April 16, 2019 – For Immediate Release
The Northern Michigan Chamber Alliance is daring to go where very few in the public policy arena have – developing a legislative agenda aimed at advancing rural Michigan communities. Called the “Four Pillars of Rural Prosperity,” the Chamber Alliance’s statewide legislative agenda for 2019-20 seeks to increase economic development tools that will address the major barriers to sustainable economic growth such as, housing, talent attraction and access to child care.
“For businesses and communities to thrive in Northern Michigan, we need to establish a basic foundation for success with right-sized programs and incentives that can work for our region,” Chamber Alliance Government Relations Director Kent Wood said. “Our ‘Four Pillars of Rural Prosperity’ approach will create additional tools for Northern Michigan businesses and communities to help achieve sustainable economic growth and improve the quality of life for our residents.”
Specifics of the Alliance’s state legislative agenda for the next two years include:
Rural Business Development
· Seeking parity for state business incentives to help rural areas compete with larger population centers.
· Research and development tax credit programs specific to rural areas.
· Rural tax credits that incentivize new jobs and investments in emerging industries.
· Addressing rural infrastructure needs including high-speed internet and air service growth.
Talent Attraction to Rural Areas
· Creating tools to attract top professional and skilled employees including intern and apprentice tax credits.
· Rural relocation incentives to draw in talent from other states/overseas.
· Improving rural health care services as a quality of life indicator and recruiting tool, especially for younger families.
Rural and Small City Housing Development
· Creating incentives for rural employers to offset housing costs through new development, building rehabilitation, vouchers or down payment programs.
· Creating PILOT (payment in lieu of taxes) programs allowing rural areas and small cities to work directly with developers to incentivize workforce housing.
Access to Quality Child Care
· Advocate for ways to make opening and maintain child care centers more achievable.
· Increasing technical assistance to new child care providers and creating an ombudsman role to assess compliance and regulatory inconsistencies across the state.
· Incentivize options for employers to provide on-site child care or through multi-employer cooperatives.
Wood noted that while progress on these issues will require working through complex policy challenges with state lawmakers and regulators, the Alliance will offer common sense solutions to these challenges that will be effective not only in Northern Michigan, but in rural areas and small cities throughout Michigan.
“The challenge for our region is using growth in traditional industries like tourism and agriculture to springboard and bolster emerging industries like health care, technology, advanced manufacturing, and environmental research,” Wood said.
Business interests and members of the public can follow the Alliance’s progress on its legislative agenda by following the Chamber Alliance’s Northern Michigan Business Blog at https://nmichiganbusiness.com/ or follow their Chamber’s legislative updates.
About the Alliance
The Northern Michigan Chamber Alliance spans 14 counties and represents nearly 8,000 members of Northern Michigan’s business community. It’s composed of the Chambers of Commerce in Traverse City, Alpena, Benzie County, Cadillac, Charlevoix, Gaylord, Manistee and Petoskey and the Lake Superior Community Partnership in Marquette County. Associate members include the chambers in Elk Rapids, Harbor Springs, Boyne Area, Cheboygan, Sault Ste. Marie, and East Jordan.
Issue: Experts claim that Michigan is still not allocating enough resources to its transportation infrastructure, primarily roads and bridges, despite a recent gas tax and license fee increase, and $600 million more being allocated from the state’s general fund.
Proposal: Governor Whitmer proposes a 45 cent increase in gas tax – dedicated to a new fund for roads called the Fixing Michigan Roads Fund.
Alliance position: Developing a set of regional guiding principles for the impending legislative debate on road funding revenue increases.
Before 2011, business income from partnerships, LLCs, and all corporations was taxed at the same rate. In 2011, the law was changed and reduced the rate for partnerships, LLCs, and S-Corps to 4.25%, while all other corporations were taxed at 6%.
As Michigan’s economic growth has continued to climb over the past decade, non-corporate businesses – most of Michigan’s small and mid-sized companies – have gone from contributing $400 million annually to $800 million in annual revenue to that state of Michigan. In short, it has been a win-win for Michigan small businesses and the State of Michigan.
Details on the Governor’s proposal:
◦ The proposal would tax pass-through business entities at 6% – up from 4.25%
◦ Will mean $280 million in new business taxes for partnerships, LLCs and S-Corps.
◦ The administration believes the cost to business will be much less, as business will be allowed a credit on federal taxes
◦ The proposal includes an individual income tax credit for owners to presumably avoid double taxation
◦ The administration believes this will largely cover the repeal of the tax on retiree pensions, which she has also proposed as part of the FY ’20 budget.
Alliance position: Opposed to any business tax changes at this time, especially those made in the 2011 tax reform law. Michigan went from a business tax climate grade of 49th in the nation in 2012 to consistently inside and around the Top 10 according to The Tax Foundation. We believe Michigan should continue to nurture and maintain that positive momentum.
Proposal: The Governor is recommending a two-year, tuition-free plan to ensure every Michigander has a real path to get the skills or education they need to land a good paying job. Under this plan, Michiganders will have the opportunity to improve their skills at any point in their life with two years of tuition-free postsecondary education or skills training.
The program consists of 3 components:
1) Michigan Reconnect Grant Program – tuition-free training for non-traditional students who are at least 25 years old to receive a credential, certificate, or an associate degree. (Summer 2019)
2) Michigan Opportunity Initiative – 2 years tuition-free at a community college. (Fall 2020)
3) Michigan Opportunity Initiative – 2 years of tuition assistance at a 4-year public or not-for-profit college. (Fall 2020)
Michigan Reconnect Grant Program
Michigan Reconnect Cost Estimates
The Michigan Reconnect grant program is expected to cost $50 million annually and will serve an estimated 51,100 students. A total of $110 million is being recommended for this program in an FY 2019 supplemental request. Of this amount, $60 million in unspent funds designated for the Marshall Plan will be repurposed for this program, and $50 million in general fund will be deposited into the Talent Investment Fund in FY 2019 to cover the remaining amount. This is projected to cover the costs of the program through FY 2021.
Michigan Opportunity Initiative
The Michigan Opportunity Initiative will provide graduating high school students with two years of tuition-free postsecondary education at a community college or tuition assistance for the first two years at a public or private not-for-profit four-year institution. This program will be available to students beginning Fall 2020.
Alliance position: Position under development
The Governor proposes $235 million to increase the per-pupil foundation allowance by $120 to $180 per-pupil, distributed through a 1.5x formula at a cost of $235 million. Total state funding for the foundation allowance exceeds $9.4 billion. The minimum foundation allowance will increase to $8,051 per pupil, an increase of 2.3%; the basic foundation allowance will increase to $8,529 per pupil, an increase of 1.4%.
This reduces the gap between the minimum and maximum foundation allowance to $478 (A record low).
Alliance position: For now, we continue to support the 2x funding model. There is a strong precedent for 2x funding and we should continue that path.
For more information on Governor Whitmer’s FY 20-21 budget proposal, consider the following resources:
From March 13-14, 2019, the Chamber Alliance’s Director of Government Relations Kent Wood attended the annual Washington, DC fly-in with the Great Lakes Metro Chambers Coalition. While in the nation’s capital, Kent had the chance to meet with federal officials about a number of topics important to commerce in the Great Lakes region, including two topics of importance to northern Michigan’s economy.
When the President Trump’s budget was released in early March, it included a $75 million appropriation for the Soo Locks and a pleasant surprise to members of the Coalition.
“I didn’t think we’d get anything in the budget for the Soo Locks,” stated Jim Weakley, Executive Director of the Lake Carriers’ Association. Weakley felt that, while the President has openly declared his support for adding a new large freighter sized lock in northern Michigan, that we wouldn’t see any appropriation for it initially in the President’s budget. “I’m more than happy to eat that crow one small bite at a time,” he joked.
The new lock project has an overall price tag just shy of $1 billion. While we don’t expect all of those funds to be appropriated at one time, we hope to expect similar appropriations over the life of the project. This means that, while the project currently continues to move forward at an exciting and historic pace, it will continue to require a consistent effort by advocates for a number of years to keep funding appropriated by Congress to move the project forward in a timely manner.
Trade Policy: United States-Mexico-Canada Agreement (USMCA) and Tariffs
Ambassador C.J. Mahoney, Deputy U.S. Trade Representative, and a key negotiator on the United States-Mexico-Canada Agreement (USMCA) was blunt in his assessment that he believes the USMCA needs to happen. The Deputy ambassador was addressing members of the Coalition about the need for the USMCA’s ratification by Congress, which, despite significant priority and outreach efforts from the Administration, is uncertain at this point.
USMCA is an update of the North American Free Trade Agreement (NAFTA) deal between Canada, Mexico and the United States that dates back to the mid-1990s. The Trump Administration made waves last year when they threatened to pull out of the decades-old deal if the three sides could not reach an agreement on an update.
According to the Ambassador, the agreement is very similar to NAFTA, but includes a number of concessions from Mexico and Canada that make the deal better for the United States, including raising labor standards in Mexico, a new section on digital trade, and stronger enforcement of Intellectual Property standards.
Officials expressed they were working to remove the tariffs as soon as possible, but stopped short of giving details about a firm deadline. They shared that they realized that some U.S. businesses were feeling the pinch from the tariffs, and promised they were working as fast as possible to reach an agreement. The President felt tariffs were the best way to address steel dumping and other trade violations from China that had been going on for years. The Metro Chambers Coalition also had some time with officials from the White House economic team, which has also been hard at work educating Congress on the new USMCA trade deal. Kent shared with officials the challenge for northern Michigan’s small and mid-sized manufacturing sector with the Sec. 232 Steel and Aluminum tariffs imposed by the administration last spring and asked for a timeline on when we could expect the tariffs to be removed.
You can have an impact by contacting the White House and talking about the importance of removing tariffs as soon as possible. Here is some more background.
You can continue to follow the work of the Great Lakes Metro Chambers Coalition here.