The Download

The Download

February 20, 2017

Monday, February 20, 2017

MI House to Consider State Income Tax Bill 

As early as this week the Michigan House may consider a bill that would roll back our state income tax. The bill is gaining traction after a House panel voted to move the plan forward last week, following testimony before the House Tax Policy Committee. 

As CMF reported last month, our state income tax generates $9.4 billion a year in state revenue, funding essential public services, including schools and roads.

If state income tax revenue is decreased, it will mean less money for schools, roads, infrastructure repair and more, impacting Governor Rick Snyder’s proposed 2018 budget, which recommends funding increases in those critical areas.

Last week Snyder said he was disappointed by the House Tax Policy Committee voting to approve the bill, saying the state is already facing budget issues without the additional tax cut.

As the bill remains under consideration, we are getting a look at new figures that were released about the immediate impact on state funding from the House Fiscal Agency, a nonpartisan group.

Fast facts:

  • Our state income tax is currently at 4.25 percent
  • Starting January 1, it would drop to 3.9 percent, if the House bill becomes law
  • Under the bill, the state income tax would decrease by 0.1 percent every year until it’s fully eliminated in 2057
  • Should the bill become law, effective January 1, 2018, it will require reductions in the governor's proposed budget exceeding $800 million
  • New figures by the House Fiscal Agency show initial reductions in the state income tax would cost the state $1.78 billion in revenue by fiscal year 2019

Michigan Radio reports that calculations from the Michigan League for Public Policy (MLPP) show the tax cut would only mean a savings of $82 for a Michigander earning an average income of $51,000.

Gilda Jacobs, president and CEO of the MLPP, shared those numbers while testifying against the bill last week before the House Tax Policy Committee, saying the tax cut would have serious consequences for our state.

“Michigan has already endured years of cuts to services people rely on every day and has seen the consequences in public crises in Flint and other communities,” Jacobs said in a MLPP statement. “Cutting the income tax will exacerbate these problems and leave our state unable to invest in our schools, colleges and universities, air and water, communities, bridges and roads, healthcare and public safety—the things that actually fuel economic growth.”

Those in support of eliminating the state income tax say it will make our state more attractive and entice people to stay in Michigan.

The bill must pass through the full House and Senate and get Snyder’s signature before becoming law.

CMF has sent a letter to the governor urging him to veto this legislation should it reach his desk, due to the likely impact that the proposed reductions will have on nonprofits and on the important services that are provided to Michigan's most vulnerable residents.

As the Michigan House considers the bill, CMF encourages our members to talk with their local legislators and stress that philanthropy does not have the resources to replace government funding.







Every Student Succeeds Act: MI’s Plan

Michigan’s Department of Education (MDE) is taking public comment on its Every Student Succeeds Act (ESSA) plan it shared last week, before it submits a final draft to the U.S. Department of Education.

ESSA replaces the No Child Left Behind Act, aimed at giving states the power to consider specific needs of a community from how and when they test students to school accountability measures and making states responsible for addressing the needs of under-performing schools.

Michigan’s plan states, “Our key goal is to reduce the negative impact high risk factors play in impeding access to a quality education — factors like poverty and a lack of equitable resources.”

Highlights of Michigan’s ESSA plan include:

  • Accountability: Starting this fall, schools will be rated on an A through F grading system. The breakdown of accountability indicators and the weight they would hold in the grading system include:
    • Student proficiency: 29 percent
    • Student growth: 34 percent
    • School quality/student success (includes chronic absenteeism, access to fine arts, physical education, etc.): 14 percent
    • Graduation rate: 10 percent
    • English learner progress: 10 percent
    • Participation in state assessments: 3 percent

As MLive reports, there are concerns the A to F report card is too focused on state test scores. “If the system were in place now, MDE estimates 14 percent of schools would receive an F grade, while 29 percent would receive a B, and 23 percent would get an A.”

Additional elements of the plan include:

  • Transparency dashboard: Information would be easily accessible for parents to view data on postsecondary readiness, access/equity, school climate/culture, student and educator engagement and advanced coursework.
  • Assessment: Reduce overall testing time within the system by shifting time spent on local assessments to a more consistent state assessment. Develop the ability to measure growth within a year with benchmarks throughout the year and provide immediate feedback for educators that can support individual goal-setting for students.
  • Partnership districts (those with low academic performance and other needs) will identify holistic needs and craft a plan with educators, community organizations, foundations and state agencies. Plans would include performance benchmarks set for 90 days, 18 months and three years.
  • More flexibility for districts: Once districts know their needs, they can support schools in creating more responsive and focused school improvement plans and spend funds to support those plans, if they reflect impact on student achievement and progress in closing gaps of subgroups of students.
  • Early childhood integration: Expand access to high-quality early learning through an aligned set of early learning expectations and standards, leverage state and federal funds to achieve greater resources to support quality early learning in different settings, including homes and increase support for transitions between early childhood and elementary school.
  • Title IV Block Grant: This system replaces the former 49 individual grant opportunities that existed. Districts may use a block grant in coordination with other state, local or grant funds to address identified needs.

The MDE is taking public comment on the plan (online or via mail) until March 16, before submitting the final draft to the U.S. Department of Education in April. The ESSA plans will go into effect in the fall.

Read the full ESSA plan by the MDE.








Dissolving the Johnson Amendment: The Fall Out for Philanthropy

Three bills are currently in Congress that could impact the nonprofit space, opening the door for tax-exempt organizations such as nonprofits and charitable organizations, including churches, to engage in political endorsement, campaign activity and political fundraising, that would raise red flags for the social sector.

The bills would override or repeal the Johnson Amendment, which prohibits nonprofits and charitable organizations, including churches, from participating in political campaigns, endorsing or opposing candidates. When it became law in 1954 it created a distinction between politics and nonprofit and charitable organizations.

President Donald Trump has said he plans to push for the amendment to be repealed, which would allow churches, other charitable organizations and nonprofits to support candidates and engage in political campaigns and activities.

As the Council on Foundations shared, language has surfaced from the draft of a potential executive order that could overturn the amendment as well.

Repealing the Johnson Amendment would affect all charitable organizations and nonprofits, including foundations, and have serious effects on transparency and the public’s trust in the social sector.

As NPR reports, repealing the amendment would “have major implications for campaign finance,” as tax-free donations could support a political candidate.

Charitable organizations could fundraise for candidates and donors may be inclined to seek out nonprofits that specifically align with their own political interests, instead of a shared interest in a cause.

The Michigan Nonprofit Association (MNA) recently shared a statement on the issue, saying in part, “Nonprofits are trusted in part because we are resolutely nonpartisan. Those who support our work rely on us to use their donations to help our communities, not engage in electioneering.”

Independent Sector, a national forum of nonprofits and foundations, has also spoken out against repealing the amendment, stating that nonprofits “should remain above the political fray, advocating and informing leaders, but not engaging in political activity.”

Those in support of repealing the law say it infringes on religious leaders’ right to free speech, but under the current law churches and other nonprofits are free to give up their tax-exempt status if they’d like to be engaged in politics.

The Johnson Amendment exists in our tax code so it would require action by Congress to repeal it. However, the president can decide whether to enforce the amendment and has talked about issuing an executive order.

The Council on Foundations released a statement saying there may be lobbying actions private foundations can take that would fall within a self-defense exemption, since any modification of the Johnson Amendment would directly affect the powers and duties of the tax-exempt organization. The Council says before engaging in any lobbying on this issue, foundations should consult with their legal counsel. 

CMF will be discussing the issue with members of Congress at Foundations on the Hill next month. We will share any updates we receive, including any recommendations on further actions by our members.

Read the Council on Foundations' statement.








Rollin M. Gerstacker Foundation and Charles J. Strosacker Foundation support redeveloping vacant city lot into a nature preserve

Content excerpted from the Midland Daily News. Read the full article.

Plans are in the works to redevelop a former manufacturing site, just south of downtown Midland, into a public recreation and conservation area.

The first phase of the project could begin as early as this spring, with riverbank cleanup, wetland restoration, adding river overlooks and canoe and kayak launches.

Momentum Midland, the group behind the project, says the Rollin M. Gerstacker Foundation and the Charles J. Strosacker Foundation are the “backbone of the $2.2 million first phase.”

It’s a public/private partnership project, leveraging the foundations’ support, FEMA funding and other sources.

The project would restore 14 acres of city property and create a nature preserve area in downtown for the community to enjoy outdoor activities.

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