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Sunday, 29 March 2015 22:00

Business community lacks consensus on Prop. 1

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Michigan’s business community appears to lack a unified front as the May 5 election approaches for Proposal 1, a major ballot measure seeking to overhaul the state’s mechanism for transportation funding.

While several local chambers of commerce, including the Grand Rapids Area Chamber of Commerce, have come out in support of the proposal, the statewide Michigan Chamber of Commerce is remaining neutral due to a lack of consensus among members. By comparison, a statewide group representing independent businesses is opposed to the proposal.

Representatives from each of those organizations say their positions were not made hastily, as some took months to gather input from their members. Regardless of their stance on the measure, the groups appear to agree that something must be done with the roads when considering public safety and economic development.

“We were very deliberate and focused on going through our legislative processes when Proposal 1 was put on the table,” said Andy Johnston, vice president of government affairs for the Grand Rapids Area Chamber of Commerce. That included discussing a position on Prop 1 in the chamber’s transportation and public policy committees, he added.

“The chamber is a long-time supporter of finding a solution for transportation funding for the state,” Johnston said.

However, the Michigan Chamber announced in early March that it was staying neutral on the topic because there was not consensus within its membership to take a position.

Despite the differences in positions among the groups, Johnston disputes the idea that the business community is split on the topic. He pointed to a “broad coalition” of business groups supporting Prop 1 as evidence. That coalition includes the local chambers of commerce in Detroit, Lansing and Traverse City; the Small Business Association of Michigan; Business Leaders for Michigan; and the Michigan Manufacturers Association.

But the director of the state chapter of the National Federation of Independent Businesses (NFIB) disagrees.

“I would dispute their statement that the business community is one big happy family on this issue,” said NFIB state director Charlie Owens. “To suggest there is a groundswell of business support for this proposal is disingenuous.”

Proposal 1 seeks to overhaul the way transportation maintenance and upgrades are funded in Michigan. If approved by voters, it would eliminate the sales and use tax on gasoline in exchange for increasing the fuel tax so money at the pump goes directly to the roads. The plan would also raise the sales and use tax from 6 percent to 7 percent to make up for lost revenue to the School Aid Fund when eliminating sales tax at the pump.

The proposal would generate about $1.9 billion, with $1.3 billion of that going directly to roads. The plan would direct the additional revenue to transit and rail and local units of government, as well as to low-income families by restoring the Earned Income Tax Credit. Democrats who worked on the compromise deal say that restoring the EITC would ensure that low-income residents are not disproportionately affected by a sales tax increase.

Owens said members of the state NFIB chapter were surveyed on how they’d vote, with 75 percent saying they opposed the deal. Some business owners are reportedly concerned about a sales tax increase negatively affecting retail sales.

“I think it has a lot of moving parts,” Owens said, referring to opposition to the complexity of the plan. “It’s clear that it was put together in the pressure of a lame-duck session. Too many other things are involved in it that had little to do with road funding.”

And that concern may not just be among the business community. Public polling from late January showed more support for the plan — 46 percent to 41 percent — by likely voters when asked if they’d vote “yes.” But when given details of the complex plan, the numbers flipped with more against the proposal (47 percent) than for it (38 percent).

Johnston said the proposal may seem complex because “we have to unwind some poor policy.”

Rich Studley, president and CEO of the Michigan Chamber of Commerce, said his organization spent months gathering information from a variety of sources on the topic before taking a neutral position.

“As we listened to our members, it became apparent over time that within our membership, there was not a high level of consensus or agreement that we needed to be involved in a statewide ballot proposal,” he said, which would involve a “significant amount” of human and financial resources. “The only role we’ll be playing is educational or informational. We believe it’s very important to fix roads and improve public transit.”

He said differences in policy like this among statewide and local organizations “happen occasionally” by the nature of his organization being such a large group with diverse constituents.

“The business community is not a monolith,” Studley said.

Studley agrees that the complexity of the deal may explain at least part of the difference in positions.

“In that regard, business leaders are like a lot of voters,” he said. “I don’t think the debate within the business community is different than the general public.”

T.J. Bucholz, president of Vanguard Public Affairs Inc. in Lansing, said the state chamber’s neutral position is “problematic” for the yes-vote campaign, particularly for the “feet on the ground” and the significant financial backing the group could offer.

“I’m not saying you can’t win it without the chamber, but it makes it difficult — especially when small businesses around the state who are chamber members have questions,” he said. “When a chamber doesn’t offer an opinion, that’s also problematic.”

Bucholz’s firm conducted polling about a month ago, showing support for Prop 1 was around 35 percent. The difference in positions on the proposal among three prominent state GOP politicians also is making it difficult to rally undecided Republicans. Gov. Rick Snyder is in support, Attorney General Bill Schuette is opposed and Secretary of State Ruth Johnson is staying neutral.

“That’s an indicator things are not necessarily looking good,” Bucholz said.

As for alternatives, Republican members of the Legislature have introduced a package of bills that closely resemble the plan brought forward last session by former Speaker of the House Jase Bolger, R-Marshall.

After legislative solutions failed last session — opponents said Bolger’s plan would strip schools and local governments of millions of dollars, while a Senate proposal to increase taxes didn’t make it through the House — leaders at the Capitol hatched a compromise to pitch to voters.

Supporters of Prop 1 insist that since past attempts failed, asking voters is the only option left on the table. Bolger even endorsed Prop 1 recently because it represents the “last, best chance to fix our roads,” according to a report in MLive.

“The longer we wait, the more costly it becomes to fix our roads and bridges,” Johnston said. “If there were enough votes in the Legislature to pass the Bolger plan, it would be done. A plan can only be a plan if it gets 56 votes in the House, 20 in the Senate and the signature of the governor.”

Opponents dispute the lack of options, though, and say the state should be ready with a contingency plan if the measure is voted down.

“For anyone who thinks this is going to pass and is confident we don’t need any kind of fallback proposal,” Owens said, “I admire their childlike optimism.”

Sidebar: How Proposal 1 would work

  • The measure requires voter approval in the May 5 election.
  • If approved, the sales and use tax on gasoline would be eliminated in favor of raising the fuel tax.
  • Fuel tax dollars would be used for transportation maintenance and upgrades.
  • To make up for lost dollars from the pump that go to the School Aid Fund, the sales and use tax would increase from 6 percent to 7 percent.
  • Of the projected $1.9 billion in funding that would be raised under Prop 1, $1.3 billion would go directly to roads.
  • The remaining funds would go for transit and rail projects, to local units of government and to the restoration of the Earned Income Tax Credit, which helps ensure low-income residents are not disproportionately affected by the sales tax increase.
Read 2598 times Last modified on Monday, 30 March 2015 15:48

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