Lame Duck Round Up – Week 3…

Posted on December 20, 2020 by chackbarth

With the Michigan Senate’s final action late Friday night, only Monday’s House session remains before the 100th Legislative Session comes to an end.

The Senate remained in session throughout the day Friday, concurring in bills that the House had sent over late on Thursday and working to formulate a deal on a year-end state budget supplemental.  As one of their final votes Friday night, the Senate passed SB 748, a $465 million appropriation bill aimed at providing additional, state-level Coronavirus relief.  Within the Senate-passed bill, $128 million is targeted at COVID-19  health-related programs funded through the Department of Health and Human Services, and over $278 million will run through the Department of Labor and Economic Opportunity to support an extension of state unemployment benefits and various small business grant offerings.  The League supported two items that were part of the appropriations for the Michigan Department of Treasury; a $5 million appropriation to cover the costs for any penalties or interest waived as part of the recently passed SB 943, which offers retroactive summer property tax deferrals to four specific industry segments harmed by pandemic shutdowns, and a change in the language outlining the First Responder Hazard Pay Premium program authorized earlier this summer, to extend the deadline for local units to have paid these hazard pay premiums to eligible employees out to December 29, 2020.

This appropriation bill now moves to the House for concurrence on Monday, along with a few remaining bills that the House was unable to act on last week.  The Governor has not indicated if she will support this supplemental appropriation.

The following are brief summaries of action during this third week of lame duck: 

OMA Virtual Meetings: The state House and Senate passed Senate Bill 1246 that would amend the Open Meetings Act to allow communities to continue meeting virtually due to the pandemic through March 31, 2021. The bill now heads to Governor Whitmer for approval. As you may recall the current law allows communities to meet virtually through the end of this month so getting this extension was a high priority for the League. This new legislation also allows a local state of emergency or state of disaster to be declared pursuant to a local ordinance (in addition to those declared under law or charter in the current law) and adds a local chief administrative officer (in addition to a local official or local governing body) as a person who may declare the local state of emergency. In addition, the bill sets requirements a public body shall follow if a meeting is held in person before April 1, 2021, including adherence to social distancing and mitigation measures recommended by the Centers for Disease Control and Prevention for purposes of preventing the spread of COVID-19 and adopting heightened standards of facility cleaning. Read this blog by the League’s Jennifer Rigterink with all the details. 

Solar Projects Tax Exemptions: SB 1105 & 1106 – Status: passed Houseboth bills now head to the governorThe League is opposed to these bills and is drafting a veto request letterThese two bills would exempt all utility-grade solar projects from the industrial personal property tax and replace that lost property tax revenue with a Payment In Lieu of Tax reimbursement that amounts to pennies on the dollar for many local units.  Local units would also be required to approve every tax exemption certificate application if the project matches the definition of an “qualified renewable energy facility”, regardless of local land use or economic development plans or support.

Summer tax deferral: SB 943 – Status: passed, heads to governor for approval. Originally introduced this summer as part of the summer tax deferral proposal that was vetoed, a substitute version of SB 943 was quickly adopted and passed by the Senate to target a select number of industries hit hardest by the pandemic. This new version allows for the retroactive deferral of any currently delinquent summer tax bills and waiver of related penalties and interest from four specific industry segments, until Feb 15, 2021. The bill also provides that the state will reimburse local units for the lost penalties and interest owed on any of these deferred amounts (see summary of SB 748-supplemental budget appropriation above). It is not known if the Governor will sign the bill. 

Poverty exemption: SB 1234  Status: passed House, heads to governor for approval. This bill amends the current residential property tax poverty exemption to assist with various COVID-related impacts that low-income residents are facing as they attempt to apply for the exemption. The League and the City of Detroit testified in support of these bills in both the House and Senate Treasury negotiated a number of amendments as a condition of their support prior to passage.

Meijer Warehouse Equipment PPT cut: SB 1153 – Status: passed House along with two other bills (SB 11491150exempting this equipment from sales and use tax.  All three bills now head to the governor. The League opposed these three bills and is drafting veto request letter. These bills would provide Meijer and other commercial retailers with full sales, use, and personal property tax exemptions for all large-scale consumer goods handling warehouse distribution equipment. The League and all other local government and school groups, and the MI Department of Treasury  testified in opposition to these bills. 

Historic Tax Credit: SB 54 – Status: passed House, heads to governor. This proposal has long been supported by the League to restore Michigan’s state-level Historic Tax Credit program that was repealed under former Governor Snyder. The new program will provide a 25 percent credit on rehabilitation expenses against state income tax. For homeowners in historic districts, this credit helps offset the costs of repairing older homes while retaining their historic attributes. SB 54 caps the total number of credits per year at $5 million in order to have minimal initial impact on the State budgetThe necessary $5 million for funding of the first year of the credit was already appropriated in the current state fiscal year in anticipation of this bill’s passage.  

Water Shut-Offs: SB 241 – Status: passed House, heads to governor for signature. A new version of this bill was adopted to codify the Governor’s previous Executive Order related to water shut-offs. In early July Governor Whitmer issued Executive Order 144 that placed a moratorium on water shutoffs until December 31st of this year. Following the nullification of the Governor’s E.O.s by the Michigan Supreme Court, the Administration and the Legislature negotiated the language in SB 241 to codify the intenof that E.O. in statute. This agreement in this bill would reinstate the moratorium on water shutoffs and extend the date to March 31, 2021. 

Tax foreclosure proceeds: SB 676 and 1137 – Status: passed House, heads to governor for approvalThese bills have been developed in response to the recent Michigan Supreme Court Rafaeli decision that found that all “excess” proceeds from a tax foreclosure sale must be paid to the former owner of the property. This court decision could have a long-term harmful impact on County Delinquent Tax Revolving Funds that will lead to chargebacks being assessed to local taxing jurisdictions. Communities that also leverage their right of first refusal to acquire these foreclosed properties for the minimum bid may also face a more expensive path to acquiring these parcels as the court decision also puts the ability to acquire parcels for the minimum bid at risk. Following months of work group discussions and negotiations with local units, the County Treasurers Association, and the Michigan Department of Treasury, the League secured amendments to retain a process for local units to continue acquiring some parcels for the minimum bid and language providing for a local fiscal impact analysis from Treasury to help evaluate and make recommendations to address any increase in chargebacks to local units.

COVID Extension to Boards of Review: HB 5824 and 5825 – Status: House concurred in Senate changes, heads to governor for approval. The League supported these two bills which codify the Governor’s now nullified Executive Order that had extended the March 2020 Boards of Review and allowed certain additional appeals and valuation changes during the July 2020 Boards of Review.

Rental Inspections: SB 692 – Status: passed House, heads to governor for approval. The League was neutral on the bill as the change only impacts certain change of ownership situations. 

COVID critical infrastructure worker: SB 1258 – Status: passed Senate this week and the House is scheduled to vote on this bill on Monday. A new law adopted this fall established certain employee protections related to exposure to COVID-19. One aspect of the new law requires employees to quarantine for 14 days following certain instances of exposure. Specific classes of employees/businesses are exempt from that 14-day quarantine, like health care employees and first responders. The League advocated for the amendments in SB 1258, which would extend the specific employee/business exemption from the quarantine requirement to include critical infrastructure employees in the energy industry and other critical employee categories necessary to preserve public health or public safety, as determined by the Dept of Health & Human Services DirectorThe bill also provides additional flexibility for returning to work with negative test results and time periods for isolation and/or quarantine as determined appropriate by the CDC, as opposed to designating a specific number of days in statute. 

The House is scheduled to commence session on Monday, December 21st at 10 a.m. and wrap up action on around a dozen bills before ending for the year.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].

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