(Source: MIRS.news, Published 02/06/2023) Steve Liedel, chief legal counsel to former Gov. Jennifer Granholm, believes the mechanism used to determine a possible income tax rollback "likely violates Michigan's constitution," and could provide grounds for the current governor not to comply.
According to Liedel, a government and political law attorney at Dykema, Democratic Gov. Gretchen Whitmer has the obligation to consider the constitutionality of every act that's been signed into law. Because of this, Whitmer could not enforce the rollback, without a legal ruling, and potentially seeking an Attorney General opinion "before you would get to any litigation."
"What the Legislature did in 2015 was create a new public body, a public body composed of the state treasurer, the head of the Senate Fiscal Agency and the director of the House Fiscal Agency – and two of those individuals are officers of the legislative branch," Liedel said on Monday's episode of the MIRS Monday Podcast. "Our constitution, without a constitutional exemption, prohibits officers of one branch from performing the functions of the other."
In 2015, the state Legislature and Republican Gov. Rick Snyder signed off on an income tax rollback trigger as part of the $1.2 billion road funding agreement at the time.
At the present time, the agreement has created a window for the state's income tax to be reduced if General Fund revenues exceed revenues from Fiscal Year (FY) 2021 once inflation, and a 1.42 multiplier is placed into the equation.
Liedel illustrated how overseeing such a trigger would be an executive function. However, because the 2015 deal directed the responsibility to the state Department of Treasury and the Senate and House Fiscal Agencies all-together, the functions had unconstitutionally been divested into a legislative office.
"Or it's a legislative function, and it's improper to invest it in the executive, and the Legislature (has) improperly delegated its legislative authority to its fiscal agency directors," Liedel said.
The attorney said another reason the trigger likely violates the constitution is that the Michigan Constitution requires the Legislature to house any instrumentality they've created, for the purpose of performing an administrative function, in one of the principal state departments.
"They failed to do so," Liedel said. "Here you have a body making a determination as to a tax rate, which will be paid as a matter of law by every individual conducting economic activity and receiving personal income in the state."
As described earlier, the Senate and House Fiscal directors would be managing the personal income tax rollback from 4.25% to 4.05% that could be triggered by high FY 2022 revenues, alongside the state Treasury.
Due to this, Liedel ultimately summarized how the Legislature would have violated something especially prohibited under Article II, Sec. 9, of the state constitution by delegating its function as a taxing power to someone else.
"Remember, Michigan's courts have said that the governor has as solemn an obligation to consider the constitutionality of, at the time, his – now we know that it can definitely be a her – every act," Liedel said. "The Governor's responsible for the faithful execution of the law and for the direction and supervisions of constitutional officers and state departments."
Liedel said if the officials in charge of administering a statute view it as unconstitutional, they have a duty under Michigan law not to comply, which has occurred in the past with the implementation of various budget issues.
He said it also happened most recently when it came to Whitmer's blocking efforts surrounding how the state's 1931 manslaughter ban on abortion should have been treated when Roe v. Wade was reversed by the U.S. Supreme Court.
During a press conference today, Whitmer highlighted a Democratic proposal to utilize $800 million from the state's General Fund to finance $180 rebate checks for all Michigan taxpayers.
In a press release that arrived shortly after Whitmer's press conference this morning with Senate Majority Leader Winnie Brinks (D-Grand Rapids) and House Speaker Joe Tate (D-Detroit), Senate Minority Leader Aric Nesbitt (R-Lawton) said the state should be doing more with a $9 billion surplus than handing out a one-time annual rebate check that equals 49 cents per day.
He additionally described his concerns that Whitmer was continuing to fight against the anticipated automatic income tax rollback, later stating "Democrats continue to push plans that pick winners and losers and seem to think one-time checks are a substitute for ongoing tax relief."
During her press conference, Whitmer said the aforementioned trigger "may or may not go into effect," and could equal about $16 in relief for a single woman raising a family while earning $30,000 annually.
On the MIRS Monday Podcast, Liedel furthermore said he doesn't believe the trigger would result in a permanent reduction in the state's Income Tax Act.
"I don't read the text that way, perhaps that was what was intended in 2015, but I don't believe it's a permanent reduction. I believe it's an annual reservation under the text as enacted," Liedel said. "It says for each tax year beginning on and after Jan. 1, 2023, so that indicates a clear intent that the Legislature intended there to be an annual re-evaluation of the rate."
He described the use of rebate checks as pretty straightforward, based on his personal views and personal experience.
