Amid GOP pushback, Michigan Legislature OKs $1B spending plan targeting biz incentives

Howes: ‘Good Jobs’ bills target competitiveness for MI

Daniel Howes
The Detroit News

Michigan’s “Good Jobs” legislation, expected to be scheduled for a vote Wednesday in the state House, isn’t about crony capitalism.

It’s about correcting past mistakes and becoming more competitive in the cutthroat interstate race for jobs. Michigan is losing more than it arguably should to Great Lakes rivals Ohio and Indiana, as well as Alabama and the Carolinas, economic development officials say.

“We lose six or eight that we don’t even compete on,” says Matt Gibb, deputy county executive who oversees economic development for Oakland County. “We lose on most projects. And they go to states where the incentives are more aggressive.”

He’s naming names, too: a Boeing Co. assembly operation lost to South Carolina; a Fuyao Glass America Inc. plant gone to Moraine, Ohio, outside Dayton; an investment by Blue Origin, an aerospace engine maker associated with Amazon founder Jeff Bezos wooed to Huntsville, Alabama, by a $50 million incentive package from that state’s Department of Commerce.

Like it or not, such rival states are more adept at balancing competing financial interests with philosophical political debates loosely moored to the facts. They better understand the reality of fierce competition for business investment, jobs and tax revenue that too often freezes Republican-controlled Lansing into inaction.

That’s a strategic mistake with long-term implications. The losers aren’t the politicians or the ideologues enforcing free-market orthodoxy. They’re not the six-figure engineers ensconced in an Oakland County research park. The losers are archetypal middle-class workers who could vie for manufacturing jobs making automotive glass or engines.

Too few are getting that chance. Eight years of economic expansion, steadily rising auto sales, a booming auto sector and the privately financed revival of downtown Detroit trace a promising picture of Michigan’s economic vitality and its competitive position. But it’s incomplete.

“We’ve done so well that we’ve filled the hole,” Gibb says. “We’ve had this great run. We lost 30 percent of what we were worth as a county” measured in property values and taxable values. “We’re nowhere near where we were at our peak.”

The “Good Jobs” package, backed by a bipartisan coalition of business, political, labor and economic development leaders, aims to recapture some lost ground. The Senate-backed legislation would entitle companies creating new jobs in the state to capture new personal income tax revenue associated with new hires, subject to annual audits and sustained investment.

No jobs, no capture of tax revenue that otherwise would not be created but for the fresh outside investment. The effort could be applied statewide, in cities large and not-so-large, in Muskegon to modernize its deep-water port or in the mid-Michigan agriculture belt to attract a plant to process indigenous crops.

Michigan needs the help. The state that once led the nation in per capita personal income now is ranked 33rd. Educational attainment is flat-lining across the state, urban and suburban, white and black. Property values and the real estate taxes generated by it are growing slower than expanding local government obligations to current and future public-sector retirees.

Detroit’s traditional automakers make more vehicles with fewer employees than any time over the past century — a pattern likely to continue however demand swings over the coming years. You want to know why it’s so important to compete for new outside investment? That’s a huge reason.

Another is that Michigan, despite remarkable progress since the end of the Great Recession, remains plagued by the weight of its past. Despite improbably becoming a right-to-work state, the historical fact of being the birthplace of labor unions is a stigma not easily shaken.

Neighboring Ohio and Indiana boast far more complete transportation corridors that run north and south, east and west, enabling business to exploit a more comprehensive logistics network. Michigan lies north of those corridors, complicated by its inability to modernize its border crossing between Detroit and Windsor.

Investment incentives for business are one way to bridge the competitive gap. They can balance generally higher costs for energy and more limited transportation corridors with inducements that make Michigan competitive with the likes of Ohio, Alabama and the Carolinas.

Using available tools, where possible, helps. A Renaissance Zone designation is enabling Williams International Co. LLC’s planned headquarters move to the Michigan Motion Pictures Studio in Pontiac. Relocating there exempts the company from property taxes for 15 years — an inducement that offset a $69 million incentive from Alabama, the county says.

Repealing the state’s Single-Business Tax and replacing it with a flat 6-percent corporate income tax helps, too. So does a far more business-friendly (and business-savvy) administration in Lansing with a governor unafraid to regularly visit, say, China to stump for investment back home and would-be opportunities in China for Michigan companies.

Necessary, but not sufficient. As much as capital goes where it’s invited and stays where it is welcomed, it also goes where it gets the best deal — from customers, countries and U.S. states whose lifeblood remains commerce.

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.