Lawmakers Seek Further Review of Michigan Tax Credits

Bloomberg / Business Week

Michigan lawmakers said Wednesday they want the state auditor general's office to dig deeper into the state's tax incentives program for businesses, a task made tougher by continuing budget cuts.

Republican state Sen. Nancy Cassis of Novi said she will formally request a closer review of Michigan Economic Growth Authority tax credits for 2008 and 2009.

The request comes after a recent auditor general's report found some companies given millions of dollars in tax credits to create jobs or invest in the state didn't always live up to their agreements on how much they would pay workers.

The audit released last month also said the Michigan Strategic Fund, which oversees tax credits awarded by the MEGA board, didn't follow proper procedures in checking whether companies were doing what was necessary to win the credits.

The Michigan Economic Development Corp., which deals with the tax incentives, largely agrees with the report and has said it found the auditor's recommendations valuable. Some of the audit's recommendations already have been implemented.

The audit covered some activity from 2005 into 2009. Cassis, chairwoman of the Senate Finance Committee, wants a more thorough review focused on 2008 and 2009 because the state's MEGA tax credit program has expanded significantly the past two years.

The performance audit released last month was the first of its kind by state auditors regarding MEGA since the program was established in the mid-1990s. That surprised lawmakers, who acknowledged they have helped create an audit backlog by requesting more reports themselves from an agency that's already spread thin.

"We have met the enemy, and it is us," said Sen. John Pappageorge, R-Troy.

Lawmakers have cut the auditor general's budget as Michigan continues to wrestle with state budget problems. The auditor general's office says its budget has dipped from about $13.1 million in 2001 to about $11.6 million this year. The office had 178 employees in 2000, but that's down to 137 this year.

The agency's budget could be cut again in the fiscal year starting Oct. 1.

Sen. Gilda Jacobs, D-Huntington Woods, said it was "pretty awful" that MEGA had been audited just once over a 14-year span -- but that was partially lawmakers' fault.

"The Legislature is to blame for part of this," she told auditors. "We're not giving you the tools."

$156M in Tax Credits Awarded to Create Michigan Jobs

The Detroit News

Lansing -- The Michigan Economic Growth Authority today awarded more than $156.7 million in tax credits for 10 corporate ventures and a brownfield redevelopment project expected to create 17,321 jobs.

The largest award -- $61.3 million in job creation tax credits over 15 years -- will go to Dow Chemical Co. for a Midland manufacturing facility to produce solar shingles. The project is expected to attract $249 million in private investment and create 6,100 jobs, including 1,275 at Dow.

Another $42 million in advanced battery tax credits will go to Dow Kokum, a joint venture between Dow and Townsend Kokam LLC, for a large-scale Midland facility to make cells and batteries for electric and hybrid vehicles. Dow Kokum has pledged $342 million in private investment for the project, which is expected to create 480 jobs.

The credit will help leverage a $161 million federal grant from the U.S. Department of Energy, and another $300,000 in training funds from the Michigan Department of Energy.

"Companies are choosing to invest and grow in Michigan because we are a great state in which to do business," Granholm said in a press release. "From solar shingles and advanced batteries to boats and scrap-tire recycling, we are creating a diversified economy where firms across a wide spectrum of industries are finding success and growing new jobs."

Other projects include a new research and development facility in Northville Township that will supply materials for lithium-ion battery cells, the re-launch of a facility in Cadillac that makes boats, and the expansion in Perry Township of a high-tech firm that provides automotive engineering and test development services.

The MEGA board also approved a brownfield redevelopment project in Brownstown Township funded by a state and local tax capture valued at $58,500. A vacant parcel next to National Wine and Spirits Inc. will be used to expand the company's warehousing and office operations. The project is expected to generate $26.5 million in capital investment and create up to 10 jobs.