Michigan lawmakers approve $1.5B incentive plan with 4 potential projects looming

Craig Mauger Beth LeBlanc
The Detroit News

Lansing — Michigan lawmakers signed off Tuesday night on a $1.48 billion spending plan aimed at using state funds to lure economic development to Michigan, including a new General Motors Co. battery plant and three other "serious projects," according to one official.

The legislation represented a dramatic push to attract businesses, three months after Ford Motor Co. announced an $11 billion investment, along with 11,000 jobs, in Kentucky and Tennessee. The proposal, which the House and Senate approved on their last session day of 2021, featured $1 billion for economic development incentives and $409 million in assistance for businesses impacted by the COVID-19 pandemic.

Sen. Ken Horn, R-Frankenmuth, said Michigan has been king of the manufacturing hill for more than 100 years. In recent years, neighboring states have been stealing the hill from underneath Michigan, Horn said.

"Today, we will cement our historical manufacturing ties and we secure Michigan’s future with a bill package that will attract and retain tens of thousands of jobs," Horn said before the Senate approved the spending bill 25-11.

Horn told reporters there were four "serious projects" considering Michigan that could benefit from the new funding. Two of the projects are in the auto industry, he indicated.

“What we did today probably gives us a better than 50/50 shot at securing all four," Horn said.

The House approved the $1.5 billion appropriation in a 78-25 vote.

Sen. Jeff Irwin, D-Ann Arbor, one of the no votes in the Senate, said the proposal amounted to bribing companies to come Michigan and to "stuffing the stockings" of corporations.

"Meanwhile, we’ve got people sleeping on the streets," Irwin said. "We’ve got a broken mental health system."

Democratic Gov. Gretchen Whitmer and the Republican leaders of the Legislature have been in discussions for weeks on the economic development effort.

Supporters contended that the proposal was necessary to help Michigan compete as automobile manufacturers, which have dominated the state's economy, transition to electric vehicles and seek to keep an advantage over their competitors.

Rep. Joe Tate of Detroit, the top Democrat on the House Appropriations Committee, said there were economic development opportunities available to Michigan, and the situation was moving quickly so lawmakers were looking to act quickly as well.

A target of the new initiative is General Motors.

GM is eyeing Delta Township near Lansing to build its third multibillion-dollar battery cell manufacturing plant in the United States. The proposed investment is pegged at $2.5 billion, according to GM's tax exemption requests to the city of Lansing, and the plant would create an estimated 1,700 jobs in the region when it is fully operational.

The Lansing City Council on Monday moved forward with supporting the battery cell manufacturing plant by approving a resolution recommending the formation of a renaissance zone for the development in an application to the Michigan Strategic Fund.

In addition to looking at investing in the Lansing area, GM also is considering investments at its Orion Assembly plant in Lake Orion to make electric trucks there based on its new Ultium electric platform, sources previously told The Detroit News. The Orion plant builds the electric Chevrolet Bolt EV and EUV.

The state House and Senate each approved legislation Tuesday to create the Strategic Outreach and Attraction Reserve Fund in the Michigan 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.

The site readiness fund would be charged with spending money on activities related to "strategic sites" and "mega-strategic sites." 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."

There have been critics of the plan on both sides of the aisle, including state Sen. Tom Barrett, R-Charlotte. Talent, infrastructure, regulatory and tax environment and energy costs were aspects of potential development sites that companies valued more than financial incentives, Barrett said.

The $1 billion could fix a lot of infrastructure in the state, he said.

"You can't spend those same dollars twice," Barrett said.

Amid the discussions about how to attract large developments, the Legislature also approved a bill that would increase the small taxpayer exemption to the state's personal property tax. Under it, entities with less than $180,000 in industrial personal property and commercial personal property would be able to qualify for the exemption. The current cap is $80,000.

"We wanted to send a message to our small and medium-sized businesses that they are indeed important to us as well," Horn said.

The proposal, which passed the Senate 21-15, would have a "likely significant" financial impact on local units of government, according to an analysis by the Senate Fiscal Agency. Sen. Jeremy Moss, D-Southfield, was among the opponents.

"By further repealing the personal property tax without a long-term replacement, the majority in the Legislature continues to threaten the sustainability of our local governments to provide for the essential services back home that we all depend upon," Moss said.

The spending bill advanced out of conference committee also featured $75 million for a local community stabilization fund to offset reductions because of the change.

But Judy Allen, director of government relations for the Michigan Townships Association, said the tax exemption change would directly affect the ability of local governments to provide essential public services and infrastructure.

For the $409 million in business relief, the program would be funded with federal dollars and would provide grants to businesses that have realized a significant financial hardship because of COVID-19. Financial hardship would be defined as a decline in total sales, but the aid available would be capped based on property taxes or based on certain fees and taxes.

Eligible businesses would include entertainment venues, exercise facilities, restaurants, barber shops, cosmetology shops and hotels. Overall, grants to businesses cannot exceed $5 million.

Justin Winslow, president and CEO of the Michigan Restaurant & Lodging Association, touted the program.

"The COVID-19 pandemic inflicted unprecedented destruction on restaurant and hotel operators across the state, with thousands closing their doors forever," Winslow said. "For those that remain, erratic supply chains, crippling inflation and a persistent virus continue to complicate their day-to-day operations. 

"This funding will help many keep their doors open by allowing them to pay down debt and to subsidize their operations until more consistent business conditions emerge."

Along with the economic development package, the Legislature was also weighing Tuesday night an $841 million supplemental spending plan to allocate federal relief dollars to combat the COVID-19 pandemic.

The bill included $150 million for testing in schools and $140 million in emergency rental assistance. Whitmer described it as a "big step forward in finding common ground and agreement."



Staff Writer Kalea Hall contributed.