LANSING – Legislative Republicans say the $3 billion high tech jobs development and Single Business Tax cuts should not be vetoed by Michigan Gov. Jennifer Granholm simply because a repeal on the 2009 sunset on the Single Business Tax is not included in the package. But top Democratic officials argue that Republicans broke the agreement reached a week ago in at least four other areas.
Still most of the fighting and the looming veto of the long-pending changes in the SBT centered largely around the sunset controversy. Granholm’s spokesperson Liz Boyd said by refusing to eliminate the sunset on the SBT, legislative Republicans are planning a massive tax shift on individuals that could cost a family of four $1,000 a year.
But the chair of the state Republican Party said not ending the SBT amounts to a tax increase on both businesses and families.
“Raising taxes will not create jobs in Michigan,” Saul Anuzis said in a press release.
Even though the Legislature was supposed to have begun a two-week break on Thursday, tentative sessions have been scheduled for Tuesday and again for November 22, despite the firearm dear season starting Nov. 15.
In a press conference, Senate Majority Leader Ken Sikkema (R-Wyoming) and House Speaker Craig DeRoche (R-Novi) were asked why tentative sessions were needed if the deal were done, and Sikkema said the Senate was prepared at any time to discuss with the administration what was the most critical issue of the day: the state’s economic health.
But Boyd said it was good the Legislature had set plans to meet next week, “because there is lots of work to do.” She said the governor will veto the bills as passed by the Senate and House.
The Legislature should send Granholm the bills they have passed quickly so she could veto them and bring people back to work, Boyd said. The House made final concurrences with Senate amendments on the package around 4 p.m. Thursday.
With almost no comment, the Senate enacted the package. Straight party-line votes marked the specific bills on the SBT changes, although Senate Democrats made no effort to add a sunset provision back into the bills as House Democrats did in the early morning hours.
Thursday effectively completed an astonishing week that began on November 4 with praises for an agreement on an SBT tax proposal and jobs development program and ended with finger pointing over the collapse of the understanding. It also featured both Republican leaders insisting in the strongest way that the sunset language was never discussed, but even that included an equivocation.
As it has all week, the question of whether a sunset provision was always part of the deal announced last week or not was the focus of the controversy.
Democrats had new fuel for the issue because a Senate Fiscal Agency memo dated on Monday said the plan called for the sunset to be eliminated. Asked about that memo in the press conference, Sikkema said the memo was simply wrong. Sikkema had said on Friday he did not think it would be difficult for members to vote for the repealer (the Senate, in fact, had included a repealer to its SBT proposal passed several weeks ago). Thursday, he said that for some members it would not be a big issue, but “a lot of people in the House didn’t like it.”
Sunsets have value, both Sikkema and DeRoche said, because they force the Legislature to come back to issues they might otherwise not. Sikkema used recent action on the state’s telecommunications bill as a prime example. If the law did not sunset this year, it was unlikely the Legislature would have reviewed it.
Treasurer Jay Rising, in a brief interview, acknowledged that on November 3 a repealer was not specifically discussed but said the meeting that day between Granholm, DeRoche, Sikkema and himself began with DeRoche outlining his latest proposal that called for SBT changes beyond 2010. “So clearly there was an implication that the SBT sunset would be repealed,” Rising said. “And the Senate didn’t discuss it because they had already passed a repealer.”
But Matt Resch, spokesperson for DeRoche, said the week before when the speaker had proposed using most the tobacco securitization for a tax cut he was asked if he was backing a repealer because the proposal had provisions that went beyond 2010. At that time, DeRoche said he would not support a repealer because the Legislature needed to come back to look at the proposal.
Beyond the question of the repealer, Rising, Lt. Governor John Cherry and Boyd, said the Republican-passed plan violates the agreement in a number of areas.
Rising said the proposal does not move the SBT apportionment to 100 percent of sales as agreed, it moves it only to 95 percent; it does not provide a new provision of commercial rental real estate as was agreed; it does not enact an increase in liquor license fees; and it does not close a tax loophole enjoyed by professional employment organizations.
Boyd said the proposal also does not provide for any tax relief for either Delphi or Visteon Corporations and it fails to use $75 million a year in tobacco settlement money for the Michigan Strategic Fund to support diversification.
Resch said that Republicans had not broken any part of the deal, exampling the agreement between officials that if votes could not be found to support a 100 percent apportionment, then it would automatically revert back to 95 percent.
DeRoche told reporters the package passed “is the deal” agreed to.
And both he and Sikkema said it was critical for Granholm to sign the package to assist Michigan businesses because corporate decisions are being made now on where to locate plants and operations. “We need to afford our industries some relief when they are making life changing decisions,” he said.
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