rss icon

Sunday, 07 June 2015 22:00

Unraveling a Patchwork? Opponents say business-backed legislation will end up hurting economic development

Written by 
Rate this item
(1 Vote)

Proposed legislation intended to improve Michigan’s business climate faces strong opposition from officials in local government who say it will have the opposite effect and thwart their ability to exercise local control.

House Bill 4052, which last month passed the state House 57-52 and awaits Senate action, is meant to eliminate the “patchwork” of local rules Michigan businesses face. It calls for a broad prohibition on the ability of local units of government to regulate various aspects of employer-employee relationships by deferring to the state and federal government for rules involving minimum pay, strike activity, training, fringe benefits and paid leave time.

While the bill’s intent is to make doing business in the state easier for employers, local officials see it as an assault on their ability to pursue unique economic development opportunities within their communities and to negotiate with suppliers and vendors.

“If we’re using tax dollars to buy a product or to do a project, it should be the ability of the community to negotiate the best use of public dollars,” said Chris Hackbarth, director of state affairs for the Ann Arbor- and Lansing-based Michigan Municipal League.

Consequently, the bill is also causing an ideological rift among some Republicans who oppose the bill on grounds that it eliminates local control. During the May 20 House vote, five Republicans joined Democrats in opposing HB 4052, which was sponsored by Jackson Republican Earl Poleski.

As drafted, opponents argue the bill would have impacts far beyond creating uniform wage and benefit policies.

“It brings in a whole host of other, very serious questions that communities in Michigan are most concerned about and how this bill would interfere with current relationships with vendors and economic development efforts,” Hackbarth said.

Specifically, Hackbarth said the bill doesn’t define what a potential “relationship” would be between an employer and an employee.

“It sweeps in contracts with vendors and economic development agreements,” Hackbarth said.

For example, if the city of Grand Rapids wanted to hire a security firm to work at one of its facilities and, as part of that contract, required the firm’s employees to take sensitivity training on how to handle a rowdy crowd, “they wouldn’t be able to do that,” he said.

The prohibition would also extend to quasi-governmental agencies such as transportation authorities. It could strike down a community’s rules for, say, hiring local labor on developments that receive tax incentives.

“The bill sweeps in so many things that the public believes are normal government interactions,” Hackbarth said.

DUELING PRIORITIES

Despite claims from business groups, it’s unclear what economic effect the policy would have. An analysis from the nonpartisan House Fiscal Agency found the new policy would have an “indeterminate impact” on state and local revenues.

“The direction and magnitude of this effect depend on broader economic conditions and the decisions of individual firms and municipalities, none of which can be known in advance,” the analysis stated.

An earlier version of the bill would have invalidated nearly 40 local policies that ban employment discrimination based on sexual orientation and gender identity. The Michigan Chamber of Commerce supported the amended bill that protects those policies.

Still, opponents have labeled the “Local Government Labor Regulatory Limitation Act” as the “Death Star” bill because of its potentially broad limitations on local units of government.

Business groups at the state and local level are leading the lobbying efforts to pass HB 4052. Organized labor groups are also pitted against the state chapter of the Associated Builders and Contractors, a merit shop advocacy organization.

The bill is before the Senate Michigan Competitiveness Committee, along with a companion bill sponsored by Sen. Peter MacGregor and eight other Republicans, including Senate Majority Leader Arlan Meekhof of West Olive.

A spokesman from Gov. Rick Snyder’s office said once the bills clear both chambers, the governor “can thoroughly review them and make a determination on whether or not to sign them.”

‘CRAZY QUILT’

In a supportive May 26 editorial, the Detroit News called the current situation — in which communities can pass ordinances or policies stipulating certain employment requirements of employers — a “crazy quilt” of local regulations.

“One of the main goals is to have a simple, fair and efficient regulatory structure in Michigan so businesses can thrive and grow and individuals can achieve economic freedom,” said Allie Bush, director of state affairs for the Grand Rapids Area Chamber of Commerce. “What we’re trying to prevent is having a patchwork of broad-based ordinances or policies that would essentially manage the HR functions of private businesses.”

Bush said any type of rules regarding wages or benefits should come from the state or federal level.

“Our intent is not necessarily to impose on (local governments’) ability to have voluntary negotiations as a contract, but rather to prevent against a broad-based rule that would impact businesses within a jurisdiction,” Bush said.

The chamber is aware of cities around the country — including Los Angeles and Seattle — that have adopted minimum wage ordinances beyond state or federal law. Bush said those debates should happen at the state and federal level, not in local government.

After the legislature voted last year to increase Michigan’s minimum wage to $9.25 by 2018, HB 4052 would effectively prevent any city from going beyond that. However, Hackbarth of the MML countered that argument, noting that “no communities in Michigan are doing those ordinances.”

“When you’re talking about a patchwork of rules on wages and benefits, maybe you can have that argument in other states but you can’t here because we don’t have communities requiring higher minimum wages or paid leave time,” Hackbarth said.

Charlie Owens, Michigan director for the National Federation of Independent Business, a small-business advocacy group, provided written testimony to the House Commerce and Trade Committee supporting the measure, noting that “local governments attempt to create their own islands of regulation and micro management that put out the ‘business not welcome here’ sign.”

Hackbarth also contends the argument over which level of government should dictate wage and benefits rules offers a limited view of what the bill actually does, particularly when considering government contracts with outside vendors.

“If a business — like GM or Chrysler — is negotiating with a supplier, there are things that business will dictate,” he said. “Those kinds of things happen all the time in the private sector. When the government is buying something from a vendor, it’s appropriate that it can dictate what those terms are.”

DOUBLE STANDARD?

Local officials say the proposed bill is just the Legislature’s latest attack on governments’ abilities to exercise local control.

“My fear is this is the beginning,” Kalamazoo Mayor Bobby Hopewell told MiBiz. “You start attacking the efforts of communities to deal with core urban issues. Specifically as an urban community — from a declining tax base to poverty expanding — they are not realizing that we have fewer tools at times to use. Taking away any tool right now in these challenging times is a mistake in regards to supporting local government.”

For example, Hopewell said Kalamazoo has a local-preference policy for bidders on city projects.

“We often hear about placemaking, creating a great environment for education and business. Then we start having our Legislature taking away tools because they say (they want) to support business growth,” Hopewell said. “But how are you making sure cities and townships are growing and thriving? How are you helping individuals survive in this economy? That’s the issue.”

Hopewell also noted that missing from the Chamber of Commerce’s argument is discussion about decreasing the number of governmental units in Michigan, “which I think would be a way to deal with the patchwork issue.”

“If a patchwork is the case, why not take it the whole way and let the federal government decide? How far do you go?” Hopewell said, adding that “it’s a hypocritical statement” for politicians to promote Michigan’s uniqueness from other states but then limit local communities’ ability to tailor their own programs within the state. “The bottom line is: Business is competitive. You come in and you know your community.”

Muskegon County Commissioner Kenneth Mahoney is concerned that the bill would not allow the county to administer its “move the box” ordinance adopted in 2012 that allows convicted felons to apply for county jobs without disclosing their criminal history on an application. Muskegon County also requires county construction projects for more than $100,000 to be prevailing wage jobs, Mahoney said, which could also be in jeopardy.

“My main concern is not allowing the county to set a policy for what local folks want,” he said.

Local units of government have the best ability to set policies and procedures that work for their constituents, including private developers and others in the business community, Mahoney said.

“We want to localize the deals because it makes a difference,” he said. “Muskegon has different priorities than Antrim County. With patchwork policies, I understand some of that concern. But I don’t like the drift of the state trying to remove local control of everything.”

But that shift of power is nothing new, Hopewell said.

“I believe local communities have had a target on our backs from this Legislature for quite some time, particularly urban communities where a lot of these things happen, where the concentration of poverty is,” he said.

The issue is perplexing for Mahoney especially since the idea of moving control upstream seems anathema to Republican ideals.

“They seem to be the party of local control,” Mahoney said of legislative Republicans. “But they certainly have been interested, since taking control of the Legislature and the Governor’s Office, to shift everything to Lansing.”

CHALLENGING CONSERVATIVE IDEALS

As the bill was being debated in the House Commerce and Trade Committee last month, Progress Michigan — a Lansing-based liberal advocacy group that challenges Republicans on issues like women’s rights and organized labor — issued a “hypocrisy alert” against Rep. Joe Graves, the Republican chair of that committee who supported the bill. The group pointed out that in 2013, Graves supported legislation that would have given local units of government more control over how they use taxes to pay for local services.

In the House last month, some Republicans joined the Democratic caucus in opposing the bill for stripping away local governing rights, as at least one representative described it.

“I understand you’d like to have things the same from place to place,” said Rep. Mike Callton, a Nashville, Mich. Republican who has also pushed for local governments to have the ability to decide whether they want medical marijuana dispensaries regulated in their individual communities. “As much as possible, I like to see locals and schools determine their fate.”

Callton said the dynamic is of two Republican ideals — less regulation and local control — pushing against each other.

For the business community that supports the bill, it’s a matter of simplifying regulations, said Michigan Chamber of Commerce President and CEO Rich Studley.

“Local control is not a grant of unlimited authority to cities and townships to over regulate businesses involved in intrastate commerce,” Studley said in a statement following House passage of the bill.

Ultimately, the Michigan Municipal League’s Hackbarth said the bill also raises questions about local control under the Home Rule Cities Act, a state constitutional provision that allows local governments to advance the interests of their own cities.

“The community is under the statutory duty to do everything it can to expand the prosperity of that community and its inhabitants. We’re charged with doing that,” Hackbarth said. “If the residents disagree on how to do that, they vote them out.”

 --
Editor’s note: This article has been changed from a previous version to clarify that the state chapter of the Associated Builders and Contractors is a merit shop advocacy organization. 

Read 3227 times Last modified on Monday, 08 June 2015 13:22

Breaking News

September 2018
S M T W T F S
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 1 2 3 4 5 6

Follow MiBiz