Legislative Update

from Government Relations

November 6, 2008

**Election Special**

The returns are in and northwest Michigan will see some new representation in Lansing starting January 1, 2009.  Record turnout was seen in many parts of the state, with a number of State House and Congressional seats switching parties.  A dynamic candidate with a first of its kind campaign at the top of the Democratic ticket, combined with a sour economy and turmoil in the financial markets spelled trouble for many candidates across the state.

Overall, the Michigan House of Representatives saw a gain of nine seats for the Democrats, increasing their majority to 67-43.  Michigan’s congressional delegation saw a switch from a 9-6 Republican majority to an 8-7 Democrat majority with the turn of two downstate seats.    

Locally, the region saw all incumbents retain their seats.  Of the two seats that were open seats due to term limits, one seat remained with the Republicans while one switched with a Democratic victory.  Here is a recap of the Michigan House elections for the region:

New Representatives:

101^st District – Leelanau, Benzie, Manistee and Mason Counties

Dan Scripps (D) defeated Ray Franz (R) with 59.9% of the vote and was one of the gains for the Democrats.  Scripps replaces term limited Rep. David Palsrok (R).   

104^th Distirct – Grand Traverse and Kalkaska County

Wayne Schmidt (R) emerged victorious with a 53-43 margin over Roman Grucz (D), holding the seat formerly held by Rep. Howard Walker (R).  Libertarian candidate Dan McDougall picked up 4% of the vote.

Incumbents:

102^nd District – Rep. Darwin Booher (R) picked up 69.6% of the vote over challengers Nate Heffon (D) and Thomas Hren (L).

103^rd District – Rep. Joel Sheltrown (D) will return for a third term by besting Dave Ryan (R) 66-34%.     

105^th District – Rep. Kevin Elsenheimer (R) garnered over 60% of the vote in defeating Connie Saltonstall (D) and Greg Dean (L).

107^th District - Rep. Gary McDowell earned a return trip to Lansing with a 68-32% victory over Alex Strobehn (R).

Top Legislation Outlook during Lame Duck

The great debate going on in Lansing right now is how much legislation is going to get addressed during the final session days of the 2007-2008 session, and what issues will be taken up.  Here are the most likely topics and ones that the Chamber is tracking and working on:

MBT Surcharge – The expedited elimination of the surcharge placed on the Michigan Business Tax (MBT) remains a priority for the Chamber and business groups across the state.  The surcharge came about last fall as part of a compromise to repeal the ill-conceived tax on services.  The agreement to impose the surcharge was intended to be a short term fix for the budget and not a long term revenue generator for the State.  Elimination of the surcharge has been a top priority of the Chamber and the Regional Chamber Alliance.  The Chamber is promoting action on Senate Bill 1242 with House and Senate leadership and will engage our membership to help promote action on the issue in the remaining session days.  

Corrections reform – The most talked about trade for elimination of the MBT Surcharge is putting in place in a number of reforms to the Department of Corrections. The Detroit Regional Chamber of Commerce recently proposed approximately $800 million in reforms to the Department.  This price tag is slightly higher than the $700-plus million dollars the MBT surcharge brings in on an annual basis.  There is some resistance to the proposed cuts by some legislators, as they oppose the proposals that would give early release to a number of prisoners.

Our Chamber is working with a number of groups and the administration in supporting the need for reform within the Department and across state government.  Reform will remain to be a priority for the Chamber and the Alliance in the coming year. 

It has been learned that an Executive Order by the Governor may be in the works to enact a number of spending reforms within the Department without the need for legislation, and would take the proposed trade for MBT Surcharge elimination off the table.

MBT Gross receipts calculation – The inclusion of taxes, fees, and surcharges in the gross receipts calculation in the MBT has been one of the biggest complaints with the calculation of the tax.  Senate Bill 1038 would take the collection of sales tax out of the calculation of the gross receipts figure awaits a final vote of approval in the House.  The important changes included in the bill need to be passed in the remaining days of the term.  Look for an important call to action from the Chamber to get this bill moving forward.   

Individual Market Reform – Over the past few months, a House-Senate workgroup crafted what could be considered compromise language on the hotly contested Individual Market Reform legislation.  Portions of the proposed compromise include the elimination of the high risk pool and reinsertion of the Attorney General’s role in insurance rate setting.  With the post-election return of the legislature, a coalition of business groups has emerged to start promoting the need to adopt the compromise.  The roadblock to taking up a compromise bill is the Senate Majority Leader and is becoming the focus of lobbying efforts to agree to an up or down vote on the compromise.

Community Colleges Job Training – The Chamber supported initiative to allow community colleges to participate in job training for employers will make a push for action on this creative initiative.  The bills are in House committee, so considering the remaining days left in session, it is possible for the bills to see action and adoption this year.

Questions on these or any other pieces of legislation can be directed to Jamie Callahan in the Government Relations Division at Jamie@northwestmichiganbusiness.com.