Snyder, Leonard to meet after biz incentive blow-up

Jonathan Oosting
DetroitNews-Unknown

Lansing — Gov. Rick Snyder and House Speaker Tom Leonard are set to meet Tuesday for the first time since last month’s dramatic dust-up over business tax incentive legislation as Michigan competes to land a new facility proposed by a Taiwanese electronic manufacturing giant.

Leonard canceled a planned vote on the so-called “good jobs” legislation three weeks ago after a late night caucus meeting with fellow Republicans ended with accusations Snyder had cut a side deal with Democrats that could “undermine” House GOP priorities.

Since the Republican governor was in Europe at the time, Leonard, R-DeWitt, said he was putting the vote on hold until Snyder “can look me in the eyes, can look the caucus in the eyes” and answer their questions about his negotiations with Democrats.

Leonard will get that chance this week ahead of a rare summer session on Wednesday. The House will reconvene for its only scheduled session day of July, and a vote on the business tax incentive legislation is again possible.

The legislation passed the Senate 32-5 in late March but has faced opposition from state House conservatives who favor lower overall taxes rather than carve-out incentives for individual companies, which some call “corporate welfare.”

The proposal would allow a qualifying business to capture some or all of the state income taxes paid by new employees if they successfully create hundreds of jobs that pay at or above average regional wages.

Spokeswoman Anna Heaton on Monday confirmed Snyder plans to meet with House leadership this week and will “discuss the merits of the legislative package and how passage will help further diversify Michigan’s economic future.”

Asked if he had made any side deals with Democrats, as alleged, Heaton declined comment. She said the governor’s office is “not going to discuss details of discussions with legislative partners.”

Snyder’s renewed push comes as Michigan, Wisconsin and other states continue to woo Foxconn, which assembles the Apple iPhone in China and is scouting U.S. sites for a new liquid-crystal display screen factory and other related facilities.

The governor traveled to Asia last month for meetings and is ramping up pressure on the House to approve the new incentive package. He penned a commentary for The Detroit News last week and blasted it out to supporters via email on Saturday.

“The need for this package is critical,” Snyder wrote, arguing the state is increasingly at a disadvantage when competing with other states that have more aggressive business incentives. “We are fortunate right now to have some very good opportunities sitting right on our doorstep, but we need to be able to close the deal.”

While Snyder has become a cheerleader for the new legislation, he has been critical of incentives in the past. He and the Republican-led Legislature ended a larger business incentive program in 2011, and as recently as 2014 Snyder referred to tax credits as “the heroin drip of government.”

Critics have used Snyder’s drug metaphor against the new incentive plan, noting the Republican-controlled Legislature approved a 2015 law providing tax breaks to a Switch data center in west Michigan and a 2017 law allowing developers to capture income taxes generated by “transformational” projects.

“Once you take ‘just one last hit,’ it’s not long before you’re controlled by the addiction and willing to justify many more,” Michigan Freedom Fund Executive Director Tony Daunt said in a recent memo to state legislators.

The proposal would “remake Michigan’s tax policy to reward big, out-of-state employers at the expense of local small businesses and the job makers already driving Michigan’s economy,” Daunt wrote.

Leonard personally opposes the incentive legislation but was prepared to put it up for a vote last month before House Republicans asked Snyder’s chief of staff what concessions the governor agreed to in securing Democratic votes likely needed for passage.

Sources familiar with the situation say a list provided to Republicans indicated the Snyder administration agreed to take any “labor relations bills” off the table for the foreseeable future. Unsure what exactly that meant, Leonard decided to hold off on any voting until he could talk to the governor.

“He’s got questions about what exactly this deal is with Democrats that would get good jobs votes,” Leonard spokesman Gideon D’Assandro said Monday. “He wants to know more about what sort of impact it would have on other legislation and other priorities of the Republican caucus.”

If any larger deals with Democrats fall through, the Detroit caucus could be key. Chairwoman Sherry Gay-Dagnogo, D-Detroit, confirmed she has discussed a potential compromise with the Snyder administration that could generate some support from her caucus.

The talks have focused around worker training and prisoner re-entry programs that result in job placements, she said, along with “transportation solutions” that could help employees get to the new jobs the legislation could create.

“You’re talking about a company that could provide almost 5,000 jobs,” Gay-Dagnogo said, referencing the possibility of a Foxconn facility in Metro Detroit. “I think we do a disservice even to them if we don’t talk about meaningful ways to get people from their homes to those jobs.”

The legislation advanced out of the House Tax Policy Committee last month after a series of amendments limiting the scope and scale of the plan approved by the Senate.

The revised proposal would cap the total value of the program at $200 million, as opposed to $250 million, and allow up to 15 agreements at any one time. It would prohibit the state from entering into any new incentive agreements past the end of 2019, a sunset that would require the legislature to revisit the program in two years or allow it to end.

Another amendment from Republican Rep. Pete Lucido of Shelby Township created a new incentive class allowing a company to keep 100 percent of the state income taxes paid by its new employees for up to 10 years if it created at least 3,000 jobs.

The legislation would also provide full tax capture for companies that create at least 250 jobs that pay 125 percent of regional wages. Companies that create up to 500 jobs paying an average wage could keep 50 percent of employee income taxes for up to five years.

Republicans who ran for office on the promise they’d create jobs have a chance to do so by voting for the legislation, Lucido said.

“I don’t like being beat up, and neither do some of my colleagues, by people saying you’re not a true conservative” if you support the bill, Lucido said. “Go open your doors to create a business that will spend a billion dollars and tell me you’d do it in the state that gives you nothing rather than a state that gives you something.”

joosting@detroitnews.com