Today is the official start of the lame-duck period for Michigan’s 98th Legislature.
Some of us remember the frenetic pace of the lame-duck in 2012, when state lawmakers passed something like 300 bills. That included "right to work" and a new emergency manager law to replace the one voters had just repealed.
Zach Gorchow, editor of Gongwer News Service, joined Stateside to discuss what’s on the to-do list this year during lame duck.
He said because the House and Senate maintained their Republican majorities this year, we aren’t going to see the “all-out craziness” we otherwise could have.
“But there are probably between two dozen and three dozen major bill packages that have had work done on them in the prior 20 months that are going to come to fruition now,” Gorchow said. “And there’s going to be a lot of activity. Maybe not Defcon 1, but it’s going to be a lot of activity.”
Economic tax development
News today focuses on the movement we're seeing around economic tax development.
For five or six years, Gorchow said, Gov. Snyder's operating philosophy has been to avoid tax incentives. That trend, however, may be about to change.
“Legislation that is expected to see a vote on the Senate floor today, kind of out of nowhere, with the governor’s blessing would allow a certain number of businesses each year to receive a substantial tax incentive for creating new jobs,” Gorchow said. “So basically, if a business were to create at least 500 new jobs, it could apply to the state and get to keep all of the income tax revenues it would otherwise withhold from employees’ paychecks. And instead of sending that to the state, they’d get to keep it.”
Should this legislation pass, as it seems likely to, Gorchow said it would be a “big break in philosophy.”
Brownfield development incentives
Another item to watch throughout the lame-duck period has to do with brownfield development incentives.
“You have a number of communities – downtown areas – that feel like they need more economic development tools, per se, to start large projects – Dan Gilbert among them,” Gorchow said.“This legislation would allow these developers to keep a certain percentage of tax revenues that would otherwise go to something called Downtown Development Authorities.”
He said lots of communities have Downtown Development Authorities – entities that use taxes for town projects, like the new Red Wings and Pistons arena for instance.
“So this [legislation] would create a pretty substantial revenue stream for what are called these large catalytic projects,” Gorchow said.
A lot of observers are putting their money on a complex energy package as the Legislature’s top “must-do” between now and Dec. 15.
“It looks like it’s going to happen,” he said.
“Basically, as long as the Democrats in the House – that’s where the bill is now, it’s passed the Senate – are on board with increasing the state’s mandate for renewable fuels to supply 15% of energy for each utility, as long as they feel like increasing it from 10% to 15% is sufficient, it looks like the votes will be there,” Gorchow said. “That they’ll be able to use those Democratic votes combined with perhaps half of the Republican caucus to get the bill done.”
That said, several Republicans are not yet on board. They think it's "damaging to choice for customers among utilities." But utilities don't want expanded choice, and Gorchow said it appears utilities have made a good enough case for the bill's various provisions that would allow them to create new power plants.
Meanwhile, Democrats too could try to “hold out for more.”
“The risk is – and this is why I think it happens this time – this is their best chance for a deal,” he said. “The next House of Representatives that comes in is even more free-market oriented. You will definitely have a chair of the Energy Committee who is nowhere near as big an ally of the utilities as Aric Nesbitt is now. He’s carrying the freight on this legislation.”
There’s a lot of movement in the Legislature toward changing the retirement system for teachers in Michigan. But Gorchow said details are not yet clear.
“In broad summation, the Senate Republicans would like to end the hybrid pension system that new teachers participate in,” he said. “So right now, if you’re newly hired as a teacher, you get some pension benefit and you get some 401(k) benefit – that’s been in place for six, seven, eight years now. They would like to see the partial pension benefit go away and instead be fully a 401(k).”
The legislation would affect only new teachers, not current teachers.
“The Republicans feel like this would address the unfunded liability issues in the system and so forth, but the Democrats and others are preparing a big fight on this,” Gorchow said.
For more detail on what to expect during the lame-duck session in Michigan, listen to our full conversation above.