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Sunday, 13 September 2015 20:39

Business, labor groups battle over prevailing wage, corporate income tax initiatives

Written by  Andy Balaskovitz
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Two statewide petition drives could change the business landscape in Michigan if they’re enacted by the Legislature or eventually passed by voters in 2016.

Organized labor groups have started collecting signatures for a plan that would increase the corporate income tax rate from 6 percent to 11 percent to raise $900 million a year for road funding. Business groups say hitting corporations with a tax hike — and reversing one of the hallmark policies of the Snyder administration — will hurt Michigan’s competitiveness and ability to attract more jobs.

Meanwhile, labor groups are also opposed to a separate petition drive seeking to repeal Michigan’s prevailing wage law. Supporters say prevailing wage increases construction costs on publicly funded projects.

As summer draws to a close, backers of each plan — which are both in signature-gathering stages to possibly end up on November 2016 ballots — say they are meant to bolster state and local coffers and bring relief to middle-class taxpayers.

Leaders of the prevailing wage effort, which had raised more than $1 million by early July mostly from business groups, say they’re closing in on the goal of about 252,000 valid signatures. That would send the citizen-initiated bill to the Legislature where it could be passed and sidestep Gov. Rick Snyder’s veto, or the Legislature could send the issue to voters.

An identical strategy to increase the corporate income tax started later, but that campaign also has raised a million dollars from organized labor and reportedly has strong polling numbers in support.


Ever since Snyder stated his opposition to repealing Michigan’s 50-year-old prevailing wage law, backers have taken matters into their own hands by launching an effort to put it before the Legislature or to Michigan voters in November 2016.

Republican majority leaders Arlan Meekhof in the Senate and Kevin Cotter in the House both support repealing prevailing wage. The Senate already passed a repeal bill this session, while the House has yet to vote on it.

Critics say repealing prevailing wage — which requires contractors to pay union-scale wages on state-funded projects — drives down worker wages, jeopardizes the quality of work on public construction projects and, as Snyder says, limits Michigan’s ability to expand the number of skilled trades workers.

“Michigan law requires that every single building be built in strict adherence to Michigan construction code,” said Chris Fisher, president of the Associated Builders and Contractors of Michigan, the group behind the ongoing effort to repeal prevailing wage. “We are not repealing the Michigan construction code. The only buildings subject to prevailing wage are government buildings and those buildings are not any better than private sector buildings built without prevailing wage. Those arguments are disingenuous.”

In June, the Michigan Building and Construction Trades Council launched a “decline to sign” program to monitor canvassers and “hamper their signature gathering activities.” Media reports in early September identified multiple cases of alleged misrepresentation by signature collectors out in the field.

Union groups also say that repealing prevailing wage lacks public support.

David Waymire, spokesman for the group Michigan Prevails that has been countering the anti-prevailing wage effort since before the petition drive began, says the repeal initiative “has only one goal: to embarrass the governor.”

“This is a small group of contractors who want to pay people low wages and make it harder for working men and women to get decent pay in Michigan,” Waymire said.

While the majority leaders have reportedly signaled their intent to take up the bill if the signatures are gathered, House Minority Leader Tim Greimel, a Pontiac Democrat, says its passage in the Legislature is less certain.

“There are a number of Republicans who agree with House Democrats that the Legislature should not be focused on cutting hard-working families’ pay, which is what repealing prevailing wage would do,” Greimel said. “In addition, I think there are some Republicans who feel it would be best to let voters decide.”


Meanwhile, an equally bitter fight between organized labor and business groups was rekindled last month when unions launched a ballot initiative to increase the corporate income tax — which is paid by about one-third of Michigan businesses — from 6 percent to 11 percent to help fill the road-funding gap.

That group, Citizens for Fair Taxes, started collecting signatures in August and has roughly six months to get the required signatures for a November 2016 vote “if no action is taken by the Legislature,” spokesman Tom Lutz said.

That group contends that Snyder’s tax policy shift that took place in 2012 hasn’t created the kind of economic recovery that was promised.

“We haven’t seen more or better jobs and we haven’t seen wage growth,” Lutz said. “This is a simple and fair fix to the (roads) problem. Everyone agrees the roads need to be fixed. Our Legislature has been inept and unable to give us a solution that works. And everything we’re seeing coming out continues to ask working-class families to pay more to shield corporations.”

Citizens for Fair Taxes reportedly raised nearly $1.2 million at the start of the campaign from three unions: the Michigan Council of Carpenters ($503,900), Operating Engineers Local 324 ($400,000) and Michigan Laborers District Council ($250,000). Internal polling also shows 69 percent support for raising the corporate income tax as a stable road-funding source, according to the Capitol newsletter MIRS.

The populist-themed effort drew strong backlash from business groups who say such an effort would reverse positive employment trends under Snyder and send a negative signal to potential employers looking to locate in Michigan.

“This petition drive to raise the corporate income tax by 83 percent is a jobs killer. It is driven by three angry partisan unions, not the entire labor movement,” said Rich Studley, president and CEO of the Michigan Chamber of Commerce.

“It’s an effort to turn back the clock, a redo on the last two campaigns for governor. It’s a complete lack of understanding of economic competitiveness and how Michigan compares to other states. It’s an incredible example of the construction industry biting the hand that feeds it — that’s why part of our message here is to not feed the alligators.

“This is really one of the most damaging and deliberately false and misleading ballot proposals we’ve seen in a long time.”

Greimel said the House Democratic Caucus hasn’t taken a formal position on the initiative.

“Our caucus has been very consistent in calling for corporations to pay their fair share through a combination of reduced tax breaks and subsidies as well as an increase in the corporate income tax on the largest corporations in the state,” he said. “There are varying views in the caucus about what the right mix of decreased subsidies and an increased corporate tax is.”


Snyder has come out publicly against both plans.

On prevailing wage, “he believes such an effort would hurt efforts to expand the number of people interested in the skilled trades,” spokesman Dave Murray said. “Michigan needs to increase the number of people with such training because (we) know businesses consider available talent when they look for places to locate or expand.

“Governor Snyder also said he opposes efforts to increase the corporate income tax,” Murray added. “Raising the taxes on our job creators would be economically challenging for Michigan, especially after we’ve come so far in reinventing our business climate. A proposal will put Michigan at a disadvantage as we look for businesses in our state to grow and create more jobs.”

It’s too early to tell whether the proposals will even make it on November 2016 ballots, but one political observer believes the prevailing wage plan may be a “tougher sell” to the public if that does happen.

“Corporations are always a good bad guy in the liberal narrative,” said T.J. Bucholz, president and CEO of Lansing-based Vanguard Public Affairs Inc. “The broader narrative is, given all of the crushing infrastructure needs in the state, that corporate America and corporate Michigan needs to step up and pay its fair share.

“Prevailing wage is a tougher sell. You could gather a lot of small business owners who say prevailing wage would either cost jobs or cost them their living, that they have to pay a wage that’s mandated that they shouldn’t have to,” he added. “But that explanation is tougher to sell publicly. Saying corporations are the bad guy is easier for voters.”

It also remains unclear what political repercussions might take place if either proposals pass or fail. The Legislature’s push for Right to Work legislation at the end of 2012 was the direct result of a failed ballot proposal to enshrine collective bargaining rights in the state constitution.

“That’s a good long-view question. The forecast is cloudy on that one,” Bucholz said. “I don’t know how the dynamics shape up afterwards. It’s an interesting dynamic to see (the two proposals) juxtaposed on the ballot potentially.”

Read 5333 times Last modified on Monday, 28 September 2015 10:50

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