The Small Business Briefing | 1.31.22

hello and welcome to the small business briefing i am brian kelly president ceo of the small business association of michigan and with me is sarah you know i was thinking sarah's i was as i was uh waiting to go live there that um what would it take for for some q and music or something like a g like a small business briefing jingle i might be too high production but uh welcome it's kind of kind of nice feels almost balmy out there today it is it is it's not a negative it says 27 on my computer right now so i'll i'll take some sunshine and above zero attempts for a few days i'm gonna have to research the intro music all i know is you don't want me to sing um i can't sing i'm not a musician so maybe you might have to write something brian for the uh for the intro on the piano we'll see maybe yeah maybe a jingle for our sponsor the moronic yes yes the murano group so as you all know we're very thankful to have miranda group as our sponsor they offer a full line of solutions designed to get your company's message into the right hands in a timely and cost effective manner so if you're considering anything in the near future with data documents or distribution you should definitely check out moroni group's offerings so so brian speaking of distribution i wanted to let you know that i did receive my at-home kova tests in the mail on saturday so i had pledged that i would order my at-home test when they were made available on this government website i did that and sure enough they did arrive to my home on saturday so how about how about you have you received any yet nothing yet although i know what you experienced and some other friends actually reached out to about a half a dozen people and several had received had received their tests in the last couple days what was interesting about it though was that the tests are coming um there's like a bubble wrap and a rubber band around it and then in a you know in the package and mailed out which is a very m when you consider that there's 500 million of these being mailed out that seems awfully manual uh to to to do i used when i was in politics we'd have these parties where like uh friends and family would come over and help with you know envelope stuffing and even like 250 envelopes is like a lot you know for the stamping and sticking and sealing and and folding and so forth and to think about like 500 million of these that were where there's bubble wrap and then there's a whole thing about plastic in the ocean and everything i wouldn't have guessed that uh they would have gone with this type of an option but it was weird it seemed very uh it looks very uh amateur and how it's like packaged um and maybe a little bit of uh of overkill but i suppose that the u.s post office um needed a shot in the arm of funding i've been running at a deficit so maybe this was just a way to transfer some some money over to the post office who who knows i can confirm i did have bubble wrap and a rubber band i will um try to reuse those instead of filling up the landfill further so but well let's get on to the show today it is monday and so as always we like to start off with data monday and a look at the the trends happening here in michigan and around the country well i'm going to go ahead and pull up the slides and um really more of the same compared to what we have seen in uh in recent weeks so we do see the nation as a whole has definitely started uh to to come down so you see a really sharp increase here in a sharp decline that pretty much matches the uh the the increase which is is similar to what we had seen in other places that were ahead of the united states you know really sharp three-week increase in in the united kingdom in south africa and then the decline pretty quickly as well if you zoom in though on the last 90 days you can see a little more clearly what has been happening and um and let there be no mistake you know three weeks ago we were saying it looks like we're probably uh about crested uh or getting you know the increases were slowing down and it's going down and it's going down pretty much everywhere if we look at all the different regions the northeast is the one that got the highest and and now has has come back down uh quite quite a bit um you know about two-thirds of its peak um but if you look across the you know the midwest and [Music] the west even now um where it's they're coming down so um looks like a really strong indication at this point that uh the experience in the united states is real similar to what uh was experienced in other places if you look at hospitalizations again across the united states you'll see um the there's definitely a a crust and a decline that has started there still very high so hospitalization is nationwide over 150 000 and um that still exceeds the previous high from a year ago in the winter but that the trend heading in the uh in the same direction and one other thing to keep in mind with hospitalization is that most states are not separating out those who are hospitalized and found to have covet but they're hospitalized for another reason and those are hospitalized because of coven which kinds of skews kind of skews these numbers a bit looking though at the last 90 days you can see definitely you know each day's reporting has been below the seven day average for over a week now so that means that that average is gonna um is is uh still declining and of course we would we would expect that as the case cases drop so quickly looking at michigan you'll see that there's been a little bit of a messy curve going up long term gradual curve and then sharp width with kind of a dual um omicron and delta wave that we're kind of one right after another uh but but clearly uh declining now in michigan also the hospitalization is is uh that's the place in michigan where you see the um you know the delta wave cresting just as omicron um took over and so you see kind of this two peak increase um uh at this time and and still uh pretty high but now our hospitalizations are now back below the previous highs of uh of the beginning of the pandemic and we had a couple of peaks in between so michigan now has had four surges that affected hospitalizations but but now back below those peaks and uh appears to be dropping um now looking at uh this is the united kingdom and the reason i wanted to show this is because i think it's starting to give us a clue though that um that with omicron at least for a while we're going to see numbers settle down in a higher place so you see a really sharp decline and then still declining but declining much much more slowly than before looking at the last 90 days for the united kingdom you'll see that um it you know got up to new highs and then um and then it came down to below 100 000 cases a day for the country as a whole and it's still trending down some but not so fast and um this historically speaking is still a really high level for that country um and so this might be a clue here in michigan that yeah we're gonna see our cases cut in half but maybe there'll be a floor in how low it gets as as opposed to before when it got really really low that may be part of this kind of endemic phase that a growing number of epidemiologists believe that we're entering into is uh is is getting it's getting closer that this this particular wave and then another variant coming out of omicron which um you know maybe is is going to keep the numbers a little higher a little bit longer but still um really kind of signaling this phase of the pandemic hopefully close to the end so generally i'd say good good news across the across the board you know the hospitalizations have been the concern the whole time not necessarily the infection rates because it's a different type of virus than it was in the beginning but just large numbers kicking in and and more vulnerable populations impacted but um hospitals definitely need um this decline to continue because uh even though as you can see from those peaks that it's it's lower but still when you have you know 3 500 or more inpatients um where they're managing covet spread and and all the all the things that come along with disease control in hospitals it's very very difficult to operate under these circumstances so while there still is no signal at all that the that the governor is considering any additional uh rules or mandates on business and business operations in connection with epidemic emergency powers still the hospital systems themselves clearly under strain a lot of a lot of turnover and staff and shortages and a lot of critical areas so bringing these numbers down hopefully it will continue as we've seen in other places and get the hospitals back to a more manageable level of inpatient services well i did sneak a quick peek while you were giving your presentation to look at the today's numbers on the state of michigan's website and over the weekend which we we do know tends to have a lower case count than later in the week um just over 21 000 for the three-day period so that is definitely lower than what we've been seeing so hopefully that decline uh does continue so um all right let's let's talk about uh the situation in russia and ukraine certainly uh dominating a lot of the headline space these days but let's talk about what economic risks we face here in the united states given the uncertainty unfolding there one thing that we have to keep in mind in situations like this is that everything's interconnected so it's not necessarily that russia has amassed a hundred thousand troops at the ukraine border that creates risk for the business environment here in the united states it's more of the disruptions and the possibility of sanctions um that that could impact things especially in the energy sector so while the united states does not buy a lot of oil directly from uh from russia when if there were sanctions uh put in place then just the the overall it's there's a good chance that the overall cost of uh of energy would increase and so that's an example of the type of thing that could have a ripple impact on um on business across the across the globe obviously we are not foreign policy experts you know what the right decision is and how to deal with the with the situation between russia and ukraine is not um it's it's not the sort of thing that we would even opine on it's but we do believe that there's a potential for some uh for some both disruptions and also volatility in a lot of different markets around the the globe in ways that could affect uh people certainly i think we should expect that if there are uh sanctions used that there would be some kind of uh ripple impacts that would be fed that would be felt across the whole globe of course including in the united states of america so there is there are some risks out there with it and it might seem remote but as we saw with the pandemic that things not working right anywhere in the world can impact things back home and so this is a risk one that there's frankly not much directly we can do about it except for to plan for and expect kind of harden yourself and your systems for some for some volatility and think about uh supply chains and things that you rely on and how they might be directly or indirectly impacted on it but we wouldn't want to um we i think we'd be remiss if we didn't point out or or suggest that there that as this comes to a head if russia doesn't pull back and um and sanctions are used then um then there the possibility for some additional volatility and what has really been a volatile and difficult start to the year uh in in so many different ways that that the potential for that to increase or get a little worse is certainly there all right let's bring it back uh closer to home here i know last week we did cover the governor's proposed tax proposal that she talked about in her state of the state but there's quite a few others kind of floating around at the state level so which ones are gaining traction so there's a there's a lot of things that are that are on the table and there's a few bigger themes that i thought we could talk about today uh so kind of famously the governor had said want to end the retirement tax we don't really have a retirement tax michigan we have an income tax and it's a matter of what levels and types of income get exempt from the income tax and that's really what what she was talking about is increasing the exemptions for retirement income and um and so that's one where um there is you know across the board you're gonna find you know republicans and democrats that like the idea of doing that but the details matter a lot it used to be that there were different rules for public pensions private pensions 401ks and also seniors that were still working so the idea of of going back to the old system it does invite some disparate treatment between types of retirement income i think it's more likely that they look at something where it's just a higher amount of of uh of senior income no matter where it source is would be um would be exempted i'd be surprised if there weren't something done in that sphere it'll be our our goal though in this to um to put on the table for consideration at the same time that when they when a business owner sells their business and in many cases that is their retirement and so we're gonna to really push this concept of um as long as you're exempting other types of retirement you should exempt the sale of the business which is the retirement nest egg for small business owners the um so and that would be in capital gains areas a little different than um than regular earned income or retirement income the uh so anyway that's that's one area and how i think for small business owners um could potentially be impacted the uh some of the others the earned income tax credit now this wouldn't be for businesses but for workers of businesses and s-bam and also the the grand rapids chamber for example has a history of supporting the an increase in the earned income tax credit this essentially gives lower income workers a refundable tax credit and it's the idea of rewarding people for working even if they are doing so at um at jobs that are uh that are lower income like entry-level type jobs and uh given the labor force participation rate being lower and all the problems that we've had with programs disincentivizing work this is one that actually rewards those who go to work so that's one thing i think some kind of adjustment in the earned income tax credit is uh is also fairly likely to make it through whether or not i don't think it will be exactly what the governor proposed but something uh something in that area now the senate republicans have put on the table a broad-based rate reduction so to take all business taxes and income taxes to 3.9 percent so the way it works today you've got a corporate income tax that's now at six they have an individual income tax and pass-through companies like s-corporations and llcs file there the idea is you take that from and that's at 4.25 percent so they want to move everything down to 3.9 so

c corporations as corporations sole proprietors llcs and partnerships and regular earned income all at 3.9 percent that's what the overall concept that the centers put on the table now ongoing revenue to the state of michigan it's a big you know it's a bigger bite it's a couple billion dollars and um and so i i think they'll probably get some pushback from the governor on that although i haven't heard that explicitly yet but um the uh the governor's tax cut proposals are are more modest in total size and a lot more than um than uh than the idea of a broad-based across-the-board rate cut now there was another option put on the table came from the house republicans and that would be to uh to eliminate the uh commercial personal property tax so this would be the uh the property tax on commercial equipment so the the property tax on the industrial equipment was phased out so uh this would phase out the uh or would eliminate the um the personal property tax on things like shelves or like this office furniture in here you know there's personal property tax that is uh that is paid on on office equipment on computers on shelving cash registers and like um the anything for a commercial business that um that you own is on your personal property tax is a little bit more complicated because um most of that revenue goes to local government so for the state to do the cut but their revenue the extra revenue is at state government and the cut would hit local government so that's a little bit more complicated to pull off and how you i make sure that local governments can still pay their bills but that's another big issue on the table so across the board there are um there are i think good possibilities here that we will come out of the other end of this with with a better situation than uh what we what we have today in terms of long-term competitiveness sbm is open to variations of all these um all these concepts and ideas some are more directly in our wheelhouse than others you know retirement income for example it's not really a you know something under the sbam criteria of issues but to the extent that there would be some recognition that business owners don't get a a tax-free uh retirement when their main retirement nest egg is the sale of the business there's a big chunk that's taken out of it in fact what often happens is that residency because you don't have any choice really residency is is established in one of the no income tax states before the sale of the business because you know the differential on that one big transaction can make it worth it to do those sorts of things so lots of uh possibilities that are on the table we'll we'll definitely keep you up to speed on it i have uh talked to several members of the of the legislature who who have indicated to me that there is not um there's not a desire to rush anything through that you've got a whole process you got the budget coming up you got you know the legislative season between now and um and the summer when they would normally finish up the first half of the year before they getting in into the election season full bore and um and so they plan on taking the next few months to really vet out these ideas to have debates and we'll see where it lands but i think all the conditions are there for a an actual tax cut and they ought to do that because in state government right now there's so much more money than they've ever had it is literally not possible for them to spend it all without wasting a lot and so the idea that some of it would be would be given back makes a lot of sense and by the way one other thing is that i think it's somewhat likely you're going to get another deposit into the unemployment insurance trust fund that's making its way through the process uh another 250 million dollars hopeful for that because the uninsurance and uh yeah uninsurance employment or unemployment insurance trust fund is um you know it's it's it's got some some deposits recently to start building up that balance but um it is nowhere near what it was pre-pandemic and since the the government used it in a different way during the pandemic not just to replace income for people that businesses voluntarily laid it played off but to to to really kind of force a bunch of layoffs and then the depletion of the fund over a very very long period of time it depleted the fund in a way that we hadn't seen since the great recession in michigan the first decade of the century so having that change or get having uh some additional deposits it really ought to have about four billion dollars in it and it's um you know it got almost down to zero didn't actually have to to do any uh long-term borrowing to make it through the pandemic but that's only because it was one of the healthiest trust funds in the country um in the um going into the pandemic but it's definitely in in skinny shape right now and it needs uh it does need to be rebuilt so we will continuously look for opportunities to do that so as to avoid assessments being made on unemployment insurance to cost to our members so continuing the unemployment thread here there have been there's a class action lawsuit that has been filed against the state regarding the unemployment system so like you said we've covered the issues with this system we've talked about um the various challenges so what is the latest uh in regard to this lawsuit a lawsuit has been filed as a class action lawsuit and the idea here is that you have uh the state made eligibility determinations and kind of famously now covered the audit and how many claims were paid over and above and organized there was some organized crime there was fraud there was there were all kinds of issues but one of those issues were people who applied and did so in good faith were awarded a certain amount and then the state came back later and said oops we accidentally overpaid you payback and that those are the um the claimants that have filed a a lawsuit and um the name the lawsuit names the michigan unemployment insurance agency and its director julia dale by the way julia dale is new in the job so it's like welcome to the job here's your here's your lawsuit but it's a um but that is a um in the um in some of the writing about this lawsuit there was it was an example i thought illustrated the situation pretty well and in this case it was a self-employed person a wedding photographer applied for benefits at the start of the pandemic remember the um sole proprietors were able to file for uh for for benefits normally they can't uh but under the um the emergency declaration they could so um the agency determined that she was eight uh that in this case uh this wedding photographer was eligible for 362 dollars in benefits weekly that happened back in april of 2020 and in october 2021 so this is you know a year and four or five months later um the agency issued a notice for redetermination and said that she should have been paid 160 a week not 362 and um and so uh was told she overpaid 14 dollars and uh so it's those types of cases the um there are several criminal cases that are happening right now where people that were caught uh cheating and stealing and i said sometimes a literally organized crime that was um that uh in in one case one of these early um uh criminal cases somebody was working as a contractor inside state government and uh in aiding these uh these false claims really really bad stuff that happened in this case though no these are cases where nobody's alleging fraud nobody's alleging anything was done um in any kind of nefarious way it was just a person who applied in good faith was awarded in good faith and then more than a year later said hey you're overpaid you got to pay the money back and that's a um how many of those there are out there we don't know for sure but um i think this class action loss is probably going to get a lot of action and you know what are the remedies that it's that's not exactly clear what the potential remedies would be uh to this situation um but i don't think it's entirely unlikely that a court would would find in these circumstances that that the claimants would not have to pay back the money so um if that were determined then um another another kind of i'm just conjecture here but it's hard for me to imagine the state carrying this all the way through you know like uh to once a court says okay you can give up i think it's probably likely that the state would give up on it but what we need to make sure is that that doesn't mean that they turn around and assess our businesses for the lost money and so there's a lot of interconnected things and it's i mean it's definitely a bum deal that's what what has happened to these uh these people and um hopefully it will get resolved in a way that both is fair to the people who who were uh and were apparently overpaid in good faith and um and but you know it dealt with in a way that doesn't cost our members who are still many of many industries trying to recover uh additional assessments all right so we're going to continue on the lawsuit theme now and switch over to redistricting there have been multiple lawsuits filed against the redistricting commission but elections are already getting underway so what are the next steps here there are now three lawsuits that are filed against redistricting this is the process where these lines are redrawn for the legislative district state house state senate congressional districts and um and they're from both sides you got a a group of uh of republicans that are saying they're not fair for republicans and some um a group in detroit and then also um more left-leaning organizations that are saying that these maps needed to lean more uh on the democratic side so there's a um there are three different lawsuits um the one that that in my again not a lawyer but i've been around the system for for a while um the ones that the one that to me looks like it has the best case is um is the one that comes from from detroit current and previous legislators that that um that say that the maps do not comply with the voting rights act and according to a traditional interpretation of the voting rights act there's no question that these maps do not comply but the what the redistricting commission is saying is not all that traditional how everybody's always looked at in the past we don't have to look at it that way we've got a new way of looking at it well how are courts going to decide on that not exactly clear but these races are already underway and and so it has to be decided pretty quickly and there are issues that could be decided in federal court and in state court how long it will take for them to to get sorted out it's difficult to say now but um but ultimately um i mean really in the next couple months you you reach a point of no return where you no longer can legitimately realistically redraw lines you have to move forward with something and so far the the lawsuits the plaintiffs and the lawsuits haven't actually put forward alternative maps although i do expect that that is probably in our future and it will be fascinating to see what the judges do with this one we had a couple other things we wanted to talk about today but we're running out of time so i'm going to use that redistricting uh conversation to let everyone know that we're actually hosting a special virtual conversation with two panelists moderated by brian on march first about redistricting and the impact it's going to have on our state this is reserved for us spams vip and elite members so if you're interested and you're not at that level we can certainly talk about how you can become a vip or elite member but it's just an example of some of the great programming we do provide to various levels of membership so that's all we have for you today we will see you back here on thursday thank you everybody for tuning in we'll see you on thursday

2022-02-08 08:43

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