Legislators consider bucking Snyder on tax break

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Michigan legislators are strongly considering an attempt to override a Gov. Rick Snyder veto for the first time since Republicans took control of state government in 2011, a move that would speed up a gradual tax break but strain relations heading into the fall session.

Snyder spurned legislators in July when he rejected legislation that would have accelerated a sales tax break for motorists who trade in old vehicles to purchase new ones, calling the bipartisan plan “not fiscally prudent.”

But House and Senate leaders from both political parties voted for the legislation and say they’re willing to do so again. They plan to discuss the possibility of a veto override with individual legislators when session resumes Sept. 6.

“I would like to deliver tax relief to the hard-working taxpayers of this state,” Republican House Speaker Tom Leonard of DeWitt told The Detroit News, “so certainly if the caucus wants to go that route, and if we’ve got the votes in the chamber, I’m willing to do it.”

The legislation originated in the Senate, which unanimously approved the two-bill package in March, so an override attempt would have to start in that chamber. Overcoming the veto would require two-thirds support in both the Senate and House, which approved the plan 88-19 in June.

Senate Majority Leader Arlan Meekhof of West Olive is waiting to discuss the matter with other Senate Republicans before deciding if he’ll pursue an override vote, but it “is a possibility,” said spokeswoman Amber McCann.

His Democratic counterpart, Minority Leader Jim Ananich of Flint, is on board. He co-sponsored the plan and argues it would help residents looking to buy new or used cars and benefit one of the state’s most important industries.

“I was proud to vote for it the first time, and I would encourage us to override that veto and give people relief,” Ananich told The News.

Michigan legislators voted in 2013 to phase in a “sales tax on the difference” break for trade-ins and vehicle purchases, approving a 25-year compromise plan signed and celebrated by Snyder.

Motorists who buy a new or used car this year can avoid up to $3,500 in sales taxes by trading in a used vehicle worth at least that much. The maximum exemption is set to increase by $500 every year until the cap is completely lifted by 2039.

The newer proposal Snyder rejected would have sped up that plan, allowing an owner to exempt the full value of their-trade-in vehicle from the sales tax on a purchase by 2029. It would also immediately exempt the full value of a recreational vehicle trade-in.

The legislation is projected to cost the state about $300 million in sales tax revenue through 2039, according to the House Fiscal Agency. Public education and local government groups opposed the plan because schools and cities receive a portion of state sales tax revenue.

In his veto letter to legislators, Snyder said the original 2013 law to phase in the sales tax exemption was designed to “lessen the burden on the state’s general and school aid funds.”

“With budget pressures from a number of areas in coming years,” including implementation of a new road funding law, “I do not believe it is appropriate to create additional financial strain by accelerating the tax relief agreed to in 2013,” Snyder wrote.

A recent report by the non-partisan Citizens Research Council highlighted several challenges that lie ahead for the Michigan budget, including previously approved tax credits and other promises that will divert about $2 billion a year in state revenue.

Michigan legislators haven’t voted to override a gubernatorial veto since the early 2000s, when they bucked then-Gov. John Engler on a local revenue sharing bill, said Bill Ballenger, a former legislator now running the Ballenger Report. Prior to that, it hadn’t happened since 1977.

“These things are really, really rare,” he said.

Ballenger said the veto override may be a way for the Republican-led Legislature to channel frustrations on other fronts, including the GOP governor’s opposition to a House income tax cut plan that collapsed earlier this year and his veto of a Senate bill to create a “Choose Life” fund-raising license plate.

“Some people believe this is more about the Legislature deliberately going after the governor or thumbing its nose at him,” Ballenger said. “Meekhof has been kind of the gate-keeper on all this. He’s been the one who has put the brakes on people demanding other veto override attempts and said let’s be careful. He’s the key guy right now.”

House Minority Leader Sam Singh, D-East Lansing, isn’t taking a position on the potential veto override at this point. It would up to the Senate to act first, he noted, “and I’ve heard a lot of mixed things coming out of the Senate.”

A fall override would accelerate Snyder’s march toward lame-duck status as he approaches the final year of his eight year tenure. Term limits will prevent him from seeking re-election in 2018.

Leonard, who has feuded with the governor over tax relief, said any override attempt should only be construed as a policy difference between the Legislature and governor.

“His prerogative was to veto the legislation, and I didn’t take that personally,” Leonard said. “So he certainly shouldn’t take it personally if we choose to override his veto.”

Ananich agreed.

“We’ll figure out ways to work on relations with the governor if that’s a problem,” he said, “but I’m more concerned about the taxpayers.”