Business groups fight to save Michigan incentives
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Amid contentious state budget talks, economic development officials are working to persuade lawmakers to keep funding business incentive programs.
Why it matters: The programs under threat have supported downtown Detroit's resurgence and are essential for Michigan to compete with other states, local development leaders tell Axios.
Yes, but: Lansing's appetite for such subsidies is waning, particularly among Republicans who want to change how Michigan does business.
State of play: The GOP-controlled House passed a $79 billion spending plan Aug. 26 that slashed spending for the Economic Development Leaders of Michigan's (EDLM) priority programs.
- Negotiations are ongoing between the House and the Democratic-controlled Senate, which passed a plan in May.
- Lawmakers and Gov. Gretchen Whitmer may face a government shutdown if they miss the Oct. 1 budget deadline.
Zoom in: EDLM crafted a list of 10 priorities last month to set the table for funding negotiations.
- The list includes $100 million for a business attraction program, $150 million for community development programs and doubling the state's R&D tax credit to $200 million.
Also: The coalition wants to expand the Transformational Brownfield Program, which provides incentives worth hundreds of millions toward Detroit's major developments.
- Examples are incentives worth $425 million for local projects involving Dan Gilbert's Bedrock firm; $615 million toward the Ilitches' District Detroit; and $232 million for Henry Ford's hospital expansion in New Center, Crain's reported.
What they're saying: "If you look at where we're at right now with the budget, they've all been zeroed out," Maureen Donohue Krauss, CEO of the Detroit Regional Partnership, tells Axios Detroit.
Context: The House budget is a starting point for negotiations, Krauss says.
- The Detroit Regional Partnership and other EDLM member groups will meet with legislators to make their case.
The other side: Michigan doesn't need corporate handouts to attract and retain businesses, says state Rep. Steve Carra (R-Three Rivers), who chairs the House Oversight Subcommittee on Corporate Subsidies and State Investments.
- A low-tax regulatory environment, quality infrastructure, and a reliable electrical grid can accomplish those goals, he tells Axios.
- "The state of Michigan would be wise to reassess how we look at corporate subsidies and incentives," Carra says. "It's just continuing to injure the taxpayers, the middle class in Michigan for the benefit of special interest groups and the politically connected."
The last word: Overhauling the state's economic development toolkit would damage the state's prospects by sowing uncertainty, Detroit Economic Growth Corporation CEO Kevin Johnson tells Axios.
- "When you can't predict what support is available, you put the state of Michigan in a competitive disadvantage that a guy floating on a canoe for a Pure Michigan ad won't be able to recover from," Johnson says.