LANSING - Gov. Jennifer Granholm, as promised, on Friday vetoed legislation that would have sped the repeal of Michigan's Single Business Tax, saying repeal without a replacement threatens Michigan families, businesses and the state's economic future.
Republicans and the business community, ready for the veto, said the governor relinquished a shot at improving Michigan's economy. But it was Granholm who lambasted Republicans regarding their true intentions of getting the repeal approved without Democratic amendments that would have identified a replacement before the sunset of the single business tax.
"I therefore return Enrolled House Bill 5743 without signature and call on you to do your job," Granholm penned in her veto letter. "Create a solution, not more problems. Pass improved business tax legislation that fully protects vital services like education, health care, and public safety. Pass a bill that also guarantees that businesses will pay their fair share of taxes without forcing Michigan families and citizens to shoulder new tax burdens. That is a solution I can support. That is the solution Michigan needs and deserves."
Republicans and many business executives are now pinning their hopes on a petition drive that would compel the Legislature (sans the need for a governor sign off or giving the ability to veto the measure) to enact the accelerated repeal. The petition drive is already well underway under the helm of Oakland County Executive L. Brooks Patterson.
Rep. Leon Drolet (R-Clinton Twp.), sponsor of the vetoed HB 5743, said, "We'll do the petition drive and rebuild Michigan's economy. We have the fall back. It's apparent now that we are going to have to govern without a governor."
Senate Minority Leader Bob Emerson (D-Flint) said he supports the governor's decision.
"The governor's veto was the responsible thing to do. Senate Democrats opposed this cut because we believed it was a cowardly act," he said. "If Republicans were serious about this issue they wouldn't have gone on vacation but instead worked through the spring break to find the necessary revenues to make it a responsible proposal."
But House Speaker Craig DeRoche (R-Novi) argued it was the governor who was not doing her job. "The Single Business Tax is a tax on people's jobs. It actually punishes people for hiring workers, offering health care and growing a business in Michigan. Today, the governor had the chance to lead and get rid this tax on jobs for something better and not surprisingly, she took a pass."
Ari Adler, spokesperson for Senate Majority Leader Ken Sikkema (R-Wyoming), said it was "unfortunate Ms. Granholm chose to remove herself from the discussion on ending the SBT. The initiative will completely bypass her office. She had an opportunity to engage with us and her council of economic advisors, but instead she brought out old arguments that didn't fly last year and new arguments that had no basis in fact."
Sikkema believes Patterson's proposal has strong support from the business community, who are "giving it all they can," Adler said.
The focus for Republicans is getting rid of the SBT and looking for an alternative, Adler said.
Tricia Kinley, director of tax policy and economic development for the Michigan Chamber of Commerce, also said the news was unfortunate, though not a surprise. "Really from the perspective that this administration continues to veto good public policy that will help the business community and help make Michigan better," she said.
"They're not interested in pursuing real reform of any type. They talk the talk but don't walk the walk," she said.
In her letter, Granholm said her record on the subject of tax reform is clear. "I have consistently supported tax reform measures that will make Michigan more competitive and create jobs, including the $600 million tax cut for manufacturers I signed into law in December."
She goes on to say that she has offered proposals and compromises to overhaul or replace the SBT since January 2005, but Republicans have either rejected or reneged on those ideas.
Kinley said that the governor's "reform" of the SBT in January would have harmed, not helped, 25,000 businesses in Michigan.
Saul Anuzis, chair of the Michigan Republican Party, "I think the governor is tone deaf to the plight of Michigan businesses, putting special interest politics ahead of concrete measures designed to create jobs and jumpstart Michigan out of its single-state recession. If Michigan wants a better economy, Michigan needs a better governor."
Chuck Hadden of the Michigan Manufacturing Association said the veto was not surprising. "I think Republicans were setting up to do this, both sides got what they want."
But his members, who include the state's largest SBT payers, were more sympathetic to the idea of having a replacement tax in place before the SBT was eliminated. " The SBT has a stigma, definitely, but at the same time my guys like the devil they know rather than the one they don't know," Hadden said.
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