Gaylord/Otsego County Chamber of Commerce

Government Relations Update from Jamie Callahan

May 12, 2008

TC and Gaylord MBT Public Forums Announced

Two public forums have been announced in northern Michigan for business owners and accounting firms to relay directly to legislators any burdens and challenges the new Michigan Business Tax (MBT) has created.

The Traverse City event will be from 9:00 – 11:00 am on May 16^th, in the Steelcase Conference Room of the Traverse City Chamber building.The town hall meeting is hosted by Rep. Howard Walker and Sen. Jason Allen.The Gaylord forum is hosted by the newly created MBT Impact Assessment Subcommittee, which is part of the Senate Finance Committee.The event will be at 11:00 am on May 19^th, in rooms U111-112 of the University Center in Gaylord, 80 Livingston Blvd.

This is a great opportunity for chamber members to voice their opinion of the new tax and what impact it will have on their business operations and employees.Both meetings are open to the public.Reservations or tickets are not required.

MBT Survey Results Released Soon

Stay tuned for a special announcement in the coming week of the results of the Chamber and Northwest Michigan Regional Alliance’s MBT Survey.

Smoking Ban Mandate Passes Senate

Last Thursday, the Senate passed House Bill 4163 which prohibits smoking in bars, restaurants and other indoor areas.The mandated ban has been a longtime issue for a number of legislators, including Sen. Ray Basham of Taylor, who has authored similar legislation every session since he took office.

The bill is even more strict than the House passed version and does not allow exemptions for non-tribal casinos and bingo halls.The bill passed 25-12 and will now head back to the House for concurrence.The governor is expected to sign the bill.Sen. McManus voted for the ban and Sen. Allen voted against the mandate.

The future of the bill is uncertain in the House, as Detroit legislators are advocating the casino exemption be brought back into bill, as Detroit casinos would be subject to the ban, while tribal casinos would be exempt and would continue to allow smoking.The argument is that the Detroit casinos would be put at a competitive disadvantage compared to the tribal casinos.

In addition to the casino issue, the blanket ban laid out in the Senate version would shut down specialty bars that cater to cigar or pipe smokers, eliminate the ability for smoking inside tobacco shops, and shut down charity events that may have smoking as part of the event, such as a smoker or a cigar dinner.

State Revenue Estimates Show State Short Over $400M

With the May revenue estimating conference this week, preliminary reports show that the state will be short over $400 million in revenue for Fiscal Year 2009 since the last estimating conference held in January.The official number will be revealed on Friday by the House and Senate Fiscal Agencies and the Department of Treasury when they come together at the Consensus Revenue Estimating Conference.The numbers from Friday’s conference will be those used to finalize the FY09 state budget.

The largest reductions in revenue reductions can be attributed to:

• Refundable film credits as part of the film incentive legislation enacted earlier this year – over $110 million
• General revenue reduction from slowing economy – approximately $85 million
• Federal stimulus package (by reducing business taxable income) – over $90 million
• Declining property values and slow real estate market – over $125 million to the School Aid Fund

One ray of sunshine is that the revenue projections for the current fiscal year are coming in pretty much on target.