Snyder, GOP Leaders Come to Tax Agreement

Governor Rick Snyder and Republican leaders in the state House and Senate outlined a tentative tax agreement yesterday afternoon in Lansing.  The plan includes a compromise on taxing retiree pensions. From Rick Pluta:

Michigan is one of just a handful of states that does not tax pensions. The deal between Governor Snyder and GOP leaders would shield people 67 years old and older from a pension tax. The governor originally wanted to tax all pensions, but he says compromises were necessary.

The plan also calls for scrapping the complicated and unpopular Michigan Business Tax in favor of a corporate income tax. That’s part of an overall tax cut for most businesses to spur job creation.

The plan would eliminate the tax break for working poor families, but offer some new tax relief for low-income homeowners and renters.

The plan must still be approved by the House and the Senate.

Bing Outlines Budget

Mayor Dave Bing proposed his budget for Detroit yesterday. The mayor warned that the city’s unions will have to make contract concessions in order to keep Detroit out of the hands of a state appointed Emergency Financial Manager. The city is facing a $155 million budget deficit. Bing said the deficit could grow to over a billion dollars in the next five years unless cuts are made now. Bing proposed $200 million in cuts and revenue in his budget proposal.

New Auto Jobs

The Detroit Three are poised to create new auto jobs for the first time in years, Tracy Samilton reports.  But, Sean McAlinden, an economist at the Center for Automotive Research, says auto manufacturing jobs will never recover to their former levels. McAlinden says the Detroit Three will likely hire 35,000 people in the next five years. That’s only about a third of the people who lost jobs with the auto companies in the past few years.

Thousands of teachers, public employees and their supporters are expected to protest at the state Capitol today.

Organizers say a rally scheduled for Wednesday could be the biggest yet for the state's current budget cycle, the Associated Press reports. From the AP:

Michigan AFL-CIO President Mark Gaffney says Republican Gov. Rick Snyder and lawmakers are moving ahead too quickly with budget plans.

Unions are upset about proposals they say would undermine collective bargaining rights. Other groups are upset about proposed cuts to education funding and other programs.

Snyder has said the protests are part of the democratic process.

Governor Rick Snyder and Republican leaders in the Legislature have struck a tentative bargain on tax reform and the state budget. The plan delays an October 1st income tax rollback and includes a compromise on taxing pensions.

Michigan is one of just a handful of states that does not tax pensions. The deal between Governor Snyder and GOP leaders would shield people 67 years old and older from a pension tax. The governor originally wanted to tax all pensions, but he says compromises were necessary. Governor Snyder:

“So it’s a transitional plan that I think addresses the shorter-term requirements while being structurally sound for the long term.”

The plan also calls for scrapping the complicated and unpopular Michigan Business Tax in favor of a corporate income tax. That’s part of an overall tax cut for most businesses to spur job creation.

The plan would eliminate the tax break for working poor families, but offer some new tax relief for low-income homeowners and renters.

The plan must still be approved by the House and the Senate.

West Michigan had the most population growth in the last ten years, while the east side of the state saw the biggest regional population declines in the state. That’s according to state demographer Ken Darga. He testified before a state House panel on redrawing Michigan’s legislative and congressional districts.

Detroit is expected to lose a few seats in the Legislature after Michigan’s political maps are redrawn. The city saw a 25 percent decline in population since 2000. State demographer Ken Darga says it’s unclear right now how political clout will shift around the state:

“We’ll have to see how the numbers—how the districts are drawn. It certainly does though, it does increase the political clout of areas that are growing, and decrease the political clout of areas that are declining in population.”

The state’s political maps need to be redrawn before this fall. But some Democrats fear Republicans will force the redistricting process through this spring. They say they hope the process is open and fair, and they say the only way to do that is to take time to draw the new lines.

The Detroit Three are poised to create new auto jobs for the first time in years.  But an expert at the Center for Automotive Research warns that auto manufacturing jobs will never recover to their former levels. 

Ford, GM, and Chrysler closed a lot of plants over the past ten years, so many of the remaining plants are working at full capacity as new car sales improve. 

Sean McAlinden is an economist with the Center for Automotive Research .

"Almost the last layoff at GM and Ford have been recalled," says McAlinden, "so any additional production through the summer requires new hiring."

McAlinden says the Detroit Three will likely hire 35,000 people in the next five years.  

But that’s only about a third of the people who lost jobs with the companies in the past few years.   

McAlinden says auto jobs will plateau after 2015, which is why Michigan still needs to diversify its economy.

Governor Rick Snyder and Republican leadership in the State House and Senate appear to be close to a deal on the budget.

From the Associated Press:

Gov. Rick Snyder and Republican state lawmakers are reporting "significant progress" on proposals related to business and pension taxes for the fiscal year starting in October...

Two people with knowledge of the talks tell The Associated Press that the proposals include many elements of Snyder's original business tax plan. They spoke on the condition of anonymity because the deal hasn't been finalized.

The Republican governor wants to replace the state's main business tax with a 6 percent corporate tax applied to corporations with shareholders.

The plan would include taxes on pensions and other retiree income but it would be modified from Snyder's original proposal. The new proposal calls for phasing in or scaling back the tax.

Some lawmakers have been loathe to accept any taxes on pensions, but it appears a plan to phase in a pension tax may be more palatable.

Peter Luke of Booth Newspapers reports on some of the details of the agreement:

Under the phased-in alternative, the status quo would apply to those 67 and up, whose pensions would continue to be tax exempt.

A middle group of retirees 60 to 66 would be subject to a pension tax, but the first $20,000 of pension income for single filers -  $40,000 for joint filers - would be tax exempt.

Those younger than 60 would pay tax on all their pension income.

An AARP spokesman said they remain opposed to a tax on pensions, whether its phased in or not.

A public announcement of the agreement is expected to come this afternoon.

Some people got locked out of today's Detroit City Council meeting, where Detroit Mayor Dave Bing was laying out a 5-year budget plan that called for cutting employee pension and health care costs.

Council security told citizens and several reporters that they couldn't come in because the hearing room was "filled to capacity."

That escalated into a dispute between security guards and the people who demanded their right to enter under the state's Open Meetings Act.

Detroit resident and volunteer organizer Felicia Sanders wanted to hear Bing's presentation.

"If you get up and you're willing to attend a meeting to fight and speak out for your city, you should be allowed to participate in the meeting."

Sanders and others questioned why the City Council didn't hold the hearing in a much larger public auditorium just across the hall.

Republican Mitt Romney announced yesterday that he has formed an exploratory committee for the 2012 presidential election. Romney has close ties to Michigan as his father, George Romney, was Governor of the state in the 1960's.

Romney lost his first presidential bid in the 2008 GOP primary to Senator John McCain (R-AZ). Since '08, Romney has largely stayed in the national political realm with the release of his book,"No Apology: The Case for American Greatness," and speaking tour.

But, it hasn't just been national politics that Romney has been interested in since his loss in '08. The Detroit News reports that Romney's political action committee took quite an interest in statewide politics in the November 2010 election. From the Detroit News:

Though Romney is mostly known in Michigan through his father's enduring business and political legacy, his Free and Strong America political action committee took a keen interest in state races in 2010, contributing to Republicans Gov. Rick Snyder, Secretary of State Ruth Johnson and Attorney General Bill Schuette.

His committee also poured money into the successful U.S. House campaigns of freshman Republican Reps. Tim Walberg, Bill Huizenga, Justin Amash and Dan Benishek, as well as the tea party-backed bid of Rob Steele, the Ann Arbor cardiologist who lost to Rep. John Dingell, D-Dearborn.

In a recent poll by Public Policy Polling, Romney led other possible GOP presidential contenders among Michigan Republican primary voters. From the PP Poll:

• 26% Romney
• 20% Huckabee
• 15% Gingrich
• 12% Palin
• 7% Paul
• 5% Daniels
• 3% Pawlenty
• 3% Walker
  

The Drug Enforcement Agency is raiding some Detroit area medical marijuana dispensaries. The DEA says it is working with state and county officials on the raids. They would not comment further on what they say is an ongoing investigation.

Matthew Abel is a lawyer who works on marijuana cases. He says federal enforcement of marijuana laws seems to be increasing.

"The federal memo had said that generally the federal government would stay out of prosecuting medical marijuana patients as long as those operations were in full compliance with state law."

Earlier this week, a Saginaw area doctor was indicted on federal drug charges for aiding marijuana distribution. More details of the DEA’s most recent raid will be coming throughout the week.

Teenagers convicted of having an under-aged consensual sexual relationship will no longer risk being placed on the state’s sex offender registry.  Governor Rick Snyder has signed a law reforming Michigan’s sex offender registry.

People convicted of serious sex crimes will still be on the state’s Tier One registry and will have to report their whereabouts at least four times a year. But people convicted of less-serious crimes will not have to register. And many people convicted as teens will be able to ask a judge to remove them from the registry. 

Michigan State Police Sergeant Christopher Hawkins says:

“The sex offender registry was really designed to notify the public of dangerous offenders and sex predators who live in their neighborhoods. When you have offenders who are, say, a 17-year-old who had a consensual sexual contact or a consensual sexual act with their 15-year-old boyfriend or girlfriend – that’s not really a dangerous offender who the public needs to be aware of.”     

Michigan has one of the biggest sex offender registries in the country. About one out of every 200 people in Michigan is a registered sex offender.

There have been complaints since it was enacted in 1995 that the law is too harsh on some young offenders. But it took the threat of losing federal victim compensation funds to force a change in the law.

During the U.S. government led bailout in 2009, Fiat took over management control of Chrysler and was given a 20% stake in the company.

The government said Fiat's stake in Chrysler could increase to as much as 35% so long as they met three milestones.

Now, the Italian company now controls 30% of Chrysler after meeting the second milestone set forth by the U.S. government.

From the Detroit News:

Fiat SpA announced today it has increased its share in partner Chrysler Group LLC to 30 percent effective immediately.

The additional 5 percent stake is triggered automatically with Fiat's completion of the second of three performance-related conditions.

The first, achieved in January, was awarded for Chrysler's assembly in Dundee of a fuel-efficient Fiat engine.

The second condition was that the Italian automaker help Chrysler generate cumulative revenue of $1.5 billion outside North America and use Fiat's dealer network in Latin America to distribute Chrysler vehicles.

The third milestone, according to the Globe and Mail, is the development of a 40 mpg Dodge car built on a Fiat platform.

Once that milestone is reached, Fiat could solidify its ownership of Chrysler. From the Globe and Mail:

Dodge is developing a compact car on a Fiat platform that will reach 40 miles per gallon, which would satisfy the third test set by Treasury in 2009.

Mr. Marchionne told analysts on a conference call in October that he expected Fiat would meet all of the Treasury’s hurdles by the end of 2011.

The indications of progress are significant because the sooner Fiat can raise its Chrysler stake to 35 per cent, the quicker it could exercise an option to take majority ownership of the U.S. automaker.

The Detroit News reports that the current ownership of Chrysler breaks down this way:

1. 59.2% - United Auto Workers retiree health care trust
2. 30% - Fiat
3. 8.6% - U.S. government
4. 2.2% - Canada and Ontario governments combined
   

Detroit’s mayor says the city’s unions will have to give big contract concessions or the city of Detroit may end up in the hands of a state appointed Emergency Financial Manager. Mayor Dave Bing outlined his budget plan to the city council this morning.

Bing says pension and health care costs threaten to force the city into insolvency.  

“If we are unable or unwilling to make these changes, an Emergency Financial Manager will be appointed by the state to make them for us.  It’s that simple.”  

The city is facing a $155 million budget deficit. The mayor says that could grow to over a billion dollars in five years, unless deep cuts are made now. 

Michigan’s new Emergency Financial Manager law gives the state appointed administrator broad powers to throw out union contracts and make budget decisions.

Were you aware that there’s a legal difference between print media and broadcast media in this country?

Print media, and the internet, are essentially completely free to print and say whatever they want to, although of course they can be sued if they commit libel or violate privacy laws. Broadcast media are different, however. The government, through the Federal Communications Commission, has the right to regulate them.

Stations can have their licenses revoked or not renewed if they violate FCC policy. Thirty years ago, stations could be in big trouble if they failed to provide news, or public service programming.

Those restrictions have now been largely relaxed. But stations can still risk their licenses if they broadcast hate speech, or programming that is either clearly racist or obscene.

The reason, by the way, that the government can regulate the broadcast media is that the airwaves are public property, like the national parks. And while you could theoretically have an infinite number of print publications or web sites, there’s only so much space on the spectrum for radio and TV transmissions.

Being granted a place on the dial is a privilege that carries certain responsibilities. However, the question is what those responsibilities should be.  Increasingly, I wonder whether stations should be allowed to broadcast advertising that is plainly false.

You might say that deception this is the very nature of most advertising, and to a point you’d be right. Nobody really believes that if you start drinking a certain brand of soda that beautiful young things will suddenly frolic on the beach with you.

We expect ads to stretch the truth. But every so often, they do more than that. As witness a last-ditch, highly expensive propaganda campaign being waged by Matty Moroun, the billionaire who owns the Ambassador Bridge over the Detroit River. He is desperate to prevent the building of a competing bridge, something Governor Snyder wants. Most commercial interests in both the United States and Canada also say the bridge is badly needed. But, Moroun fears his profits might be affected, and is currently waging a hugely expensive ad campaign to try and sway legislators.

Detroit Mayor David Bing is delivering his budget address to city council right now.

Bing says the budget he is presenting is a five year plan to eliminate the city's budget deficit.

He says the most important conversation the city has to have is with union employees about pensions and health care benefits.

By 2020, Bing says fringe benefits and pensions would consume half the city's general fund.

You can watch the speech here.