FOCUS: Last-Minute Budget Agreement Reached; No Tax on Legal Services
Throughout the final negotiations on the budget crisis, the State Bar continued to post daily budget updates on the Public Policy Resource Center. Check online for an archive of what happened last week.

Today’s update includes a report of the final votes cast to enact revenue enhancements and a continuation budget.

The state government endured a partial shutdown for only 4 hours, with a longer shutdown averted by early morning votes on several measures in the Senate.

Earlier in the night, the House voted out the 30-day continuation budget that would only gain final passage if one of two combinations was passed simultaneously: an increase in the income tax coupled with the extension of the sales tax to some services, or, an increase in the income tax combined with business tax loophole closures. The Senate ultimately passed the continuation budget with the income tax increase and the sales tax extension.

The income tax will be raised to 4.35%, effective immediately. The final vote in the Senate was 20-19, with Lt. Governor Cherry casting the deciding yes vote. The extension of the sales tax was also decided on a 20-19 vote, with Lt. Governor Cherry again breaking the tie-vote. The tax on services will NOT include legal services. Services to be taxed are described as being discretionary and not essential to daily life, and include some business-to-business services. The tax is effective December 1. A complete list of services to be taxed is included in the enrolled legislation, HB 5918.

With the revenue portion of the budget now decided, the legislature still must set the spending budget for the next fiscal year by enacting all of the department budgets. With the continuation budget, there are 30 days to act but leaders are hoping to act much sooner. It is expected that some $400 million in cuts will need to be made during this process.

Last Updated: October 1, 11:30 am

See also:
To the Wire: Lawmakers Scramble Trying to Avoid Shutdown
(Lansing State Journal, 10/1/07)

'Lack of Trust' Blamed for Budget Delay
(Lansing State Journal, 10/1/07)

Chaos Averted With Deal to Raise Income Tax, Add Tax to Some Services
(Detroit Free Press, 10/1/07)

In the Capitol
Complete Committee Meeting List

New Public Acts

Legislation Introduced 9/24 - 9/28
Of Interest to the Legal Community
SB 817 Civil procedure; statute of limitations; "discovery rule"; codify. Amends sec. 5827 of 1961 PA 236 (MCL 600.5827).

At the Bar
FOCUS: The Board of Commissioners met on Wednesday, September 26, 2007, at which time the State Bar of Michigan adopted the following public policy position:
HB 4422 (Pastor) Civil procedure; civil actions; limitation on recovery amount allowed in small claims suits; revise. Amends sec. 8401 of 1961 PA 236 (MCL 600.8401).
SBM Position: Support in principle a modest increase based on inflation, calculated prospectively from the date the legislation takes effect, with an annual inflationary increase to be rounded and published once a year.

Federal News
Exoneration Using DNA Brings Change in Legal System
(New York Times, 10/1/07)

Justices Begin Work on a Polarizing New Docket
(New York Times, 9/30/07) 

Legal Aid Offer for Detainees is Retracted
(New York Times, 9/29/07)

Supreme Court Will Decide Constitutionality of Voter ID Law
(AP/Mlive.com, 9/25/07)

Links of Interest
Public Policy Resource Center | Michigan Supreme Court | Michigan Legislature | MCL Search Engines