Mark Sanchez: It's an election year, a gubernatorial election, legislative elections, and whenever you have an election year like this, you get tax proposals from the candidates and from various office holders who everybody wants to talk taxes. And that's the conversation that arose last week with the proposal from the Republican Speaker of the House, Matt Hall. He's proposing to expand the state's 6% sales tax to certain services and sectors as part of a property tax cut, he also proposes. And he's getting some pushback from the big business groups and business advocates in Lansing, including the influential Michigan Chamber of Commerce that has a lot of questions about this proposal.
Specifically, he's talking about taxing limousines, country club memberships, private jets, marinas, tourist services, travel agencies, skiing, golf, artificial intelligence services, newspaper publishing. arts, environmental consulting, political ads, and just a whole litany of services that he would apply the 6% sales tax to. And basically, he's also looking at pulling back the property tax, providing some property tax relief, and that would shift about $5 billion in state revenue. onto a new sales tax for services.
And in a story, my colleague here at Crain’s did, Dave Eggert, he's our capital correspondent in Lansing, talked to some of the business groups and they have a lot of questions. Again, the Michigan Chamber of Commerce is saying, okay, how's this going to work? We'd like to see some of this. They're not big on this idea of applying the sales tax to services. It's never been there.
And Matt Hall, the Speaker of the House, he's also calling for electric utilities to cut their rates by a billion dollars in exchange for eliminating the personal property tax on machinery, computers, furniture, tools and equipment and supplies. It's a significant proposal. It'll get some conversation in Lansing as the political season and the election season ramps up the spring, summer and toward the fall. But right now, it's an idea that's out there. And we've also seen the governor recently in her budget proposal for the next fiscal year propose some higher sin taxes. So, taxes is on the agenda in Lansing this year as we head to that November election.
Patrick Center: Does he lay out the criteria for what is and what is not a service?
Mark Sanchez: That's always been one of those things. What's a service? What's a good? What's this? That's something that's going to all get defined in the upcoming debate over this.Exactly who should qualify for having this tax applied, who should not. Everybody's going to stake out their position and they're going to debate it. Presuming it even goes forward. There have been ideas floated in the past in history in Michigan of taxing services and they've gone nowhere. But again, this is the Speaker of the House proposing this, so you have to believe he's at least going to get it into a committee hearing in the House.
And also I'll just say that some of the other business organizations in Lansing, the Small Business Association, Restaurant and Lodging Association, the Grand Rapids and Detroit Chambers of Commerce, they're not taking positions on this proposal just yet, except to say they'd like to hear some specifics and then they can talk to their members about how it could affect their business.
Patrick Center: Mark, I don't think we've made it through a Business Brief conversation without touching on healthcare in some form or fashion. And we're seeing Blue Cross has reduced some of its losses under massive cost cutting programs, but the cost keeps going up.
Mark Sanchez: Yeah, without a doubt. And, you know, when you say some form or fashion, always say healthcare should be an issue to two types of people, those who pay a payroll or those who are on a payroll.And you know, for 30 plus years, we've seen these prices just and costs just continue to escalate. That takes a bite out of a lot of things. And you know, the insurers, health insurers, their medical claims keep going up. So therefore, the rates keep going up.
Last year in 2024, Blue Cross Blue Shield lost more than a billion dollars on writing health policies. In 2025, it cut that loss dramatically down, they only lost $246 million dollars on revenue of $43.3 billion and that came after cutting about $420 million in administrative costs.
So bottom line for Blue Cross Blue Shield of Michigan, which is the largest health insurer in the state has about a two-thirds market share, significantly cut the loss but it's still a loss and Blue Cross Blue Shield is going to have to make that up somewhere just like any company when you sustain a loss and you've had repeated losses, you have to make it up somewhere, whether that's cutting costs or raising prices.
And we know what the insurance premiums have been doing for a number of years now. We're second, third year in a row this year we had double digit average increases across the state. We won't know the effects of this until May. That's when the health plans have to file their insurance rates for 2027 with the state regulators. So, we'll see some of those filings in mid-May. We'll see their explanation. And how these costs, these medical claims, especially for pharmaceuticals, for hospitalizations, you know, we're getting older. We're an aging population that consumes a lot of healthcare. So, we'll see how this bottom line for Blue Cross Blue Shield in 2025, how will that affect their rates going forward?
Patrick Center: It's always about the trend line.
Mark Sanchez: It's always about the trend line. You try to keep that trend line in the positive area, but like I said, everybody who pays a payroll or has health insurance through their employer, you know exactly what's been going on with rates for a number of years now and the costs keep going up. The hospitals, health systems, they're having higher costs. They have to reflect that in the rates they charge and they negotiate the rates with the insurance companies. You know, it's a complex, complicated system on how it all works out financially, but bottom line, the biggest health insurer in Michigan lost money again last year. In a few months, we'll find out how that affects rates going forward.
Patrick Center: We're talking with Crain's Grand Rapids Business staff writer, Mark Sanchez. You've written a piece on Wolverine Worldwide. We're seeing sales growth, and this is what you've described as a turnaround story.
Mark Sanchez: It really is. You know, I sat down a little more than a year ago with Chris Hufnagel. He's a CEO there at Wolverine World Wide based in Rockford, and this is a 140 plus year-old corporation. One of these iconic West Michigan companies that's been around for generations. You know, rewind a few years ago, the company was having a tough time, had heavy debt, had a cost structure that was not supported by sales. It had just a number of issues coming on.
Chris Hufnagel came in as a new CEO that the directors brought him in. He started a kind of restructuring turnaround plan, and it's made some good progress. They've fixed a lot of the issues. And basically in 2025, Wolverine World Wide grew sales globally, 7.1% to $1.87 billion. And really had some nice growth in some of the brands. What's known as the Active Group brand, that includes the Merrell and Saucony footwear brands. They had some nice double-digit sales increases.
On the downside, well, the Sweaty Betty brand, that's a UK based brand, and the Work Group brand, that includes the Wolverine work boots, they need a little more work. They had some sales declines, and so I sat down with Chris and just talked about the status of the turnaround plan and where they're going.
He says he's happy that the two biggest brands are back to growth and doing well but remains unsatisfied overall with the business. These two other brands, they need to get back to growth and that's the focus for 2026. So again, bottom line, as we like to focus on as a business publication, companies going in the right direction has largely fixed some of the issues that were plaguing the company a few years ago, still has more work to do.
Patrick Center: Does he mention anything aspirational, anything he wants to accomplish in the next two to three years?
Mark Sanchez: Let's basically just get those two brands back to growth, the Sweaty Betty and the Work Group brand with the Wolverine boots. Just get them back to growing sales again and reestablishing those brands.
You know, the Wolverine, we talked about this some time ago, he said increased marketing, increased promotion should help. Remember a number of months back, we talked about how the Wolverine brand was a sponsor of the TV show, Landman, about the oil wildcatters in West Texas. He says that's gotten millions of views of the product and product placement in the program. So that's really the focus is continuing. A lot of what was ill was fixed, but there are still two brands that need to get picked up and get back to growth again. And that's really the focus right now.
Patrick Center: Crain’s Grand Rapids Business staff writer, Mark Sanchez, thank you so much.
Mark Sanchez: Thank you, Patrick.