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Half-billion dollar lame duck spending plan collapses; MI Legislature heads home

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Michigan lawmakers have gone home — likely for the last time this year — without reaching an agreement on a spending package that would have totaled close to $500 million.

House Republicans said $200 million of that money would have gone toward an economic development project the state hoped to attract.

Gov. Gretchen Whitmer had signaled for weeks that she would like the current Legislature to approve more money for business incentive programs before a new set of lawmakers takes over in January.

Neither Whitmer nor legislative leadership has publicly said what types of projects, if any, the state was hoping to attract.

But Rep. Beau LaFave (R-Iron Mountain) said the money would have supported a timber project in Delta County, within his Upper Peninsula district. He and other House Republicans blamed Whitmer, a Democrat, for the talks falling through.

“I believe there are hundreds of jobs that we have today that won’t be there next year because of Gretchen Whitmer’s actions,” LaFave said early Thursday morning.

House Tax Policy Committee Chair Matt Hall (R-Comstock Twp) said he believed there was an agreement between the Republican-controlled Legislature and Whitmer.

“It was going to be a major economic development project in our state that would have created hundreds of jobs. And … I’ve been somebody who wants to promote economic growth in our state, who wants to create jobs and so I thought we had a really great deal,” he said.

Hall, the future House Republican Leader, released a joint statement early Thursday morning alongside incoming Senate Minority Leader Aric Nesbitt (R-Lawton) lamenting the lack of an agreement.

At least one Senate Republican, however, said there were too many moving pieces to work out a deal to begin with.

“I think that there was multiple issues and the issues changed multiple times and so, unfortunately, they couldn’t come together. But I don't know that I'm blaming anybody,” Sen. Jim Stamas (R-Midland), chair of the Senate Appropriations Committee, said after his chamber adjourned late Wednesday evening.

His Democratic vice chair, Sen. Curtis Hertel (D-East Lansing) called the notion of Whitmer sinking any potential deal a “ridiculous misrepresentation.”

“There was at no point anything that was presented to my caucus in a way that was acceptable either,” Hertel told reporters.

In a texted response to Hall and other Republicans’ accusations, Whitmer spokesperson Bobby Leddy referred to the comments from Hertel and Stamas while referencing bills that did pass through divided government.

“Whitmer is always ready to work with anyone who’s serious about solving problems and getting things done that will make working families’ lives better right now,” Leddy said.

After apparently cycling through various policy suggestions to accompany the economic development incentives, Republicans settled on a measure to keep the state Department of Treasury from collecting sales and use taxes on businesses for delivery and installation services.

Supporters worried the Treasury was unfairly going after small businesses for that tax revenue despite Michigan not having a service tax.

“We don’t have a service tax in Michigan. Now they’re having to jump through all these hoops, battle the state in the tax tribunal. It’s really become an issue,” Rep. Pat Outman (R-Six Lakes) said.

He co-sponsored a bill package to prevent that that had last come up in March.

Republican House communications said the resurrected proposal would have included $180 million to help make up for the revenue lost from delivery and installation taxes. It would have been spread out over a three-year period.

Republicans say the rest of the spending in the failed talks would have been for some year-end accounting work to fill in gaps. That includes re-authorizing funds for the state’s Independent Citizens Redistricting Commission.

The group has been raising concerns for months that it needed money appropriated during the last budget cycle re-authorized so it could pay its legal fees to defend the state’s new legislative districts in court.

Now that each priority has failed to pass, it will be up to the next Legislature to pick up the pieces.

With Democrats taking a narrow majority in the House, Whitmer will likely need Republican support to get her economic policies through.

That could open the door for Hall and his caucus to exert some power from the minority.

“I’m disappointed and it creates questions about how well we’re going to be able to work together. It’s not the tone we want to set,” Hall said, expressing his frustrations with how this session’s talks ended.

Still, Whitmer’s team appears forward-focused.

“In less than a month, an entirely new legislature will be seated after Michiganders voted to change leadership, and we look to tackle this and more with new lawmakers in the new year,” Leddy said.