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Michigan’s State of the State: The Good and the Bad

February 6, 2020

By Brian Calley

Roads dominated the headlines following the Governor’s State of the State Address. Her $.45/gallon gas tax increase proposal last year didn’t go anywhere. In fact, it didn’t even get introduced in the legislature which means that there was not a single Republican or Democrat who supported it enough to put their name on it. Discussions with the legislature deteriorated after the entire budget process broke down.

This year, the Governor pivoted to a strategy where the borrowing capacity of the Michigan Transportation Fund is utilized at $3.5 billion. The problem is, borrowing by Governors Engler and Granholm is exactly how we got into this mess in the first place.

The Governor’s borrowing plan will use the funds to fix state trunk line roads (M, US or I roads) for the next few years and then use road maintenance money over the next 25 years to pay it back. This will result in a short term improvement in some state road conditions, followed by a rapid decline. No matter how well you build the roads, they won’t last if you do not have the money to maintain them. One of the other weaknesses in the plan is that none of it will be spent on local roads, which are in far worse shape and comprise 92% of the roads in Michigan.

SBAM supports a wide range of options to fix and rebuild our roads, but favors a user fee style system such as gas taxes or registration fees. SBAM would also support reprioritization of General Fund dollars to supplement the roads budget. The only option SBAM outright opposes is borrowing without an identified repayment source.

We were delighted to hear the Governor focus on making high quality childcare more accessible to parents wishing to enter the workforce. This has become a critical issue in addressing the labor force shortages being experienced in most industries and in most areas of the state. The Governor’s immediate plans are modest in expanding access, but we are working with her team and others in the business community to do a lot more with public private partnerships in the future.

Community College
The Governor has continued to advocate for expanded access to Community College and high value career certificates for both graduating seniors and adults returning to work. SBAM has been actively supportive of the Governor’s Reconnect and Mi Opportunity Scholarships as a scaled response to the workforce shortages being experienced in nearly every sector of our economy. This support is, however, conditioned upon the restoration of the skilled trades training fund which was vetoed in the previous budget. These programs together promise to have a substantial impact across all or most industries.

Mandatory Overtime Rule
Unfortunately, the Governor is proposing a substantial increase in the mandatory overtime income levels. As you may be aware, the federal government recently increased mandatory overtime levels to $35K nationwide. Now, the Governor is proposing increasing that number to $55K here in Michigan, which would make our state one of the most expensive in the US. SBAM is opposed to this proposal on the grounds that it would make Michigan less competitive and because it bypasses the law making process in proposing the change.

Payroll Fraud Task Force
Last year a legislative bill package and a task force in the Attorney General’s office both sought to address what supporters call “payroll fraud.” We see the task force as a solution in search of a problem at best. At worst, it is a criminalization of payroll errors. And upon closer review, the legislative package increases payroll fraud penalties and severely limits the ability of business to use subcontractors.

As usual, this state of the state address includes items that we support and items that we oppose. At the Small Business Association of Michigan we focus on the issues, not the party or the person. We look forward to partnering with the Governor in areas where we agree and respectfully opposing her policies that we disagree with.

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