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Published in Economic Development
Michigan Capitol rotunda. Michigan Capitol rotunda. COURTESY OF mihousegop

Lawmakers finalize $1.5B in support for large, small businesses in year-end session

BY Wednesday, December 15, 2021 11:21am

LANSING — State lawmakers have passed $1.48 billion in additional spending to provide incentives for major economic development projects and relief for small businesses hit hard by the COVID-19 pandemic.

Supplemental spending legislation passed late Tuesday includes $1 billion from federal stimulus funding to create new state funds to support large economic development projects such as a Lansing-area battery plant for electric vehicles that General Motors is considering.

Legislators and the Whitmer administration moved quickly this month to craft legislation creating the Strategic Outreach and Attraction Reserve Fund. The effort followed Ford Motor Co.’s announcement in September that it would join partner SK Innovation Co. to invest $11.4 billion and create 11,000 jobs in Tennessee and Kentucky to build facilities that manufacture both electric vehicles and batteries.

Business advocates in Lansing who had been advocating for the move praised the bill’s passage.

“One of the biggest concerns we hear from potential investors is that Michigan is a state without a consistent, collaborative approach to economic development,” said Jennifer Owens, CEO of Lakeshore Advantage Corp. in Zeeland that’s part of a coalition of economic development organizations known as Winning Michigan Jobs that advocated for the new fund.

“This is the start of a new approach. Our state’s leaders coming to quick, bipartisan agreement on how to deepen our strategic reserves is exactly the type of action that will change both our economic development foundation and our state’s perception,” Owens said in a statement.

Business Leaders for Michigan CEO Jeff Donofrio called the legislation “an important step forward” for the state. Bipartisan support for the bill in both the House and Senate “shows the sense of urgency around economic development and a recognition that Michigan has struggled to be competitive with other states, Donofrio said.

“Michiganders have made it clear they want a long-term strategy and sustainable tools to be competitive over the long-haul,” he said in a statement.

The legislation passed the state Senate late Tuesday night on a 25-11 vote, soon followed by passage in the House on a 78-25 vote. It now heads to Gov. Gretchen Whitmer.

Quentin Messer Jr., CEO of the Michigan Economic Development Corp., said the new incentives the fund will provide under the Michigan Strategic Fund “reflects Michiganders’ ability to rise to, respond to and surmount challenges.”

In testimony last week to the House committee, Messer told lawmakers that the state has 11 projects in the pipeline that represent more than $74 billion in capital investments and more than 27,000 direct jobs “that require programs like the ones in these bills to secure.”

“Let there be no doubt: Team Michigan is making strategic investments in our economy and our economic development toolkit that will benefit our friends and neighbors as well as the small businesses that they have created,” Messer said today. “Michigan’s globally recognized talent base, long-standing heritage in manufacturing, innovation and affordable cost of living, combined with a Pure Michigan quality of place, already put Michigan in a strong position to win. These bills heading to the governor’s desk provide competitive programs that are responding to the market and invest in business retention and attraction to complement Michigan’s already undeniable strengths as a state.”

Small biz support

The economic development incentive package comes along with $409 million for COVID-19 pandemic relief grants to businesses affected by the pandemic and a reduction in the personal property tax exemption for small businesses.

House Bill 5351 would raise the personal property tax exemption from $80,000 to $180,000.

Increasing the exemption “is going to be a game changer for Michigan’s small businesses trying to recover from the pandemic,” Small Business Association of Michigan President Brian Calley said.

“It is often said that small businesses are the backbone of our economy. Today, the Legislature proved that they believe it with their actions,” Calley said in a statement.

Legislators did provide $75 million for a one-year appropriation to replace lost tax revenue that cities, counties and townships would lose from the higher personal property tax exemption.

In a joint statement, organizations representing townships, cities and counties said they “fully intend to have our members hold the Senate, the House, and the governor’s feet to the fire to devise a permanent funding solution that will preserve essential services in our local communities.

“Our organizations stand ready today to help implement creative solutions to fix the long-term funding deficit that today’s action creates,” according to a statement from the Michigan Townships Association, Michigan Municipal League and Michigan Association of Counties.

The increased tax exemption “would have an indeterminate, though likely significant, fiscal impact on local units that receive payments” from the state through personal property tax collections, according to a Senate Fiscal Agency analysis.

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