06/30/2008
This week in Lansing:
Legislature
Michigan House and Senate
The Legislature completed work on the 2009 budget and adjourned for the summer. Lawmakers may return for a few days in August and September.
Energy bills (Public Act 141 reform)
The energy package was reported out of the Senate before they adjourned, however, differences in the bills from the House package will need to be ironed out before the package sees further action. None of the changes addressed issues of concern to small business and NFIB remains opposed to the bills.
Water withdrawal legislation -- Great Lakes compact
This package of bills opposed by NFIB passed both chambers last week and is headed for certain approval by the governor. As indicated in earlier reporting, 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.
Blue Cross Blue Shield -- Individual health insurance market reform
These bills were referred to a conference committee prior to adjournment by the Legislature. NFIB opposition continues as 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.
Taxes
NFIB testified in support of SB 1038 last week and it was reported to the House floor and passed before the Legislature adjourned. The bill would remove all sales tax and other fees collected by a business for the state from the gross receipts base of the Michigan Business Tax. However, part of the deal being worked out is to pay for the measure (passage of the bill would reduce state tax revenue by $150 million) by getting Senate Republicans to pass legislation that would decouple the MBT from provisions of the federal stimulus package that allows businesses to use an accelerated write-off of equipment purchases. By doing this, many businesses that had counted on both a state and federal tax reduction for equipment investment will now see the state tax savings eliminated. It is estimated that this would result in a $92 million to $120 million tax increase on those businesses in order to fund the MBT gross receipts fix. NFIB supports fixing the MBT but not paying for it by hiking other business taxes.
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, 2008. 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.
