Supreme Court Ruling Could Put Major Hole in FY15 State Budget
A recent 4-3 decision of the Michigan Supreme Court in IBM v. Treasury could have a major impact on the state’s FY15 budget if the Supreme Court does not rehear its decision on corporate tax breaks under the old Michigan Business Tax. According to the state budget office, the state could be forced to make more than a $1 billion in cuts to the General Fund in FY15 if the ruling is not reversed.
When the case was decided on July 14, officials expected the case to hit the state for at least several hundred million dollars, but the estimate reached by the Department of Treasury and delivered to Budget Director John Roberts came as an unexpected surprise.
Just three justices signed the majority opinion. IBM won the case because Justice Brian Zahra wrote a separate concurring opinion.
In the decision written by Justice David Viviano and joined by Justice Michael Cavanagh and Justice Stephen Markman, the Supreme Court held the Michigan Business Tax was in fact an income tax under the broad definition of income tax in the Multistate Tax Compact. That would allow IBM to calculate its taxes under a three-step apportionment factor which allowed it a much larger refund than the state allowed. When the tax was enacted in 2007, it was intended to continue the value-added system created initially in 1975 with the old Single Business Tax. Justice Zahra held that the definition of tax bases in the MBT met the definition in the compact.
Justice Bridget McCormack, joined by Chief Justice Robert Young Jr. and Justice Mary Beth Kelly, wrote the dissent that argued the Constitution permitted the Legislature to bar taxpayers from using the compact's formula, and that taxes calculated had to be done under the MBT's formula which dealt with sales only.
In making its motion requesting the court rehear the case, the state said the decision could bust the state's budget. Additionally, some legislators said the court should rehear the case, because the 4-3 decision misinterpreted the intent of the 2007 tax.
In a statement supporting the effort to have the case re-argued, House Speaker Jase Bolger (R-Marshall) said, "The intent of the Legislature was clear back in 2007 when they implemented the Michigan Business Tax and again in 2011 when we repealed the MBT. Out-of-state companies should pay taxes based on their sales in Michigan and not reduce their bill based on having fewer employees in our state as that would give them a tax advantage over our local job providers." Michigan taxpayers would be forced to pick up the cost for those companies headquartered out of state, which could hurt Michigan businesses, he said.
"Rewarding companies for not hiring Michigan workers is not fair tax policy, does not make sense and clearly was not what was intended when Governor Granholm signed the original law. With respect, I believe the Supreme Court made an error in overruling the lower courts in this case and should reconsider its decision," Mr. Bolger said.
If the court does agree to rehear the decision, it will be a rare occurrence. A spokesperson for the court said it gets about 10 requests a year to rehear a decision, but grants such a request every "two or three years."
Healthy Michigan Enrollment Tops 350,000
Total enrollment in Healthy Michigan, the state's expanded Medicaid eligibility program, has topped more than 355,000 people, the Department of Community Health showed on Monday.
The latest milestone was reached less than one month after enrollments hit 320,000, which was the total expected for all of 2014. If enrollments continue at the current pace, the state could hit the estimated total number of people it would cover - 470,000 - in a little more than another two months.
The largest number of enrollees comes from Wayne County at 98,414 so far and 54,896 of those specifically from Detroit. Macomb County has the next largest total of enrollees at 26,334, following by 25,760 from Oakland County, 23,644 from Genesee County and 17,256 from Kent County.
SAMHSA Seeks Comments on Strategic Plan
The Substance Abuse and Mental Health Services Administration (SAMHSA) has released its draft strategic plan for the next three years. “Leading Change 2.0: Advancing the Behavioral Health of the Nation 2015-2018” outlines SAMHSA’s proposed work across six Strategic Initiatives:
- Prevention of Substance Abuse and Mental Illness
- Health Care and Health Systems Integration
- Trauma and Justice
- Recovery Support
- Health Information Technology
- Workforce Development
SAMHSA noted in release accompanying the strategic plan that the efforts identified in the strategic plan will help increase public awareness and improve understanding about mental and substance use disorders; promote emotional health and wellness; increase access to effective treatment; and support recovery.
The Strategic Plan will be used to guide SAMHSA in setting budget and policy priorities, managing financial resources, engaging public and private partners, and tracking and disseminating progress. SAMHSA is seeking public comments on the Strategic Plan, with a deadline of Monday, August 18. Click here to provide your feedback.