untanglingwebs
El Supremo
|
Brian Dickerson | Detroit Free Press | freep.com
www.freep.com/briandickerson - 224k - Cached - Similar pages
Brian Dickerson: How Lansing's ignorance cost Michigan a cool $280M ... Brian Dickerson: Why fresh faces from Michigan may yield same old gridlock
By Brian Dickerson
Detroit Free Press Columnist
Would you sign a contract without knowing what it might cost you?
That’s exactly what Michigan legislators did this past January — every feckless, reckless Republican and Democrat in the House and Senate — when they unanimously approved a bill making it harder for the state Treasury Department to collect overdue taxes from corporate officers.
Gov. Rick Snyder signed Public Act 3 into law less than three weeks later, boasting in a Feb. 6 news release that the legislation would “bring more fairness” to the collection of business taxes and “establish a more positive business tax environment.”
■ Related: Michigan revenue dip tied to new tax law limiting corporate liability
How much would all this “relentlessly positive action” cost the state in lost tax revenues?
Snyder had no clue.
Neither did state lawmakers, because the nonpartisan agency responsible for putting a price tag on legislative proposals had been unable to quantify the tax bill’s likely cost.
“This will have an unknown impact on state revenue,” the Senate Fiscal Agency’s Elizabeth Pratt wrote in an analysis submitted to the Legislature on March 3, almost a month after Snyder signed PA 3 into law.
Pratt identified four ways in which the bill, adopted unanimously by both legislative chambers, was likely either to increase the Treasury Department’s costs or to reduce its business tax collections, but said her agency lacked sufficient data to estimate the cumulative wallop of those factors.
But just two months later, state Treasurer Kevin Clinton, Senate Fiscal Agency director Ellen Jeffries and House Fiscal Agency director Mary Ann Cleary revealed last week that the hastily adopted PA 3 will cost the state more than $280 million in tax revenues over just the next three fiscal years — more than a quarter of the $986-million reduction in estimated revenues that the three state officials disclosed Thursday.
That’s more than a quarter billion dollars less to pay for roads, fund K-12 education, subsidize soaring college tuition costs or make any of the other investments that Michigan needs to pull itself out of the Michissippi rut it has fallen into over the last decade.
The road to $280 million
How did this happen?
Where did PA 3 come from, and who were its chief beneficiaries?
Why were legislators in both parties so eager to pass it without knowing what it would cost?
And why did Gov. Snyder assert that it would “improve” business tax collections without determining how much it would reduce them?
What’s known at this point is that Sen. Jack Brandenburg, R-Harrison Township, introduced a bill in January 2013 to limit the circumstances under which Michigan could hold officers, managers and partners of a corporation or partnership personally responsible for the payment of the entity’s delinquent taxes.
Brandenburg didn’t return my calls to his office Friday, but others familiar with his legislation said it was designed to address concerns that officers who were not at a firm or in a position of responsibility when the firm’s taxes went unpaid could be saddled with personal liability for sins their predecessors committed in the firm’s name.
Besides narrowing the range of “responsible persons” that the state could go after and limiting the specific taxes for which they could be held liable, the bill sharply limited the time frame in which the Treasury Department could assert a claim for unpaid taxes.
Legislators in both houses voted unanimously to adopt Brandenburg’s bill, Senate Bill 64, last December, but Snyder vetoed it. His spokeswoman, Sara Wurfel, said the governor “had heard stories about cases in which corporate officers were unfairly held responsible” but concluded that Brandenburg’s original bill would “essentially eliminate the state’s ability to go after bad actors.”
When House and Senate conferees put a slightly less sweeping bill on Snyder’s desk the following month, he signed it, despite his own Treasury Department’s continuing reservations and the Senate Fiscal Agency’s warning that the bill’s impact on tax revenues was difficult to predict.
David Zin, the Senate Fiscal Agency’s chief economist, said the Treasury Department did eventually provide his agency with hard revenue projections.
“Unfortunately,” he added, “it had already been signed into law.”
Late Friday afternoon, I asked Wurfel why Snyder had agreed to sign the second bill without knowing what it would cost the state.
“We knew there was going to be a cost,” she said, calling the tradeoff between reduced liability for corporate officers and lost tax revenues “a fairness equation.”
But what if the Treasury Department had told Snyder back in January that PA 3 would cost the state more than a quarter billion dollars in the first three years alone? Would Snyder have signed it into law anyhow?
“I can’t speak to a hypothetical,” the governor’s spokeswoman replied.
Contact Brian Dickerson at 313-222-6584 or bdickerson@freepress.com. |
|
|
FAQ
Search
Memberlist
Register
Profile
FlintTalk.com Forum Index
> Political Talk
