Government Relations Update
From Jamie Callahan

October 26, 2007

State Budget Agreement:  October 31 Deadline Looms

With the fiscal year 2008 almost one month old, the legislature is still negotiating the final budget agreement for the fiscal year, with the next shutdown deadline at midnight on Halloween.  The legislature and governor still need to agree on $435 million in budget cuts to balance the current fiscal year budget. 

Agreements have been made on almost every budget.  However, no conference committee action will occur until there is agreement on the entire budget.  The last points of contention remain the privatization of additional services provided by the Department of Human Services, public financing for a new bridge crossing the Detroit River, and whether the governor will veto scholarship funding for students who attend private universities. 

The House of Representatives were scheduled to convene last Friday, while Conference Committee notices for the department budgets were posted for October 29^th.  The legislature should be able to complete the budget bills in time for the Halloween deadline based on the progress made to date and the disputed areas resolved.  

Sales Tax on Services: Update

            Discussions continue on what to do about the recently enacted sales tax on services and the looming December 1 effective date.

Proposals are surfacing from a straight repeal, to revisions of current tax vehicles that would replace the $600 plus million in revenue the new tax would have raised.   Possible sources of replacement have revolved around the modification of tax rates.  The leading proposal as of the end of last week was to adjust the new Michigan Business Tax (MBT) by either revising the tax rates or imposing a pro-rated surcharge to the MBT itself.  There is also a proposal to push the effective date of the services tax to January 1, 2008, allowing more time to enact a repeal of the tax along with replacement revenue.

Any of these proposals, of course, must be supported by enough legislators in both chambers and signed by the governor.

The ‘Ax the Tax Coalition’ plans for a launch of their website www.axthetax.com and the corresponding petition drive to repeal the tax on November 1^st.

Upcoming election – get informed

With just about a week to go before the November 6^th elections, there is still time for citizens to get familiarized with the candidates and ballot proposals in their jurisdiction.  There are a number of municipal races and proposals which could impact the area and local business community for years to come. 

Make sure you take the time to become an informed citizen on the candidates.  Their positions on issues from taxation, economic growth, property rights, land use, and the role of government can vary dramatically.  If you have any questions about polling locations or voting regulations, contact your local clerk.