Big 3 automakers slap bills to prevent more tax credits
The lobbying arm of Michigan's manufacturing industry came out swinging Wednesday against legislation that would prevent Detroit's Big Three automakers from getting additional tax credits for hiring more workers and expanding facilities in the state.
The Michigan Manufacturers Association opposes a two-bill package that would prevent Gov. Rick Snyder's administration and future governors from adding to a $9.4 billion long-term liability for tax credits owed to companies that create or retain jobs through 2031.
Testifying Wednesday morning before the House Tax Policy Committee, a lobbyist for the manufacturers' group said prohibiting future tax credits would "unilaterally disarm" Michigan in the interstate competition for business investment and job creation.
"What this bill does ... (is) it truly establishes in law and announces to everyone else: 'Don't even come to Michigan, don't even ask Michigan whether a billion-dollar investment would be good for Michigan or not. Don't even ask us. Go ask the 49 other states,'" said Mike Johnston, vice president of government affairs for the Michigan Manufacturers Association.
Johnston's remark generated a sharp rebuke from the committee's Republican chairman.
"Excuse me, I'm going to stop you right there because that is false," said Rep. Jeff Farrington of Utica. "This is in no way making that statement. And for anyone that's listening, that's B.S."
A lobbyist for General Motors Co. said the Detroit-based automaker also opposes the legislation, but did not testify before the committee Wednesday.
Freshman Republican Reps. Gary Glenn of Midland and Lee Chatfield of Levering are sponsoring the bills in response to $391 million in added tax credits the Snyder administration awarded companies since 2011.
Chatfield said the bills do not reduce tax credits promised to companies that created or retained jobs in the state.
"This is going to prevent any change from adding any more burden on taxpayers," Chatfield said. "What's done is done."
The growth in tax credit liability — from $6.5 billion to nearly $9.4 billion — helped cause a $325 million midyear deficit that the Snyder administration and Republican-led Legislature erased through a combination of fund shifts and budget cuts.
The Michigan Economic Development Corp. has said there is about 280 companies entitled to business tax credits valued at $9.38 billion.
Farrington said he wants to cap the liability to the state's $10 billion general fund. He did not take a vote Wednesday on the bills and said a vote would not be taken next week.
The Detroit News first reported Wednesday that just more than $9 billion of the credits, or 96 percent, are owed to what the MEDC classifies the "transportation" industry. The state agency has refused to disclose tax credit amounts owned to individual companies, citing taxpayer privacy laws.