Michigan Senate approves bills targeting 'mega' projects, auto jobs
Lansing — The Michigan Senate voted Thursday to set up a funding system through which the state could use government dollars to entice corporations launching major economic development projects.
The Senate's passage of the bills marked the latest step as the proposal, which supporters have described as key to the state's future, quickly moved through the Legislature. The House approved a similar package on Wednesday, the same day the bills were initially debated in committee.
The proposal is targeted, at least in part, at an upcoming project from General Motors Co. It also comes after Michigan lost out in Ford Motor Co.’s decision in September to partner with SK Innovation to invest $11.4 billion and create 11,000 new jobs in Kentucky and Tennessee.
Supporters of the new bills have argued that if Michigan wants to continue to land auto manufacturing jobs amid the shift toward electric vehicles, it needs to expand its ability to offer incentives. The next phase for Michigan will be focused on innovation, said Sen. Adam Hollier, D-Detroit.
"We are competing with the entire world to make sure that batteries are produced here, that semiconductors are produced here," Hollier said.
And the state needs to act quickly, said Sen. Ken Horn, R-Frankenmuth, who chairs the Senate's committee on economic development.
"We have some opportunities on the hook right now that will change Michigan’s future," Horn said.
The three Senate bills passed 27-10 on Thursday. On Tuesday, the House and Senate are expected to consider each other's proposals and a bill to appropriate funds for the initiative. Democratic Gov. Gretchen Whitmer's administration has been working with lawmakers on the bills, and she would have to sign them.
Opponents have blasted the idea, contending the plan essentially means state government will give money to large corporations.
The proposal strips resources out of the budget that could be used to fund other priorities, like needed road improvements, said Sen. Tom Barrett, R-Charlotte. Lawmakers continually get persuaded by "powerful interests" to come up with new incentive programs, he said.
“If these programs worked, they would have already proven themselves effective by now,” Barrett said.
“Would major corporations rather have reliable transportation with smooth roads to get their goods to market or would they have cash in their pocket as a settlement to make up for the potholes outside their facility?” Barrett asked at another point.
Three Democrats, including Sen. Stephanie Chang, D-Detroit, and seven Republicans voted against the bills. Chang suggested the legislation amounted to giving “hundreds of millions” to “unnamed, big corporations in unnamed locations.”
The state should have a comprehensive conversation about economic development that looks at solutions at education, housing, workforce and transit, Chang said.
The package would create the Strategic Outreach and Attraction Reserve (SOAR) Fund in the Department of Labor and Economic Opportunity. Money in the SOAR Fund could only move to two other new funds — the Michigan Strategic Site Readiness Fund and the Critical Industry Fund — with the approval of lawmakers, giving them influence over the decisions.
Those other funds reveal the purposes of the program. The site readiness fund would be charged with spending money on activities related to "strategic sites" and "mega-strategic sites." "Mega-strategic site" means a strategic site that is at least 500 acres in size, according to one of the bills. Eligible site readiness expenses include land acquisition, site preparation, infrastructure improvements and construction.
The other fund, the Critical Industry Fund, would be focused on providing investments to "qualified businesses for deal-closing, gap financing, or other economic assistance to create new qualified jobs or make capital investments."
A target of the new initiative is General Motors.
GM and battery supply partner LG Energy Solution have plans for four total U.S. battery cell manufacturing sites. So far, they’ve announced two — one in northeast Ohio and a second in Spring Hill, Tennessee.
GM President Mark Reuss previously told The Detroit News the automaker is looking at its home state for the location of at least one of the additional plants planned:.
"We'd like to lessen that transportation cost. And, of course, a lot of us are Michiganders, that's the way it is," Reuss said.
One potential location for a battery plant is near GM's Delta Township plant where the automaker has 770 acres available, sources previously told The News. GM owns a total of 1,090 acres in Delta Township near its plant, according to the tax assessor's office. Of that, the current manufacturing site sits on 320 acres.
Earlier this week, GM spokesman Daniel Flores said his company supports the pending legislation: "We support efforts that will enable companies like ours to improve their competitiveness by addressing operating costs for new investment and job creation.
Multiple state lawmakers, including Horn, have signed non-disclosure agreements, preventing them from discussing at least one potential project that could benefit from the new funding program.
On Wednesday, House Speaker Jason Wentworth, R-Farwell, declined to say whether he had signed such a deal.
"I won’t get into exactly what I signed or didn’t sign,” Wentworth told reporters.
One of the bills' sponsors, Sen. Curt VanderWall, R-Ludington, said Horn hadn't told other senators about what information he's obtained through his agreement.
Horn has been working with a lot of different business, and it's public knowledge that GM is looking to expand, VanderWall noted.
"What this bill does is allow us to negotiate and make sure that we take care of Michigan businesses," the GOP senator said.
Staff Writers Beth LeBlanc and Kalea Hall contributed.