Government Relations Update
from Jamie Callahan
November 23, 2007

Presidential Primary – Back On!

In the latest turn to the on again, off again tale that is Michigan’s January 15, 2008, presidential primary date, the Michigan Supreme Court overturned the Appeals Court ruling on November 21^st, restoring the primary election date and remanded the case to the Ingham County Circuit Court for dismissal.

Previously, the law creating the primary date was ruled unconstitutional as the voter information would be available only to the state Democratic and Republican parties.The lawsuit was filed by voter data collection companies who would be denied access to the data.

The Court stated in their ruling that political parties serve a public purpose and that their access to the lists promotes public debate that is "integral to the operation of our democracy, our electoral process, and our political campaigns and thus serves a public purpose by enlightening the public and encouraging the informed decision-making process.'"

A copy of the Michigan Supreme Court Ruling can be viewed at: http://migop.blogs.com/blog/2007/11/presidential-pr.html.

Senate Passes Services Tax Repeal

On November 20^th, the Senate convened to address the House passed version of the service tax repeal and Michigan Business Tax surcharge replacement bill.The Senate version contains a number of differences to that of the House.

The primary changes to the bill include:

*Is estimated to bring in $560 million vs. the $625 million from the service tax for this fiscal year.

*The surcharge rate drops from 32.9 percent to 13.85 percent.

*Raises the cap from $2 million to $7.5 million.

*Has a January 1, 2011, sunset.

*It relies on $219 million in one-time revenue from the MBT spread over three years.

* Bill is tie-barred to Senate Bill 838, which repealed the service tax.

The vote on immediate effect failed on a party line vote of 20-16.The Senate can revisit this vote after a final compromise is reached. The House is expected to send the bill to a conference committee of both chambers where a final compromise will be hammered out.

All indications continue to show that the legislature will repeal the service tax by the December 1^st deadline date, with just a day or two to spare.

House Bill 4508 can be tracked through the Michigan Legislature homepage, www.mileg.org.

October Tax Revenue Figures

The Senate Fiscal Agency has released Michigan’s tax revenue data for the month of October. Some of the report highlights include:

• The revenue generated from Michigan's General Fund and School Aid Fund earmarked taxes totaled $2.78 billion in October, which was up 1.1% from last year's level. Increase in October tax revenue was concentrated in the income, tobacco, and industrial facilities taxes.

• For FY 2006-07, estimates show that cash collections for the year will exceed expectations by approximately $110 million ($70M General Fund, $40M School Aid Fund).

• Income tax revenue totaled $587.1 million in October, which was up 4.4% from last year's level.Withholding payments were up 2.1%; however, most of this growth was probably due to the recent increase in the income tax rate from 3.9% to 4.35%.

• Sales tax receipts totaled $604.0 million in October, which was down 0.1% from last year's level. Based on cash collections for FY 2006-07, sales tax collections are down 1.2%, and appear to be short of estimates by about $10.0 million.

• Of note:Single business tax collections totaled $236.3 million in October, representing a 4.9% decline from last year's level. Total cash collections for FY 2006-07 are down 6.0%.

The entire SFA revenue report can be found at: http://www.senate.michigan.gov/sfa/Publications/MonthRev/mrroct07.pdf