Published in Economic Development

Unfinished Business: A look at what’s next for Michigan lawmakers in 2016

BY Sunday, June 26, 2016 10:46am

Earlier this month, the state Legislature adjourned for most of the summer so lawmakers can focus on constituent issues in their home districts, as well as this year’s election. 

However, they left Lansing with unfinished business on bills ranging from energy policy to property tax assessments.

Sources say that of the 25 scheduled session days left in 2016, it’s likely that lawmakers will pick back up on the legislation in September and during the “lame duck” period after the Nov. 8 general election, particularly for controversial bills. Gov. Rick Snyder, for instance, signed Michigan’s Right to Work law after a contentious lame duck period in 2012.

Political observers also are closely watching the legal dispute surrounding the signature-gathering process for ballot initiatives, an issue that lawmakers looked to settle on their own but that the courts could ultimately decide.

So far, the 2016 session has been productive, building off victories last year on a road-funding plan and ending tax credits for the film industry, said Rich Studley, president and CEO of the Michigan Chamber of Commerce. The chamber supported bills last year that prevented local ordinances involving labor law and that made changes to Michigan’s abandoned and unclaimed property process.

In early June, the Legislature also signed off on a $54.9 billion budget for the 2017 fiscal year, which — outside of a controversial funding strategy for Detroit Public Schools — includes a $5.3 million increase for the state’s Skilled Trades Training Fund.

Looming large over how the rest of this year’s session plays out, though, is whether Democrats will be able to retake control of the state House from Republicans, who currently have a 63-45 majority. 

“The Democrats probably have their best chance to take back the House in a number of years,” said TJ Bucholz, president of Vanguard Public Affairs Inc. in Lansing. 

Should Democrats gain the majority, Republicans are likely to take a “scorched earth” approach to legislation, ramming through controversial bills before the end of the year.

Controversial actions by the Legislature this year, the potential effect of Donald Trump on down-ticket races and Snyder’s low favorability in the wake of the Flint water crisis are all contributing factors, Bucholz said of Democrats’ chances of picking up nine House seats.

“It’s an achievable goal,” he said. “And if Democrats take the majority in November, they will become a significant obstacle for Senate Republicans and Gov. Snyder. I suspect that the lame-duck session would start the day after Democrats retook the House. (Republicans) would push a litany of anti-Democratic measures to make the work of the new majority harder in January.”

Studley said the Michigan Chamber of Commerce will be active in the coming weeks on statewide races.

“It’s very important for business people to understand that the entire state House is up for grabs,” he said.

But whether Democrats will be able to flip the House and which policies might get rammed through in the lame duck session if they do to retake the majority remain unclear ahead of the two major parties’ conventions in July, as well as the statewide primary on Aug. 2 and the Nov. 8 general election.

As the Legislature begins its summer break, here are some of the major policies affecting Michigan businesses with actions left to be completed.

ENERGY

It looked as if the Senate’s version of an overhaul to 2008’s energy policy might gain some traction after moving through committee on May 31, though Senate Majority Leader Arlan Meekhof, R-West Olive, was hesitant to bring Senate Bills 437 and 438 to the full Senate without a closer look.

In other words, Republicans need to resolve their differences over key aspects of the bills, including the future of Michigan’s 10-percent cap on exercising electric choice. If the bills, sponsored by Republican Sens. Mike Nofs and John Proos, face uncertainty in the Senate, they likely will encounter an even steeper uphill climb to pass the House, observers say.

With more than a year’s worth of rewrites and committee hearings already, the bill sponsors will likely want to take action before the end of this session on a major energy rewrite, setting it up for lame-duck work.

The versions of SB 437 and 438 that were voted out of committee with only Republican support, though, faced opposition from a diverse group of stakeholders, including the Michigan Chamber and Grand Rapids Area Chamber of Commerce.

Business interests say the bills fail to provide enough protection for ratepayers against future rate hikes, and they also believe they will stifle competitive bidding on new generation projects. Also, business groups are concerned that additional requirements on those who participate in the electric choice market will be squeezed out, eventually eliminating choice through attrition.

However, Nofs is reportedly working to court business groups with amendments that would attract their full support of the bills.

HICA REPEAL

Studley of the Michigan Chamber says the Legislature’s work on Michigan’s Health Insurance Claims Assessment has run the spectrum this year.

In February, the Legislature passed a measure to extend HICA through 2020 rather than let it lapse in 2017. That was shorter than the House’s original extension to 2025 that the chamber had opposed.

The chamber continues to seek a repeal of the HICA tax, which it says is an unreliable revenue stream to fund Medicaid. The program, started in 2011, is a 0.75 percent tax paid by individuals and businesses on health insurance claims.

In early June, the Senate advanced a four-bill package (SBs 987-990) with broad support to repeal the HICA tax by Jan. 1, 2019, sending the proposal to the House for consideration. The bills would restructure the current use tax and direct revenue into a fund that’s restricted from being used on Medicaid programs while allowing state income tax revenue to be used for Medicaid matching funds.

“It’s one of those issues where the first part of the session didn’t go well but the second half did, and I think we’re back on track for a better and more stable source of revenue going forward,” Studley said.

‘DARK STORES’

With the support of local-control advocates, the House passed HB 5578 earlier this month on a 97-11 vote. The legislation looks to close a controversial property tax loophole for big box stores.

Currently, major retailers can appeal their property tax assessments to have them assessed at rates comparable to similar vacant properties, under a process known as “dark store” theory. MiBiz previously reported that the loophole has cost municipalities about $100 million since 2013.

The proposed bill would apply “generally accepted appraisal principals” to all commercial properties. Amendments to the original bill ultimately garnered the support of the Michigan Association of Realtors, which was initially opposed to the legislation.

However, the Michigan Chamber remains opposed to the House-passed bill, saying the issue is “much more complicated” than how it’s been portrayed by local-government advocates.

“My sense is that a lot of what is driving that is the desire on the part of local government officials for more revenue,” Studley said. “While it’s not surprising that government officials would like more revenue, I’m not sure changing how property is assessed is the best way to go about that.”

THIRD-GRADE READING

A bill the Grand Rapids Area Chamber of Commerce has been actively supporting for years would adopt reading standards for all Michigan third graders. 

The standards look to increase reading proficiency as third graders advance to fourth grade by allowing districts to hold students back under certain circumstances. Many groups view improving third-grade reading proficiency as a key factor in workforce development. 

Earlier this year, HB 4822 — sponsored by Rep. Amanda Price, R-Holland — cleared the House before being amended in the Senate to allow for more exemptions that would prevent a child from being held back a grade. The House failed to pass the Senate’s version of the bill, so caucus leaders sent the bill to a conference committee to work out differences between the two chambers.

Price says that committee has yet to meet, acknowledging the bill is likely on hold until after the August primary election.

BALLOT SIGNATURES

Looming above all of these policy proposals in the Legislature are a pair of lawsuits brought on by advocacy groups challenging the state’s 180-day window to gather valid signatures for ballot initiatives.

The Legislature acted quickly to pass a bill earlier this month clarifying the 180-day window to gather signatures, though opponents say the time frame is unconstitutional.

If the legal challenge is successful, groups pushing for a statewide ban on hydraulic fracturing and the legalization of marijuana could significantly alter the way policies are crafted in Michigan.

While supporters say opening the window to gather valid signatures allows the public to have a greater say in issues and wouldn’t limit successful signature-gathering initiatives only to powerful groups that can pay for it, Studley called the lawsuit a “dangerous can of worms” that could be opened up.

“I could see the lawsuit resulting in big and negative changes in how public policy is established,” Studley said. 

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