the effect her roads proposal would have on the state budget overall.

“This (the roads plan) makes Whitmer’s budget proposal a huge increase,” Hall said. “Government has grown 43% today, it’ll grow 47% if we raise taxes the way the governor wants to. … We don’t need more taxes, let’s set better priorities.”

Hall said he was not open to a CIT increase to fund roads.

“I think we have enough money,” Hall said. “I think that the conversation of CIT should really be enough.”

Local governments could miss out on state funding for special projects under new House rules if they do not agree to comply with federal immigration officials.

The House adopted HR 19 to amend the House rules on Tuesday and prohibit any jurisdiction that refuses to comply with federal immigration enforcement measures from receiving additional state funding through earmarks. The resolution does not prohibit municipalities from receiving constitutionally required revenue sharing.

The resolution passed along party lines, 56-50. Rep. Jaime Greene (R-Richmond), Rep. Jamie Thompson (R-Brownstown Township), Rep. Karen Whitsett (D-Detroit), and Rep. Alabas Farhat (D-Dearborn) were absent.

Republicans said the issue addressed by the resolution was a growing concern within the state.

“Sanctuary jurisdictions give protections to the unvetted illegal aliens instead of working with the federal government to secure our border and following immigration laws so we can keep our communities safe,” Rep. Mike Harris (R-Waterford Township) said during testimony before the House Government Operations Committee on Tuesday morning. “Federal law is clear on immigration enforcement. Municipalities and universities that actively subvert these efforts create legal and financial liabilities on the state of Michigan.”

Places such as East Lansing, Kent County, Wayne County, and Ingham County have practices in place that would run afoul of the new House rule. East Lansing identified itself as a sanctuary city, and the counties have policies requiring a warrant from federal officials before further detaining someone who has committed a crime and is alleged to be in the country illegally.

“These policies directly undermine federal immigration law and create inconsistencies and enforcement that can lead to serious public safety concern,” Harris said. “Simply put, taxpayer dollars should not be funneled into local governments that willfully defy federal law.”

House Democrats raised concerns about the rules change.

Rep. John Fitzgerald (D-Grand Rapids), the minority vice chair of the House Government Operations Committee, asked if, in effect, this rule would be asking local law enforcement officials to subsidize the operations of federal law enforcement.

House Minority Leader Ranjeev Puri (D-Canton) said the resolution, introduced by House Speaker Matt Hall (R-Richland Township) created uncertainty for communities.

“It seems more like a power grab from Speaker Hall to consolidate power into terms of where he can pick and choose where money should be going,” he said. “It’s not clear what the definitions are of a community that would be in violation of cooperating with federal government.”

Rep. Stephen Wooden (D-Grand Rapids) gave the example of Kent County’s policy to require a warrant, which was instituted in 2019, after a Kent County resident and Marine combat veteran, Jilmar Ramos-Gomez, was handed over to ICE by the Kent County jail, after ICE sent a request to the jail to hold him.

“Our Republican sheriff has simply said, let’s make sure we have a second set of eyes to make sure this doesn’t happen,” Wooden said. “It doesn’t violate any federal law. It doesn’t violate any state law, but the vague wording of this resolution could jeopardize that county’s funding.”

Harris said Kent County’s policy would violate the new House rule.

“We know mistakes get made… and sometimes we have to go back and fix things,” he said. “Generally speaking, it is something where the intention is to follow what the law says and to comply with those legal orders.”

During committee testimony, Liz Balck, policy strategist for ACLU of Michigan, said that the resolution could make it more difficult for local municipalities to prioritize how they were using their resources.

“To ask that localities put their energy into figuring out a very complicated area of federal law, instead of using law enforcement to solve crimes and to interview witnesses, we just really want to make sure that local entities are not pulled of those really important fundamental parts of their positions,” she said. “We also fear that HR 19 might actually amount to an unfunded mandate, simply because immigration law is so incredibly complex. … It’s simply not possible, in our opinion, to have local law enforcement or county law enforcement be competent in order to rise to the level of figuring out what obstruction might look like.”

Several House Republicans said that the resolution was only related to budget earmarks and not any constitutional or statutory local revenue sharing.

The point was underscored by Hall during a floor speech.

“People are saying that this is going to be jeopardizing critical funding, or funding that these local governments are relying on,” Hall said. “I would encourage them not to base their budget on pork projects.”

Transit groups in the state are calling for the governor and legislators to address the lack of sufficient funding for public transit, including bus systems.

The Michigan Public Transit Association and the Michigan Association of Transportation Systems estimated $200 million in additional annual funding would be needed for fully funded public transit.

Earlier this week, Whitmer announced a road funding proposal her office said would include an additional $250 million for transit.

“It wouldn’t be a total fixer or full funding that we’ve estimated, but it would be a significant increase and hopefully, a sustainable, long term funding source,” said John Dulmes, executive director of MPTA.

He said around $125 million of the funding would go to local bus systems.

“We applaud Gov. Whitmer’s proposal to improve our state’s transportation infrastructure, including public transit,” Dulmes said in a statement. “This plan not only addresses the immediate funding crisis faced by local bus systems but also helps pave the way for more stable services and the development of new transit initiatives in our state to meet growing demands. We encourage the governor and Legislature to redouble their efforts toward funding solutions for our entire transportation system.”

However, the feasibility of the Legislature and Whitmer agreeing on a plan to add significantly more money into the state’s infrastructure systems, including transit, in an open question.

As for the current funding, Ken Jimkoski, the president of MASSTrans, which is based in the Thumb, called the situation “unsustainable.”

“(It) is reaching a dire point for transit services,” he said.

Jimkoski said legislators must make sure that road funding packages include a portion for local public transportation.

Dulmes said transit agencies are unstable at the current funding levels.

“It is crucial that the upcoming budget process reverse the stark decline in the state’s support for Local Bus Operating,” he said.

Dulmes said state support for local bus systems is at its lowest share ever out of the transportation budget, and the factors such as reduced hours of operation, reduced service, and difficulty in employing drivers and mechanics have contributed to the funding difficulties.

“The overall trend is that the revenues have been flat or not increasing to keep up with inflation and the cost of providing services, which has to do with general inflation and the cost of wages and things like that, which certainly have grown faster than the revenues coming in from the state,” Dulmes said.

Newly appointed minority vice chair of the House Appropriations State and Local Transportation Subcommittee Rep. Jason Morgan (D-Ann Arbor) said there is a funding crisis for transportation.

“A lot of our bus agencies, particularly in rural areas, are looking at potential cuts to services if we don’t invest additional dollars in local bus operating funding through the state budget,” Morgan said. “So I think it’s really important that we take a hard look at public transportation in the budget, and we find the resources to make sure these important services for seniors, veterans, kids, and ultimately everybody can get to where they need to go.”

He said transportation dollars flow into accounts that support local and state road infrastructure and public transportation, and every account has a need for additional funding.

Dulmes said the state funding formula is a shared fund, which reimburses local transit agencies that spend money on their own, such as raising money through local millages. Generous millages may “draw down” more state funding as well.

“When local property tax millages for public transit systems are on the ballot, including in November in the general election, they overwhelmingly are supported by local voters, including in conservative areas that have voted to support increased funding at the local level for public transit,” he said.

According to data from the Center for Transportation Excellence, more than 83 percent of public transit ballot measures passed in Michigan in 2024.

In rural areas where public transit demand is still high but supply is low, he said vans and buses work on a demand basis, but must prioritize who they pick up due to lack of funding and employees. Some have ended weekend services as well.

Buses only make up a small percentage of public transit funding as one of the “comprehensive transportation modes,” which he said is less than 10% of the budget.

Transportation modes include bus operating, rail, ferries, and inter-city buses, such as the Michigan Flyer, with five different locations in the southeastern area of the state.

Dulmes said local, county and state roads and their funding make up the other 90% of the transportation budget.

“It’s not surprising that people focus on road funding, but the same formula also funds public transportation services, and we certainly are willing to work with legislators on either side of the aisle when it comes to transportation funding on either new revenues or using existing revenues to provide more funding,” he said.

Other transportation and environmental groups also announced they urged lawmakers to invest in sustainable and affordable transportation systems on Feb. 4, also know as Transit Equity Day in honor of Rosa Parks’ birthday.

The organizations, Transportation Riders United, Area Transportation Authority, Michigan Sierra Club, Southwest Detroit Environmental Vision, Detroit Disability Power, and Michigan Environmental Council, advocated for transportation funding and systems to be “fair and effective.”

“While we’d all like smoother roads, Michigan leaders can’t ignore our state’s hundreds of miles of rail, three public ferry systems, 77 public transit systems, three Amtrak lines, and hundreds of community transit providers that together serve every county across Michigan,” Megan Owens, executive director of Transportation Riders United, said in a statement “When buses, ferries, senior shuttles, or trains don’t run, that leaves Michiganders who can’t drive stranded in the freezing cold, missing school, cut off from the community, losing jobs and worse. That’s why when our state leaders decide how to fund essential road repairs, they must also invest in fixing the full transportation system.”

They also advocated for a “fix it first” approach before expanding roadways.

“For too long, our state and our region have been held back due to a lack of real transit,” Sen. Mallory McMorrow (D-Royal Oak) said in a statement. “Meanwhile, other states and cities have become magnets for young talent and investment by leveraging transit to attract and retain the best people. From the Growing Michigan Together report to countless surveys, young people are looking for options that don’t require owning and insuring a car. For Michigan to succeed, we must invest in transit as part of a comprehensive infrastructure plan to connect our communities, bring people together and keep the next generation in our state instead of seeking opportunity elsewhere.”

Rep. Donni Steele (R-Orion Township), chair of the House Appropriations State and Local Transportation Subcommittee, did not return requests for comment on transit funding over the past week, but expressed disappointment in the governor’s budget proposal for the Department of Transportation.

Legislative Republicans have also panned Whitmer’s broader road funding announcement from earlier this week, which includes tax increases.

Michigan Technological University has been designated as an R1 research institute by Carnegie Classification of Institutions of Higher Education.

The R1 classification identifies Michigan Tech among the 187 top research universities in the country, alongside Michigan State University, University of Michigan – Ann Arbor, and Wayne State University.

“By remaining true to the mission of Michigan Tech’s founding charter, we’ve joined the top tier of the nation’s research institutions while serving the needs of Michigan industry,” Michigan Tech President Rick Koubek said in a statement. “While we did not change who we are or what we do in pursuit of R1 designation, we are certainly proud to be recognized for the exemplary work our faculty and staff are doing in research and education, and we are excited for the opportunities that R1 status brings.”

The University Research Corridor, an academic research cluster that includes the other three universities, has not announced whether Michigan Tech will be included as well.

“We congratulate Michigan Tech University on receiving their R1 status, a category of universities with the highest research intensity and greatest number of doctorates granted,” Britany Affolter-Caine, executive director of URC, said in a statement. “MTU has raised its R&D expenditures every year, making significant contributions to Michigan’s top industries. Our state is fortunate to have four R1s – a critical asset for our economy and residents.”