Late-March 2025 Newsletter

House Moves Road Funding Plan Telling Senate to Get Onboard
The House passed a nine-bill package on Wednesday to provide $3.1 billion for a long-term road funding plan, and although House Republicans insist it’s revenue neutral, Democrats argue the plan could have massive ramifications on the budget.

The legislation passed with bipartisan support, though Democrats objected to the proposal, saying that Republicans were playing shell games with state dollars.

"We’re going to prioritize fixing our local roads over giveaways to a select few corporations, the most connected corporations in the state," House Speaker Matt Hall (R-Richland Township) said. "We’re going to prioritize fixing our roads … We’re infusing over $3.1 billion of new money into roads, and that’s basically doubling the amount of money that’s goes into roads."

The package includes HB 4180, HB 4181, HB 4182, HB 4183, HB 4184, HB 4185, HB 4186, HB 4187 and HB 4230.

House Minority Leader Ranjeev Puri (D-Canton Township) said the plan, as passed, was a non-starter.

"Without a fully baked plan, this is just a terrible use of our state dollars," Puri said. "The plan should be to have everyone at the negotiating table to have an earnest negotiation."

The plan moves all $2.2 billion generated by the Corporate Income Tax and to road funding. This includes the more than $1 billion currently earmarked for corporate incentives and housing. Then, the proposal ends the practice of collecting sales tax on fuel and increases the fuel tax a corresponding amount – revenue neutral for drivers but putting about $1 billion more toward roads.

Currently, roughly $1 billion of Corporate Income Tax revenue is divided between the General Fund, the Housing and Community Development Fund, the Revitalization and Placemaking Fund and the Strategic Outreach Attraction and Reserve Fund.

To backfill those funds, the plan calls for increasing the Michigan Business Tax, which would effectively eliminate Michigan Economic Growth Authority credits freeing up $500 million for the state. The plan would also eliminate the $500 million currently going to SOAR. An additional $600 million would come from higher-than-expected state revenues and another $500 million would come from eliminating budget earmarks.

The sales tax on fuel currently generates funds for the School Aid Fund and statutory local revenue sharing. To hold that funding harmless, the legislation allocates $750 million in sales tax to the School Aid Fund and $95 million in sales tax to local revenue sharing. The plan also retains the $50 million currently allocated for the Housing and Community Development Fund.

The result is $850 million that is unaccounted for in the plan.

"We’re going to make a lot of cuts in this budget," Hall said. "We’re also going to go through that budget, line-by-line, and we’re going to work it, and we’re going to find things that are less important, and we’re going to prioritize roads."

Lawmakers will work out what those budget cuts will be through the budgeting process, House Republicans said, whether that’s duplicative programs or those that are deemed ineffective.

"Government spending in the state of Michigan has grown nearly 50 percent in the last six years," Rep. Pat Outman (R-Six Lakes) said. "We’ve added nearly 4,000 government employees. The money is there. We just need to reprioritize it a little bit better."

Democrats objected, saying they could not support a plan without knowing where the cuts were coming from.

"There are plenty of programs in our state budget that fund critical services for everyday, working-class people … and any of those programs are now at risk of being on the chopping block," Puri said. "This is an issue that everyone wants to solve, and so I think that there’s going to be a lot of discussions that happen in parallel to this. How they all end up merging I don’t know."

Democrats did not offer an alternative plan on Wednesday, and Rep. Alabas Farhat (D-Dearborn) is the only Democrat in the House or the Senate that has put forward legislation addressing a long-term road funding plan this term – HB 4142, HB 4143 and HB 4144.

Farhat’s bills would increase the Corporate Income Tax and create a new digital advertising tax.

"I think the speaker forgot to include my bills that actually pay for the plan, but I’m glad we took a step in the right direction today," Farhat, who voted yes on the legislation, said. "I was proud to stand with the labor community and work towards better roads now."

Puri said his goal was not to be "another cook in the kitchen" on road funding.

"There’s not some magic bullet out there," Puri said. "We also just don’t want to be crowding the noise of all the debate that’s out there. We want to be coming to the table in good faith."

Rep. Noah Arbit (D-West Bloomfield) said the Republican plan didn’t move the conversation around road funding forward in a meaningful way.

"It’s not robbing Peter to pay Paul, it’s robbing Peter and Paul, and Mary’s already dead," he said. "This is not a real solution. It just shifts money around."

He did acknowledge that it might be necessary for Democrats to put forward a comprehensive plan for roads.

"Some plan that stakes out our broad principles about what we would view to be a meaningful step forward on roads," he said. "I think those conversations will continue."

HB 4180, which would exempt motor fuel and aviation fuel from sales tax, passed 65-43. Democrats Rep. Joey Andrews IV (D-St. Joseph), Farhat, Rep. Jason Morgan (D-Ann Arbor), Rep. Samantha Steckloff (D-Farmington Hills), Rep. Joe Tate (D-Detroit), Rep. Karen Whitsett (D-Detroit) and Rep. Angela Witwer (D-Delta Township) voted for the bill.

HB 4181, which would eliminate the 6 percent specific tax levied on interstate motor carriers that use motor fuel or alternative fuel in Michigan, also passed 65-43. Andrews, Farhat, Morgan, Steckloff, Tate, Whitsett and Witwer again voted for the bill. HB 4182, which would exempt motor fuel and aviation fuel from the use tax, passed 65-43, with support from the same list of Democrats.

HB 4183, which would increase motor fuel tax to 51 cents per gallon, passed 62-46. Andrews, Farhat, Morgan, Steckloff, Tate and Whitsett voted for the legislation, but Witwer voted no, along with Rep. Steve Carra (R-Three Rivers) and Rep. Jim DeSana (R-Carleton).

HB 4184, which would increase the tax imposed on aircraft fuel to 10 cents per gallon, passed 62-46. Andrews, Farhat, Steckloff, Tate, Whitsett and Rep. Dylan Wegela (D-Garden City) voted yes. Carra, DeSana and Rep. Josh Schriver (R-Oxford) voted no.

HB 4185, which deposits $755 million into the School Aid Fund from the revenue collected under the 4 percent sales tax imposed by the act and $95 million for cities, villages and townships, passed 64-44. Andrews, Farhat, Morgan, Steckloff, Tate, Wegela, and Whitsett voted with the majority.

HB 4186, which would increase the Michigan Business Tax to 30 percent, passed 61-47. Andrews, Farhat, Morgan, Steckloff, Wegela and Whitsett voted with the majority.

HB 4187, which would modify the distribution of the Corporate Income Tax, passed 63-45. The chamber adopted a floor substitute to maintain funding for the Housing and Community Development Fund. Andrews, Morgan, Steckloff, Wegela and Whitsett voted for the bill.

The final bill in the package, HB 4230, which would establish the Neighborhood Road Fund, passed 63-45. Andrews, Farhat, Morgan, Steckloff, Tate and Whitsett voted for the bill, but Witwer and Carra voted no.

Interest groups widely praised Wednesday’s vote as a step forward on the issue, which has plagued the state for decades.

"Michigan is in desperate need of a new road funding plan as drivers speed into spring pothole season, any legislative movement toward an eventual negotiated solution, like this one, is progress to be celebrated because that means progress toward smoother roads, job creation and a growing economy," Build It Michigan Strong Coalition spokesperson John Sellek said in a statement.

The coalition includes the Michigan Chamber of Commerce, the Michigan Infrastructure and Transportation Association, the Home Builders Association of Michigan, among others.

The Michigan Municipal League also praised the vote.

"With bipartisan support, the passage of this proposal is a significant first step to solving this problem," board president Sault. St. Marie Mayor Don Gerrie said. "We are committed to finding a long-term solution and are ready to engage in dialogue."

The Detroit Regional Chamber and MichAuto continues to express concerns about the elimination of the MEGA credits.

"The vote today in the State House to increase the Michigan Business Tax and eliminate the MEGA credits various large Michigan employers hold undermines trust in the state’s commitments, sending a disturbing signal to businesses that Michigan does not honor its contractual obligations," the groups said in a statement. "For companies that have long honored their end of this bargain by retaining and creating jobs before receiving any credits, the vote today creates uncertainty that could drive them to relocate or invest elsewhere, especially as competing states continue to offer attractive incentives to lure businesses."

With the legislation out of the House, the ball is now in the Senate’s court, Hall said.

"My hope is by demonstrating this moving through the House, they’re going to be hearing over spring break from their local governments. They’re going to be hearing from their road builders. They’re going to be hearing from many people, their unions, the laborers, saying: put a roads plan on the table," Hall said. "We should get this done, and this is the closest we’ve ever been."

House Votes to Lower Individual Income Tax
Some House Democrats joined Republicans to pass legislation that would reduce the individual income tax from its current 4.25 percent back down to 4.05 percent.

HB 4170 would reduce the rate and ensure any reduction in the income tax set in motion under a 2015 trigger law is permanent.

The bill passed 65-45 with some bipartisan support.

Rep. Kelly Breen (D-Novi), Rep. John Fitzgerald (D-Wyoming), Rep. Matt Koleszar (D-Plymouth), Rep. Denise Mentzer (D-Mt. Clemens), Rep. Reggie Miller (D-Van Buren Township), Rep. Angela Witwer (D-Delta Township) and Rep. Mai Xiong (D-Warren) voted yes on the bill.

Rep. Kathy Schmaltz (R-Jackson), the sponsor of the legislation, said it was about providing relief for Michigan residents (editor’s note: this story has been changed to correct the spelling of Schmaltz’s name).

"Families across Michigan are struggling to afford basic necessities – groceries, gas, housing and child care costs are stretching budget thinner than ever," she said in a statement. "People need relief, and they need it now. With the state collecting more than enough tax revenue, it’s time to give money back to the hardworking families who earned it."

Rep. Bryan Posthumus (R-Rockford) said that income tax reduction was money the state owed residents.

"Every dollar the state takes in is a dollar taken away from hard working Michiganders," he said. "Our state doesn’t need more revenue. It needs less government."

The legislation is a reaction to the reduction in the income tax triggered by the 2015 law. In 2023, the income tax was reduced to 4.05 percent based on a complex formula in statute triggered after revenues to the General Fund exceeded inflation and an additional amount to account for economic growth.

"This bill is a wolf in sheep’s clothing," said Rep. Morgan Foreman (D-Ann Arbor). "The wolf being the wealthiest receive yet another tax cut. … We really need to get back to the drawing board and look at what taxation looks like for Michiganders. We want to do our fair share. We want to pay into our taxes so we can have the things we want. We want better roads. We want remarkable schools. We want to pay for the great higher education that we have in the state, but we can’t do that if we’re playing along with these joking tax bills."

A House Fiscal Agency analysis said the change would cost $539.3 million in the current fiscal year; $713.0 million in the 2025-26 fiscal year; and $727.6 million in the 2026-27 fiscal year.

Republicans have asserted the state has enough revenue to pay for the tax cut.

Although the legislation cleared the Republican controlled House, it’s unlikely to be taken up by the Democratically controlled Senate.

"This is not going to move, so it’s a little bit playing political theater," Rep. Jasper Martus (D-Flushing) said.

Rather than discussing individual income tax, which Martus said only makes a difference for wealthy Michiganders, lawmakers should be discussing a progressive income tax.

Farmers, Business Owners Express Frustration with EGLE at House Oversight Hearing
Members of the farming and business communities testified before the House Oversight Committee Tuesday, expressing frustration with the Department of Environment, Great Lakes and Energy’s regulatory and permitting systems.

Tuesday’s hearing was the latest in a string of inquiries by the committee into state departments and agencies as part of a larger effort to examine what House Republicans believe to be problems within Governor Gretchen Whitmer’s administration. It was accompanied by a tractor protest outside the Capitol building by farmers – including one sporting a sign that read "DOGE EGLE," referring to cuts to federal agencies made by Elon Musk’s U.S. Department of Government Efficiency.

The subject of the farmers’ ire is a regulatory environment they said has become increasingly inhospitable to businesses, particularly family farms, in recent years. James DeYoung, an agricultural consultant and owner of CJD Farm Consulting in Grand Rapids, said his clients have experienced difficulties in the past few years that they never used to encounter in working with EGLE.

"I have 21 years of experience helping farms maintain compliance with the Right to Farm Act and Michigan water quality standards. Unfortunately, in the past few years, something has changed," DeYoung said. "(EGLE) has become hostile to farms in Michigan; we used to be able to work with the department, and our relationship was a lot more cooperative. I used to be able to call staff and just talk to them or discuss solutions to issues I found on a farm, but now everything must be in writing, and sometimes that is used as evidence against my clients."

DeYoung and others who testified described a regulatory atmosphere with a lack of trust and a sentiment that farmers are "part of the problem" when it comes to environmental and public safety compliance. Surprise inspections on farms when they used to be scheduled days or weeks in advance, departmentally mandated installation of costly groundwater monitoring wells when farmers felt they weren’t provided sufficient evidence of contamination and a sense that farmers no longer have a seat at the table contributes to mutual distrust, he said.

"My clients are aware of the negative perception that some people have of large farms, but like many other small family businesses, Michigan farms need to grow in order to maintain efficiency and to stay competitive – the families that own these farms take great pride in what they have built and how they’re able to take care of their animals and the land that they farm," DeYoung said. "They usually live on site, and in many cases, their children and grandchildren work at the farm. There seems to be a lack of trust on both sides, and as a veteran department staff member recently shared with another consultant, ‘there’s just too much activism in departmental decisions,’ and farmers know their land … but they’re not being invited to the table, and instead, they’re being told that they’re just part of the problem and it needs to be solved."

Mike Alaimo, director of legislative affairs for the Michigan Chamber of Commerce, said the organization will be creating an internal rules and permitting work group that will focus on policy reform ideas to present to lawmakers, with the aim of reopening the lines of communication between EGLE and the businesses it regulates.

"While permitting has historically been a challenge in Michigan, we have seen efforts by the department to improve the process, and we certainly support the governor’s recent comments around working to do more," Alaimo said. "Frankly, we were having productive conversations with the department about ways in which to do this leading up to 2023, but that dynamic of the last legislative cycle made it challenging to move on those issues in a pragmatic way, and we largely had to push the pause button. Now we are hopeful that we are at a point in time we can renew those discussions again."

Dale George, spokesperson for EGLE, in a statement said the agency is tasked with implementing its programs efficiently while also protecting public health and the state’s natural resources.

"We at the Michigan Department of Environment, Great Lakes, and Energy recognize how vital our agriculture and regulated industries are to the state’s economy. We have been and continue to be committed to implementing effective programs that support the needs of the agricultural community while also protecting public health and safeguarding our natural resources," George said in a statement. "EGLE executive staff members attended today’s and last week’s House Oversight Committee meetings, however, we were not invited to speak at those meetings. We welcome the opportunity and are working with the committee chair to schedule a time to talk with committee members about our efforts to cut red tape while protecting the environment in a way that benefits all Michiganders."

Rep. Jay DeBoyer (R-Clay), the committee chair, said he expects EGLE to testify before the committee in the coming weeks.

Understanding and Implementing MI’s Earned Sick Time law: New Q&A Opportunity via Michigan Chamber of Commerce

What’s happening: Michigan’s new earned sick time laws are in effect, and businesses need to understand their obligations.

Join us: A live Q&A webinar with Sean Egan from the Department of Labor and Economic Opportunity (LEO) – the agency responsible for interpreting the law and guiding compliance – and Wendy Block from the Michigan Chamber.

 Date: Tuesday, April 29, 2025
 Time: 12-1 p.m.
 Virtual Event
 Free for members; $25 for future members

Why it matters: Employers must comply with new requirements, and this is your chance to get answers directly from the agency responsible for guidance and enforcement to stay ahead of the changes.

Register Now

DCD OUT AND ABOUT:

Jake German enjoyed catching up with his Hillsdale College friend, Senate Majority Leader Aric Nesbitt, at Judge Michael Warren’s recent Patriot Week Patrick Henry Dinner at the San Marino Club in Troy.

Senator Mat enjoyed the State of the County address with Ahmad Taylor of the Pontiac Housing Commission and friends as well as Macomb County Sheriff Mark Hackel and OCHN’s Dr. Nik Hamady.

ARTICLES OF POLITICAL INTEREST:

Is Michigan’s Trump Fighting AG Politicizing the Office or Helping Michiganders?

Trump Orders End the Department of Education.  What it Means for Michigan.

Amid China Fears, GOP Seeks to Bar Some Nonresidents from Buying Michigan Land

Whitmer’s Office Mum on Key Michigan Senate Special Election

Michigan’s FOIA Law Exemptions One of Many Transparency Challenges in the State

Marijuana News, Updates, & Articles of Interest

THE DCD MARIJUANA TEAM:  YOUR COMPETITIVE EDGE!

DCD continues to exist as the premier resource helping municipalities navigate the waters of cannabis policy. We would be more than happy to answer any questions you may have regarding medical or recreational cannabis policy, procedure, and more. DCD is available for presentations to municipal boards, for one-on-one meetings, and for consultations.

We are here to help you with: municipal lobbying, license application writing and assistance, business plans, state required operations manuals and compliance, facility design, corporate structure, and design and branding. 

We are experts in both medical and recreational cannabis policy and have been in the space for over ten years.  We welcome any opportunity to work with you in the future!

ARTICLES OF CANNABIS INTEREST:

As Michigan Cannabis Prices Fall, Business Owners Point to Other Threats to Their Survival 

Southwest Michigan Drug Bust Seizes Over 2000 Pounds of Pot Near Branch County Family Home

Cannabis Beverages Could be the Future of Social Drinking in Michigan 

Warren Moves Toward Allowing Recreational Marijuana Retailers

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