Senate vote needed to support congressional delegation efforts

LANSING - Governor Jennifer M. Granholm today praised the State House of Representatives for quick action on House Bill 4239 that will protect some 34,000 Michigan businesses from having to pay as much as $43 million a year in the form of a "solvency tax." The tax was imposed by the Unemployment Insurance Agency (UIA) to cover interest payments on money the state has borrowed from the federal government to fund unemployment benefits.

"At a time when businesses are trying to navigate the waters of a rough economy, this tax added an unnecessary burden on their bottom-line," Granholm said.  "I worked hard along with Michigan's congressional leaders to lift this burden for businesses, and now we need to follow up by changing the law here in Michigan to protect our businesses."

Today's action by the State House would allow Michigan to take advantage of a waiver in the American Recovery and Reinvestment Act (ARRA) that protects businesses from having to pay a state solvency.  Granholm had pushed the administration for a solution that would help Michigan businesses avoid this tax.  Congressional leaders Sander Levin, Debbie Stabenow, and Gary Peters were instrumental in crafting language in the American Recovery and Reinvestment Act to make this happen.

Under the ARRA, states are granted a two-year waiver from having to pay the interest owed on money they've borrowed to fund unemployment benefits for workers.  For Michigan to take advantage of the waiver, lawmakers need to amend the law that requires a "solvency tax" to be assessed on businesses to meet those interest payments.  Without a change in state law, businesses would be forced to pay the tax even though the federal government is waiving those payments.

The bill, sponsored by Rep. Robert Constan (D-Dearborn Heights), now goes to the State Senate where the governor is hopeful lawmakers will send it to her desk for her signature.

# # #