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Mackinac Policy Conference kicks off today

The annual Mackinac Policy Conference gets underway today on Mackinac Island. The conference is sponsored by the Detroit Regional Chamber and has been taking place since 1981. It's a place where policy makers, politicians, and business and thought leaders get together to discuss ideas and policies that could shape Michigan's future.

Conference organizers hope to "spur a comprehensive dialogue on innovation, collaboration and the 21st century global market" at this year's conference.

If you feel compelled to tweet about the event this week, the hashtag for the conference is #mpc12.

Michigan Governor Snyder will deliver welcoming comments today at 3:30 p.m.

Michigan Radio's Zoe Clark and MPRN's Rick Pluta will bring us updates from the conference. You can also watch online coverage of the event sponsored by Detroit Public Television.

Update on wildfires in the Upper Peninsula

The AP reports that the 3,400-acre Pine Creek North wildfire in Schoolcraft County is mostly contained:

Officials say some crews are leaving the area as mop-up operations continue. Firefighters on Tuesday planned to patrol the perimeter of the fire looking for hot spots.

The wildfire was ignited by lightning and first reported on May 21.

However, the Duck Lake Fire continues to burn. More from CNN wire services:

The Duck Lake Fire has burned more than 22,000 acres and is still going despite recent rains, the Michigan Department of Natural Resources reported on its website.The state agency estimated Monday the blaze is about 51% contained, thanks to progress made by firefighters in maintaining a firm perimeter.

Moving up income tax cut called a "gimmick"

The Michigan House of Representatives will begin taking up plans today to move a planned income tax cut up by a few months.

The tax rate will drop from 4.35 percent to 4.25 percent next January. The Associated Press reports Michigan House Republicans want to start the tax cut in October 2012.

House Republican Speaker Jase Bolger wants to return $90 million from a budget surplus to taxpayers. The tax rate would drop from 4.35 percent to 4.25 percent.

The Michigan League for Human Services says the move is an election-year gimmick. It says the money would be better spent offering preschool or dental care to low-income children.

Democrats say tax changes passed last year by GOP lawmakers will require that individuals pay $1.4 billion more in taxes next year. They say the $90 million cut is insufficient.

Matthileo / Flickr

Taxes, as we all know too well, are a powerful political issue. And the issue has come up yet again at the state Capitol. A cut in the state income tax has become part of the negotiations as Gov. Rick Snyder and the Legislature's top Republican leaders wrap up their budget negotiations. Rick Pluta, Lansing Bureau Chief for the Michigan Public Radio Network, and I sit down to talk politics every Friday and today, in It's Just Politics, it is all the politics of taxes.

Rick Pluta: The governor and the Legislature have set this deadline of June 1 for wrapping up the next state budget.

Zoe Clark: And that's important, because - even though the state's fiscal year begins October 1 - schools, community colleges, cities, townships, and counties all have budget years that begin July 1. They all have budgets that are tied into state spending.

RP: Right. Now, in the final days of discussions, Republicans have put an income tax cut on the table. State House Republicans will roll out the legislation next week.

ZC: So, that begs the question: why are they doing it now?

RP: Well, for a year and a half, Democrats in Lansing have hammered Republicans because all the tax and budget reforms have focused on reducing costs for businesses: eliminating the Michigan Business Tax on 95,000 businesses and the proposal to eliminate the tax on industrial equipment.

ZC: At the same time, a dozen tax credits and exemptions claimed by homeowners, parents, seniors on pensions, and  poor families earning incomes were ended.

RP: And Democrats have been pounding Republicans with that incessantly and with an eye toward the November elections - when, we should note, all 110 seats in the state House of Representatives are up for election.

ZC: So now, courtesy of Republicans, a proposal for income tax relief.

RP: The main bills in the tax rollback package will be sponsored by state Representatives Holly Hughes and Ed McBroom, Republicans representing districts that are considered marginally - 51, 52 percent - Democratic.

ZC: And Democrats most certainly want those seats back.

RP: Exactly, and this shows Republicans intend to put a fight in these seats by giving their incumbents these bills. One accelerates a reduction in the income tax rate; the other increases the personal exemption. But the bottom line is Republicans want the message to be: Republicans equal tax cuts. Democrats, however, have already revealed their counterattack.

ZC: And the counterattack is really what their message has been all along. Since last year, GOP hegemony in Lansing has meant tax cuts to businesses while seniors, homeowners, and working poor families all lost tax breaks that they've counted on, as well as reductions for schools, universities, and local governments.

RP:  Right, so Democrats say this so-called "tax relief:" 50 cents a week, nine dollars a person per year  is pretty meager compared to the costs that everyone has had to pick up in the name of improving the business climate.

Michigan's budget will have about $300 million more this year than state economists predicted in January.

That money is the result of a combination of higher-than-expected tax payments and fewer people receiving Medicaid and other state services.

That came from today's revenue estimating conference in Lansing.

State budget director John Nixon says he thinks much of the extra money may go into the state's rainy day fund. Or it may be set aside in case the state loses legal fights over collecting income taxes on public pensions or having state workers pay more of their pension costs.

“What we’ll do is with the one-time money, we’ll look for one-time expenditures," said Nixon. Budget Stabilization Fund is obviously a piece, a good place to put one-time money, as well some of the other spending pressures we have in the budget.”

Officials also estimate the state will have about $100 million more to spend in the budget year that starts Oct. 1.

Nixon says he doesn't think that will mean radical shifts in the budget bills lawmakers hope to finish by month's end.

The budget news accompanies forecasts that Michigan’s economy will continue to grow at a slow pace – with many of the new jobs coming from higher-paying fields. Michigan’s unemployment rate dropped again in April, hitting 8.3 percent.

When people who have quit looking for work are counted, as well as ­part-time workers who’d like to be full-time, Michigan’s rate of unemployment and under-employment is 17.8  percent.

Michigan State Capitol
Jimmy Emerson / Flickr

A UM economic forecaster is predicting moderate economic growth for the state until 2014.

The Detroit Free Press reports that George Fulton, director of the Research Center on Quantitative Economics at the University of Michigan, gave the forecast at today's revenue estimating conference at the state Capitol.

From the Freep:

Private sector job growth will continue in 2013 and 2014 but at a more moderate pace than the rapid growth seen in 2011 and the early part of 2012, Fulton said.

"We see a sustained but moderately paced recovery from now until 2014," he said.

The revenue estimating conference is part of finalizing the state's 2013 budget.

Officials try to reach consensus on how much revenue the state can expect in the coming years.

MPRN's Rick Pluta is covering the conference and will have more for us later.

Michigan's State Capitol in Lansing.
Steve Carmody / Michigan Radio

LANSING, Mich. (AP) - The House and Senate fiscal agencies have come out with their revenue estimates ahead of Wednesday's revenue estimating conference, and the news isn't all good.

Both say they expect the state general fund to take in less revenue in the fiscal year that starts Oct. 1 than it will this year as companies pay less money because of the business tax cut that took effect early this year.

They expect the drop to be bigger than they forecast in January.

Next fiscal year's school aid revenues may be slightly higher than forecast.

The directors of the House and Senate fiscal agencies will meet Wednesday with state Treasurer Andy Dillon to set revenue estimates lawmakers will use as they finish work on the budget for the upcoming year.

The Michigan League for Human Services is pressuring lawmakers in Michigan who voted last year cut tax credits for working poor families.

The earned income tax credit - or EITC - gives people who would qualify for welfare an incentive to go to work instead. There's a federal credit, and one offered at the state level too. But the state credit was reduced last year in a budget-cutting move.

The reduced tax credit allows families who qualify to claim 6-percent of the federal earned income credit on their 2012 state taxes. In the past, families could claim 20-percent.

Judy Putnam is with the Michigan League for Human Services; a non-profit, non-partisan advocacy group. She says the tax credits boost the economy because poor families spend the money right away.

 "Whereas a business or an upper-income tax payer you know getting tax breaks they don’t automatically go and spend that money,” Putnam said.

The organization has published a report it hopes will convince Republicans to restore the earned income tax credit. The report outlines the legislative districts with the most residents affected by the change. 

Here's the breakdown by state senator's district; while another set here break the data down by state representatives. 

Tom Dailey / Creative Commons

The state has rescheduled a public hearing on the proposed consolidation of the cities of Douglas and Saugatuck. The hearing was set for later this month. But the state pushed it back to next month because notice of the hearing wasn’t mailed out at least 30 days prior.

Local leaders were upset the original public meeting was scheduled at a smaller venue in the middle of a workday anyway. It's now been rescheduled for 4p.m. June 20thinside the Saugatuck High School gymnasium.

Lindsey Smith / Michigan Radio

Today some people in the Cities of Granville and Walker will begin collecting signatures to get their cities out of the partnership that runs the bus system in metro Grand Rapids. It’s called The Rapid.

The Kent County Taxpayers Alliance says it's not against bus transportation in general, but feels the system is wasting tax dollars. The grassroots organization with volunteer staff tries to keeps tabs on taxpayer dollars in local government.

Lindsey Smith / Michigan Radio

U.S. Senator Debbie Stabenow will introduce a bill next week to prevent companies from getting tax write-offs for moving overseas.

Currently businesses can write off moving expenses on their taxes if they’re moving within or out of the country.  But no such break exists for businesses moving into the U.S.

“That makes absolutely no sense,” Stabenow said at a press conference Monday at Grand Valley State University.

Contemplative Imaging / Flickr

Every week, Rick Pluta, Lansing Bureau Chief for the Michigan Public Radio Network, and I take a look at state politics.This week: it's all about the politics of taxes. It was Tax Day this week and that brought out plenty of politicians ready to talk about taxes... but, they weren't the usual suspects.

Dems: It's About Taxes

"We had Democrats coming out and talking about taxes which is kind of an inversion of the way that the political world usually works. On Tax Day, you usually get Republicans coming out talking about how taxes are too high... But [this week] you saw Lansing Democrats coming out and reminding people that 2012 was when seniors who have pension income were taxed on that income for the first time and that the dozen or so tax breaks that people used to be able to apply to their state income taxes are no longer," Pluta explains.

GOP: It's About the Economy

Republicans, instead, focused on an economic message with Governor Snyder tweeting about the state's declining unemployment rate. "The Republican message, right now, is framed a lot more around the economy, not taxes... They're really not even trying to get in front of the tax message. What they're trying to get in front of is the message that 'whatever it is that we're doing, it's working.'"

All Politics is Local... Really?

It's important to note that it's not just state Democrats beating the tax drum. "In this age where most elections are really nationalized, especially in presidential election years, what Democrats are saying and doing in Lansing fits in pretty snuggly alongside what we're hearing from Democrats in Washington  and what President Obama is saying about Republicans, and tax policy, and who should be paying more in taxes," Pluta explains. So, although former U.S. House Speaker Tip O'Neill made the "all politics is local" line famous, it certainly doesn't hurt state Democrats to be in step with their party's national talking-points.

__________________

This week certainly had it's share of political news: Governor Snyder made a surprise trip to Afghanistan, Lt. Gov. Brian Calley signed the autism mandate into law and three (out of nine) members were appointed to Detroit's Financial Advisory Board. Pluta and I take a look at these stories and more in an extended edition of It's Just Politics. You can hear the show below:

automotiveauto.info

The first hearing will be held tomorrow on a Republican plan to phase out taxes on most industrial equipment in Michigan.

Local governments collect about $400 million in revenue a year from the industrial property tax.

Lieutenant Governor Brian Calley helped design the plan to get rid of the tax over the next several years. He says Michigan is unique in how it taxes industrial property -- and he says it’s driving investments to other states and countries.

“So at the end of the day, it’s about jobs and removing the penalty for investing in Michigan,” Calley said.

But local leaders say the way the phase-out is drafted now, it would force disinvestment in schools, and city services. That’s because it does not replace all the revenue lost to local governments.

Some state lawmakers like Senate Democratic leader Gretchen Whitmer agree.

“At best, they only intend to replace 81 percent of the dollars,”Whitmer said. “So does that mean that they are going to cut our fire services 19 percent? They’re also going to cut our police service 19 percent? They’re going to cut our schools an additional 19 percent? How is that made up?”

The communities that would be most affected are industrial cities with the most factories. That includes Michigan's third-largest city, Warren.

Warren mayor Jim Fouts says the city stands to lose $12 million a year in revenue if the tax is repealed.

“It would be absolute disaster," said Fouts, who said he'd be forced to cut public safety and other vital services. 

"It’s a good example of short-term thinking without looking at the long-term consequences, which are draconian consequences.”

Fouts says Lansing has recently shifted more costs and mandates to local governments, while also cutting off their sources of revenue. He sent a letter expressing his concerns to Governor Snyder.

Joe Ross / Creative Commons

Former Michigan Governor John Engler says politicians in Washington need to make important decisions now, despite the general election coming in November.

Engler is now President of Business Roundtable, a national association of CEOs.

He says politicians have a lot of tough decisions to make to keep the U.S. competitive globally. That includes decisions on energy and education; but most importantly, he says, decisions about the tax code and the federal deficit. Engler says those decisions need to made as quickly as possible.

Allieosmar / Flickr

Democrats in Lansing plan to use this week’s tax-filing deadline to re-open the debate about last year’s tax overhaul at the state Capitol.

Democrats think the tax issue will help them in elections this year. Seniors born after 1946 have their pensions taxed for the first time. Deductions and tax breaks for many charitable donations will be gone when state taxpayers file next year. At the same time, taxes were lowered for many businesses.

Democrats intend to remind voters of that as they try to win an additional nine seats in November to take control of the state House. They say more than a dozen swing districts will be the target of fierce campaigning on the issue of taxes.

Republicans says there are elements of the tax overhaul that were unpopular, but necessary to streamline and simplify tax filing and to make Michigan a more business-friendly state.

user auntowwee / Flickr

LANSING, Mich. (AP) - Lower-than-expected tax collections could threaten parts of Gov. Rick Snyder's next state government budget plan.

Republicans who control the Michigan Senate have preliminary plans to spend roughly $150 million less overall than Snyder has proposed for the fiscal year starting in October.

The targets include about $25 million less than Snyder proposed for information technology system upgrades and $45 million less on the state prison system.

The Senate targets do not reduce Snyder's funding proposals for education. Proposed spending would be relatively flat for K-12 schools, while universities and community colleges could get average increases of about 3 percent.

The Snyder administration says it's too early to change its budget plan, noting more information will be available when state economists gather in May for an official revenue estimating conference.

user orinzebest / Flickr

Voters may soon decide whether Michigan should scrap the 19-cents-per-gallon tax on gas at the pump in favor of a sales tax increase of 1 percent.

The change would help generate more money for transportation funding.

A proposal to put the question to voters is gaining momentum with some legislative leaders.

That change would require a constitutional amendment and put the question to voters on the ballot.

Republican state Senator Howard Walker sponsored the measure. He said if taxpayers are asked to pay more to fix the state’s roads, they should have a voice.

MLHS

A new report by the Michigan League for Human Services takes a look at Michigan's shifting tax policy and it's impact on low-income families.

The report shows what we already know, that businesses in Michigan will receive a tax cut in the state while individuals will pay more.

Low income families, the report's author Joanne Bump concludes, will be hit the hardest.

wikimedia commons

A new report says three Michigan companies spent more on lobbying than they did in corporate income taxes between 2008 and 2010.

Those companies include Michigan’s two biggest utilities, DTE and Consumers Energy. It also includes Ann Arbor-based freight hauler Con-way.

State revenue projections continue to climb

Jan 3, 2012

The state is bringing in more money than expected. That’s according to a report by the non-partisan Senate Fiscal Agency.

The agency says Michigan ended the fiscal year that ended September 30th with a $1.3 billion surplus. An improving economy and lower income tax refunds are largely credited for the surplus. But much of the windfall has already been dedicated to programs in the current fiscal year.         

David Zin is an economist with the Senate Fiscal Agency. He says the auto industry still has a major impact on the state’s economy.

“People cut back so much on vehicle purchases in the 2008-9 recession, that while sales are low by historical standards, they’re up quite significantly from just a year or two ago,” Zin said.

Zin says the state collected more tax revenue in 20-11 than projected last year. He says the economy is not expected to grow quickly over the next couple years.

Lindsey Smith / Michigan Radio.

Sales of real Christmas trees are down more than 20 percent for the past two decades. This season Christmas tree growers wanted to collectively start an advertising campaign to try to reverse that trend. But of all things, politics, got in the way. 

Artificial Christmas trees gaining favor

Real trees still outsell fake trees by about three to one. But artificial tree sales have been increasing for several years. Fake trees now have a slightly higher share of the Christmas tree market than real ones. Michigan is the third largest grower of real Christmas trees in the U.S., harvesting around 3 million a year.

morguefile user Penywise / http://michrad.io/1LXrdJM

Nonprofits across Michigan are doing their annual end-of-year holiday push for financial donations. This will be the last time donors will be able to take advantage of a charitable tax credit.

user cookbookman17 / Flickr

A top Michigan Republican would like the makers of Jack Daniel's whiskey to consider moving north if the company decides to leave Tennessee.

House Speaker Jase Bolger has invited distillery managers to visit Michigan. He says the state's business climate is improving, and he noted the state's large supply of fresh water.

A spokesman for Jack Daniel's parent company said Friday there are no plans to visit Michigan or other places that have made similar offers since a dispute about taxes sprouted in Tennessee.

Some Moore County citizens have proposed a "barrel tax" for the Lynchburg, Tenn., distillery that could raise up to $5 million a year. They're asking Tennessee lawmakers to authorize a local referendum.  

The distillery is waiting to see what happens with the tax issue.

John Morgan / Flickr

(*Editor's note - Michigan Radio, as a licensee of the University of Michigan, benefits from this tax credit)

The Michigan charitable giving tax credit expires at the end of the year, and charities are expecting the amount people donate to charities to drop as a result.

The charitable giving credit was ended as part of Governor Snyder's effort to pay for a business tax cut of more than $1.5 billion.

The credit allows Michigan taxpayers to essentially double their contribution when they give to community foundations, homeless shelters, food banks and public institutions (such as Michigan universities, museums, public libraries, and public broadcasting stations).

For a single filer, half their contribution can come off their Michigan tax bill up to a $200 contribution. Joint filers can take half of a $400 contribution.

Brian Conner of the Detroit News wrote a piece on the expected effects of the credit's expiration.

Conner writes that charities in Michigan don't quite know how much of their donations are tied to the credit, but the expect to take some kind of a hit.

The Lansing city council has moved a step closer to approving a tax deal that could lead to an expansion of  Capital Region International Airport.   A final vote is scheduled for next week.   

Businesses at the airport oppose the tax deal.     George Carr owns a hanger at the airport.  He says the tax deal is a 'killer'.

“This…pits the existing tenants and businesses against future tenants and businesses.   It does it by raising taxes…on existing businesses…so they can abate taxes on future businesses that may or may not locate there," says Carr.   

A city economic development official says  the proposal will help improve business at Lansing’s airport.  Bob Trezise with the Lansing Economic Development Corporation says the tax increase is a question of ‘fairness’.  

"We just merely are saying  ‘We wish you to pay a small amount to participate in supporting the airport, like all the businesses and residents of Ingham County do.  And you’re at the airport'," says Trezise.  

The tax deal must be in place by the end of the month so the airport can apply for a state development grant.

It turns out Michigan's state government might have brought in more money from taxes and fees than previously expected in the fiscal year that ended September 30th. That likely will set up a battle this fall over what to do with
the cash, which could total $285 million or more.

Democrats, outnumbered in the Michigan Legislature, say any extra money should be committed first to public schools and education programs that are dealing with budget cuts in the fiscal year that started this month.

Republicans, including those in Governor Rick Snyder's administration, are hesitant to commit to any spending before they have a clearer picture of state revenues.

Snyder's budget office is expected to close the books on the recently completed 2010-11 fiscal year in December.

(photo by Steve Carmody/Michigan Radio)

Michigan Senator Debbie Stabenow says she doesn’t know if the president’s jobs bill will clear its first legislative hurdle later today.    That’s when the U.S. Senate is scheduled to take a procedural vote on the $447 billion ‘American Jobs Act’.   

Stabenow, a Democrat, says she’d like to see the legislation move forward.  

The Michigan legislature and the governor are working to make Michigan a more business-friendly state by changing the tax structure.  But, while businesses are benefiting from already passed tax reductions --and anticipate more--  the change is costing communities. 

I went to one city to see how it was handling those changes.

When I visited, it was a beautiful day in downtown Monroe.  The city is situated on the River Raisin in the southeast corner of the state, right on Lake Erie.  It’s just 19 miles north of Toledo, Ohio.

The state is holding a series of workshops to get the public’s feedback about historic preservation. A meeting is planned in Traverse City on September 21 and in Detroit on October 12. Another meeting will take place in Lansing in January.

People have already attended workshops in Kalamazoo and Midland. Their biggest concern so far is the lack of funding for preservation programs.

Laura Ashlee is with The State Historic Preservation Office.

“As part of the governor’s restructuring of taxes in Michigan for businesses he eliminated the tax credits for historic preservation. There will be a new program, we believe, and we’re going to work with the governor to implement that program.”

Ashlee says historic preservation also makes economic sense. She says people are employed when working on restorations. She also says historic buildings attract people and businesses to that area. 

The State Historic Preservation Office is in the process of writing its plan for the next five years. And the public’s feedback will help shape its plan.

user subterranean / wikimedia commons

The Michigan Supreme Court has agreed to let unions and business groups weigh in before the justices rule on whether the state’s new tax on pension income is legal.

The court will hear arguments in the case next week.

Governor Rick Snyder asked the court to cut short any legal challenges with a preemptive ruling.

The governor wants an opinion from the court before the end of the month.

His budget relies on $343 million dollars from taxing pensions, and he wants to avoid months or years of legal wrangling on the question.

The governor asked the court to decide whether the pension tax breaks a promise by the state to retirees and public employees; and whether income limits in the law amount to a graduated income tax – which is prohibited by the state constitution.

The Supreme Court has agreed to accept briefs from retiree associations and unions that oppose the pension tax, as well as business groups that say the tax is fair.

The Michigan Education Association, the UAW, and the AARP are among the groups that filed briefs opposing the tax. They say the pension tax breaks a promise to retirees and public employees, and it violates the state constitution.

Business groups, including the Michigan Bankers Association, and the Small Business Association of Michigan, are backing Governor Rick Snyder. They say the pension tax is fair because it treats all income equally in the tax code.

If the pension tax is upheld, pension income will be subject to the state income tax starting January 1, 2012.

There are taxes, and then there are taxes. Some are straightforward. If I spend ten dollars at the hardware store this afternoon, I know I’ll pay sixty cents in sales taxes.

But other taxes are hidden, and may be higher than we suspect. The Mackinac Center for Public Policy is an independent, non-partisan think tank with a strong fiscally libertarian bias.

Last week, it released a statistical analysis of liquor prices. The center found they are higher in states like Michigan where the state government acts as the statewide wholesale distributor.

How much higher? A little over six percent. They took as their example a fifth of a particular common brand of Scotch. They found that it costs, on average, a dollar fifty-nine more a bottle in the seventeen states like Michigan where government is the wholesaler. The Mackinac Center said this amounted to, “a substantial hidden tax on a commodity already subject to large state and federal taxes.” The implication is that this is bad.

However, I’m not so sure. I suppose it would bother me more if it were a tax on baby formula, or if the tax left liquor costing twenty percent more than in Illinois, for example. But nobody forces anybody to buy a bottle of Scotch.

Dave Garvin / Flickr

How to get by with less is an issue all levels of government are facing.

The emergency manager in Pontiac, Michael Stampfler, is proposing a combination of tax hikes and service cuts to cure the city's budgetary ills as reported in the Oakland Press:

Stampfler took to the microphone this morning for an informational meeting about the updated financial plan that could mean property taxes being raised between 6 and 8 mills.

He requested the public and elected officials submit ideas in writing if they have alternatives to what is proposed.

Stampfler released an update of his financial plan, adding $15.05 million to the budget with a combination of cuts and possible tax hikes.

An 8 mill property tax increase would mean that a property owner whose house is assessed at $50,000 would pay $400 more a year in taxes.

This past spring, the assessed value of homes in Pontiac dropped by an average of 21.4 percent, resulting in $2.6 million in lost annual revenues for the city.

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