Dec. 16, 2022 | This Week in Government: Inflation Concerns Persist, Voters Optimistic About State’s Future

Voters generally feel like Michigan is on the right track post-election day, but concerns about inflation and the economy remain, especially among Republican voters, according to survey data collected in the Detroit Regional Chamber’s latest statewide poll of registered Michigan voters.

“Not surprisingly, the economy – especially the continued high level of inflation – continues to be front and center in voters’ minds,” Sandy Baruah, president and CEO of the Detroit Regional Chamber, said in a statement. “But other than certain pockets of voters, Michiganders appear to be expressing a collective sigh of relief post-election day with an increased confidence in our voting process, calls for a centrist agenda in Lansing and confidence in Gov. Whitmer as she embarks on her second term.”

The survey was conducted in partnership with the Glengariff Group, Inc., between Nov. 28 and Dec. 1, 2022. Questions were asked of 600 voters statewide.

Most of those surveyed said they were concerned about inflation, with 92% saying it was a concern and 64.5% saying they were very concerned.

Of those surveyed, about two-thirds said they have had to make new spending choices, but 66% of voters also said they were doing the same or better economically than in the past.

“A vast majority of consumers and voters are saying, ‘Hey, we’re doing OK, but we’re still cranky about the economy,” Baruah said. “That’s been an ongoing issue that I’ve been waiting to see if that starts to shift, but we haven’t seen that yet.”

Consumer confidence is also low right now, with Michigan’s consumer confidence number at 59.9, which is lower than it was during much of the Great Recession in 2008 and 2009.

“It does continue to show this dichotomy that we see in consumer behavior. GDP is strong, the unemployment rate is still at record low, both nationally and close to record lows here in Michigan. People are clearly still spending because we’re seeing that in the economy, but they’re still very cranky,” Baruah said.

Notably, Republican voters are more likely to be concerned about inflation and the state of the economy.

“There is a clear political component to this inflation conversation,” said Richard Czuba, president of the Glengariff Group, Inc. “Those who are saying they’re worse off are disproportionately Republican voters.”

Of those who said they’re worse off economically than they have been in the past, 50% are base Republican voters compared to 31% of independents and 14% of Democrats, according to the survey data.

Despite concerns about the economy, most voters feel like the state is on the right track.

“This is something I’ve been watching for 40 years,” Czuba said. “It’s not often to see Michigan on the right track, frankly, with the voters.”

That data correlates with confidence in Michigan’s leadership, with Gov. Gretchen Whitmer receiving a 66% approval rating.

“They are pleased with the direction of the state leadership, but inflation is just an ongoing concern,” Czuba said.

Most voters also approved of how the election was handled, with 84% approving of the process by which they voted.

“There was a sigh of relief that the 2022 election was without a lot of drama,” Baruah said.

Those who disapproved of the election process were disproportionately Republican primary voters, Czuba said.

“These voters are equating their faith in democracy or their optimism in democracy on whether or not their candidate won, not with the system,” Czuba said.

The survey showed that voters approve of legislation on gun control, with 24% of voters agreeing it should be the number one priority for the new legislative term. Background checks for gun purchases received support from 90% of voters surveyed, and red flag laws were supported by 74% of voters.

Repealing the pension tax was also a popular priority, supported as the number one priority by 18% of those surveyed, and repealing Michigan’s 1931 abortion ban was the third most popular priority at 15%.

“It’s very rare to see a policy at 90% support amongst the voters,” Czuba said on background checks for gun purchases. “That’s a low-hanging fruit opportunity for this new Legislature to pass some of these centrist issues that have support across the board.”

Repealing Michigan’s right to work law was only considered a top priority by 4.5% of voters, and passing legislation prohibiting discrimination against LBGTQ workers was a top priority for just under 4%, according to the survey data.

This is the first year the Chamber has asked voters about how important a state’s social policies – such as its stance on abortion, gay rights, and legalized marijuana – were to their choice to live or move there.

Of those surveyed, 60% of voters said it would be important, and 38% said it would not be. Among voters under the age of 40, 46% of those surveyed said social policies were very important to them. Social policies were also more important to women than they were to men, according to the survey data.

“What is clear in these numbers is that it does factor into, particularly young workers, decision about where they’re going to go,” Czuba said.

Understanding the answer to that question is important to economic development, Baruah said.

“When we talk to employers, their biggest challenge is attracting and retaining talent,” he said. “Social issues are now becoming economic issues. … It’s important for us to understand how the social issues interplay with the talent retention and attraction issues.”

Gov. Gretchen Whitmer said Wednesday she is examining issuing executive reorganization orders for state departments and agencies, an area the past four years where she could not act as strongly as she wanted because the Republican majorities in the Legislature could reject them.

Whitmer, in a year-end roundtable with reporters, also mentioned expanding the Earned Income Tax Credit and repealing the “retirement tax” as priorities when asked if she felt a sense of urgency about the first six months of 2023 when Democrats would have full control of state government for the first time in 40 years.

With Democrats taking control of the Legislature in January, the barrier to executive reorganization orders presented from 2019-22 is likely gone. Whitmer said her administration is examining whether to reissue similar orders involving the environmental permitting and rules committees that Republicans rejected in 2019. She also spoke of the need to realign the executive branch to consolidate housing matters.

Executive reorganization orders take effect in 60 days unless rejected by majority votes in both legislative houses.

“This is a second term, a new opportunity in front of us,” she said. “New needs, frankly, and so I don’t have anything to announce right now. But we are examining whether or not the early changes that we had hoped to make might still make sense or if there are different organizations. So, we have a lot of affordable housing needs in Michigan. And, unfortunately, we’ve got not one place that addresses everything. So, there’s an office in the MEDC that probably shouldn’t be. I mean, there are just some things like that, that we are considering as well.”

In early 2019, Whitmer issued a sweeping executive order that, among other changes, eliminated three oversight panels within the Department of Environment, Great Lakes, and Energy, with the Environmental Rules Review Committee and Environmental Permit Review Commission being the prime targets. In late 2018, the Republican-led Legislature passed and then-Gov. Rick Snyder signed, legislation setting up the panels as a check on the incoming Democratic Whitmer administration to slow and limit new environmental rules and help assure more favorable treatment for permits. Both houses rejected the executive order, forcing Whitmer to issue a revised order that kept the panels intact (See Gongwer Michigan Report, Feb. 14, 2019).

In practice, the panels have been fairly invisible with limited apparent impact. Additionally, as time has passed, Whitmer has filled a number of slots on both commissions with her appointees.

Still, the commissions’ presence, particularly on rules, could have served as a hidden check and prevented EGLE from promulgating rules knowing the panel could slow their approval to a crawl.

Whitmer was asked about the urgency to act in the first six months given the narrow Democratic majorities and the possibility, even probability of vacancies.

Already Rep. Kevin Coleman (D-Westland) has stunned and angered his House Democratic colleagues by announcing he is running for mayor of his hometown next year with the possibility the city council could appoint him interim mayor to fill the vacancy being left by retiring Mayor William Wild.

If Coleman departs, that would drop the Democratic majority to 55-54 and put them at risk of not having a majority to pass bills should another vacancy occur before Coleman’s were filled.

In the past four terms, the majority party in the House has had two terms with vacancies (three in the 2021-22 term and two in the 2015-16 term).

Whitmer said vacancies or not, the first six months are very important. She said she is working closely with Senate Majority Leader-elect Winnie Brinks (D-Grand Rapids) and House Speaker-elect Joe Tate (D-Detroit).

“We are going to have an agenda that I think we’re all we’re all absolutely dedicated to, and I would imagine early on, we’ll be able to give the working family tax credit, get that done, as well as the retirement tax repeal,” she said. “So that’s just the start.”

There is considerable speculation as to what might move first after the 102nd Legislature convenes on Jan. 11. Whitmer’s comments suggest the expansion of the EITC and repeal of the tax on pensions is high on her list.

Whitmer would not offer other top priorities for the first six months of 2023, deferring to her State of the State address.

She did say her team is looking at “all sorts of old zombie laws and cleaning up the books” in talking about the 1931 felony ban on abortion, now invalidated by voters’ adoption of Proposal 22-3, and also referenced laws involving the LGBTQ community.

The governor did not offer specifics, but there is a statutory ban on gay marriage in Michigan law that the Legislature could repeal though the constitutional ban – nullified by the U.S. Supreme Court decision in Obergefell – would remain intact. The state also still has a criminal ban on sodomy in the Michigan Compiled Laws – nullified by a 2003 U.S. Supreme Court ruling in Lawrence v. Texas.

Whitmer also was asked about codifying protections for people on the basis of sexual orientation and gender identity in the Elliott-Larsen Civil Rights Act. The Michigan Supreme Court said the act’s protections against discrimination to other classes already apply to sexual orientation and gender identity because of the ban on discrimination on the basis of sex, but changing the statute would ensure a future court could not unwind the Rouch World ruling.

“Elliott-Larsen is an important thing for us to get done. I would anticipate that will be early on in the schedule,” she said.

Whitmer was asked about House Minority Leader-elect Matt Hall (R-Comstock Township) saying the governor walked away from a deal on various items during the final voting session days last week. Whitmer disputed that and called it irresponsible of Hall to make that claim when he “was not even a part of deal negotiations.” Hall had worked with the administration on some tax issues, but since his election as minority leader, has taken on more of a role leading the opposition.

“I’m hopeful that Representative Hall will come back to Lansing after the first of the year with a spirit of trying to work together, but I’ve got to tell you, I think that that’s a really unproductive way to kick off a new relationship,” Whitmer said.

In a statement released after Whitmer’s comments became public, Hall said, “the governor not knowing who was in the negotiations is part of the problem.” He reiterated that Whitmer backed out of a deal.

Whitmer had a couple of parting shots at the outgoing Republican leadership in the Legislature.

She mentioned a longtime axiom in town about it taking 56 votes in the House and 20 votes in the Senate to pass anything and the signature of one governor for it to become law.

“56, 20 and one, and that one is very important, and the last Legislature didn’t maybe understand that or appreciate that,” she said.

Minority Leader-elect Matt Hall named key members of his leadership staff on Thursday, many with long histories in the Legislature and Republican institutions statewide.

Lindsay Young, the current policy director under Speaker Jason Wentworth, will serve as Republican chief of staff and legal counsel, while outgoing Rep. Julie Calley will serve as director of strategy.

“House Republicans have led the way to bring higher-paying careers to our state, make life more affordable for Michigan families, and build stronger and safer communities,” Hall said in a statement. “Our staff members have been critical partners in Republicans’ accomplishments for our state, and I’ve put together a battle-tested team to help us defend these successes and keep leading our state forward.”

In addition to serving as policy director under Wentworth, Young also previously served as his senior deputy legal counsel. She has worked for seven House and Senate Republican leaders since 2009.

Gideon D’Assandro will serve as central staff director. He has been the press secretary for each of the previous four speakers of the House and the communications director for the House Republican caucus for the past three terms. D’Assandro previously served on Gov. Rick Snyder’s reelection campaign after a stint in House Republican Communications.

Dulce Cardenas will be the administrative director for Hall. She is currently Wentworth’s legislative coordinator and formerly acted as the executive assistant in the speaker’s office. Prior to working for the speaker, Cardenas was the director of scheduling for former Attorney General Bill Schuette.

Nick Bolger, who was most recently the legislative director for former Rep. Jim Lilly (R-Holland), will serve as legislative director. He served as a legislative assistant to two speakers of the House after previously working at a national campaign consulting firm in Washington, D.C.

Jeremiah Ward will act as press secretary for the House Republicans. He is currently a communications advisor for House Republicans (editor’s note: This story was changed to correct the spelling of Ward’s first name and clarify his role) and previously worked as communications director for former Speaker Tom Leonard’s attorney general campaign. Prior to his service in House Republican communications, Ward was a legislative aide to state Sen. Tom Barrett.

Calley, who will be director of strategy, is concluding her third term as a state representative for the 87th House District, which includes Barry and Ionia counties. During her time in the Legislature, she sponsored laws to limit the cost of prescription drugs, enhance Michigan’s 911 system and establish juvenile mental health courts. Previously, Calley served eight years as an Ionia County commissioner, including three years as chair. She also served on and chaired the Michigan Community Service Commission.

Derek Robinson will act as policy director. He has been a policy advisor for House Republicans for six years and has also acted as deputy budget director. Robinson has advised legislators on issues including taxation, local government, energy, education, and appropriations. He previously served as legislative director for former state Rep. Jack Hoogendyk, Rep. Tom McMillin, and Rep. Margaret O’Brien.

Zac Obermiller will serve as member services director. Obermiller is currently the political director for the Michigan Republican Party, and before that, he was the campaign manager for Garrett Soldano’s gubernatorial campaign. In 2020, he was the campaign director for the reelection campaign of U.S. Rep. Mike Garcia of California.

Gustavo Portela will be communications director. He currently is the Michigan GOP’s communications director. Portela has held several communications roles, including senior press secretary, director of media relations, and communications director with Kevin Faulconer, former mayor of San Diego and California gubernatorial candidate. His prior experience includes political and advocacy work in Washington, D.C. and Michigan.

Catherine Edwards will be deputy Republican counsel. She currently serves as deputy legal counsel and policy advisor in the House. Previously, Edwards was a law clerk for Judge Brock Swartzle of the Michigan Court of Appeals. She also served for more than 13 years as an attorney for the city of Grand Rapids, including eight years as chief city attorney. Edwards clerked for former Michigan Supreme Court Justice Stephen Markman and former Michigan Court of Appeals Judge Michael R. Smolenski.

Phil Browne will continue in his role as budget director for House Republicans. He was previously senior budget advisor for the House Appropriations Committee and served as director of government affairs for the Michigan Department of Transportation. Browne also was deputy chief of staff to former Speaker Jase Bolger.

The state of Michigan brought in $2.6 billion in November from its main tax collections but was slightly below projections for the first month of the new fiscal year, the Senate Fiscal Agency said Thursday.

In its monthly revenue report, the agency said total revenue collections were up 4% from the same period the previous year. However, they were $64.4 million less than its predictions for the month based on the May 2022 consensus revenue estimate.

Individual income tax withholding and larger individual income tax refunds were less than expected and offset collections from the sales tax, State Education Tax, and Corporate Income Tax that were above projections.

General Fund collections were $134 million less than expected for the month, while the School Aid Fund collections were $69.7 million higher than anticipated.

Net income tax revenue came in at $868.9 million in November. This was down 8.9% from the same period one year ago, along with $166.3 million below estimates. Withholding payments representing most gross income tax revenue were also down from one year ago by 4.2% and $111.9 million less than expected.

Individual income tax returns filed in October with extensions led to individual income tax refunds being $70.2 million more doled out than projected.

Sales taxes were at $918.6 million for November. This was up 14% from the previous November and $71.5 million more than estimated. For use tax collections, they totaled $210.8 million and were up 8.4% from last year.

New revenue from the Single Business Tax, the Michigan Business Tax, and the Corporate Income Tax was at $19.4 million for the month. This was down 46.2% in the same period one year ago but $4.6 million higher than anticipated.

Michigan Business Tax collections were at negative $54.7 million due to refunds exceeding payments by $18 million above what was expected. Net Corporate Income Tax collections were up 34.7% over the previous November levels and $22.6 million more than projected.

In the days since Gov. Gretchen Whitmer announced the departure of Liesl Clark as director of the Department of Environment, Great Lakes and Energy, several sources speaking on background have said the governor’s office decided to make the change in the position as opposed to Clark deciding to leave.

Gov. Gretchen Whitmer, meeting with Capitol reporters Wednesday for a year-end roundtable, was asked if she had forced out Clark. The governor never answered the question directly but said several times that change in departmental leadership is normal at the end of an executive’s first term and praised Clark.

“Between every first term and a second term, there are always changes in leadership. And that’s normal,” she said. “To be honest, the fact that we held on to a full Cabinet for that full first four years with all the stuff that we had to navigate I think was pretty remarkable. I got a great deal of respect for Liesl. I appreciate the work that she’s done. And you know, there are a few spots in state government where we’ll have some new leadership and people shouldn’t read too much into why that is, other than this is a new day and people move on and we wish you know everyone well for them and their families.”

Whitmer was asked if it was necessary to make changes at EGLE.

The governor responded that the administration made changes in several departments. She reiterated there is always change at the end of a first term and noted she had the same chief of staff during her entire first term as a sign of the stability that has existed.

“We’ve had actually extraordinary stability, and I’m proud of it,” she said. “I think we have a good environment. We got a lot of good people, but you know, change happens and it’s healthy and it’s normal.”

Whitmer was asked what would improve at EGLE as a result of the leadership change. Acting Director Dan Eichinger has shifted from his former position as director of the DNR. It’s not clear if he’s the long-term leader of EGLE or would return to the DNR upon the selection of a new EGLE director.

Whitmer said across all state government – including EGLE, but not just EGLE – her team is reviewing how quickly the state can move on issues.

“We’ve got a set of standards we’ve always got to abide by and protect the public and we will continue to do that,” she said. “But we’re looking to see if there are ways that we can streamline and move a little faster. Whether it is in you know, the Liquor Control Commission or is in MSDHA or is in EGLE or MDOT or any other state government, really, we’re trying to really drill down and see where we can streamline some things. It’ll take some more FTEs, it will take perhaps some new processes, but that’s a focus of ours. “EGLE has taken some criticism from environmental groups that think it should focus more on environmental justice and take a harder line on polluters.

Industry has long chafed at EGLE’s permitting and rules as too slow or burdensome.

Whitmer was asked about the direction EGLE would take.

“I think we got to we’ve got to do both, right? We got to listen to both,” she said. “But I don’t think that these critiques are unique to the last four years, right? You look across state government. These have traditionally been the critiques, no matter who’s sitting in this chair, no matter who’s sitting in that chair. So, I don’t take any of that as unique to this administration.”

Michael Alaimo, Michigan Chamber of Commerce director of environmental and energy affairs, in an interview, said the chamber had a good working relationship with Clark. However, he did say he wanted to see some improvement from the department regarding the permitting process and contaminated site cleanup.

“The business community always wants a permanent process that is fair, consistent and based on the rulemaking process and there’s been instances where that hasn’t been the case,” Alaimo said. “It did lead us to conduct a survey … to ask our members what their experience was. We had well over 100 responses from the chamber alone on the topic.”

The responses largely said there was more that can be done to streamline the permitting process and make it more business-friendly.

Alaimo said he heard Whitmer’s comments about state departments needing to move more quickly, saying he was encouraged.

The Ajax facility in Flint was one of the instances Alaimo noted some back and forth between EGLE and a business. After the public hearing, Alaimo said EGLE put further restrictions in place, some of which the business does not see as workable.

“This was a minor source air permit,” he added. “This is unprecedented to see this type of scrutiny, this type of back and forth. And the restrictions put into place…I can just tell you that sends a very clear signal to the business community.”

The Ajax facility faced backlash from Flint residents, with more than 4,000 residents signing a petition requesting the facility be built somewhere else. Alaimo said both need to occur when asked if there needs to be better communication between the community and the business or if it was EGLE’s job to be a facilitator between the two.

“I think that my members see themselves as good stewards of the community and certainly see the relationship with any host community as critically important,” he said. “Education is a huge component of that, and I have members that have absolutely led the way on how you serve and communicate with a community.