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Gov’s Tax Plan OK’d 20-17; I.E. Defeated; Dems Threaten Rule Change

February 21, 2023

Article courtesy MIRS News, for SBAM’s Lansing Watchdog e-newsletter

Gov. Gretchen Whitmer’s tax reform plan passed the Senate on a party line 20-17 vote, but the measure didn’t receive the two-thirds support needed to make it go into effect immediately, which throws the future of the measure into question.

Despite the bill being passed, it stayed in the Senate Thursday, since the defeated motion on immediate effect was reconsidered, leaving a motion on the measure unresolved.

Without 26 votes on the procedural immediate effect vote on HB 4001 , a provision that would deliver $180 rebate checks to Michigan taxpayers – or $90 per married joint filer – wouldn’t happen for more than a year, if at all. Also, without “IE,” $800 million wouldn’t be shifted out of the General Fund in time to stop a trigger that would likely roll back the state’s income tax from 4.25% to 4.05%, a key Republican priority.

Senate Republicans will have a second chance at granting the governor’s tax plan immediate effect following this weekend. If they don’t, majority Democrats signaled that they could change the rules on how immediate effect votes are counted.

“We’re gonna give them a few days to think about it, and we will give them another opportunity to make that a reality for the families that need it the most,” said Senate Majority Leader Winnie Brinks (D-Grand Rapids)to the media about the postponed reconsideration of granting HB 4001 immediate effect. 

Additionally Thursday, SR 12 , a resolution sponsored by Brinks to historically make the electronic roll call vote for granting legislation immediate effect optional, was referred to the Senate Majority Leader’s very own government operations committee. 

“If, in the future, we find that there are people who are getting in the way of doing things and working together well for the benefit of our state, we will consider action on that resolution,” Brinks said. 

Brinks said she believes the goal here is to help ensure everybody is working together for the benefit of Michigan, and if anybody stands in the way of getting things done for residents in an “unreasonable way, we will consider making changes so that that doesn’t happen.” 

However, while Democrats were in the Senate minority during the last four decades, the Senate’s immediate effect rule, that all voting must take place on the electronic board for all to see, was always maintained. Democrats used this two-thirds supermajority as one of their principal negotiation tools. 

If SR 12 is approved, an argument could be made that it violates the state constitution, as minority parties have long argued the House rules allow.

Technically, both the House and Senate are required to grant legislation immediate effect through a two-thirds vote in each chamber, in order for the policies to be enacted before 90 days following the end of the year’s session. In the House, the two-thirds approval is received through a voice vote, allowing whoever is holding the chamber’s gavel to make their own determination if immediate effect has been granted. 

Senate rules have not only allowed that votes requiring two-thirds support be put on the voting board, but that one-fifth of the members can request a roll call vote. SR 12 reads that votes requiring two-thirds support “may” be put on the voting board.

“They’re trying to silence the voice of half the state,” said Senate Minority Leader Aric Nesbitt (R-Lawton)to the mediawhen asked about SR 12 . 

As for if there’s any scenario in which at least six Republican senators decide to grant HB 4001 immediate effect, Nesbitt said “let’s do real negotiations.” 

“Send it back to the conference committee. They wouldn’t even recognize a member of the Senate in the conference committee in terms of the objections. They changed the title of the bill. They put appropriations in the bill. They’re playing these games . . . Let’s deal with these issues one at a time,” Nesbitt said. 

HB 4001 aims to increase Michigan’s Earned Income Tax Credit from 6% to 30% of the federal credit to incentivize work among low-income households, as well as to offer complete tax exemptions for private and public pension retirement incomes throughout a four-year phase-in process. 

It would also designate $460 million into the state’s Strategic Outreach and Attraction Reserve (SOAR) Fund for luring large-scale business projects during the current FY 2023, $465 million in the next FY 2024 and $500 million in FY 2025. The money would come from corporate income tax revenue after $1.2 billion is deposited into the General Fund.

“Pushing it through the conference committee without allowing amendments, constantly changing the goals and contents of the bill and leaving us with only rumors rather than written policy are all actions that suggest dishonesty,” said Sen. Kevin Daley (R-Lum)on the Senate floor Thursday. “Michigan taxpayers deserve transparency in their legislation process, rather than secrecy, especially when they are about to be cheated out of a universal tax relief already promised by law.”   

Daley served in the state House when it was led by a Democratic majority in the 2009-10 legislative term. The Republican said while he’s served as part of the minority before, “I have never seen anyone legislate like this.” 

Sen. Jeremy Moss (D-Southfield), on the other hand, illustrated how he reportedly represents four of Michigan’s 10 wealthiest individuals, and can assure the chamber “none of them are hurting and none of them have reached out to me for a cut in the income tax.” 

He said the income tax rollback plan, which was designed through a 2015 Republican-led agreement, would give the average resident in the wealthier Lake Angelus community $386 in savings, and the average resident in the more economically disadvantaged Pontiac community $29. 

“That is indefensible,” Moss said. “Instead, the important proposals in HB 4001, repealing the retirement tax, boosting the ‘Working Families Tax Credit’ and delivering checks that leave no Michigander behind based on their income – which gives that Pontiac family $1,412 in relief – are actually the fairest way to deliver relief to folks where it’s needed the most.”   

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