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A Better Partnership


Jan 2012
January 03, 2012

From The Capitol - The Year in Review - 2011




Last year brought us a new Republican Governor and large GOP majorities in both Houses of the Legislature. In fact, the Senate Republicans won a super majority of seats in the 2010 election, claiming a whopping 26 out of the 38. With strong majorities in both Houses and a politically savvy staff, Gov. Synder, a newcomer to politics, introduced his agenda.

For the most part, the Governor accomplished his goals, which were focused on tax policy, regulation and other economic issues. The Republican majority followed his lead and placed its socially conservative agenda on the back burner for now. With the exception of the State Senate’s rejection of legislation allowing the construction of a second bridge across the Detroit River, now called the New International Trade Crossing (NITC), and the implementation of a health care insurance exchange, the Governor was successful. In the face of strong attacks by Democrats, many of the votes taken by Republicans to implement the Governor’s agenda could have serious consequences in the general election of 2012.

The following is a summary of the legislative accomplishments in 2011, its unfinished business for 2012, and issues looming into the future.

An Overhaul of State Tax Policy:

Governor Snyder campaigned and pledged that if elected he would advocate for repeal of the Michigan Business Tax (MBT). The MBT was hastily conceived when it was enacted in 2007. It was a two edged sword taxing both a business’ income and gross receipts. It was the tax on gross receipts that received the most attacks. Gross receipts are no indication of the profitability of a business or its net worth and many businesses ended up paying much more tax than they paid under the old Single Business Tax, attributable in large measure to the gross receipts portion of the MBT.

The Governor made it clear in his first State of the State Address and in his budget presentation that he would seek a flat 6 percent income tax on business income, doing away with the MBT and its 21.99 percent surtax. In March, Representative Jud Gilbert introduced House Bills 4361 and 4362 to implement the Governor’s plan. After several hearings, the bills were signed by the Governor:
  • Repealed the MBT and a number of tax credit incentive programs for businesses
  • Put into place a flat 6 percent tax on an S corporation’s income
  • Ended business taxation for pass through entities, such as limited liability companies and partnerships
  • Introduced a phased in income tax on retirees’ pensions
  • Eliminated a number of individual tax credits and deductions

The new Corporate Income Tax (CIT) took effect on January 1, 2012 and will save business approximately $1.8 billion. It was designed to make Michigan much friendlier for “job creators.” That remains to be seen, but no one could argue with the fact that the Governor was off to a fast successful start.
Goodbye to Mega, Brownfield and Historic Tax Credits; Hello to Development and Revitalization Programs:

Governor Snyder has signed into law a five bill package that creates the Michigan Business Development and Michigan Community Revitalization Programs, which will provide $100 million in incentives for competitive projects. The program replaces the Michigan Economic Growth Authority (MEGA) Brownfield and Historic Tax Credit programs that were eliminated under the new corporate business tax enacted earlier last spring. Senate Bills 556, 566-568 and 644, now Public Acts 250-254 of 2011:
  • Create the Michigan Business Development Program to provide loans and grants to qualified businesses
  • Create a new Michigan Community Revitalization Program to provide grants, loans and other assistance up to $10 million per project that will revitalize urban areas
  • Reuse vacant land or historic buildings for sustainable development

The contribution of Warner attorneys John Byl and Troy Cumings were key to enactment.

A major objective for business, especially the businesses represented by the Michigan Manufacturers Association (MMA), is repeal of the personal property tax (PPT) imposed on everything from machinery and equipment to furniture. PPT revenue is relied upon by local governments and school districts for operating expenses. Thus, a repeal would, in theory, have a devastating effect on their budgets. On the other hand, the PPT is seen as an impediment to the growth and future investment of a business. The state recently revamped its business tax credit programs, such as those for filmmakers, brownfield development, historic preservation, renaissance zones and even for the manufacture of batteries. Advocates for PPT relief claim the savings realized by tightening or eliminating these credits will offset revenue derived from the PPT. However, such funding would be subject to legislative appropriation, which makes them subject to shifting political wins. In short, local governments claim they can’t plan if they have to come to Lansing every year and hope a legislature funds them properly. They want a guarantee of funding and a guarantee that these funds could not be raided by a legislature at some future date for other purposes. So, next year the fight may not be over repeal of the PPT so much as over a guarantee (a constitutional amendment) that local governments will continue to be funded with a replacement to the PPT.

Deregulation: The Word in Lansing:

On the deregulation side, in February the Governor issued Executive Order 2011-5 which created the Office of Regulatory Reinvention (ORR) within the newly renamed and reorganized Department of Licensing and Regulatory Affairs (LARA). The new ORR superseded and replaced the State Office of Hearings and Administrative Rules and has authority over rulemaking and review. Also in the Executive Order, ORR was empowered through Advisory Rules Committees it would create to conduct a systematic review of all rules and the rulemaking process. This review of rules continues today and is taking into account such considerations as:
  • The health and safety benefits of the rules
  • Whether the rules are mandated by any constitutional or statutory provision
  • The cost of compliance
  • The extent to which rules conflict with one-another
  • The extent to which the rules exceed national or regional compliance
  • Developments since implementation

The Governor intends to reduce the number of rules to add clarity, fairness and efficiency to the process for business and others who deal with government. The work of ORR and its advisory committees will be completed in 2012 with ORR issuing a report to the Governor on its recommendations for reform. Warner attorneys are involved in this process and will have the latest information regarding elimination and/or consolidation of rules.

Ever the businessman, the Governor also issued Executive Orders to rearrange departments and agencies within state government. For instance, health occupational licensing had been housed within the Department of Community Health. It is now within LARA, the Department charged with overseeing all licensing matters. In fact, LARA is a much larger version of the old Department of Licensing and Regulation which was combined with two other departments in Governor John Engler’s first term in the early 1990’s.

Item Pricing Repealed:

Governor Snyder made repeal of Michigan’s item pricing law a priority in his State of the State Address. The law which had been on the books for over 35 years required retailers to place a price tag on every item for sale. For years, retailers fought for repeal, but seniors, labor and consumer groups always prevailed in beating back repeal. This year was different. After a number of hearings, HB 4158, now Public Act 15 of 2011, sailed through the Legislature.

Some Tax Relief for Trucking Industry:

Remember that dreaded MBT with its tax on gross receipts? No where was it felt more than in the freight hauling industry. The owner of a trucking company that subcontracted with independent truck drivers would have to recognize the payment made to that subcontractor as a gross receipt rather than a legitimate business expense. This injustice was threatening to drive business out of the state, especially businesses with growth potential such as logistics companies. Legislation was introduced and passed after a long struggle with the Department of Treasury that gave those engaged in hauling goods a measure of tax relief in the last year of the MBT. Warner attorney Jim Cavanagh assisted in this effort.

Unemployment Insurance: Michigan Business Pays but Gets Something in Return:

Michigan’s unemployment trust fund is severely in debt (estimated $3 billion) to the federal government due in large measure to the loss of manufacturing jobs. Simply put, the number of unemployment claims far exceeded the amount held in the trust fund to pay those claims. The fund is supported entirely by a tax levied on Michigan employers. Consequently, with any new plan to pay off the debt would come insistence by employers for changes in the unemployment compensation system, some of which would require the recipient to be more diligent about becoming re-employed. Senate Bill 483, now Public Act 267 of 2011, creates the Employment Security Financing Act and permits the Michigan Finance Authority to issue bonds to pay off the debt incurred by the trust fund, continue to pay unemployment benefits and avoid additional advances.

Senate Bill 484, now Public Act 268 of 2011, amends the Michigan Employment Security Act to:
  • Create the Obligation Trust Fund
  • Mandate that employers pay an unemployment assessment to be deposited into the fund
  • Require the Department of Licensing and Regulatory Affairs to spend fund money for payment of expenses and debt

Senate Bill 806, now Public Act 269 of 2011, will:
  • Require claimants to be actively engaged in seeking work and to report details of the work search in order to qualify for benefits
  • Increase the taxable wage base from $9,000 to $9,500
  • Allow certain employers with 25 or fewer employees to apportion their first quarter contributions
  • Provide that claimants will be considered unavailable for work if they fail to communicate with their employer or the Unemployment Insurance Agency or cannot be reached by mail or phone
  • Require of a claimant who has received benefits for half of the year to accept employment if that employment pays at least 120 percent of weekly benefit amount

Changes Made to Workers’ Compensation Act:

House Bill 5002, now Public Act 266 of 2011, amends the Workers’ Disability Compensation Act and does the following:
  • Requires that an injury be medically distinguishable from an employee’s prior condition
  • Provides that limitation of wage earning capacity would occur only if an employee was unable to perform all jobs paying the maximum wages in work suitable to his/her qualifications or training
  • Changes the definition of “wage earning capacity” to include wages an employee earns or is capable of earning and provides that an employee has an affirmative duty to seek reasonably available work
  • Includes pension and/or retirement benefits that an employee was entitled to receive among the amounts that must be deducted from weekly benefits
  • Allows an employee to be treated by his/her own physician after 28 days rather than after 10 days allotted under the previous law

This GOP initiative, received a party-lines vote which is meant to codify recent rulings made by the Republican majority on the Michigan Supreme Court.

Electronic Documents of Title – Revision of the Uniform Commercial Code:

Ask any law student – there is no more boring class than one dealing with the study of the Uniform Commercial Code (UCC). Ask that same law student once he/she is 10 years removed from school and he/she will tell you it is one of the most important statutes to study. It's vitally important to commerce.

Originally drafted in 1952 by the Uniform Laws Commission, the UCC regulates the relationships between parties within interstate and intrastate commerce in sales, banking, freight hauling, warehousing and secured transactions. Nearly every state has adopted most if not all of its provisions. Michigan adopted this comprehensive act in 1962, but has made very few changes since that time.

Enter House Bills 5081, 5082 and 5083. These bills add, delete and redefine terms, amend Article 7 of the Code to recognize electronic documents of title such bills of lading and warehouse receipts for freight haulers and warehousemen and amends Article 9 to revamp forms used in a secured transaction. Finally recognizing electronic documents of title, especially in the logistics industry, would put Michigan in line with 40 other states that have adopted these changes. Late in 2011 the bills were reported from the House Banking and Financial Institutions Committee to the floor of the House. Action by that body is expected in the first quarter of 2012 with Senate action expected by the fall. Warner attorney Jim Cavanagh is helping to spearhead this effort.

Right to Work Legislation Will Be Given a Try Early in 2012:

Right to Work legislation will be introduced in January with an effort to move it through both Houses prior to the spring break. Likely bill sponsors Sen. Patrick Colbeck (R-Canton Twp.) and Rep. Mike Shirkey (R-Clark Lake). The effort will be made quickly in 2012 so as avoid lots of publicity. If the bills don’t gain any traction in the spring, RTW advocates may have to hope the Republicans maintain the House majority in 2012 and move legislation in 2013.

Budget Passed in Near Record Time:

In his State of the State Address of last year, the Governor challenged the Legislature to send him a finished budget by Memorial Day. The Legislature did just that, accomplishing something that had’t been done in decades. This amounted to a drastic change from the previous four years where the Democratic Governor and Republican Senate could not agree and the state was temporarily shut down on two separate occasions.

There certainly were winners and losers in this budget go-round. Winners included Medicaid, mainly due to attractive federal matching funds. The big losers, however, were those in the education community, both K-12 and higher education. The cuts, especially in K-12 funding, were met with an angry and sometimes even visceral responses by parents. The Governor insisted that funding would increase based upon performance, a commonly referred to theme within his administration.

An Elimination of Revenue Sharing As We Know It:

The governor made it clear he believes Michigan’s layer-upon-layer of local government is often redundant and wasteful. In an effort to become more efficient by either eliminating or consolidating some services, the Governor and legislative Republicans agreed to eliminate the automatic formula for local funding called revenue sharing. Instead, state aid will be based on a set of criteria devised by the Administration.

Aggressively Bringing Fiscal Stability to Local Government Emergency Manager Legislation:

Michigan has had an emergency “financial” manager law since 1990 and since that time seven local governments have been operated by an emergency financial manager. Several organizations including the Michigan Chamber of Commerce and the Citizens Research Council had been advocating that changes be made to the 1990 law so that financial managers would have greater authority to act in a fiscal crisis and thus avoid bankruptcies and a higher cost of borrowing. With several local governments and school districts in serious financial shape, the Governor, at the urging of Andy Dillon, his Treasurer and the former Democratic Speaker of the House, had introduced a six bill package that repealed the 1990 law and replaced it with measures giving the Governor broad authority to place a local government into receivership and then appoint an emergency manager. The emergency manager would have the authority to suspend collective bargaining, revoke agreements – even labor agreements, act as sole trustee for the jurisdiction’s public retirement system and suspend the power of locally elected officials. The legislation passed pretty much along political party lines and set off a wave of demonstrations. Specifically, organized labor marched on the Capitol shouting slogans like “One Term Nerd” to protest the measures in the hope the Governor would not sign them. In the end, the Governor signed the bills just after the protesters left, adding insult to injury to the labor movement.

Labor, still smarting from its legislative defeat, stepped up its efforts to recall legislative Republicans and began a petition drive to subject the emergency manager legislation to the referendum process.

Late last year, the Administration had introduced back up legislation on emergency managers just in case the referendum effort was successful. The new legislation created a new act and therefore would not be encompassed within the language of the referendum. Passage of the new emergency manager law is expected before spring.

Governor Signs Domestic Partner Benefit Ban:

Just prior to the Holidays, the Governor signed legislation that prohibits some public employees from receiving publicly funded health insurance benefits for domestic partners. The Governor signed the legislation only after being advised that the ban does not apply to the state’s public universities. Universities have autonomy under the Michigan Constitution and thus have authority to dictate their own policies. Earlier in December Sen. Mark Jansen (R-Grand Rapids) and Senate Majority Leader Randy Richardville (R-Monroe) disagreed on the scope of the legislation, with Jansen believing it applies to universities and Richardville disagreeing. The American Civil Liberties Union has already stated it will challenge the constitutionality of the law on behalf of families who would lose health insurance benefits.


Every 10 years the Legislature has the opportunity to redistrict itself, ostensibly to correspond with shifts in population that occurred the previous decade. It is also an opportunity for the Party in power to keep it that way by drawing districts with a stronger political base of support and pitting two or more incumbents of the opposite Party against each other.

This past year the Republicans controlled the process. Since Michigan is losing a congressional seat due to a shrinking southeastern Michigan population, incumbent Democrat Gary Peters’ district disappears and is now part of the new 13th District. Peters will be in a tough Democratic primary fight with another Democratic incumbent, Hansen Clarke.

State House and Senate lines guarantee that, at the very least, the GOP will remain the favorite to keep majorities in both Houses.

Work on the Court of Appeals reapportionment should be concluded before spring.

County Road Commissions May Not Be Long for This World:

As part of his transportation message to the Legislature last fall, the Governor suggested the possibility of elimination of county road commissions, another layer of local government deemed unnecessary by some.

HB 5125 and 5126 were introduced nearly at the same time. The bills allow county commissions by resolution to place the question of whether to eliminate a county road commission on the ballot. If the voters approved the measure, the county commission would assume the duties of the road commission. On the last day of session, the Senate adopted its fifth substitute to HB 5125. These bills allow road commissions to be dissolved if existing road commissions were appointed by county commissions. If road commissioners were elected, the voters would have to approve. This fifth substitute called for a sunset in 2015.

Republicans who hold large majorities in both Houses were split on the issue, with suburban lawmakers favoring the substituted version. However, GOP lawmakers from rural and northern Michigan, where politics is very local and relationships at the county level, are forged over time with mutual trust, were dead set against elimination of the road commissions. In addition, with the passage of the Senate substituted version, House Democrats pulled the support they had given previous versions. As the day wore on, it was clear House Republican leadership did not have the votes to carry the day and the bill was not considered, but will be given further consideration when the Legislature returns.

Teachers and Their Union Targeted:

For years, the largest teacher unions in this state have been a thorn in the side of Republicans. The heavily Democratic Party leaning Michigan Education Association has thousands of members and enjoys tremendous political clout through its huge political action committees and its grassroots network. This power has for years been directed primarily against GOP candidates. The election of the Republican slate gave the Legislature the opportunity to fix that "problem." Besides curbing certain political activities of public employee unions, the Republican majority had long seen the state’s teacher tenure system as rewarding mediocrity and the health care benefits, as being of the Cadillac kind, certainly nothing you would enjoy in the private sector.

House Republicans introduced a four bill package aimed at tightening Michigan’s Teacher Tenure Law. One of the leaders of this effort was Rep. Paul Scott (R-Grand Blanc), the Chair of the House Education Committee and arch-enemy of the MEA. The bills amended the Teacher Tenure Law to:
  • Make it easier for a school district to dismiss or demote a teacher
  • Allow a controlling board to place a suspended teacher’s salary in escrow if criminal charges had been filed against the teacher
  • Require a teacher to verify his/her ability to perform the job after being placed on unrequested leave for physical or mental disability
  • Increase a teacher’s probationary period from 4 to 5 full years
  • Protect teachers rated effective or highly effective from displacement solely because another teacher is on continuing tenure
  • Allow a probationary teacher to be dismissed at any time
  • Shorten the deadlines in the tenure hearing process

As with the emergency manager legislation, the Teacher Tenure and Revised School Code amendments passed nearly along party lines.

Wounded and seeking a measure of retribution, the MEA redoubled its recall efforts against Republican lawmakers, but especially against the House Education Committee Chair, Paul Scott – an effort which eventually led to the recall of Scott in November.

About the same time, the Republican majority was enacting legislation that would place a cap on the expenditure a public employer could make toward health care benefits. This effort was spearheaded by Sen. Mark Jansen (R-Grand Rapids) and Rep. Tom McMillin (R-Rochester) and was meant to realize savings and to eliminate the Cadillac type of health care benefit packages enjoyed by many public employees, especially teachers. A local government employer, of which a school district is one, could opt for a fixed hard cap on what it would pay or a percentage where the public employer did not pay any amount greater than 80 percent of the cost of insurance. This legislation also passed along Party lines and has been signed by the Governor.

Bullying Legislation Takes a Wrong Turn, Then It's Righted:

It started out as a simple bill to require the board of education of a school district to adopt and implement a policy prohibiting bullying and harassment. However, once it got to the floor of the Senate, the substitute for Senate Bill 137 changed significantly. The substitute created an exception on bullying based upon “a sincerely held religious belief or moral conviction of a school employee, school volunteer, pupil or a pupil’s parent or guardian.” In essence, the “First Amendment” exception was so huge it made the legislation virtually meaningless.

Senate Democrats were outraged at both the process (a broad new substitute bill springing up on the Floor) and the substance. Most Democrats voted against the bill and chastised the Republicans for gutting its original intent. In fact, Senate Minority Leader Gretchen Whitmer’s remarks were caught on You Tube and were eaten up by the national media. The Senate Republicans, as a consequence, were made to look quite foolish.

On the House side, Republican leadership now viewed the Senate bill as toxic and moved to enact their own version minus the gigantic “First Amendment” exception. In the end, the substitute for HB 4163, sponsored by Rep. Phil Potvin (R-Cadillac), was passed by both Houses with the name “Matt’s Safe School Law” named after Matt Epling, the tragic victim of bullying. In this instance, the House came through to pass meaningful legislation and right a Senate wrong.

Charter Schools Unbound By a Cap:

The Legislature enacted SB 618, now Public Act 277 of 2011, which lifts the 150 school cap on university sponsored charter schools after December 31, 2014. Charter schools would also be required to demonstrate they were making measurable progress toward meeting education goals and be subject to having their progress reports being posted online. Lifting the cap on charter schools has been vehemently opposed for years by the Michigan Education Association, the Michigan Association of School Boards, the Michigan Association of School Administrators and much of the public school education establishment.

Yes Virginia, The Republicans Did Pass a Tax – a Claims Tax, That Is:

In 2010, the federal Center for Medicare/Medicaid Services (CMS) indicated to state officials that a use tax on Medicaid health plans and certain other providers would no longer be an acceptable method to “draw down” matching federal funds. This was a very deep concern for the new Snyder Administration because the federal match is currently about 2 to 1. The use tax raised approximately $400 million. The federal match was $800 million. Therefore, if Michigan did not act to find another funding mechanism to trigger the federal “draw down,” the Administration would face a $1.2 billion hole in the FY 2011-2012 budget.

The Governor was convinced that an alternative to the use tax was necessary in order to avoid a budget disaster. Any replacement would have to be broad based, as small as possible and, to secure passage, revenue neutral. At his budget presentation hearing last February, the Governor proposed a 1 percent claims tax (those skittish about use of the word “tax” call it an assessment) to replace the use tax – with some exceptions for workers’ compensation medical claims and other claims dictated by statute.

Initially, there was considerable push back on the measure from the Michigan Manufacturers Association, which represents major employers who are self insured. They agreed the claims tax would impose a new cost and burden on business. Conservatives did’t like the notion of a tax for whatever reason, even if it was necessary to save the state approximately $800 million in federal funds. In the final analysis, pragmatism prevailed. The Republican majority was persuaded and the tax passed, assuring maintenance of the Medicaid system and state solvency.

Health Care Exchange:

The Senate passed and sent to the House, SB 693 which creates a health care exchange called MiHEALTH MARKETPLACE. The exchange could stand on its own, but it is mandated by the federal Affordable Care Act (ACA). At this point it is hard to imagine the Michigan House agreeing to implement any form of federal health care reform a/k/a “Obamacare.” House Republicans are betting the U.S. Supreme Court strikes down the ACA altogether. But even if the Court rules the “individual mandate” unconstitutional, other provisions of the ACA, such as those dealing with an exchange, may survive. If they do, Michigan will be way behind in implementing the technology by the required date of 2013. This course of action could lead to the federal government running the whole show, an anathema to conservative Republicans.

The best alternative for the House GOP is to divorce the exchange from “Obamacare.”  Then, they need to convince "Teapublicans" that implementation of such a program would be in the best interests of the marketplace.

Blue Cross Will Seek Deregulation:

This state’s largest commercial health insurer by far is Blue Cross and Blue Shield of Michigan (BCBSM). It is estimated that BCBSM has anywhere from 65 to 71 percent of the market statewide and in some areas that number is higher. Established by the legislature as a public benevolent charitable trust, BCBSM rate making is subject to attorney general oversight. BCBSM would like to shed this oversight and, for rate-making purposes at least, be treated like a private insurance company or health plan whose rate making is overseen by the Office of Financial and Insurance Regulation.

The explanation by BCBS/M representatives at three separate Senate Committee hearings, where they were the only ones invited to make a presentation, was the need for a level playing field. It would appear the Blues are doing just fine, given their market share, but they want more and will seek it by February.

The Tide is Trending for Required Coverage of Autism:

For the past few legislative sessions, advocates of mandatory insurance coverage for autism have nearly won passage. This time it appears it will happen and the health insurance industry appears to be accepting the inevitable. Insurers are proposing amendments that would cover treatments that are part of “evidence based medicine” and would cover children during a crucial age window. Look for passage before the summer break.

Regulation of Pharmacy Benefit Managers:

A major complaint among providers against large pharmacy benefit managers (PBM) is that there is no standard protocol for their audits. Audits have been called with very little notice and the decisions on payment of claims are often arbitrary. Legislation will soon be introduced to establish a protocol for such PBM audits when no protocol exists. Warner attorney/lobbyist Jim Cavanagh is working on this matter.
Another Bridge Across the Detroit River: Is it a Bridge Too Far?

This issue has been with us for a decade, but came to the fore in 2011. Legislation sponsored by Senate Majority Leader Randy Richardville authorizing a public/private partnership with Canada, Michigan and a private party willing to risk venture capital, was defeated in committee when only 2 votes could be mustered out of 5 to move it to the Floor. Democrats would not vote for a version that did not contain a community benefits provision within the bill, obligating the private entity to pay for retraining and relocation of those displaced by the project. The two Republicans on the Committee willing to vote for the Richardville version of the bill were not willing to accept the Democrats’ call for a community benefits provision. Whether or not this issue gave each side cover for not moving the bill, as some suspect, is not fully known. However, the stark reality is the legislation appears dead if not for this session, at least for now, due in large measure to the unprecedented lobbying and public relations campaign of Matty Maroun, the owner of the Ambassador Bridge, the only span across the river.

Recently, Governor Snyder has indicated to the media that his Administration is looking into possible alternatives to legislation in order to get the bridge built. Obviously, any move to complete this project will be challenged by Mr. Maroun, who does not want to share revenue with a competing bridge. Look for Governor Snyder to move on this issue before the Spring.

How Do You Fill A $1.4 Billion Need in an Election Year?

The Michigan Department of Transportation (MDOT) has estimated that the state needs an additional $1.4 billion just to maintain the current road infrastructure. As roads get worse, that cost gets higher. Rep. Rick Olson’s (R-Saline) Transportation Subcommittee confirmed that figure with a thorough study.

So where does the money come from? Governor Snyder suggested, but did not recommend, raising all motor vehicle registration fees. For automobiles, that amounts to about $120 per vehicle. The reaction from the public so far has been a resounding “NO!” Other alternatives have been mentioned, such as changing the gas tax structure to levying a tax on wholesalers. Another proposal by Sen. Howard Walker (R-Traverse City) calls for raising the sales tax from 6 to 7 percent and dedicating that 1 percent increase toward transportation. This is cumbersome because it would require a constitutional amendment.

What is likely to happen is a piecemeal approach until after the 2012 election. No politician, especially a Republican, wants to be in a position of having to defend raising taxes. A likely stop-gap measure includes dedicating some of the sales tax revenue derived from gasoline and other fuels sold at the pump.


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