Committee considers bill to preserve Michigan home heating tax credit’s inflation adjustment

Representative Brad Schuette on June 12 told the House Committee on Economic Competitiveness that House Bill 4543 would preserve the annual inflation adjustment for Michigan’s home heating tax credit by switching the index the state uses to calculate the adjustment.

“This is a simple fix to a simple problem that is gonna have a really big impact on Michiganders in both of our peninsulas every winter,” said Representative Brad Schuette, who testified in support of the bill and explained the problem arose because the Bureau of Labor Statistics stopped publishing the Detroit consumer price index for fuels and other utilities.

Under current statute, the credit’s annual adjustment ties to the Detroit CPI for fuels and other utilities; HB 4543 would change the reference to the U.S. consumer price index for household energy so the state can continue to make the inflation calculation despite the federal data change. Schuette said the credit is used by “approximately 6% of filers, across the state.”

Amanda West, deputy treasurer for the Michigan Department of Treasury, testified in support and said the agency must make the inflation adjustment “by August 31 of each year,” urging the committee to act quickly so Treasury can apply the replacement index on schedule. She was joined by Scott Dara, state administrator for Treasury’s Tax Analysis Division.

During Q&A, committee members asked about how the new, national index might change the calculation. Treasury staff said long-term averages using the Detroit-area index and the U.S. household energy index produce “very similar numbers” over five-, 10- and 20-year spans, though a regional index can show more year-to-year variation.

Members also raised budget and program-dependency questions. Representative Britsey described herself as “a big supporter of this program” and noted the credit “benefits, like, 210,000 low income renters and homeowners.” Treasury staff explained the home heating credit is tied to the federal Low Income Home Energy Assistance Program (LIHEAP) and related state spending priorities: the available LIHEAP dollars influence a proration calculation for the credit. A Treasury witness said Michigan’s LIHEAP allocation is “more than a $150,000,000” (rough estimate) and that the home heating credit cost “for the last year was, I believe, $37,000,000.”

Representative Brixie asked whether a broader budget bill that zeroed out LIHEAP funding would eliminate the credit’s payments; Treasury confirmed “the credit only operates if there is an annual LIHEAP appropriation.” Representative Schuette and Treasury witnesses said HB 4543 only changes which CPI series is used for the inflation adjustment and does not create or appropriate LIHEAP funds.

Christy Seloff of the Community Economic Development Association of Michigan submitted written support for the bill but did not speak. The committee took no formal vote on HB 4543 during this session.