Lansing Update: November 4, 2005

In this issue of Lansing Update:

1. Agreement Reached on Business Tax Cuts, Investment to Spur Economy
2. Department of Human Services Releases Welfare Reform Suggestions
3. Schools to Receive Assistance for Students Displaced by Katrina
4. Attorney General Rules in Favor of Mexican Drivers

Agreement Reached on Business Tax Cuts, Investment to Spur Economy

In an effort to spur economic development and attract business to the state, legislative leaders and the executive office this week hammered out an agreement that will securitize some $1 billion in tobacco settlement funds to provide business tax relief and fund long-term job investment in Michigan. Among the details of the agreement include:

• Cutting business taxes by $1.14 billion over the next six years,
• Cutting the single business tax rate in 2009 from 1.9 percent to 1.85 percent,
• Giving companies an immediate 15 percent credit on the personal property taxes they pay on computers and equipment,
• Giving companies a 100 percent credit in 2006 and 2007 on the personal property tax they pay on equipment if they bring jobs or equipment into Michigan from another state or country,
• Cutting the tax rate for small businesses that pay the alternative tax,
• Phasing out the tax businesses pay on health care over the next five years,
• Raising the amount that sales tax counts in the single business tax assessment from 90 percent to 95 percent beginning Jan. 1,
• Providing $300 million for venture capital investment through the Venture Michigan program, and
• Giving investors who invest in Michigan businesses a 100 percent tax deduction on any profits from those investments that they reinvest in other Michigan companies.

According to the agreement, Michigan will securitize $1 billion in funding the state is owed from the tobacco settlement dollars to pay for job development in the life sciences and high tech industries. An additional $300 million will go towards jobs development from a venture capital investment fund for new development. The plan is intended to revive a Michigan economy that, unlike most of the nation, has yet to recover from an economic downturn and currently has one of the worst unemployment rates in the country.

Department of Human Services Releases Welfare Reform Suggestions

This week the Department of Human Services (DHS) produced a series of recommendations to reform welfare that the department says will increase the chances for Michigan’s poorest families to become self-sufficient. The suggestions were forwarded to a bi-cameral legislative work group that was assembled to address the issue of welfare reform in Michigan.

DHS told the work group that its suggestions would help decrease the number of Michigan families on welfare assistance. That number is currently at 211,402 and is down slightly from the 2004 monthly average of 211,569.

“Work First,” a state program that helps welfare recipients find jobs, is the target of DHS’s suggestions. According to the department, “Work First” should be incrementally replaced by a self-sufficiency plan that would be created and tailored to each individual family. The plan would outline services to be provided -- such as remedial education and skills training—and the family’s responsibilities for receiving them. Sanctions for failing to comply with the requirements, in some cases, would be broadened or toughened, according to the department.

Members of the legislative bi-cameral work group include: Senators Bill Hardiman (R-Kentwood), Alan Cropsey (R-DeWitt), Shirley Johnson (R-Royal Oak) and Irma Clark-Coleman (D-Detroit). The panel also includes Representatives Jerry Kooiman (R-Grand Rapids), Tom Pearce (R-Rockford), Rick Shaffer (R-Three Rivers) and Chris Kolb (D-Ann Arbor).

Michigan Catholic Conference will engage the workgroup to ensure that any welfare reform includes, among other points, that education and job training are a top priority, the elimination of a 12-month limit on education to work incentives, and ardently opposing any imposed family size limitation.

Schools to Receive Assistance for Students Displaced by Katrina

The United States Senate this week passed by voice vote legislation that will distribute to public and non-public schools $6,000 for every enrolled student that was displaced by Hurricane Katrina.

Prior to the vote the Senate addressed similar legislation that would also have appropriated funding to both public and non-public schools—however, the dollars would have been forwarded directly to the school rather than appropriated by a designated local public school district. That measure failed 31-68, with Michigan senators Carl Levin and Debbie Stabenow both voting against the measure. Michigan Catholic Conference expressed displeasure with the failure of this legislation, which would have provided immediate funding to the individual school rather than having to wait for the local public school district to forward the relief.

To date students displaced by Hurricane Katrina have been admitted, free of charge, to schools in the (arch) dioceses of Detroit, Grand Rapids, Kalamazoo, Lansing and Saginaw. Students have also been admitted to other schools associated with the Michigan Association of Non-Public Schools.

Attorney General Rules in Favor of Mexican Drivers

Michigan Attorney General Mike Cox recently ruled that a Mexican resident with a legal Mexican driver’s license could legally drive in Michigan without first having received a state driver’s license.

The decision was handed down after state Senator Cameron Brown (R-Sturgis) and state Representative Rick Shaffer (R-Three Rivers) requested the ruling on behalf of local law enforcement officers who were seeking guidance if Mexican drivers could legally operate a vehicle in Michigan.

In opinion number 7181, Mr. Cox cited a 1943 convention that regulated inter-American traffic, which was signed by the United States and several individual states. Under the treaty, a Mexican citizen driving in the United States must have a valid license and be at least 18 years old.

The Michigan Secretary of State’s website publishes a list identifying the countries with which the Michigan Secretary of State has exchanged letters confirming reciprocal operating privileges.