Gov Orders 20% of State Contract Spending To Go To Disadvantaged Businesses
Michigan’s technology and budget department would need to dedicate at least 20% of state contract spending to Geographically Disadvantaged Business Enterprises (GDBEs), like those owned by residents of color and women, under the Governor’s latest executive directive. 

According to Gov. Gretchen Whitmer, who spoke Friday in front of the Michigan Minority Supplier Development Council in Detroit’s Rivertown-Warehouse District, the state of Michigan ordered $3.4 billion of contracts. She indicated how the goal of her executive directive is to address how "a minimum of 3%, not big enough, goes to geographically disadvantaged business enterprises, or GDBEs." 

"This includes Michigan firms owned and operated by people of color, women and businesses from underserved areas like small towns and inner cities. The program empowers folks who’ve been left out of the contracting process," Whitmer said. "I think now’s the time to raise the bar, and that’s what this executive directive is all about." 

Ultimately, the executive directive Whitmer signed today will require the Michigan Department of Technology, Management and Budget (DTMB) to set a goal that 20% of all expenditures from state departments and agencies be awarded to GDBEs starting in the Fiscal Year (FY) of 2024. 

Other speakers at last week’s event consisted of Detroit Mayor Mike Duggan, House Speaker Tate, Lt. Gov. Garlin Gilchrist II and Sen. Erika Geiss (D-Taylor), the chair of the Michigan Legislative Black Caucus. 

"In this American story, we have seen so many businesses have a path to that next step of growth, to go from being a risky enterprise to a growing concern, because they were able to work with governments," Gilchrist said. "So early in our administration, we made a commitment to having that be a more viable path for a wider swath of businesses, from a broader set of areas all across the state of Michigan." 

With "Growing Concern" signaling trust in a company’s foreseeable future, Gilchrist said the executive office in Michigan set a commitment of wanting more people to be "part of our shared prosperity." 

Chief Executive Officer Michelle Robinson of the Michigan Minority Supplier Development Council and Sylvester Hester, the chair of the Global Automotive Alliance, also spoke at today’s event. 

Robinson illustrated how, based on national research from the U.S. Department of Commerce, up to $8 trillion has been left on the table "because we’re not as inclusive as an economy as we should be." 

She additionally said her council has accepted a state enhancement grant allowing them to assist and provide funding and capital assistance in the range of $25 million for Michigan minority-owned businesses. 

"There’s an additional pipeline of $125 million just with the team that we have, with the grant that we have, from the state," Robinson said, adding how today’s executive directive signing "takes that to a new height." 

‘Inflation Relief’ Checks Added to Latest Income Tax Proposal
An “inflation relief check" has been wrapped into a broader tax relief package Gov. Gretchen Whitmer and legislative leaders have agreed to, according to a press release issued this afternoon that heralds the plan as the “largest tax break in decades.” The size of the check was not released, but is being viewed as a replacement for a permanent income tax cut.

Whitmer and Democratic legislators have agreed on eliminating the income tax on public and private pensions, an Earned Income Tax Credit (EITC) that could equal $3,150 for the average low-income worker and the aforementioned “inflation relief check.” A rollback of the state income tax is not being highlighted as part of the Governor’s plan as new questions have arisen about the permanency of the tax cut created in the 2015 road funding plan.

As to whether any General Fund money will be transferred from the General Fund into the Strategic Outreach and Attraction Reserve (SOAR) Fund, which would block the income tax rate rollback trigger, Whitmer told reporters this afternoon, "There are a lot of different pieces that we are still working through." 

"We recognize that Michigan is on the cusp of landing a lot of . . . economic development that will create good-paying jobs, not just for today, but for the long-term," Whitmer said to the media. "Continuing our work to make sure that Michigan is competitive and we win is also important, and that’s a shared value." 

Whitmer said the bill for the "Lowering MI Costs" plan, which she previewed during her State of the State address in January, will be voted on soon with more information being released on Monday.

Republicans had wanted an income tax rollback that is being triggered through a 2015 law to go through, with estimates having the state’s 4.25% rate going down to 4.05%. However, Dykema attorney Steve Leidel is questioning if that 2015 law is constitutional. 

Rep. Sarah Lightner (R-Springport), the ranking Republican on the House Appropriations Committee, senses that Democrats are using the one-time checks as a way to circumvent the permanent income tax rollback. 

“Don’t let the Governor’s shell game fool you,” Lightner said. “Handing out one-time checks to Michigan taxpayers is nothing more than a ploy to distract people from the permanent income tax rollback she’s blocking.”

The joint press release from Whitmer, House Speaker Joe Tate (D-Detroit) and Senate Majority Leader Winnie Brinks (D-Grand Rapids) came out immediately before Whitmer signed an executive directive in Detroit to prioritize that at least 20% of money from state contracts is awarded to geographically disadvantaged business enterprises, consisting of businesses owned by residents of color, women and those in small towns and inner city communities. 

Tate was in attendance as well at today’s Detroit press conference. 

The joint press release highlighted that nearly 500,000 households will be benefited by an average of $1,000 per year through a "repeal (of) the retirement tax." 

Based on a 2021 report that more than 1.72 million Michigan residents were 65 years old and over, the presented number could have a positive impact on more than 28% of the state’s senior community. 

The vehicle for this change appears to be HB 4001, which was sent to a joint House-Senate conference committee this week. However, Tate did not say if the conference committee would soon be delivering the "Lowering MI Costs" Democratic bill. 

"There’ll be additional information next week," Tate said. "But as what the Governor said, the priority is going to be ‘how are we providing immediate tax relief.’" 

A member of Whitmer’s team relayed information on Sen. Kevin Hertel (D-St. Clair Shores)’s 
SB 1, which would reinstate tax-free public pensions and offer exemptions on employer-provided annuities and employer donations and matches for 401(k)s. 

Under Hertel’s legislation – that passed 23-15 in the Senate on Jan. 26 and would start in the 2023 tax year – seniors could either use the new exemptions, if their retirement income qualified, or access $56,961 for a single return and $113,922 for a couple through non-restricted deductions. 

As for the EITC expansion, which the Governor renamed the "Working Families Tax Credit," the press release stated the latest plan will put $3,150, on average, into the pockets of 700,000 Michiganders. 

SB 3, legislation expanding the EITC to 30% of the federal credit, would have offered an estimated total of up to $3,000 in aid when combined with the federal EITC. 

Whitmer said the upcoming plan is "about over $3,000 in the pockets of 700,000 families in Michigan. A million children live in those households, and so this is going to be a huge deal for families." 

"The repeal of the pension tax, the retirement tax…as well as rebates to every family, every taxpayer so that we recognize inflation and what it has cost and what it has meant so that we can help people now," Whitmer said. "I anticipate and look forward to partisan support because this is one of those opportunities that I think everyone in the Legislature is going to want to be a part of." 

Senate Minority Leader Aric Nesbitt (R-Lawton) said, "Senate Republicans are cautiously optimistic that Gov. Whitmer may finally be heeding our call for immediate inflation relief for Michiganders. But when it comes to lower taxes, her actions have too frequently failed to match her words.

“Michiganders are tired of playing Charlie Brown while the Governor plays Lucy, pulling away tax relief at the last second.”

Bills on Delivery, Installation Charges Back This Session
Republican senators hope clarification in statute can be achieved this session over taxation of products billed on a receipt separate from the sale, an issue that has come up in recent sessions without resolution.

Two bills were introduced in the Senate on Wednesday that would amend the General Sales Tax and Use Tax acts to exempt certain delivery and installation prices if those charges were separately stated on the invoice, bill of sale or similar document given to the buyer.

Sen. Mark Huizenga (R-Walker) told reporters Thursday that SB 48 and SB 49 provide clarity over the taxation involving charges for the delivery and installation of products. Clarity for businesses is also part of the idea behind the proposal.

"Providing clarification is really one of the things that we can and should do," Mr. Huizenga said, adding that ambiguity has remained in the law for a long time and it is time to address the matter.

Under current law, delivery and installation charges incurred before the completion of transfer of ownership are included in the tax base and are generally taxable. Delivery and installation are generally not taxable if the charges are incurred after the transfer of ownership.

Last session, similar legislation was introduced and passed by the House but did not come up for final votes on the Senate floor.

The Department of Treasury opposed the proposed changes last session, with officials testifying they had concerns over the estimated $60 million per year revenue loss if it were to become law.

"All of our decisions here have implications, but the bills hold the School Aid Fund harmless, and doing that is important to all of us," Mr. Huizenga said.

Delivery has been taxable in Michigan since 1979, and installation was made taxable in 2004.

With the state working with a multibillion-dollar surplus, he said the state can absorb and address such issues.

"This is the time to make these kinds of fixes, to hardwire these kinds of changes into policy," Mr. Huizenga said.

Mr. Huizenga added he could see the proposal garnering bipartisan agreement, pointing out the House bills last session passed that chamber 69-34.

"These are good and easy bills. It should be something that everybody should get behind," Mr. Huizenga said.

The intent of the bills is to enable businesses to consistently apply sales and use tax and to address confusion that some businesses experiences in administering the taxes.

Senate Minority Leader Aric Nesbitt (R-Porter Township) told reporters Thursday he supports the proposed changes.

"It’d be nice to get a better clarification on saying that you shouldn’t be taxing sales tax on services in the state of Michigan," Mr. Nesbitt said.

He said the process of taxation in such matters is complicated and convoluted, making it difficult for customers and businesses to understand what is meant to be taxed.

Mr. Nesbitt said he opposes taxing people on services at all, adding he is willing to work through the issue by negotiations to get the bill to the governor’s desk.

The bills were referred to the Senate Finance, Insurance and Consumer Protection Committee.


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