Honigman Capitol Report

DTMB Forecasts Slow Job Growth

The Michigan Department of Technology, Management and Budget (DTMB) released data last week projecting an annual employment rate increase of 0.2% in the second quarter of 2024. The DTMB has also projected the overall number of jobs will increase from 4,279,580 to 4,654,510 by 2030. The data was released during the 2023 Michigan Occupational Outlook Conference held at Lansing Community College. Self-employment is expected to drop by 3.9% by the second quarter of 2024. The biggest increase projected in an overall industry was in leisure and hospitality which has a projected annual growth rate of 2.7% through 2030. Most of this growth will come from the amusement, gambling and recreation industries according to the DTMB. The largest projected increase in an individual area is the motion picture and sound recording industry, potentially because of recent legislation introduced regarding new tax credits for film and media projects in Michigan.

Several Parties Sue State over Income Tax Cut

Multiple business groups, legislators and taxpayers filed a lawsuit last week against the Michigan Department of Treasury to make permanent a statutory income tax cut which, according to an Attorney General Opinion issued earlier this year, would raise the tax rate the following year. The suit was filed in the Court of Claims by the Mackinac Center for Public Policy and the named plaintiffs include ABC of Michigan, the National Federation of Independent Business Inc., and Republicans Sen. Ed McBroom of Vulcan and Rep. Dale Zorn of Onsted, in addition to several state residents. The 2015 road funding law at issue allows for an income tax rate reduction based on revenue growth. The trigger was hit last year. This means, for the 2023 tax year, the income tax rate will decrease from 4.25 percent to 4.05 percent. The Attorney General opined that the income tax reduction would be effective for only one year and would need to be reevaluated on an annual basis. The lawsuit alleges that legislative history and the definition of the word “current” indicate that the reduction is meant to stay in place until the trigger once again lowers the rate. Additionally, the parties claim that, if lawmakers want to avoid further rate reductions and increase the tax rate the following year, the law must be changed.

State Board of Canvassers Rules on Recall Petitions

Six proposals for recall petitions were considered last week by the State Board of Canvassers with only 1 approved to move forward. Board members voted unanimously that language submitted on a recall petition against Rep. Sharon MacDonell (Democrat-Troy) was clear enough to begin circulation efforts. The specific language approved was “[o]n April 13, 2023, State Representative Sharon MacDonell voted ‘yes’ on Michigan House Bill 4145 creating the Extreme Risk Protection Order Act, i.e. ‘Red Flag’ Law.” MacDonell indicated that Attorney Mark Brewer may possibly appeal the decision and stated “I am proud of my vote on the bill. It’s my job to protect the people in my district and the state of Michigan and to do whatever I can to try to prevent them from being injured in any way, including gun violence.”

The remaining five proposed recall petitions were rejected. The petition against Rep. Betsy Coffia (Democrat-Traverse City) had the same language as MacDonell’s except the word “Act” was missing making it read as if Coffia voted to create an order. This omission would cause confusion according to the Board. The four other petitions against Democrats Jennifer Conlin (Ann Arbor), Noah Arbit (West Bloomfield), Kelly Breen (Novi) and Denise Mentzer (Mount Clemens) were rejected because two of the members of the Board stated that the language read as if the law was being amended but did not specify how the existing law was being changed. The rejected language was: “On June 23, 2023, State Representative (insert name) voted yes on Michigan House Bill 4474, which would amend provisions of the Michigan Penal Code that now define and prohibit the crime of ethnic intimidation.”

Looking Ahead

All eyes in the Michigan political world will be tuning into Governor Gretchen Whitmer’s planned August 30th address. Economic development is the expected focus. In a year that has seen over 100 bills signed into law before the end of summer, the speech is billed as charting “what’s next”. Democratic legislative majorities will be sorting through the myriad of caucus interests to determine what they believe will be a realistic set of goals to achieve in the relatively short span between their September return to session and the November elections. As we have previously discussed, mayoral races in Warren and Westland could determine whether house democrats maintain their narrow 56-54 majority. Should current state representatives Lori Stone and Kevin Coleman prevail in their respective races, the chamber would fall into the first equal power scenario in decades- at least until special elections can be held to fill vacated seats. We anticipate a reasonable degree of coordination between Governor Whitmer, Senate Majority Leader Brinks and House Speaker Tate. This week’s speech will be a first look at how these discussions have shaped the coming agenda.