Dillon: Renegotiation isn’t reneging
I recently called for major corporations who stand to benefit from $9.4 billion in state tax credits to come to the negotiating table and partner with our state to ease the significant budget deficits caused by those incentives — a plan that columnist Daniel Howes called “dishonorable” and “wrong” in his March 10 column, “Tax credit ‘hangover’ draws faulty prescription.” I’d like to clear up Howes’ misconceptions.
First of all, I know of no member of the Legislature who has even remotely suggested that we should “renege on deals.” To renege is to completely and unilaterally back out of a deal, and that’s nothing close to what has been proposed. Instead, what our state needs is mutually agreed upon renegotiations of these credits that will benefit both the companies that receive them and the taxpayers of our state.
There is nothing dishonorable or wrong about renegotiation. In fact, it has become one of our state’s time-honored traditions when facing dire financial situations.
Detroit pensioners were asked to come back to the bargaining table and accept a reduction to their benefits as part of Detroit’s “grand bargain” bankruptcy package. State workers were asked to accept unpaid furlough days during the worst part of the Great Recession. In fact, over the last 15 years, state employees have been asked and agreed to accept $4 billion in concessions to help balance the state budget.
Corporations have also turned to renegotiation when times were tough. In many cases, the workers at those corporations have recognized that there is nothing “dishonorable” about negotiating in good faith to help improve their employer’s bottom line. The United Auto Workers renegotiated the terms of retiree benefits in 2007 and also took a concessionary contract in 2009 to pave the way for GM and Chrysler to seek financial assistance from the federal government.
But I’m confused — if renegotiation is dishonorable and wrong, then why did Howes himself praise the “grand bargain” pension renegotiation as recently as Feb. 26, and approve of the GM renegotiation in a September 2007 column? Maybe renegotiation is only permissible when the little guy pays the price.
Even Gov. Rick Snyder thinks there’s merit to the idea of bringing tax credit recipients back to the negotiating table. He’s talked of “mutually agreed upon” agreements with the 240 corporations that hold tax credit deals in Michigan. When a CPA and former CEO thinks it’s time to renegotiate, it is probably not some sort of sinister anti-business scheme to “renege” on contracts.
Renegotiating the MEDC’s MEGA tax credits is nothing new. When corporations recently asked to renegotiate tax credit agreements to lower job creation targets and make them easier to cash in, the state complied.
We need to return to the table and craft better agreements that are accountable and transparent, and do not force us to forgo other critical pro-business investments in education, public safety and transportation. Moving forward, we also need an economic development strategy that doesn’t only focus on large corporations, but that also fosters the growth of small businesses, the job-creating engines that drive our state’s economy.
Michigan needs an economy that works for and is fair to everyone. I am hopeful that those corporations that are thriving in our state and have befitted from the investment taxpayers have made to insure their survival and success will work with Gov. Snyder to help ease the burden on the state budget, just as honorable workers from all corners of Michigan have done throughout our history.
State Rep. Brandon Dillon,
D-Grand Rapids, represents the 75th District