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Mon July 27, 2009
Fight over tax breaks focused on disclosure
By Rick Pluta, Michigan Public Radio Network
LANSING, MI – Governor Granholm's administration will resume lobbying this week for expanding the number of tax credits the state uses to attract employers. The Michigan Economic Growth Authority awards the credits based on the recommendation of the state's business development agency. But this month, the authority almost reached the limit of what it can offer. And the governor says that threatens to stall her efforts to bring more skilled jobs to a state that badly needs them.
AUDIO: Governor Granholm wants to expand the number of tax credits the Michigan Economic Growth Authority - or MEGA - can award. This past weekend, she took her campaign to the airwaves by making it the topic of her weekly radio address.
"Expanding the number of MEGA tax credits will enable us to bring thousands of new jobs to Michigan, which we need right now -- obviously," Granholm said.
Without more tax credits, Granholm says Michigan is out of the game until January, when it can again start promising businesses tax breaks in exchange for jobs. She says just the July credits alone led to the promise of 62 thousand jobs that will either come to Michigan or won't be leaving. She says those jobs will spinoff another 161 thousand jobs.
Without the MEGA credits, she says other states with incentive programs will have the advantage.
"If Michigan can't award more credits until next year, we could miss out on 10s of thousands of new jobs and even lose existing jobs," Granhom said.
The governor's campaign has a target audience of one. That's Republican state Senator Nancy Cassis of Novi. She's chairs the Senate Finance Committee, and is sitting on the bill to expand the number of credits.
Cassis says she'd like to know how and why Michigan burned through a year's worth of credits in roughly half that time. And, Cassis says she wants more proof the credits are a good deal for taxpayers.
"We do not have evidence of that now, so we're utilizing the opportunity where they come back and ask for more credits to involve transparency, accountability and oversight as major ingredients of any pursuit of more credits."
One of her big concerns is that the MEGA credits are refundable - that is, if a company gets more credits than what it would owe in taxes, the state writes that business a check. Cassis says that means the rest of the taxpayers have to carry a higher burden.
"So we have to be very aware that what is going on will produce measurable results with the scarce dollars at hand, and also be able to provide some broad based tax relief for the businesses that are here right now that are trying to hang on so no more jobs are lost," Cassis said.
Cassis has drafted legislation that would require the Michigan Economic Development Corporation to disclose more information about companies that get MEGA credits. Among other things, she'd like to know if companies that get the credits would really go somewhere else without them.
Greg Main is the president of the Michigan Economic Development Corporation. Main says he has that information, but he can't share it.
"Because our lawyers tell us if we did that, then we are violating the tax laws that say tax information is a private matter."
Main said that on the Michigan Public Television show "Off the Record."
Critics say the state is actually making it harder to gauge how well the credits work. Michael LaFaive is with the Mackinac Center, a free market think tank fiercely opposed to MEGA and other targeted tax credits.
"We have noticed over time that it has become harder and harder for us to obtain the information that we used to get to stay up to date in the programs and analyze their efficacy," LaFaive said.
The Mackinac Center is releasing a report later this week alleging the Michigan Economic Development Corporation is becoming more secretive, and is revealing less about its key economic development tool.