Detroit Regional Chamber > Advocacy > June 10 | This Week in Government: Senate Moves Child Care Expansion Bills Closer To Governor’s Desk; Bills Extended Tax Abatement For Biz Contested By Both Dems, Reps

June 10 | This Week in Government: Senate Moves Child Care Expansion Bills Closer To Governor’s Desk; Bills Extended Tax Abatement For Biz Contested By Both Dems, Reps

June 10, 2022
Each week, the Detroit Regional Chamber’s Government Relations team, in partnership with Gongwer, will provide members with a collection of timely updates from both local and state governments. Stay in the know on the latest legislation, policy priorities, and more.

  1. Senate Moves Child Care Expansion Bills Closer To Governor’s Desk
  2. Bills Extended Tax Abatement for Biz Contested by Both Dems, Reps
  3. Whitmer To Sign Bill Allowing 17-Year-Olds To Serve Alcohol
  4. Testimony Divided Over SOAR Fund Tax Capture Proposal
  5. Candidate Accused of Storming U.S. Capitol Has Home Raided by FBI


Senate Moves Child Care Expansion Bills Closer To Governor’s Desk
Senators in wide bipartisan votes Wednesday moved legislation that would expand child care options in the state farther along the path to Gov. Gretchen Whitmer’s desk.

The bill package came up for a Senate vote this week about eight months after being passed by the House.

Before the chamber were HB 5041, HB 5042, HB 5043, HB 5044, HB 5045, HB 5046, HB 5047, and HB 5048.

The bills include provisions intended to increase the number of children family child care and group care homes can serve.

Bill language also would rescind rules covering the licensing of child care centers in multiple occupancy buildings. Other items include new ownership disclosure rules, the creation of family child care networks by the Department of Education to support home-based child care providers, model contracts for some state-licensed child care providers, and change database reporting requirements.

Other bills in the package provide 90 days for child care centers and homes to comply with state rules and create more flexibility in the maintenance of licensing records.

S-3 substitutes were adopted for HB 5041 and HB 5042 that would lower the age for eligible childcare workers from 18 to 16 years old. This was said to increase the pool of potential workers.

The votes on HB 5045, HB 5046, HB 5047, and HB 5048 were 38-0, while the votes on HB 5041 and HB 5042 were 37-0. The votes on HB 5043 and HB 5044 were 32-5 and 33-5, respectively, with Sen. Tom Barrett (R-Charlotte), Sen. Jon Bumstead (R-North Muskegon), Sen. Ruth Johnson (R-Groveland Township), Sen. Jim Runestad (R-White Lake) and Sen. Lana Theis (R-Brighton) the opposing votes on the two bills.

Sen. Wayne Schmidt (R-Traverse City) told reporters he was pleased with the progress made on child care, calling it a first step in improving access to quality child care.

“You still have all the safety measures in place, but it’s much more realistic,” Mr. Schmidt said. “Daycare providers can handle that ratio, and that will make a difference in terms of profitability. That’s what we’ve seen, we’ve seen because of overregulation, because … it’s not very profitable, the costs, that people are getting out of daycare, and hopefully this is a step forward in removing some of the barriers.”

He said providers want a safe environment balanced by not being overregulated out of the market.

“It just really made the process more transparent, made sure that the ratios were increased, basically giving daycare operators a better chance and a more free hand to run and take care of children in Michigan,” Mr. Schmidt said.

Monique Stanton, president and CEO of the Michigan League for Public Policy, said in a statement the bipartisan votes were a positive step toward addressing a key priority for businesses and workers.

“These bills address the need to keep working to make child care more accessible and affordable while supporting our state’s vital child care providers, including addressing the specific challenges and needs of our home-based child care providers,” Ms. Stanton said.

Bills Extended Tax Abatement for Biz Contested by Both Dems, Reps
A push to extend granted tax abatement exemption certificates for businesses by local governments saw some opposition from both Republicans and Democrats during the Wednesday meeting of the House Local Government and Municipal Finance Committee.

Rep. Pauline Wendzel (R-Watervliet) said her bills, HB 5768 and HB 5769, would allow some surplus tax revenue to be retained by a downtown development authority, as well as allow facility owners to apply to receive an enhanced abatement of up to 25 years.

The first bill, HB 5768, would amend the Recodified Tax Increment Financing Act to specify that the excess funds of a tax increment financing plan would be captured to further that development program. Ms. Wendzel said these bills would make Michigan more competitive with surrounding states.

“Currently, excess revenue is reverted to the local taxing bodies. Under my bill, more flexibilities would be provided to local units of government and economic development partners who work with them to attract investment in our communities,” Ms. Wendzel said.

The second bill, HB 5769, would amend the Plant Rehabilitation And Industrial Development Districts Act, and, in addition to increasing the exemption certificate to 25 years, it would allow local legislatures to grant enhanced abatements that would further reduce the tax owed on an industrial facility or extend the length of an exemption certificate.

Testifying with Ms. Wendzel was Rob Cleveland, president and chief executive officer of Cornerstone Alliance, who presented a report comparing the competitiveness of Michigan’s property tax climate to other neighboring states, specifically Indiana.

Mr. Cleveland said the independent contractor authoring the report, Maguire Sponsel, found that property taxes are a “weighty consideration” in the site selection process.

“A couple of ways that they believe we can become more competitive are to adjust the tax abatement policy … and make it more flexible at the local level to decide how and when they want to be competitive on projects,” Mr. Cleveland said. “Another thing we can do is leverage the property taxes that are accumulated, which Rep. Wendzel mentioned, in relation to tax increment finance.”

He added that tax increment financing benefits need to be eligible for all locations in the state, not just corporate communities, and the state needs to allow tax increment financing to accumulate over time after the total expenses have been paid through an associated brownfield redevelopment plan.

“Both of these things will support speculative development. We need more buildings in that state of Michigan in order to recruit companies,” Mr. Cleveland said.

In a second report comparing property taxes in areas across the state and Indiana, Mr. Cleveland said the property taxes in Sturgis are more than five times than those just a few miles across the border. In his community of Benton Harbor, the property taxes are double that of South Bend, Indiana.

There was pushback, though, from both Democrats and Republicans.

Rep. William Sowerby (D-Clinton Township) said he was trying to wrap his head around why extending the exemption to 25 years would be good for local government, saying 25 years produces a tremendous amount of time for economic cycles, including recessions.

“During the Great Recession, I spent much of my time chasing down those businesses who failed to live up to the contractual agreement and the (TIF) and many times had to resort to revoking their (TIF) for failure to pay taxes,” said Mr. Sowerby, a former Clinton Township treasurer.

He also asked Mr. Cleveland and Ms. Wendzel how they plan to protect local governments.

Mr. Cleveland clarified the bill would allow the exemption to be up to 25 years, and would not set 25 years as a minimum threshold.

“When we’re talking about a (tax increment financing authority) in the state of Michigan, we are still getting more than 50 percent of that tax, so the abatement is less than 50 percent,” Mr. Cleveland said. “We are getting … revenue whether in a recession in other years, every year we are getting something even when abatement is granted.”

Mr. Cleveland added that as far as bad actors they tend to be the exception. However, Mr. Sowerby rebutted this, saying that it occurs regularly and it’s not a few bad actors, it’s struggling businesses who are failing to live up to the contractual agreement.

Rep. Jim Ellison (D-Royal Oak) added that an issue he saw with increasing the duration is that those elected during the first year of a business’ abatement may not be in office by year 24.

Mr. Cleveland replied that perhaps local governments could be tasked with setting a policy that states what qualifies for an enhanced abatement and what does not.

Rep. Gary Howell (R-North Branch) said the notion the abatements can be granted one to 12 years is a fallacy, saying they are always granted 12 years. It’s going to be 25 years if these bills were to become law because they’re going to feel the pressure, he added.

“I realize you’re in a fairly unique situation up against Indiana (and) Ohio. Many of us are far deeper into the state and we’re battling with our next-door neighbor,” Mr. Howell said, adding it will be hard for his small municipalities to work with 25-year-long abatement.

Mr. Howell asked if Mr. Cleveland would be open to standards where more rural areas like North Branch would only give exemptions up to 12 years. Mr. Cleveland said $100 million in an area like Grand Rapids is much different than in an area like Benton Harbor, adding that the issue is complex, but he would be open to suggestions.

No further action was taken on the bill.

OTHER BUSINESS: The committee also reported three bills, two of which would allow summer resort and park associations to become domestic nonprofit organizations.

HB 5863 and HB 5864, sponsored by Rep. John Roth (R-Traverse City), would allow summer resorts to covert to a nonprofit if the organization satisfies the requirements under the Nonprofit Corporation Act. No substitutions were taken up and the bills were reported 11-1. Rep. Mary Cavanagh (D-Redford Township) voted no, and Rep. Terence Mekoski (R-Shelby Township) was absent.

A bill that would allow a public walkway that is part of a recorded plat to be relinquished without filing an action in circuit court was also reported. Sponsored by Rep. Steve Johnson (R-Wayland), HB 5600 was also the subject of an H-1 substitute that would give the local government input in the process. The substitute and bill were reported unanimously.

Whitmer To Sign Bill Allowing 17-Year-Olds To Serve Alcohol
Gov. Gretchen Whitmer is planning to sign legislation enrolled by the House this week that would allow 17-year-olds to serve alcohol, changing a policy that has been in place since 1981.

The House gave final approval to HB 4232 on Tuesday and ordered the bill enrolled, which will soon be presented to Whitmer.

Bobby Leddy, spokesperson for the governor, indicated she would approve the legislation.

“Governor Whitmer is eager to do everything possible to help small businesses as we continue growing the state’s economy. While unemployment is at record lows and job creation remains strong, there are still businesses that could use additional help,” Mr. Leddy said. “That’s why Governor Whitmer looks forward to signing this legislation to help small businesses across the state fill labor shortages as they ramp up hiring for this summer and help Michiganders earn more in wages and tips.”

Under the bill, a 17-year-old would be able to serve alcohol at establishments with an on-premise license.

The bill would also require 17-year-olds who are serving to be under the supervision of someone 18 or older and they must successfully complete an alcohol server training course approved by the state.

“The point of the bill isn’t to create an environment where 17-year-olds are slinging drinks behind a bar every night until 2 a.m. – not that labor laws would allow that anyway. It’s designed to let servers carry drinks from a bar to a table or out to a patio,” Michigan Licensed Beverage Association Executive Director Scott Ellis said in a statement. “Currently, these servers are taking orders and bringing food out to tables, but if they aren’t 18 or older, a bartender is having to come out from behind the bar and run every drink to patrons.”

Once signed, the state would become the second behind Maine to allow 17-year-olds to serve alcohol. A House Fiscal Agency analysis said the state’s prohibition on minors serving alcohol started as an administrative rule in 1981 and was codified in 2008.

Testimony Divided Over SOAR Fund Tax Capture Proposal
A bill package that would capture taxes from projects approved under an economic development incentive fund approved by the state and use those monies to replenish the fund for future projects was the subject of divided testimony Thursday before a Senate panel.

Supporters of the three-bill package before the Senate Economic and Small Business Development Committee for testimony only said the Legislature’s passage late last year of an economic development incentive package and $1 billion was a strong start. Now, they said efforts to provide ongoing cash in the fund and maintain momentum for development is needed.

Opponents contended that large-scale economic development incentives do not stimulate growth and if fiscal benefits to the state and public are realized it will take many years for said benefits to materialize.

The package consists of SB 981, SB 982, and SB 983.

The bills build off the economic development fund created through bipartisan legislation late last year intended to attract major development projects to the state.

Legislative efforts created the Strategic Outreach and Attraction Reserve Fund, the Michigan Strategic Site Readiness Program, and the Critical Industry Fund.

Maureen Krauss, president and CEO of the Detroit Regional Partnership, told committee members the package passed last fall has been a game-changer for economic development as the state competes with others for large-scale projects.

“It shows that Michigan wants to be in the game, the way our competitors do, competing for jobs and investment,” Ms. Krauss said. “Our competitors are not waiting for us to catch up, they are all passing new legislation to create new and innovative tools to win deals.”

Ms. Krauss said the bills would take revenue that would not otherwise be generated to fuel further growth.

Under SB 981, qualified businesses would have to report construction period tax capture revenue, withholding tax capture revenue, and income tax capture revenue as it relates to the improvement and use of qualified projects.

The Department of Treasury would have to develop a process for businesses to report the required tax information, while the owner of strategic sites or mega-strategic sites would be required to notify the department if there were a change of ownership or if the end user began or terminated occupancy of a site.

For SB 982, monies exceeding $2.5 billion within the SOAR Fund would at the end of each fiscal year be placed into the General Fund except for money in the SOAR Fund that is already committed or obligated.

As for SB 983, statute would be changed to require an amount equal to the construction period tax capture revenue, withholding tax capture revenue, and income tax capture revenue for qualified projects to be deposited each year into the SOAR Fund.

General Motors is the first major recipient of funding through the new programs, allowing for the expansion and construction of two manufacturing sites, in Delta Township and Orion Township.

Leaders had been concerned over losing out to other states for major automotive and other manufacturing projects, believing the creation of large-scale incentives would help the state be more competitive in the location of such projects.

Not everyone is sold on the renewed large-scale economic development push by the state. David Guenthner, senior strategist for state affairs with the Mackinac Center for Public Policy, is among them.

“They will divert state tax revenues, income tax revenues, from teachers, classrooms, roads, health care, public safety and towards more preferential deals for decades,” Mr. Guenthner said.

Mr. Guenthner referred committee members to a Mackinac Center study stating that based on what he called optimistic projections for hiring and wages during the construction phase and the expiration of the GM deal that it would be decades before any income tax capture from the employees flows into the General Fund or the School Aid Fund.

He suggested that projects should instead be subject to the full appropriations process so that the public can see the details and the project can be defended prior to approval.

Mr. Horn shot back that he saw the projections from the Mackinac Center as being based off a snapshot in time and one-dimensional before thanking Mr. Guenthner for his testimony.

“It just kind of underscores the difference between reality and of a highbrow, ivory tower economic thinking,” Mr. Horn said.

Lansing Mayor Andy Schor echoed Ms. Krauss, praising the Delta Township electric vehicle battery plant to be built by GM using incentives.

“This was a one-time thing that was tremendously important, but now we need to do that over and over again and make sure that that can be done into the future,” Mr. Schor said. “This fund will ensure that more of this large economic development can be done.”

Center for Economic Accountability President John Mozena was opposed, saying Michigan is repeating past mistakes with large-scale incentives by putting all its eggs in one basket.

“These bills would have the practical effect of creating an auto industry slush fund, using money that instead should be either paying for essential public services or left in taxpayer’s pockets,” Mr. Mozena said.

Mr. Horn replied he found the slush fund characterization offensive, saying the funds are meant for all industries and all communities.

Candidate Accused of Storming U.S. Capitol Has Home Raided by FBI
GRAND RAPIDS – Republican gubernatorial candidate Ryan Kelley never shied away from the fact he was at the U.S. Capitol building with supporters of then-President Donald Trump seeking to overturn the 2020 election on January 6, 2021, and on Thursday, the FBI charged him with several misdemeanors originating from the event.

The group was not successful in blocking Congress from certifying the election, but shortly after that day at the nation’s Capitol, Mr. Kelley mounted a campaign for Michigan’s highest office.

On Thursday, Mr. Kelley found himself on the other end of a different type of raid – this time from FBI agents who arrested him and searched his home in relation to his alleged participation in the events of that day.

The charges do not include sedition against the nation as others have been charged with since law enforcement made it a priority to hunt down and prosecute those who had been seen in photos and viral videos shared across social media. Mr. Kelley, rather, was charged with several misdemeanors and was released from federal custody following an arraignment at the U.S. District Court for the Western District of Michigan courthouse in Grand Rapids.

It is now an open question of whether the timing of his arrest, coincides with the U.S. Congressional January 6 Committee’s Thursday public hearing that is to be televised nationally, with some calling his arrest a political hit job. Most others agreed that the arrest and news to follow would only boost his profile in the five-way gubernatorial race, where one’s stance on the 2020 election is paramount to Republican primary voters in a state where a good portion of its inhabitants believe the election was stolen from Mr. Trump.

Following Mr. Kelley’s arraignment Thursday, his attorney, Health Lynch of the Springstead Bartish Borgula & Lynch law firm, said that they haven’t seen any of the evidence used to charge his client.

Mr. Lynch also said he found it odd that federal investigators waited more than a year after the incident to bring the charges that Mr. Kelley now faces. In fact, the Statement of Facts from the FBI released Thursday indicates it confirmed in March 2021 Mr. Kelley climbed the Capitol to help urge the insurrectionists forward.

Mr. Lynch spoke outside the federal courthouse after Mr. Kelley’s hearing before U.S. Magistrate Salley Berens. He was arrested by the FBI in a morning raid at his Allendale Township home.

The complaint charging Mr. Kelley with crimes in United States of America v. Kelley (USDOC Docket No. 22-00133) was made public shortly afterward he was taken into custody. He was held prior to his arraignment but was released on a personal recognizance bond in the late afternoon – meaning the candidate did not have to pay to be released – at the suggestion of Assistant U.S. Attorney Chris O’Connor.

The assistant federal prosecutor did not see Mr. Kelley as a danger or a flight risk and thought his release was appropriate. Ms. Berens agreed and ordered the candidate not to leave the continental U.S. as part of his bond conditions, nor was he allowed to use any drugs or alcohol in the meantime.

She also reminded him that violating any federal or state laws would be a violation of his bond, to which Mr. Kelley said he understood each condition.

Mr. Kelley is one of five GOP candidates for governor in a field that had already been winnowed down considerably late last month after five candidates were disqualified from the ballot. It remains unclear how this will affect the race, but several have said the arrest by way of an FBI raid on misdemeanors may only benefit his candidacy among GOP primary voters (see separate story).

Mr. Kelley has not shied away from his presence at the U.S. Capitol more than a year ago when supporters of former President Donald Trump stormed the building, but he has maintained that he did not enter the premises. Video does however place him outside the building climbing scaffolding.

The document filed Thursday charging Mr. Kelley with several misdemeanors says he went further than merely being present, and includes charges such as:

Knowingly entering or remaining in any restricted or grounds without lawful authority;
Disorderly and disruptive conduct in any restricted building or grounds;
Knowingly engaging in any act of physical violence against (a) person or property in any restricted building or grounds; and
Willfully (injuring) or (committing) any depredation against any property of the United States – or in this case, the U.S. Capitol building and grounds.
Those charges each carry a maximum punishment of a year in prison and a $100,000 fine, along with possible restitution payments and a $25 special assessment on each count if found guilty.

A congressional commission probing the U.S. Capitol incident plans to hold a public hearing Thursday evening to potentially discuss some of its major findings. Some have said that the timing of the hearing and Mr. Kelley’s arrest seemed fishy.

Leaving the courthouse Thursday with his family and several supporters in tow, Mr. Kelley had few words for members of the media waiting for him, other than to say he’ll have more to add on the charges later.

His campaign did not issue a statement on the matter other than a text-only Facebook post that simply said, “Political Prisoner.” Mr. Kelley was also greeted after his release by GOP attorney general nominee Matthew DePerno, who welcomed him with a handshake. The two laughed, smiled and Mr. Kelley put his arm around Mr. DePerno as they engaged in small talk before Mr. Kelley attempted to move further away from the gaggle of press.

Prior to the hearing, several supporters and people just generally concerned with the way Mr. Kelley was treated by federal authorities said that they felt it was “disgusting” that the candidate was dragged out of his home by law enforcement in front of his family and neighbors, especially on misdemeanor charges. When asked why she was there Thursday outside the courthouse, one woman said it wasn’t about Mr. Kelley, but “all of us.” She added that she felt that if his constitutional rights were violated in such a matter (however nothing on the court’s record supports that claim), “they” could be next.

In line waiting for entry, another woman shared a similar sentiment, this time saying that it could be one of the other candidates in the race – Tudor Dixon, Ralph Rebandt, Kevin Rinke, and Garrett Soldano – who become “political prisoners” as the primary looms on the horizon. A man standing next to her, both of whom wore a Kelley campaign sticker on their respective clothing, said that if Mr. Soldano is next, he’ll be right back at the courthouse protesting the action.

Neither Ms. Dixon nor Mr. Rebandt, Mr. Rinke, or Mr. Soldano have been implicated in the matter affecting Mr. Kelley, nor any legal matter related to the January 6 insurrection.

Regarding his release, Mr. Lynch said that he was pleased no motion for Mr. Kelley’s detention came from Mr. O’Connor or his colleagues in the U.S. attorney’s office, but he didn’t expect one given how much time had passed since January 6, 2021.

“And, given that he’s been out (as a candidate for governor), there was absolutely no reason why he should have been detained,” he said. “I think the U.S. attorney’s office made the right choice here. … I have no idea why they waited this long (to bring the charges).

Mr. Lynch added that his firm has the benefit of knowing how these cases work because it has represented a number of other people who had been charged with crimes following the January 6 insurrection attempt.

FACTS OF CASE POINT TO VARIOUS INFORMANTS: As to the evidence, Mr. Lynch said the charging document was only unsealed about 90 minutes prior to the arraignment hearing and that he spent much of that time trying to understand the charges and communicating with Mr. Kelley’s family as they prepared for the hearing.

While Ms. Berens only gave a brief overview of the charges, the court proceeding did not veer into any presentation of the evidence as would take place in a preliminary examination – which is used to determine probable cause before a case moves over to trial.

Mr. Lynch reiterated that his firm was still working to secure that evidence in its entirety and would then work through it to build Mr. Kelley’s defense.

However, in a statement of facts circulated by the district court, the FBI said it received multiple tips about Mr. Kelley’s presence at the U.S. Capitol on January 6, 2021. One tip, which was sent 10 days after the attempted insurrection designed to stop Congress from certifying President Joe Biden as the winner of the 2020 presidential election, included photos of whom they believed was Mr. Kelley at the U.S. Capitol, the same photos posted by the Michigan Tea Twitter account.

On January 19, 2021, a tipster said they had seen Mr. Kelley in numerous photos and videos from the attack on the Capitol.

On January 28, 2021, a confidential source working with the FBI on domestic terrorism groups in Michigan identified Mr. Kelley in a news video of the riot.

Law enforcement then attempted to put together a more complete record of Mr. Kelley’s actions on January 6.

FBI then identified on January 19, 2021, a video from January 6 showing Mr. Kelley in a crowd of people assaulting and pushing past police at the Capitol. Further video showed Mr. Kelley at 1:51 p.m. moving toward the side of the nearby U.S. Capitol stairs and beginning to climb onto an “architectural feature” next to the stairs. In news footage, Mr. Kelley can be seen through the scaffolding on the stairs.

“At approximately 2 p.m., Kelley climbed onto and stood on an architectural feature next to the northwest stairs and indicated by waving his hand that the crowd behind him should move towards the stairs leading into the U.S. Capitol Building,” the Statement of Facts said, citing a video posted to YouTube.

At 2:05 p.m., he then pulled a covering off a temporary structure erected as part of the upcoming inaugural.

“At approximately 2:20 p.m., Kelley continued to gesture to the crowd, consistently indicating that they should move towards the stairs that led to the entrance of the U.S. Capitol interior spaces,” the statement said.

Then, the statement says, Mr. Kelley runs on top of the stair railing toward the Capitol’s northwest courtyard and enters it, motioning toward the doors of the inside of the Capitol. Multiple videos were cited.

The FBI said it spoke to people who knew Mr. Kelley personally and they confirmed the man the FBI suspected to be Mr. Kelley in the photos and videos at the insurrection to be him.

While the arraignment was held at the U.S. District Court for the Western District of Michigan in Grand Rapids, the case is being heard in the U.S. District Court for the District of Columbia. Mr. Lynch said that’s where the case will stay for now and the Grand Rapids hearing was held there because it was the nearest federal courthouse in relation to the site of the arrest in Allendale.

The next hearing is scheduled to take place next week and will be held via Zoom, Mr. Lynch said.