Committee hears bill to switch index for Michigan home heating tax credit; Treasury backs change but funding questions remain

Representative Jim Schuette told the Michigan House Committee on Economic Competitiveness that House Bill 4543 would replace a Detroit-area consumer price index used to adjust the state's home heating tax credit with the U.S. consumer price index for household energy, after the Bureau of Labor Statistics stopped publishing the Detroit metro index.

Schuette said the change is intended to preserve annual inflation adjustments that keep the credit aligned with energy costs. "This is a tax credit that is used by approximately 6% of filers across the state," Schuette said, adding that the credit is used in both metropolitan Detroit and in parts of the Upper Peninsula. He urged the committee's support and said the bill uses "the best available data" so the credit can continue to provide relief.

Amanda West, deputy treasurer for the Department of Treasury, testified in support and asked the committee to consider fast-tracking the bill because the department is required to make the adjustment by Aug. 31 each year. West was joined by Scott Dara, state administrator for Treasury's Tax Analysis Division; Dara told the committee that over long periods (5, 10, 20 years) the Detroit-area index and the national household energy CPI produce "very similar numbers," though regional indices capture more local variation year-to-year.

Members asked technical and funding questions. Representative Altman asked why a Detroit index had been used historically; Schuette replied that the Detroit index made sense when it existed and that the national index is the best available replacement. Representative Britsey said she supports the program and noted it serves "about 210,000 low-income renters and homeowners," adding that keeping homes heated can be lifesaving for the most vulnerable.

Several members pressed on funding mechanics. Treasury staff explained the home heating credit works in conjunction with federal LIHEAP dollars and state spending priorities; Treasury said the proration calculation compares LIHEAP and other available funding against expected benefits and that the department performs the calculation when preparing the credit for operation. When asked for exact LIHEAP totals, Treasury staff gave a rough figure of "more than $150,000,000" for the federal grant Michigan receives and said the home heating credit cost for the last year was "I believe, $37,000,000." Treasury also stated that the home heating credit operates only if there is an annual LIHEAP appropriation.

Representative Grant asked whether the nationwide index would materially change the number of Michiganders served. Dara said long-term averages are similar and "the numbers are gonna be very similar" over five- to 20-year spans, though year-to-year regional differences can occur. Representative Brixie/Bridal asked whether the change is meaningful if federal funding is zeroed out; Treasury staff confirmed that without an annual LIHEAP appropriation, the credit would not operate.

Treasury asked the committee to expedite the bill so the department can apply the replacement index before the statutory deadline for the adjustment. Public-comment cards in support were received from Christy Seloff of the Community Economic Development Association of Michigan. No committee vote on HB 4543 was recorded in the transcript excerpt.

The committee later excused absent members by unanimous consent and adjourned.