In June, 2007, as agreement on the Michigan Business Tax (MBT) was being finalized, ABC of Michigan engaged in an intensive lobbying effort and ABC members throughout the state sent over 1000 emails to leaders of the House, Senate and the Governor to successfully avoid an unfair and cascading tax burden for the construction industry that would have resulted in double and triple taxation for construction firms. This effort paid off when a bipartisan agreement was reached to allow contractors and subcontractors to deduct the cost of labor and materials (supplies, inventory, etc.) from their gross receipts liability.

Although it was the intent of the Legislature to allow for contractors and subcontractors to deduct labor and materials from their gross receipts liability, over time a question has arisen as to if the MBT language, as enacted, actually provides for the deduction of materials for construction firms. This is due to officials in the Department of Treasury suggesting that the new tax law is limited to only those instances where materials are purchased as part of a subcontract, effectively excluding the direct purchase of materials.

Without a decisive solution to this problem that reflects the original intent of the legislature, which was to allow for the deduction of directly purchased materials, construction companies may experience a significant and detrimental cost of doing business in Michigan that can result in a 600% or greater increase in a company’s Michigan Business Tax liability compared to what their Single Business Tax liability was.

To correct this serious concern, ABC of Michigan has consulted members, CPAs and other business groups including Michigan Association of Homebuilders, MITA and the American Subcontractors Association. We are prepared to testified in front of legislative committees, are meeting with ranking lawmakers, forming coalitions, distributing memos and position papers and working tirelessly to advocate for a fair and equitable business tax replacement. Additionally, ABC held successful meetings with Rep. Steve Beida, Chair of the House Tax Policy Committee and Sen. Nancy Cassis, Chair of the Senate Finance Committee to correct this flaw. ABC also met with other key lawmakers involved in the Michigan Business Tax, including Sen. Mark Jansen (R-Grand Rapids) and Rep. Brian Calley (R-Portland), All of this is part of an intensive effort to have the MBT accurately reflect the intent of the legislature to allow contractors and subcontractors to deduct the direct purchase of inventory, materials and supplies from their Michigan Business Tax gross receipts liability. These legislators are committed to working with ABC on a bi-partisan level to provide a swift solution to this priority ABC issue.

ABC Leads the Fight to Protect Merit Shop Contractors from Unfair Union-backed Prevailing Wage and Hiring Mandates

On February 26, 2008, ABC of Michigan was the only association to publicly provide testimony and answer questions before a rare joint committee meeting of both the House Commerce and House Labor Committees. The public hearing received testimony on a program with the supposed goal of promoting the hiring of Michigan construction workers. The program would stipulate that a contractors working on state funded construction projects must make sure that 100 percent of his or her employees have been Michigan residents for at least one year. This legislation was pushed and supported by nearly every construction trades union and labor organization in Michigan who called the initiative “Hire Michigan First.”

However, ABC vehemently opposed this legislation because in reality it targeted Merit Shop contractors by stipulating that the hiring mandate only applies to construction firms who are not “party to collective bargaining agreements.” In opposing this anti Merit Shop bill, ABC of Michigan’s President Chris Fisher attacked the measure as “inequitable” and for creating and “uneven playing field.” In exposing the true intent of the measure Fisher concluded, “This has nothing to do with ‘Hire Michigan First’. What this really calls for is to hire union first from any state, and hire Michigan second.”

Another provision that was described by ABC of Michigan as “untenable, unpractical and over-reaching” was a provision tied to the Hire Michigan First charade that stipulates that any contractor or subcontractor found to be in violation Michigan’s Prevailing Wage law faces the following:

The contractor shall not receive any further payments under the contract.

The contractor may be held financial liable for costs incurred to rebid the contract.

The contractor may face debarment form participating in future bidding opportunities.

The contractor may be required to return any payments already received under the contract.

ABC will be working with legislative leaders in both the House and Senate to lead the fight against these anti-merit shop bills in order to protect the rights and freedoms of our members and the future of our industry.
ABC Urges Governor, Lawmakers to Remove Job Killing Prevailing Wage Requirement from Economic Stimulus Package

Associated Builders and Contractors of Michigan called on the Governor and lawmakers to create even more construction jobs than the 28,000 promised by Governor Granholm’s Economic Stimulus Package by eliminating the state’s outdated prevailing wage requirement.

“While ABC greatly appreciates the Governor’s focus on construction jobs, in this economy especially, it’s important that we are doing all we can to stimulate and promote job growth,” said ABC president Chris Fisher. “Removing prevailing wage mandates from the Governor’s stimulus package alone would free up an additional $100 million that could be used for additional construction projects to improve Michigan while over 1000 well paid construction jobs across our state.

Michigan’s Prevailing wage law increases overall construction costs at least ten percent by dictating that wages and other benefits on all taxpayer-supported construction projects must be determined exclusively by labor unions even though 78 percent of Michigan's construction work force chooses against belonging to a labor union. 'Prevailing wage' does not mean a fair market wage, but one artificially inflated and arbitrarily determined by an ever-shrinking minority of the construction work force. ABC instead supports competitive wages that are neither artificially high nor low.

“The fact of the matter is that our state is wasting taxpayer dollars and turning its backs on jobs by recklessly paying wage mandates which take the average competitive construction wage in Michigan and artificially inflates it beyond what the market can handle and what the state can afford,” said Fisher. “Eliminating this provision like other states have done would instantly create thousands of new, good paying jobs that on average pay more than $20 per hour.”

In the past year, newspapers across the state have been critical of prevailing wage laws including the Detroit News, Lansing State Journal and Grand Rapids Press. Legislation to repeal prevailing wage on school construction has been introduced in the state House by Reps. Dave Hildebrandt (R-Lowell), and Arlan Meekhof (R-West Olive). In the state Senate, Sen. Nancy Cassis (R-Novi) wants to suspend prevailing wages for all state construction whenever state unemployment is higher than the national average.

“As the Governor continues her pledge to go anywhere and do anything to bring jobs to Michigan, ABC encourages quick action to promote this much needed reform that will bring jobs and investment to our state at a time it’s needed more than ever,” Fisher concluded.

Western Michigan Chapter Testifies in Senate on Benefits of Community College and Construction Industry Partnerships

Western Michigan ABC President and CEO John Doherty recently testified before the Michigan Senate Appropriations Subcommittee on Community Colleges during a special committee meeting held in Grand Rapids to discuss community college and ABC partnerships on apprenticeship training, continuing education, safety and first aid/CPR, applied technology and “green building”.

As the baby boom generation retires, Doherty discussed the need for our industry to produce the best craft persons, managers and entrepreneurs, and that to do so we must lean heavily on Michigan’s educational resources.

During his remarks Doherty stated that in order to enable ABC member companies and their employees to survive in today’s business climate, we need to have training partners that understand the marketplace we work in; provide educational opportunities that match industry needs and can be delivered at the speed of change. They need to have people that will anticipate what we need often even before we know ourselves.

Referring to the community college system our industry often accesses on behalf of ABC member employers as “essential to the training of the next generation of construction industry employees”, Doherty laid out several trends affecting construction industry dynamics and went on to highlight needed reforms to better enable ABC members to excel in today’s construction marketplace.

Doherty concluded that “We are either going to stay ‘state of the art’ or slip into irrelevancy. Workforce development is critical for any of the skilled trades and applied technologies that are essential for employers to produce buildings or products that fuel our state’s desired economic growth. A trained workforce is essential for us to gain any kind of an edge against competing states or nations.
The Western Michigan Chapter of ABC has collaborated efforts with Grand Rapids Community College, Kalamazoo Valley Community College, Northwestern Michigan College and the M-TEC @ Kirtland. The chapter currently has 425 students engaged in formal apprenticeship training in five trades primarily electrician; numerous in safety and first aid/CPR courses; and over 110 studying to become LEED Accredited Professionals to translate green building principles into construction practices.