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Thursday, November 10, 2005

Michigan House Approves $3 Billion Tax Cut, Tech Jobs Package - Veto Threat Over Single Business Tax Sunset Remains

LANSING - A marathon 12-hour session ended early Thursday when the Michigan House approved the business tax cut and high-tech job plan with the basic parameters that were agreed upon last week by the governor and legislative leaders. The one change, House Republicans pushed through legislation to keep the sunset on the Single Business Tax, which Gov. Granholm vowed to veto.

The $3 billion package now moves to the Senate, which will take up the package on Thursday.

Earlier in the evening, Ari Adler, spokesman for Senate Majority Leader Ken Sikkema, said Granholm would be "vetoing tangible relief in favor of a concept," if she should veto the package because it did not repeal the sunset.

The SBT cuts are valued at $1.1 billion over the next six years, one year beyond the 2009 sunset now provided in law, and the job stimulus package is worth $1 billion in direct state investment in high tech, life sciences and venture capital over nine years.

The tax plan calls for changes to the personal property tax, which would create $500 million of the tax cuts over the five-year period through the 2009 sunset date. Much of that would come from the 15 percent-nonrefundable industrial credit.

A two-year 100 percent credit for jobs and equipment moved into Michigan, which is targeted at corporations such as Delphi, could cost an estimated $50 million.

On the job stimulus front, the state would securitize $400 million, which would be put to work the first year in making loans and grants towards economic development. Another $600 million would come from taking $75 million a year for eight years of the settlement funds.

House Speaker Craig DeRoche maintained throughout the session that lasted until just after 1 a.m. that because an elimination of the SBT was not discussed between leaders it should not be part of agreement wording in the 14-bill package. Two bills still in the Senate, HB 4973 and HB 4342, will be addressed by the House on Thursday following expected Senate approval.

"These bills represent the entirety of the agreement that was reached on Thursday," DeRoche said. "It's a first step and for some businesses an important step. She's trying to confuse voters and taxpayers. I don't understand how somebody can stand in the way of business. She's putting politics in front of families and their jobs."

Granholm told reporters: "The position of the Republicans is to go back on the deal. It was a good, solid deal. The business community has to have some sense of knowing what their obligation will be. We need certainty."

House Democrats said Republicans were the ones setting up the political joust and that some technical amendments did in fact change the percentage of personal property tax credit and investment in the high-tech jobs portion.

"It's disappointing,” said Lt. Gov. John Cherry. “Obviously, politics have overcome public policy.” When asked whether the package is salvageable, Cherry replied, "This is not a good start."

Republicans say keeping the sunset gives the Legislature a deadline to deal with a tax that is roundly criticized as depressing economic growth. Granholm spokesperson Liz Boyd said 2009 is close at hand given the pace of legislative action and that the governor is prepared to continue to work on alternatives to the SBT.

"If they want to continue to keep talking about restructuring of the SBT, the governor is more than willing to talk about it," she said. "If talks were to occur, there is no telling what direction those talks would take." Although Democrats attempted to amend the legislation to do away with the SBT sunset and an increase in the minimum wage, those initiatives failed as Speaker Pro Tempore Rep. Jerry Kooiman (R-Grand Rapids) gave representatives a few seconds to vote. The sunset amendment lost, 37-68; the minimum wage went down, 38-45.

Although Granholm and DeRoche - who would not discuss what was said - met late Wednesday, there was still no consensus on the SBT sunset issue that dogged an agreement all three leaders had hailed as a great step toward improving the state's economy. Since then, some business groups and some in the GOP caucus slammed the package as inadequate.

And the Coalition for Tax Relief, a group of organizations representing mostly small businesses, had late Tuesday called for more time to review the plan before taking it to a vote.

Here is the breakdown of votes on the bills in the package: HB 5048, 98-7; HB 5109, 104-1; HB 5047, 92-13; SB 633, 92-13; HB 5098, 58-47; HB 4098, 105-0; HB 5095, 59-46; HB 5096, 58-47; HB 5097, 58-47; HB 5106, 58-47; HB 5107, 58-47; HB 5108, 105-0; HB 4972, 104-1.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

Author: Staff Writer
Source: Gongwer News Service

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