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Weekly legislative roundup: budget/tax details, 1099 repeal, item pricing, ergonomics

February 19, 2011

  • Higher education would be cut by 15 percent, with $83 million set aside for distribution to universities that keep tuition increases below 5-year, system-wide averages. Universities will be funded through a formula beginning in fiscal year 2013 based, in part, on graduation rate.
  • Statutory revenue sharing of more than $300 million would be eliminated and replaced by $200 million in combined money distributed to those municipalities that adopt best practices to be announced in March.
  • A 48-month lifetime limit on able-bodied welfare recipients.
  • No cuts, as promised earlier this week, to Medicaid services.
  • The closing of one prison facility, privatization of some prison services such as food service and prison stores and Corrections employee concessions.

Highlights of the governor’s tax reform proposal include:

  • Honoring of those “contractual” credits promised under the MBT (e.g. MEGA, Brownfield, etc.) through a yet-to-be-determined manner (either by allowing the businesses to elect to continue filing and paying the MBT or by applying the credits to the new tax structure).
  • Lowering of the individual income tax rate from 4.35 percent to 4.25 percent in October, 2011 as scheduled – but locking the rate at that level.
  • “Flattening” of the individual income tax base by elimination of nearly all credits and exemptions, including the Earned Income Tax Credit (EITC), and the exemptions applicable to both private and public pensions.

For more information on specific portions of the budget recommendations, you may view the Governor’s recommendation in their entirety here.

1099 Reporting Repeal Finds Footing the House

Legislation to eliminate the 1099 reporting requirements created under the Patient Protection and Affordable Care Act is receiving a great amount of attention in the U.S. House of Representatives.

This week, the House Ways and Means Committee voted to repeal the reporting requirements. However, a disagreement among committee members on how to pay for it resulted in the approval of two measures.

The panel first approved H.R. 4, which only repeals the reporting requirement. The committee then voted to approve H.R. 705 that not only includes the repeal of the Form 1099 requirement, but also provides for an offset to the cost of the repeal. The measure was approved by a 21-15 vote along party lines, with Democrats opposing the effort to offset the associated cost.

H.R. 705 is expected to head to the House floor by May 1. As previously reported, the Senate voted to repeal the Form 1099 reporting requirements, also with a language that would offset costs thanks to an amendment offered by Senator Debbie Stabenow (D-MI). However, each version of the bills contains differing language on how the offset is made. With conflicting offsets, a compromise will eventually need to be agreed upon.

Supporters of repeal argue the new health care law places an unnecessary and expensive paperwork burden on small businesses, making legislation rescinding the provision imperative. Specifically, current federal statute requires businesses to use 1099 to report all payments to corporations in excess of $600 for goods and services to the Internal Revenue Service.

Item Pricing Clears State House

Since Gov. Snyder called for repealing Michigan’s Consumer Item Pricing Act in his State of the State Address, the issue has been on the legislative fast track to his desk. State Representative Lisa Lyons (R-Alto) has introduced House Bill 4158, which seeks to repeal the mandate on retailers, while establishing the Shopping Reform and Modernization Act, which carries forward a few of the more reasonable consumer protections.

The House Commerce Committee on Tuesday heard testimony on the legislation and promptly passed the bill with bi-partisan support, sending it to the floor where six Democrats joined the entire 63 member House Republican caucus in the vote to send the measure on to the Senate.

The law, in place since 1978, is now the only one of its kind in the country. Grocers and retailers have argued that with advancements in technology, stickers are no longer needed and cost Michigan customers an estimated $2.2 billion a year.

House Panel Approves Ergonomics Bill

A bill barring the state from promulgating rules that would require companies to enforce ergonomic standards was reported from the House Regulatory Reform Committee this week by a 12-3 vote. Specifically, the bill bars the state, through a department, board or commission, from trying to enforce ergonomic standards by either rule or standards. The Legislature could statutorily impose a standard on its own.

Senate Bill 20, authored by Senator Rick Jones, was able to garner Democratic support after an amendment was adopted which allows the state to provide guidance on ergonomic best practices. Any guidance the state provides, however, may not be more stringent than current federal standards.

The bill represents one yet another reform effort placed on the fast track to the Governor’s desk since the opening of the 96th Legislature. The Senate initially passed the bill less than a week ago.

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