Lansing Update: November 11, 2005

In this issue of Lansing Update:

1. Bishop Sample Joins Michigan Catholic Conference Board of Directors
2. Michigan Catholic Conference Testifies Against Contraceptive Mandates
3. Stem Cell Issue Comes to Forefront in Michigan
4. House Education Committee Addresses Mandated High School Curriculum
5. Governor Releases 2006–07 Executive Budget Recommendations

Recent Tax Plan Compromise Doomed for Collapse

This week the state Senate and House of Representatives passed legislation that implements a $1 billion tax change and economic development plan that was agreed upon last week by legislative leaders and the administration, but the bills are likely headed for a veto after the governor said certain provisions have been excluded.

The main point of difference between Republican legislative leaders and the Democratic governor is a sunset provision related to the state’s Single Business Tax (SBT). Republicans contend that the tax is a business killer for the state, while Democrats assert that businesses should pay their fair share, especially as it represents a significant source of income for the state.

The governor insists that included in last week’s compromise was an agreement to repeal the SBT’s 2009 sunset. The Senate Majority Leader and Speaker of the House have asserted that the SBT sunset repeal was never included in the compromise and should be removed as scheduled.

It is unclear what steps the legislature or governor will take once the bills are vetoed. Michigan, however, continues to struggle with its economic development as unemployment rates are consistently among the worst in the nation.

Michigan Prepared to Regulate Payday Lenders

Both the Senate and House of Representatives this week passed legislation that for the first time in Michigan’s history will regulate the industry known as payday lending. Payday lending is an industry that provides customers with up-front cash to pay off debts or creditors—often at the expense of extremely high interest rates and percentages.

Provisions in the House/Senate compromise include the following:

• Mandating payday lenders to license each individual business with the Commissioner of the Office of Financial and Industry Services (OFIS), who shall have a licensing procedure established by July 1, 2006. Licenses must be renewed annually.
• A customer is only able to enter into one payday lending agreement at a time with a maximum amount borrowed of $600. Service fees and percentages must not exceed 15 percent. Agreements cannot be renewed, although it can be extended if no additional fee was owed and if the balance owed did not exceed the amount owed on the original agreement.
• The OFIS commissioner must by December 31, 2006 develop, implement, and maintain a statewide common database with real-time access through an Internet connection that will be available to licensees and to the commissioner. The database will prohibit a licensee from entering into a transaction with a customer if the customer has an open transaction with the licensee or has an open transaction with any other licensee.
• A private right of action allows a customer to file a complaint against the licensee to the OFIS commissioner if the customer feels he or she has been wronged by the licensee. The commissioner of OFIS will have to investigate written complaints from customers and can investigate and conduct examinations on his or her own initiative as considered necessary.

Michigan Catholic Conference in the coming weeks will distribute a Focus essay with information on the payday lending business and further details regarding the “Deferred Presentment Service Transactions Act.”

Eminent Domain Amendment Headed to House of Representatives

The Senate this week passed legislation that will allow Michigan voters in November 2006 to decide if the state’s constitution should be amended to include stronger language against eminent domain. For the language to appear on the ballot the House of Representatives must also pass Senate Joint Resolution E by a two-thirds majority, which seems likely.

The proposal would codify in the constitution the principles on eminent domain that the Michigan Supreme Court established in 2004, which overturned a previous court decision of the early 1980s in favor of eminent domain. Eminent domain is the term used to describe the government allowing private businesses or enterprises to buy-out residences or small businesses in favor of higher taxable land use.

According to the proposal, a government would be banned from taking private land for another private purpose. A government seeking a property taking would have to show by a preponderance of evidence that the property is needed for a public purpose. An amendment was included in the legislation that requires a government to pay an individual 125 percent of the fair market value of a property if it is the principal residence of the individual. That payment would be in addition to any other reimbursement allowed by law.

Michigan Catholic Conference has testified in support of the legislation.

Editor’s Note: Lansing Update will again publish Friday, December 2 when the Legislature returns from its Thanksgiving recess.