LANSING – A bill protecting Michigan businesses from suffering a loss of stock market value was approved by a mostly party-line vote of the Senate on Wednesday, over objections of Democrats who complained the current-year budget issues deserve top priority.

The bill does not have a budget impact until 2013, and while numbers are sketchy, the Granholm administration estimates it will cost the state some $1 billion over a 10-year period.

The 26-12 vote on the changes in the new Michigan Business Tax sends SB 687 to the House, where similar legislation (HB 5104 ) is pending after being approved by the House Tax Policy Committee and readied Wednesday for a final vote.

Before the final vote, the Senate on a 16-22 vote rejected an amendment that would have recouped the estimated losses with a temporary 10-year increase in the 4.95 percent rate under the MBT. Five Democrats joined the solid Republican majority in favor of the bill.

Sen. Michael Prusi (D-Ishpeming) criticized the Senate for taking up the bill at a time when he said myriad issues dealing with ending the current fiscal year in the black and a projected deficit in the 2007-08 year are unresolved. “We need to take some time in committee for testimony and consider other issues,” he said.

But Senate Finance Chair Sen. Nancy Cassis (R-Novi), whose committee did not review the bill as it was introduced last month and sent directly to the full Senate, said the problems the bill addresses were recognized when the MBT was being drafted.

“If we don’t pass this, some companies will be immeasurably harmed and harmed on Wall Street,” she said. “This has to be fixed and it has to be fixed now. Truly our economic reputation depends on it.”

Administration officials, who have pegged the loss at about $100 million a year, characterize the proposed change as a tax cut.

The bill permits companies to take deductions against the MBT of 10 percent of the difference in changes in deferred tax liabilities that occurred with the enactment of the new tax July 12. That deduction could be taken over 10 years beginning with the 2013 tax year. That means a business could immediately claim an asset of a deferred tax that would offset the deferred tax liability under the income tax nature of the new MBT, and thus avoid posting a decrease in its book value.

Democrats voting with Republicans in support of the bill were Sen. James Barcia (D-Bay City), Sen. Glenn Anderson (D-Westland), Sen. Hansen Clarke (D-Detroit), Sen. Mark Schauer (D-Battle Creek), and Sen. Buzz Thomas (D-Detroit).

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