06/23/2008
This week in Lansing:
Legislature
Michigan House and Senate
The Michigan House and Senate are in session this week.
The Legislature is working to complete the 2009 budget by the end of this week in an attempt to adjourn for summer recess. Whether or not that will occur is a subject of debate as both chambers are a ways apart on a number of budget items. It is likely that session will go late into the night toward the end of the week. A budget shortfall of $400 million exacerbated by the tax give away to the movie industry will complicate attempts to balance the budget.
In addition to the budget, there are three major policy issues that lawmakers had hoped to resolve before the summer recess. It remains to be seen whether these issues will be put to bed this week while the budget is still in process:
Energy Bills (Public Act 141 "reform")
NFIB Position: Opposed
Reason: Taxpayer subsidized handout to alternative energy industry and narrowing customer choice in choosing electricity providers by returning to a protected monopoly system.
Summary: Legislation in both the House and Senate would return Michigan's electric industry into more of a regulated market, and is being pushed by the incumbent monopoly power providers Consumers Energy and DTE. Tied to the package of bills are also so called Renewable Portfolio Standards (RPS) that would require a set percentage of all energy consumed in Michigan to be from "renewable" sources such as solar and wind by a date certain. Rather than standing on their own from a cost perspective, the legislation is designed to subsidize these sources by spreading any additional costs among all rate payers.
Status: Pieces of the package have just passed a Senate Committee and it is expected that the entire proposal will be acted upon by summer break. These bills are supported by a number of lawmakers from both parties and many business groups are also supporting the package.
Water Withdrawal Legislation -- Great lakes Compact
NFIB Position: Opposed
Reason: The bills are not necessary to protect Great Lakes water from diversion and give the DEQ more authority over the ability of private land owners in Michigan to drill and extract water from their own property.
Summary: This legislation purports to protect against the diversion of Great Lakes water by other states. However, the bills are not necessary to protect Great Lakes water from diversion to other states as current law gives Michigan veto power over any major water withdrawals from the Great Lakes. These bills would allow a majority of states that sign the "compact" to overrule or authorize lake diversions without Michigan approval. In other words, Michigan would surrender almost total control over to majority rule by a body of other Great lake states and Canada. Of more concern is the process created in the legislation to give DEQ more authority over the ability of private land owners in Michigan to drill and extract water from their own property.
Status: On June 4, the House passed the final bills in the legislative package. The bills will probably be referred to a conference committee; however an agreement could still be reached before that. These bills are supported by a number of lawmakers from both parties and many business groups are also supporting the package.
Blue Cross Blue Shield -- Individual Health Insurance Market Reform
NFIB Position: Opposed
Reason: This Blue Cross supported legislation would change the rules for the individual health insurance market that would expand Blue Cross market share and drive up costs for small business.
Summary: This Blue Cross supported legislation would change the rules for the individual health insurance market. As originally proposed, the bills would allow Blue Cross to extend the pre-existing conditions waiting period from six months to one year, rate on the basis of age, end Attorney General oversight on rate increases and allow the Accident Fund (owned by Blue Cross) to engage in other lines of insurance. The bills would also require other health insurance carriers to subsidize Blue Cross losses in the individual market by participating in a high risk pool managed by Blue Cross. NFIB has testified against all of the proposed bills as looking to fix a problem that doesn't exist. Other business groups that testified in support of the Blue Cross bills substantially admitted that the real problem is that they are losing members and money as employers and employees discover they can obtain comparable coverage in the individual market for less money than the business association backed programs. As a result of NFIB opposition, many of the Blue Cross-supported changes were stripped from Senate versions of the bills, however, the bills are still not in the interest of small business and would destabilize the individual health insurance market.
Status: In May the Senate Health policy Committee reported out Senate versions of the package that were an improvement over the original proposals. A work group has been formed to iron out differences but it appears that the real purpose of the work group is to give Blue Cross cover to reestablish the original House language removed from the Senate bills. It is likely that the bills will end up in a conference committee prior to passage before summer break.
Other issuesTaxes
It is hopeful that two changes to the Michigan Business Tax could move this week. One would remove tobacco product taxes from the gross receipts base and the other would clarify for contractors what types of building materials could be deducted from gross receipts. The House Tax Committee will also take up bills supported by NFIB that would remove all sales tax collected from the gross receipts base.
Regulations
Identity theft legislation that was opposed in committee by NFIB will likely see floor action this week. NFIB continues to oppose the bills as they impose new and redundant record keeping requirements on business. At the committee hearing, NFIB was the only business group to oppose the bills. Other groups have remained neutral on the bills.
Michigan Minimum Wage Increases July 1
For those over 18, the state minimum wage is $7.15 per hour, and increases to $7.40 per hour, effective July 1. These wages are currently higher than the federal minimum wage.
There is a Michigan youth sub-minimum wage for those under 18 years of age. Businesses can pay these young workers 85 percent of the adult minimum wage. On July 1, 2008, the Michigan sub-minimum wage increases to $6.29, but only until July 24.
Federal Minimum Wage Trumps Michigan Minimum Wage
However, where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages. This becomes an issue in Michigan in July 24 of this year as the federal minimum wage becomes $6.55 an hour versus Michigan's youth wage of $6.29 effective on July 1. Since the federal rate is higher, the $6.55 rate is the minimum wage that applies for those under 18 years of age. Technically, you could pay the lower Michigan wage of $6.29 from July 1 to July 24 when the higher fed rate kicks in.
To make it even more confusing, there is also a special wage for tipped employees who are 18 years of age and older. These workers must be paid $2.65 per hour provided they report in writing tips which when added to $2.65 will equal or exceed the state's minimum hourly rate. In other words, the wage and tips combined must equal or exceed $7.15 an hour until July of this year, at which time the wage and tips combined must equal or exceed $7.40 an hour.
Employers can direct their Internet browser to the Wage and Hour Division Web site where there is more information and a question and answer area.
