The Building Tradesman Newspaper

Friday, January 25, 2019

Fresh start for state governor, lawmakers, hopefully labor, too

By Marty Mulcahy, Editor



LANSING - It's a new year: Michigan has a new governor and new lawmakers, and it's certain to be a fresh start for organized labor. Unions and working people have had a target on their back during the past eight years of total Republican rule in Lansing, but now there are people in office who will have labors' back. 

Gov. Gretchen Whitmer has taken the oath of office, as have Attorney General Dana Nessel and Secretary of State Jocelyn Benson - all Democrats, all endorsed by organized labor - and all who are sure to be more labor-friendly than their Republican predecessors. There are even a few more Dems in the state House and Senate after last November's election, which limit the Republican majority and may lead to a little more pro-worker (or at least less anti-worker) legislation.

Following are a few of the issues that are rising as new state government gets started.

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From the get-go, Gov. Gretchen Whitmer may find it a bit difficult to fix the damn roads.

The amount of money needed to fix the roads is huge - and growing. The state's entire general fund amounts to about $10 billion, but leaders at the Michigan Department of Transportation have said over the past decade that the state needs to spend upwards of an additional $4 billion per year to fix our crumbling roads. 

The money needs to come from somewhere, and the General Fund - with little expectation of dramatically higher revenues this year -  isn't the place to get it. Whitmer has talked about issuing bonds, but she also seems open to hikes in vehicle registration fees or a higher gas tax. 

The Republican-dominated state House and Senate haven't been much help over the past eight years they have held sway in the state Capitol. Loathe to increase any taxes or fees, they never did come up with a new source of money for road repairs.  In 2015 they diverted $325 million from the General Fund to pay for road repairs, an amount which will climb to $600 million when fully phased in by 2021. But it's not new money - as it sits, the budget will have to pull revenues from other sources, like education or local grants.

“If you’re thinking, ‘Let’s fix the roads,’ you’re probably going to need to have some sort of (new) revenue source to do that,” Snyder's former budget director Al Pscholka told Bridge Magazine. 

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Newly elected Michigan Secretary of State Benson will ask newly elected fellow Democrat and Attorney General Nessel for an opinion on the constitutionality of a new GOP-backed law that places restrictions on the collection of petition signatures.

In the very busy Lame Duck session late last year, the Legislature's ruling Republicans adopted a law that caps at 15 percent the number of signatures petition organizers can collect from voters in any single congressional district. Passage of the law means that future petition drives - like those that might address issues hated by the GOP that might reinstate the state's prevailing wage act or take a second stab at upping the state's minimum wage sooner - would have a steeper hill to climb. 

The current law, as of Jan. 1, now requires petition gatherers to spread out their efforts from more populous jurisdictions into more sparsely populated areas in order to get sufficient signatures. In signing the law, outgoing Gov. Snyder said it would "promote geographic diversity" in the makeup of petition signatures.

Benson, who in her position also heads the Bureau of Elections, said she wants the attorney general to review the new rule to ensure citizens "have access to this important right."  The state Constitution has no such restrictions on where petition signatures are gathered in the state. The courts are also likely to have a say in the new state law.

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One of the first things then-Gov. Snyder and the all-GOP state Legislature did after they first took office in January 2011 was to hike taxes on senior pensions in order to pay for a nearly equivalent cut in corporate taxes. 

The law increased taxes on individual pensioners by eliminating the state's tax exemption for that income, while at the same time repealing the Michigan Business Tax for most businesses in favor of a flat corporate income tax. Repealing the tax on pensioners would cut income to the state treasury by $250 million to $300 million every year. 

This time there is support for the repeal among Republican lawmakers - even Whitmer's opponent in the election, Bill Schuette, supported doing away with the pension tax. 

State Rep. Joe Bellino (R-Monroe) introduced legislation this month that would end the tax on pensions. "Times have changed for the better since the pension tax was adopted,” Bellino said. "Back then, the economy was bottomed out and the state budget was a mess. That’s simply not the case anymore."

Bellino's House Bill 4006 would re-establish Michigan’s previous retirement tax structure. Public pensions would be exempt from taxation and other retirement income would have higher deductibles for state income taxes. Social Security income would continue to be exempt.

There is no specific plan in the legislation - or anywhere else - that explains how the state would make up the potential $300 million hole in the budget if the legislation is enacted. Reinstating the corporate tax is a complete non-starter.