Wednesday, September 02, 2009

House Passes Tax Credits For Wixom Project, But Expanded MEGA Credits Still in Limbo

The House passed the legislation that will give the Wixom renewable energy park a $100 million dollar tax credit in an effort to lure two major companies to Michigan, but is this really a done deal? Both chambers are applauding the project to convert the old Ford plant and the potential to bring thousands of jobs to the site, but they both have tie-barred this to the legislation concerning the expansion on the MEGA credits for this year... and that means they still have to deal with Cassis. From Gongwer, via Mi-Tech News:

Legislative Democrats have tied the measure (HB 5275) to efforts expanding the number of Michigan Economic Growth Authority credits the state can issue for the remainder of the year, but legislative Republicans in turn have tied that proposal to bills that provide greater transparency to lawmakers on what credits are offered (SB 70, SB 71).

The House is not expected to vote on the Senate bills this week and no deal has been struck between the two chambers to get a comprehensive package passed, although lawmakers from both parties have touted the energy park project, which could create more than 4,000 jobs in the state.

Keep that in mind when you hear this story today. They haven't "finished" anything yet.

The two companies involved are just the kind of business we are trying to bring to the state. Xtreme Power is a Texas based manufacturer of large batteries for made energy storage, focusing on renewable sources such as wind turbines. They would produce the bulk of the jobs. Clairvoyant Energy out of California plans on making solar panels. September 14th is the deadline, as these companies are also vying for federal grants and they have to turn in their applications. They also are looking at sites in other states - so this needs to get done, pronto.

Not to mention all the other companies stuck in the MEDC pipeline that are waiting for an answer on MEGA credits. As far as Cassis and the smokescreen about not knowing if jobs are being produced by MEGA - shovels in the ground yesterday at the site of BAE's expansion has already produced 400 new jobs for Sterling Heights, with 600 total by the time it is complete, is just one such example of how this program works.

Linda Hudson, land and armaments president for BAE, made the announcement Tuesday during a groundbreaking ceremony for the new site on Van Dyke Road. The highpaying jobs, mostly engineering, will come in 2011 when construction at the site’s 81 acres is complete, Hudson said.

She said BAE, which produces tanks and fighting vehicles, has already recruited and hired more than 400 employees that are stationed at a temporary lease site for now.

The project also will generate more than $923 million in personal income for Michigan workers over the next 12 years, she said.

Cassis wants to reduce the number of credits in the coming years. Besides requirements that business open up their books on the offers they received from other states (ahem, real bad idea), she has introduced this formula...

SB 0773 would allow for a one-time addition of 85 tax credits for 2009, as MEGA has run out. SB 0774 would cap the year-to-year growth in the amount of MEGA credits that can be approved beginning in 2010 at $95 or $75 million, depending on the growth of state revenues. MEGA credits would go down from 400 to 300 with an additional 85 credits as long as prior credits from years past have been cancelled at a rate of 1.5 to 1. Both measures moved unanimously.

... in the name of protecting the "taxpayers" from receiving high-paying jobs, or something.

Greg Main from MEDC, in an interview with MIRS, explained how the MEGA credits work. Looks like companies already are reporting job numbers to get the credit, so why this sudden need for "more transparency"?

We have a computer model -- nationally recognized -- that analyzes the inputs and the outputs of that transaction so we know that there's going to be certain tax revenue the state is going to receive. Some of it is going to be income taxes. Some of it is going to be sales taxes. We take it all into account and we get an idea of how much revenue the state is going to get.

The MEGA award is based on how much income tax revenue will be generated by the people who are filling the jobs that will be created. We track it on an annual basis. They have to file reports on how many jobs are created, what the wage rates were, etc. So we know what the tax revenue is. If it matches up with what they said they were going to do, then we pay them a credit. If it doesn't, we don't pay it.

Seeing as how other states offer these incentives and will gladly eat our lunch for us when we limit these credits, the notion of turning down business and jobs is quite absurd. But hey, anything to limit job creation, right Nancy? We can't have any kind of "recovery" in this state when the Republicans are going to need campaign slogans next year!

MEGA has been in place since 1995. Very interesting that the Republicans are choosing this particular point in time to make it an issue, isn't it?