Michigan lawmakers approve $846M in economic development incentives

Michigan Republican and Democratic lawmakers voted Wednesday to send more than $846 million in taxpayer dollars to a special fund with the intention of providing the money to private businesses that pledge to locate or expand in the state.

The controversial move is part of a $1 billion package introduced Wednesday by state legislators as part of an effort to use a chunk of the state's roughly $7 billion budget surplus.

The measure passed the Senate by a 25-8 margin. Republicans voting against the bill were Sens. Tom Barrett, R-Charlotte; Ed McBroom, R-Vulcan; Ruth Johnson, R-Holly ; Aric Nesbitt, R-Lawton; Jim Runestad, R-White Lake; and Lana Theis, R-Brighton. Democrats Stephanie Chang, D-Detroit, and Jeff Irwin, D-Ann Arbor, also voted against the bill.

“Economic development is critical to our future. As our economy faces the challenges of high inflation, labor shortages and supply-chain issues, we must help our state remain competitive for long-term, high-wage jobs," said Senate Appropriations Committee Chairman Jim Stamas, R-Midland.

House lawmakers followed suit later Wednesday, voting 76-28 in favor of the measure. The bill received bipartisan support.

Gov. Gretchen Whitmer thanked lawmakers for coming together on the supplemental funding bill, arguing it "will help us attract transformational projects bringing billions in investment and creating thousands of jobs to Michigan."

"The supplemental is a testament to what we are capable of when we work together. Let’s keep putting Michiganders first and moving our state forward," Whitmer said in a statement.

Whitmer and GOP legislative leaders generally herald economic development incentives, but this package and a specific deal that could get funding were decried by other prominent lawmakers and officials, including the GOP candidate for governor and one Republican official who resigned his spot atop a key budget committee in protest of the spending bill.

"The wise thing to do is keep money on hand to ensure we can fulfill budget commitments already signed into law, and possibly return money to Michigan taxpayers struggling with inflation. With all of the uncertainty in the economy today, we should not be making new spending commitments," said Rep. Thomas Albert, R-Lowell, in announcing Wednesday morning his decision to resign as chairman of the House Appropriations Committee.

“Increased government spending has fueled inflation and played a major part in the economic struggles we face today. Additional spending would just make things worse. The measure the Legislature is considering today is reckless and irresponsible to taxpayers, and I will be voting against it."

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Legislators are expected to approve the measure later today, in what could be the final time the House and Senate meet before the Nov. 8 general election.

The $846 million is headed to something called the Strategic Outreach and Attraction Reserve Fund, or SOAR. Some of the money was already in the fund this year, but lawmakers needed to vote again to ensure it wasn't sent back to the General Fund.

Money in this special fund is used to dole out incentive payments to corporations that vow to invest in the state, and comes on the heels of news that Gotion Inc., a Chinese manufacturer of electric vehicle batteries, intends to invest $2.4 billion in a new plant destined for mid-Michigan.

The legislation does not specifically mention any economic development projects. Otie McKinley, a spokesman for the Michigan Economic Development Corporation, did not deny the project would receive public incentives. But he said it would be "inappropriate for MEDC to get ahead of our legislative partners, the company and Michigan Strategic Fund board in discussing any requests" for incentive funds.

"Out-hustling and out-competing means respecting the established process and we will comment when the process dictates," McKinley said.

A spokesman for Whitmer did not immediately respond to a request for comment. But it is anticipated that the Gotion project will receive some form of state incentives, having already received local incentives, according to news reports.

The fact that the EV battery maker is a Chinese company garnered pushback from Tudor Dixon, the GOP nominee for governor.

"Your taxpayer dollars should be used to make sure your kids are getting a world-class education, you have a reliable infrastructure. That you have safe cities. But now we're seeing taxpayer dollars go into an adversary, a Chinese corporation," Dixon said in a taped statement released late Tuesday.

"Under a Dixon administration, your taxpayer dollars will be used to make sure you are safe, your kids have a great future and that the roads you drive on are good. They won't go to a Chinese corporation."

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Michigan lawmakers used hundreds of millions from the same SOAR fund recently for huge incentive packages given to GM and Ford.

The Ford plan, a promise to provide $100 million in exchange for the company investing $1 billion and creating 3,030 new jobs, received some pushback after the Dearborn-based automaker announced earlier this year it would lay off 3,000 employees around the world. with most of those job cuts coming in Michigan. The fact the move largely affects salaried employees and not hourly workers means Ford can still take in the tax money while slashing positions.

Other components of the funding bill include:

• $27 million to improve the sewer system of Thomas Township, a small municipality near Hemlock, home to the massive company Hemlock Semiconductor. The investment is part of a broader plan to help the company expand its operations.
• $25 million to increase funding for child care institutions that provide services to children receiving mental health and behavioral stabilization programming, or children who are "developmentally disabled or cognitively impaired," according to reports from the House and Senate fiscal agencies.
• $20 million for "settlement payments" related to a lawsuit titled Bauserman v. Unemployment Insurance Agency. It's a lawsuit filed by people who say the state later garnished their wages or took other benefits after wrongfully accusing them of receiving improper benefits.
• $15 million to update the Michigan National Guard Armories with bathroom, locker room and lactation facilities for women.

Contact Dave Boucher: dboucher@freepress.com or 313-938-4591. Follow him on Twitter @Dave_Boucher1.