Around the Dome

by Del Chenault, Senior Vice President, Government Affairs
Scofes & Associates Consulting, Inc. (S&A)

November 2003

SENATE COMMITTEE APPROVES M.E.G.A. EXTENSION
This week, the Senate Commerce and Labor Committee approved a four-bill package aimed at extending the sunset on the Michigan Economic Growth Authority from December 31 to 2009. The package now goes to the full Senate for a vote in the next few weeks.

The current law, enacted in 1994, is set to expire on December 31. Since its inception, M.E.G.A. has provided over $53 million in tax credits to 58 companies for new facility locations or significant expansion. The Michigan Economic Development Corporation estimates these projects have directly created over 11,000 new jobs.

Senator Jason Allen, Committee Chairman, has included a new provision in the extension bills that adds one appointee each from the House speaker and the Senate majority leader to the M.E.G.A. Board of Directors. The arrangement is similar to one added this year to the Department of History, Arts and Libraries.

The legislation also includes provisions to deal with specific corporate projects including an effort to keep a refrigeration plant in Greenville.

However, some new provisions in the bills drew concerns from some officials who said they could discourage businesses from even applying for the M.E.G.A. grants.

One area drawing concern is the provision requiring the Department of Transportation to audit every recipient of M.E.G.A. grants to ensure they were adding the required jobs. Critics stated such a provision could scare businesses away from M.E.G.A. due to overly broad audit powers granted to the Department of Treasury.

Another provision drawing criticism requires M.E.G.A. grant recipients to make "good-faith" efforts to buy their supplies from Michigan companies. Critics stated the definition of "good faith" needs clarification.

The bills are expected to see action on the Senate floor this week.

SENATE PASSES BROWNFIELD REDEVELOPMENT BILLS
The Senate this week passed two new bills that provide new funds to the Brownfield Redevelopment efforts of the state. Supporters claim the changes could spur several new projects that could lead to the creation of 12,000 new jobs.

Under SB 805 and 806, a Clean Michigan Initiative revolving loan program would be established and would make certain Clean Michigan Initiative brownfield cleanup revenue available. The bills will reallocate $75 million to redevelopment projects, with $35 million in a grant program and $40 million in a loan program. The program would continue to be run by the Department of Environmental Quality.

The bills will focus on cleaning up urban brownfields that have signed agreements with developers for projects.

Proponents stated the bills help meet some of the proposals of the Governor's Michigan Land Use Leadership Council report by targeting Michigan's older core urban areas and older suburbs.

BILL ADDRESSING DETROIT BLIGHT READY FOR HOUSE COMMITTEE
A bill that would allow cities to set up a separate hearing process for illegal dumpers and zoning violators was passed by the House Judiciary Committee. The bipartisan package saw testimony this week in the Committee where supporters said it was a key component of Detroit Mayor Kwame Kilpatrick's clean-up efforts. The bills would make it easier to address areas of the city that are plagued with illegally dumped waste, overgrown weeds, and dilapidated buildings.

Under the 7-bill package, cities could set up an administrative hearings bureau to hear cases on violations of the charter or ordinances designated "quality of life" violations. The city would appoint hearing referees, who would be required to have five years of practicing law and training for the position. Currently, the city must take such cases to the 36th District Court, which has little time for municipal civil infractions due to its large backlog of cases.

According to Detroit city officials, the 36th District Court currently allots two half-days a week to hear 300 cases of municipal civil infractions. But during this allotted time, it can only hear a small portion of those cases. A Detroit task force estimated there are 20,000 cases per year of illegal solid waste dumping alone.

Some testified to similar successful efforts in New York City to crack down on small dumping offenses. Some committee members raised concerns about the powers of the administrative hearings bureau, but bill supporters are stressing that it would not be able to do anything that current law does not now allow.

The bills now head to the full House floor for action.

GRANHOLM OUTLINES LAND USE PLANS
Governor Granholm announced a 7-point land use action plan this week that would require Michigan state offices to look first at locating in urban areas. Further, the plans would also require the Department of Transportation to continue both its "preserve first" policies as well as making sure that roads and bridges "fit well within their surroundings."

The action, seen as a first step in meeting the goals of the Land Use Leadership Council report, comes some 2 months following issuance of the Council's final report and a month after a hearing in Senate Committee. The Land Use report contained more than 100 recommendations to help control sprawl in undeveloped areas.

Governor Granholm announced that legislative priorities would include letting local governments form joint planning committees and creating fast-track authorities to get tax-reverted property into the hands of developers more quickly.

The Governor's plan includes the following:

• Instructing state departments to first consider locating any new office buildings or other facilities in urban settings;
• Expanding "live where you work" programs;
• Directing the Department of Transportation to search out "context-sensitive" solutions to all aspects of transportation design and construction to be sure that roads and bridges fit in within their surroundings. The department also will have to continue its controversial "preserve first" policy that puts an emphasis on maintaining state roads and bridges before building new ones;
• Directing the DEQ to design a web-based "one-stop information shop" to help agencies find grant and loan programs targeted at preservation efforts;
• Directing the Department of Environmental Quality to start an internal review of programs it conducts for their potential affect on sprawl; and
• Transferring authority for streamlining the transfer of tax reverted properties from the Department of Environmental Quality to the Department of Treasury
• Engaging community leaders to aid the administration in further refining and developing land use initiatives.

The Lansing Political Landscape
This month, the Governor and legislative leaders received startling news from state revenue forecasters—the recently enacted FY 2004 budget is short over $1.2 billion. This deficit includes a shortage of over $350 million in the school aid fund alone. This announcement came after the budget had been enacted for only 2 weeks.

State leaders are now laying out strategies and plans to deal with this deficit. The Governor continues negotiations with state unions over concession plans to save the state some $250 million. This month, two of the largest unions relented and agreed to pay concessions. However, two unions more recently denied the Administration's plans. This places the Governor in a precarious political position as she balances relationships with core supporters-union members-while trying to satisfy state constitutional demands for a balanced budget.

Meanwhile, the Governor announced another round of Executive Order cuts aimed at reducing the school aid grants by $195 per pupil or $349.7 million. The cuts are being heavily criticized by the education community—primarily the Michigan Education Association, the state's largest teachers union. Following the release of the EO, the Governor announced that she wants to work with legislators on alternatives to minimize the impact on schools of reduced state revenues.

These looming deficits and budget cuts have set up an interesting political dynamic between the Governor and the legislature as each looks for new revenue streams and economic stimulus.

The Governor has announced a new "Manufacturing Matters" summit to be held in December. The summit will be aimed at focusing state resources on the state's beleaguered manufacturing sector. Recently announced economic data indicated that one of every four manufacturing jobs lost nationally in the past 2 years has come from Michigan.

Legislative leaders, meanwhile, have announced several bill packages that mainly focus on tax incentives for manufacturing companies in an effort to create jobs. The struggling tool and die industry would be exempt from most state taxes and new small businesses could operate largely tax-free under legislation proposed by legislative Republicans.

Republicans also called for reauthorization of the Michigan Economic Growth Authority, which expires after this year, as well as work on a plan to exempt health care costs from the Small Business Tax.

The Administration has already criticized many of the proposals as costing the state revenue at a time when it can least afford it.

This sets up a political showdown as the Governor is forced to cut state spending while the legislature looks to cut taxes and reduce some revenue streams even further. Certainly, tough negotiations lay ahead.

BOMA'S KEY STATE LEGISLATIVE ISSUES
The BOMA Governmental Affairs Committee reviewed and discussed major issues facing its membership in the state legislature. The GAC chose the following issues to be lobbied and monitored by BOMA lobbyists Steve Scofes and Del Chenault.

Service Taxes—BOMA strongly opposes any type of new service taxes in Michigan. The recently enacted budget did NOT include any new service taxes even though many fees and taxes were enacted to help offset the state's $1.8 billion budget shortfall.

SBT—BOMA supports efforts to further reduce the SBT in Michigan or maintain the tax at its current level. The package of bills that will exempt health care costs from the SBT cleared the Senate Finance Committee and now move to the full Senate for action.

MOLD—BOMA promotes high standards to protect the health and safety of building occupants. However, BOMA opposes state initiatives to write model building codes and standards regulating mold and moisture. GAC Chairman Bruce Babiarz and BOMA lobbyists Steve Scofes and Del Chenault are convening a committee to write legislation that addresses BOMA needs and concerns. BOMA lobbyists continue to monitor current legislative packages already introduced that are seen as hostile to BOMA. At this time, no committee hearings are currently scheduled on those bills.

UTILITY DEREGULATION—SK&A lobbyists are following a proposed package of bills being pushed by DTE that would rescind electric deregulation passed in 2000 under PA 141. DTE's plan would effectively end competition and electrical choice for all customers using under 1 megawatt. Further, the bills would allow DTE to charge class specific transition charges that would greatly increase rates for commercial customers.

Also, the PSC released its report this month on the effects of the blackout in Michigan. The report placed much of the blame on Congress for not appointing a regulatory authority over the entire system. The report also found that no Michigan companies were to blame for the outage and that all Michigan companies responded properly.

URBAN SPRAWL/SMART GROWTH—BOMA encourages the use of the Brownfield law for redevelopment of urban areas and adaptive re-use of obsolete building. As mentioned previously, the Governor announced several initiatives related to the Land Use Council Report. The Senate also held its first hearing on the report with no planned action on the Governor's recommendations.

MEDC FUNDING CUTS—BOMA Michigan is opposed to efforts to reduce or eliminate funding for the MEDC. As reported previously, the legislature is moving on a bill to reauthorize the Michigan Economic Growth Authority, the major tax incentive body for the state economic development efforts. Also, the Governor appointed a new MEDC CEO, Don Jakeway, former economic development officer for the state of Ohio.

BROWNFIELD TAX EXTENSION—BOMA applauds the Michigan legislature for extending the Brownfield Tax Credit last year through 2008. This is the type of tax law that will spark urban development and curtail suburban sprawl. We encourage the state to invest more in brownfield development as future funding allows. As reported previously, the Senate has moved on a two-bill package that targets an additional $75 million for brownfield redevelopment efforts as well as creating the Clean Michigan Initiative revolving loan fund for use by local governments to ready brownfield sites for development.

Read previous Around the Dome reports

The "Around the Dome" newsletter is written monthly by BOMA's Michigan lobbying firm Scofes-Kindsvatter & Associates (SKA) for BOMA members to be aware of key issues in Lansing. In addition, SKA is monitoring top issues identified by the Government Affairs Committee. If you have comments on the newsletter or BOMA issues, please direct them to GAC Chair Bruce Babiarz at bruce.babiarz@bartonmalow.com or Cynthia Andary of BOMA staff. We welcome your comments and questions on BOMA advocacy issues.