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Round-Up of Legislative News

Early Retirement Bills Move in the Senate

Senate Panel Moves Public Employee Health Reform Bill

Congress Should Act on Estate Tax Reform

 

Early Retirement Bills Move in the Senate



A revised version of the Governor’s early retirement package for state and public school employees recently cleared the State Senate on an almost party-line vote.

Sen. Mickey Switalski was the lone Democrat to cross the aisle to support the Senate Republican version of the plan.  As written, it is estimated that the package would save over $225 million in next year’s state budget.  (It should also be noted that Sen. Switalski was the only Democrat to vote to reject the state employees 3 percent wage increase.)

Although the Senate bills deliver less savings than what was originally proposed by Gov. Granholm, the ten year forecast estimates nearly $3 billion in savings.  The Senate Republicans led by Senate Majority Leader Mike Bishop, and Sen. Switalski should be applauded for taking action on this important step to deliver cost saving reforms.

It is still unclear if the State House will take up the Senate bills or similar bills in their own chamber.  We are encouraged by this latest development and will continue to push this plan and other reform efforts.

Senate Panel Moves Public Employee Health Reform Bill



Also this week, a Senate committee moved bills that would require public employees to pay at least 20 percent of the cost of their health insurance bill.

The bills would bring public employees more in line with what private sector employees pay for their health insurance.  (Currently public employees pay less than 10 percent of their insurance costs.) 

It still remains to be seen what will happen on the Senate floor.  Like the state employee pay raise issue last month, one of the bills requires a two-thirds majority to pass.

SBAM testified in support of the bills last month and we will continue our efforts to support passage.

Congress Should Act on Estate Tax Reform



Now that health-care reform is complete, Congress needs to turn its attention to estate tax reform.

If Congress does not act, the estate tax—which is now repealed because lawmakers could not reach a policy agreement last year—reverts back to its 2001 levels in 2011—with a top tax rate of 55 percent and a $1 million exemption. This is more restrictive than the solution most Democrats support, which would keep the 2009 rate of 45 percent and exemption amount of $3.5 million.

There is also a proposal that would permanently raise the exemption to $5 million and set the top tax rate at 35 percent, with the exemption indexed to inflation.  While SBAM prefers a repeal of the estate tax, the proposals that are out there will certainly be better for small business owners and their heirs than if Congress fails to act.

We will keep you updated on this important issue.



SBAM gets national visibility for its opposition to sales tax on services

SBAM’s President and CEO Rob Fowler was featured recently in The New York Times and ABC World News with Diane Sawyer.

 


An excerpt from The New York Times article:

 

Though some say the proposed service taxes face opposition too fierce to succeed in many places, particularly in an election year, even some of the most ardent opponents predict that some of the taxes will scrape through. The current budget misery will probably “push the idea over the edge” in at least some states, said Robert D. Fowler, president and chief executive of the Small Business Association of Michigan. “And they won’t be any better off for it, either,” said Mr. Fowler, who added that his members detested the notion. “It’s the wrong time, in the heat of just trying anything to find money, to have this discussion. “Yes, we need more money, but is this a step toward turning the economy around?” Mr. Fowler asked. “Taking more money out of peoples’ pockets? Putting more burdens on small business? It doesn’t seem like a recipe for a state turnaround.”

And, an excerpt from the ABC News video report:

 


"Adding a new tax burden to our citizens and our small businesses at a time when the state is hurting so badly doesn't make a lot of sense," says Rob Fowler of the Small Business Association of Michigan, "I would say it's bad for business, it's bad for consumers, and it's bad for Michigan."

What do you think about Michigan’s proposed sales tax on services? Leave a comment below or tell us more in our sales tax on services forum.

 






SBAM tops 8,900 members

The Small Business Association of Michigan’s (SBAM) statewide membership topped 8,900 in March, up 184 members from February.

“Even in this challenging economy, small business owners are demonstrating that they believe in the power of numbers and they believe in supporting SBAM’s mission of championing small business before lawmakers in Lansing,” says Barry Robinson, SBAM’s vice president for sales and marketing.

SBAM is the only statewide and state-based association that focuses solely on serving the needs of Michigan’s small business community. It has been successfully serving small businesses in all 83 counties of Michigan since 1969. Small business owners can join the fight by clicking here.

 


Beware misinformation about the new federal health care law – get the facts from SBAM

As a service to Michigan small business owners, SBAM, with the assistance of our national affiliate the National Small Business Association (NSBA) has compiled answers to the following list of Frequently Asked Questions about the new federal health care law.

A key finding from SBAM’s and NSBA’s research: despite what you may have heard, health insurance is going to be more expensive, not cheaper, under the new law.

Please use the social networking tools at the bottom of this article to forward this information to your small business colleagues. And we want to know what you think of the new law and how it might affect your small business. Engage in our online Forum!

FAQs:

1. As a small business owner, will I be required to provide health insurance to my employees and their dependents?

 


    a. There is no “employer mandate” to provide health insurance. However, the new law does have a so-called “free-rider” provision that only applies to small businesses with more than 50 employees and begins in 2014. Here is how it works with a couple of examples:
         i. Employers with more than 50 employees who DO NOT OFFER insurance to their employees, but at least one employee receives a federal premium subsidy through the new exchange, will be required to pay a penalty of up to $2,000 per employee for each employee over 30 employees.  
              1. For example, Acme Inc. does not offer health coverage to its 57 full-time employees. Five of its employees qualify as low-income and thus receive premium subsidies through the new Exchange. Acme will be required to pay a $54,000 penalty (57 employees minus 30 employees = 27 employees, multiplied by $2,000 = $54,000).
         ii. Employers with more than 50 employees who DO OFFER insurance to their employees, but have at least one employee receive a federal premium subsidy through the new exchange will be required to pay the lesser of $3,000 for each employee receiving a premium subsidy OR $2,000 for each full-time employee.
         1. Using the same example as above except Acme Inc. does offer health coverage to its 57 full-time employees. Five of its employees qualify as low-income and thus receive premium subsidies through the new Exchange. Acme will be required to pay $15,000 (The lesser of 1.) $3,000 X 5 employees = $15,000, and 2.) 57 employees X $2,000 = $114,000)

 



2.    How are full-time employees defined and do part-time or seasonal employees count toward the free-rider provision?

 


    a. Full-time employees are defined as those working at least 30 hours a week. Additional guidance is expected on how to address employees that are not paid on an hourly basis. Employers can carry over 50 employees (including part-time, seasonal and full-time) and not be counted as such as long as they don’t work longer than 120 days out of the calendar year. Seasonal workers are counted as full-time employees if they work more than 120 calendars days in the year. Part-time employees are counted as “full-time equivalent” employees by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.
         i. For example, Acme has 48 full-time employees and three part-time employees that work 10 hours a week. The three part-time employees’ aggregate number of hours for the month is 120 hours, which is considered to be one

SBAM President featured in WKAR public radio report on the value of economic gardening in Michigan

SBAM President and CEO Rob Fowler appeared on a WKAR radio “reworking Michigan” program that examines job creation and workforce evolution in Michigan. Excerpt:

“Fowler says in the aftermath of its manufacturing golden age, Michigan's future job growth will happen in small and midsize companies--- many of which are already here.”

Listen to the audio report online by clicking here.

 




State Employee Pay Raise to Go Through

The scheduled 3% pay raise for the state’s unionized employees will take effect this fall.  The state Senate tried unsuccessfully for a third time to overturn the raise.

The third vote was the same as the second, 23-15 in favor of rescinding the raise.  However, the vote requires a two-thirds majority to pass (26 “yes” votes).  The state House never took up the measure. 

The vote to obtain the majority needs to happen before April 11, and neither chamber is scheduled to be in session until April 13.  Therefore, the raise will go through as scheduled.

Recall that as part of the governor’s budget non-unionized employees had their 3% raises rescinded.  The measure would have saved the state $83 million. 


Governor’s Early Retirement Bills on Hold

As part of Gov. Granholm’s budget plan, she proposed an early retirement proposal for teachers and state employees.  It is estimated that the measure would save more than $300 million.

The Governor hopes to see the measures pass soon so that retirees and schools can plan accordingly for the upcoming year.  A Senate committee reported their version of the legislation to the full Senate.  However, the votes weren’t there to pass it, so no vote was taken.

Over in the House, testimony has been taken on the bills, but it has not yet moved out of committee.

The legislature adjourned for a two-week break and is not due back until next week.  Gov. Granholm and legislative leaders have been discussing the measure over the break and hope to move something upon their return.  We will keep you updated on the progress of the bills.


SBAM Expresses Opposition to Bill Banning Credit Checks for Hiring Decisions

A bill that would prohibit businesses from using credit checks with regard to employment decisions was taken up before the House Labor Committee.

Proponents of the bill argue that it is unfair to look at a prospective or current employees’ credit history when making employment decisions.

SBAM argues that the bill is an intrusion on the employee-employer relationship and the government should play no role. 

While many businesses do not use this tool in making employment decisions, others do.  Credit checks allow businesses to verify employment histories and provide other useful information to the employer.

There was no vote taken on the bill.  We will keep you updated on its progress.


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