LANSING, Michigan (AP) – Michigan lawmakers on Tuesday night passed a $ 1.5 billion bill with state incentives to complete major business projects, including an electric vehicle battery plant that General Motors wants to build in the Lansing region.
Once Governor Gretchen Whitmer signs off on the funding and related bills, $ 1 billion in state revenue will go to the new Strategic Outreach and Attraction Reserve Fund. Legislative budget committees should approve transfers from the account to the preparation of the new site and “Critical industry” funds before the state’s economic development board can distribute grants, loans, and other business assistance.
“With the effective collaboration of legislative leaders on both sides, our state will be competitive for every dollar and every job for years to come.” the Democratic governor said in a statement. Funding legislation was approved by 25-11 and 78-25 votes in the Senate and House before lawmakers adjourned for the year.
As part of the deal, she will sign $ 409 million in aid for restaurants and other businesses that lost money during the pandemic. The Republican-controlled legislature also approved a $ 75 million tax cut for businesses that pay taxes on non-industrial equipment and personal property. The exemption, based on the value of the equipment, would increase from $ 80,000 to $ 180,000 per package.
“We are in a period where there are growing opportunities that will have a generational and transformative impact. This allows us to be in a better position to win these contracts ”, Quentin Messer Jr., CEO of Michigan Economic Development Corp. and chairman and chairman of the Michigan Strategic Fund, spoke about the billion dollar incentives.
Lansing City Council on Monday began approving local tax breaks for GM’s proposed project, which could cost up to $ 2.5 billion and employ up to 1,700 workers. Business leaders and lawmakers have said Michigan is in the process of making three more big deals that could be announced as early as January.
Michigan automakers are eligible for generous job retention tax credits under a former economic development program, and some companies have received tax incentives as part of a new initiative that expired in 2019. But supporters of the new incentives say the state can’t compete with what other states are offering, despite criticism that these business subsidies are unfair to other businesses and could be better spent on government services.
Talks about increasing the incentives were underway but have intensified in recent months after Ford Motor Co. announced plans to build an electric vehicle assembly plant and three battery plants in Kentucky and Tennessee.
“Ford’s announcement struck me as a punch in the nose. … The Michiganders have always responded to every punch with a more powerful kick ”, Messer told The Associated Press.
Opponents of both parties, including Democratic Representative Cynthia Johnson of Detroit, called the incitement “Corporate well-being” and said there is no guarantee the new jobs will last in the long term.
“Why are the wheels turning so fast for American businesses? When they come here and ask for something, they get it like that ”, said Democratic Senator Jeff Irwin of Ann Arbor. “What about people who silently suffer from mental illness? What about the people who sleep on the streets? What about small businesses trying to figure out how (to) pay for health care? “
But Sen. Ken Horn, a Republican from Frankenmuth, said residents are counting on Michigan to prepare for the auto industry’s shift from internal combustion engines to zero-emission electric power.
“This is our opportunity to make a difference. It’s money well spent, “ he said, claiming the incentives would give Michigan a “Better than 50-50 shots” to secure the four “serious” projects on the table, including another auto-related deal.
The grants for businesses affected by the pandemic – which will be funded by discretionary federal pandemic assistance – and the tax cut have been welcomed by groups representing small businesses. Grants to eligible businesses will be tied to what they paid in 2020 for property taxes or rent, unemployment insurance taxes and alcohol charges, inspection fees and other charges.
Critics questioned the effect of the tax cut on municipalities.
“By repealing this tax in perpetuity without replacement for local communities beyond the first year, you are directly financing the money that goes to public security”, said Sen. Jeremy Moss, a Democrat from Southfield.
Senate Republican Majority Leader Mike Shirkey has pledged to work on designing a permanent funding solution over the next year.