Detroit Regional Chamber > Media Coverage > Michigan lawmakers approve $1 billion incentive fund to attract new plants

Michigan lawmakers approve $1 billion incentive fund to attract new plants

December 17, 2021
Detroit Free Press
Dec. 14, 2021
Paul Egan

Michigan lawmakers voted late Tuesday to put $1 billion into a new fund intended to attract economic investment, such as a new GM battery plant that could be built in the Lansing area and create up to 1,700 full-time jobs.

The $1 billion is to fund a new Strategic Outreach and Attraction Reserve (SOAR) Fund in the Department of Labor and Economic Opportunity.

The incentive fund was the biggest part of a $1.5-billion supplemental spending bill, Senate Bill 85, that includes about $410 million in tax and fee relief for business owners hurt by pandemic restrictions and $75 million to exempt more businesses from taxes on personal property and equipment.

Gov. Gretchen Whitmer is expected to sign the bill into law after the Senate approved it 25-11 and the House approved it 78-25.

“Thanks to the effective collaboration of legislative leadership in both parties, our state will be competitive for every dollar and every job for years to come,” Whitmer said after lawmakers sent her the bill.

Though much of the state’s supplemental spending has come from billions the state has received in federal coronavirus relief dollars, the entire $1 billion that lawmakers voted to allocate to the SOAR Fund comes from the state’s general fund.

Economic development officials told lawmakers last week there are several decisions pending on major new manufacturing plants and Michigan needs the incentives to compete for those projects with other states.

Quentin Messer, Jr., chief executive officer of the Michigan Economic Development Corp., said the legislation represents a team effort by the executive and legislaive branches of government, along with business and labor. He said it sends a powerful message to companies that “we are serious and we can move quickly.”

The most immediate prospect is a $2.5 billion battery plant that could be built just west of Lansing on land Delta Township voted to transfer to the city Monday night. It was not clear Tuesday how much of the fund might go toward that project.

Ultium Cells LLC, a joint venture between GM and LG Energy Solution Michigan, was approved by the Lansing City Council Monday for a tax-exempt “renaissance zone” on the land, which is adjacent to an existing GM plant that builds the Buick Enclave and Chevrolet Traverse.

Bob Trezise, president and CEO of the Lansing Economic Area Partnership, stressed that the company has not yet chosen Lansing for the plant and the development could still go elsewhere, even if the requested incentives are approved.

GM is also looking at expansion at an existing assembly plant in Orion Township, in northern Oakland County.

According to the Michigan Economic Development Corp., the state agency has 11 potential large-scale projects in its pipeline, representing more than $74 billion in capital investment and more than 27,000 direct jobs.

A conference committee composed of key lawmakers from both the House and Senate approved the bill shortly before 9 p.m., sending it on to the full House and Senate.

Not all state lawmakers were enthused about the expenditure.

“How can we leave for the holidays, stuffing the stockings of corporate America full with cash, while we’re leaving behind the most vulnerable people in our state?” asked Sen. Jeff Irwin, D-Ann Arbor.

“What about the people sleeping on the street?”

Irwin said Michigan continues to neglect the most important issues that would make the state attractive to companies and workers — education, transit and affordable housing.

State Rep. Abraham Aiyash, D-Hamtramck, said the bill does not represent good stewardship of taxpayer money.

“This is not an investment in the people of Michigan,” Aiyash said. “This is simply a giveaway of taxpayer money to for-profit corporations.”

But Sen. Ken Horn, R-Frankenmuth, one of the main sponsors of the incentive plan, said it would “secure Michigan’s future” and lead to thousands of new jobs.

“Michigan is on the precipice of a huge industrial evolution,” Horn said.

Former Republican Gov. Rick Snyder, who served from 2011 through 2018, had tried to move Michigan away from “picking winners and losers” through the use of major financial incentives to lure manufacturers. Instead, he wanted to focus on a low business tax rate, reduced red tape, and other ways to improve the state’s overall business climate.

But the news in September that Michigan lost out to Kentucky and Tennessee on Ford Motor Co.’s $11.4 billion electric-vehicle and battery plan, which involved an assembly plant, three battery factories and about 11,000 jobs, appeared to spur a major change in direction.

Messer compared Ford’s September announcement to a heavyweight punch that staggered Michigan but did not send the state to the canvass.

He noted that former heavyweight champion Mike Tyson once said that everyone has a plan until they get punched in the mouth.

“There was a feeling that we got punched,” Messer said. “I said publicly then that Michigan will rally. Michigan has always rallied.”

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