Oct. 13, 2023 | This Week in Government: Senate Panel Considers Fix to SOAR Fund, Strategic Tax Capture ProgramOctober 13, 2023
Each week, the Detroit Regional Chamber’s Government Relations team, in partnership with Gongwer, provides members with a collection of timely updates from both local and state governments. Stay in the know on the latest legislation, policy priorities, and more.
Senate Panel Considers Fix to SOAR Fund, Strategic Tax Capture Program
A lengthy discussion before a Senate panel on Thursday saw early support from a mix of stakeholders on measures to revive the Good Jobs for Michigan program and amend the Strategic Outreach and Attraction Reserve Fund.
The Senate Economic and Community Development Committee heard testimony on SB 579, SB 580 , and SB 581, modifying and revising aspects of the Good Jobs program, and SB 559, SB 560, SB 561 , and SB 562, affecting the SOAR fund.
The Good Jobs bills are sponsored by Sen. Sam Singh (D-East Lansing) and Sen. Mary Cavanagh (D-Redford Township). Together, they would revive the program which ended in 2019 and became the Michigan Strategic Tax Capture program.
The bills would modify the program’s qualifications for an eligible business and certified new jobs, increasing the wage requirements, decreasing the required number of jobs, and requiring those jobs to be permanent, full-time positions.
The bills would apply application, agreement, and withholding tax capture revenue requirements of the Good Jobs program to the Michigan Strategic Tax Capture Program, in addition to modifying some requirements.
Additionally, SB 579 would increase the amount of total withholding tax capture revenue that the Michigan Strategic Fund could commit for approved projects under the Michigan Strategic Tax Capture Program from $200 million in total to $100 million annually. The new program would sunset five years after the bill’s effective date.
Singh and Cavanagh spoke to their bills during the committee.
“Those bills at that point in time were really, I think, geared towards larger companies and actually one or two of the motivations of trying to do that was some larger potential job opportunities,” Singh said. “But what we are presenting today is something really meant for our times, where our state is, and probably what’s better for Michigan, especially for our smaller businesses as well as our larger businesses. I think it has a has an opportunity to sort of impact a larger group of organizations.”
He said the updated version continues a requirement for permanent new jobs created and certified, with an eye toward prosperity regions and annual wage that can be adjusted as needed.
“We want to provide some level of flexibility there, but also then for smaller amounts of jobs, we want to make sure that the median income is higher. That will be at 175%,” Singh added.
Cavanagh added that several stakeholders spoke about the need to invest in small businesses as well as large companies that typically compete for incentives.
“We did try to keep the intent of the previous program of creating new higher paid jobs in Michigan,” she said. “These bills work specifically to ensure that we’re not just solely attracting and creating any type of job, but jobs with competitive, livable wages that bring meaningful benefits, not only to the community but to our residents here in Michigan. … It has been an overarching point in conversation in Michigan’s economic development strategy that we really need to advocate for quality investment over quantity. We work against ourselves and our residents and create jobs that simply cannot pay your bills and don’t provide meaningful opportunity to advance in the workplace.”
No other testimony was taken on the Good Jobs bills, but several groups and businesses said they supported the bills – including the Detroit Regional Chamber, Toyota, Southeast Michigan Council of Governments, the Michigan Municipal League, and the Metropolitan Affairs Corporation – but did not wish to speak. The Mackinac Center for Public Policy issued a card opposing the bills.
Like the Good Jobs bills, the SOAR package would seek to rename the fund. Under the package, SOAR would become the Make It In Michigan Fund. The bills would require the Michigan Strategic Fund to operate a newly created Michigan 360 Program, broadening the Critical Industry Program’s scope to allow the Strategic Fund to grant investments determined critical to the economic growth and development of the state. They would also modify the scope of the Michigan Strategic Site Readiness Program, which currently creates investment-ready sites for potential business.
Under the bills, for an investment to be made under the Critical Industry or Site Readiness programs, an additional investment would have to be made under the 360 Program equal to at least 20% of the total project investment.
Chair Sen. Mallory McMorrow (D-Royal Oak), sponsored SB 559, which creates the 360 Program using the framework for Critical Industry and Site Readiness. She said since SOAR’s implementation, Michigan has changed course on landing significant, large economic development, and investment projects, but the fund came with a great deal of concern from legislators on both sides of the aisle.
The main concern had been how the tool was used, leading to questions about how or why certain projects were getting into the pipeline, the level of visibility afforded to legislators and the communities that they represent, and tension between communities and companies – much like the furor over the Gotion battery plant plans – when those communities do not feel they are a full partner in the process.
McMorrow said that there are currently two proposals sitting before the Senate addressing the SOAR fund: one from Sen. Thomas Albert (R-Lowell) and the one before the committee on Thursday. The Albert package, however, seeks to gut the SOAR fund and repeal it in its entirety.
“Our proposal is slightly different. It acknowledges that we must improve in our basics, strengthen our fundamentals, and use economic development in a strategic way that hopefully over time reduces our reliance on incentives,” she said. “But we also understand that those systemic improvements will take time, and we know that Michigan has had an inconsistent history with our approach to economic development across multiple administrations and across both parties. So, with that, we wanted to align around a new north star.”
She added that in national rankings which consider outcomes for residents – not projects – Michigan has fallen behind. Michigan’s top competitors appear to be states that have warmer climates and larger tech hubs. McMorrow said that Michigan can only control one of those factors, being a northern state.
All those factors showed McMorrow and Cavanagh that a new economic development framework was needed in Michigan. Making that framework viable for all Michiganders would hinge on directing investments to places and people driving those economic development gains while also reducing the reliance on incentives or tax breaks.
When the Legislature was debating the initial SOAR fund bills, critics repeatedly stated that data shows tax breaks and large incentive packages are no more effective than focusing on infrastructure and community-based considerations.
McMorrow used the example of Amazon to bolster that point, noting that it had passed up on Michigan for a smaller incentive package in a state that had better infrastructure, better public transit, and community amenities – northern Virginia.
She also made a slideshow used during the hearing available so the public would be able to see where they were headed. It also includes details of a new process map that would be used to guide the state as it seeks to move forward with potential projects.
The committee heard supportive testimony from Jared Fleisher of Rocket Companies, two members of Invest Detroit, and two members of the MML.
Fleisher said his company was supportive of the bills, as they were deeply involved in the creation of the SOAR fund. He shared several legislators’ ire with the fund, noting that it was necessary following the loss of big projects but was not desirable.
“SOAR needed to live in a broader context, something more holistic,” Fleisher said. “My point is, there’s always been the seeds that SOAR has to exist … to be the right policy and to be politically sustainable, but it just seemed to never connect. It was siloed. What you have in this bill, in our opinion, is those seeds (blossoming) into a flower.”
The office of Detroit Mayor Mike Duggan and Michigan Works! supported SB 559, while the Metropolitan Affairs Corporation, the Southeast Michigan Council of Governments, and Toyota supported the entire SOAR overhaul package.
The Mackinac Center opposed the package; the Michigan Chamber of Commerce and the National Federation of Independent Business were opposed to SB 559 but did not wish to speak.
McMorrow said that they would continue to take testimony on the bills at future meetings.
Population Workgroups Recommend ‘Equitable’ School Funding; K-14 System
Workgroups for part of Gov. Gretchen Whitmer‘s population council on Thursday recommended “equitable” school funding and a K-14 education system that includes two years of higher education tuition as part of its charge to attract and retain residents.
The Growing Michigan Together Council heard recommendations from several of its workgroups on Thursday. Members outlined early recommendations on K-12 education, higher education, and transportation and infrastructure during a virtual meeting.
A report from the entire council is due later this year. The recommendations outlined Thursday were not detailed and will continue to be discussed.
On the higher education side, key recommendations were a K-14 education system in the state that would include two years’ tuition for a community college or public university. The workgroup also recommended providing incentives for college graduates who stay in Michigan to work.
The K-12 education workgroup recommended funding school equitably, but did not get into specifics on a number.
“We need to fund the system fully, equitable, efficiently and transparently so every student and every school has the resources needed to meet the system’s goals,” Michigan Education Association President Chandra Madafferi said.
Patrick Anderson, member of the workgroup, criticized the process that blocked him from providing a dissent with the recommendations. Anderson disagreed with the funding portion of the group’s recommendations.
He said any changes to the tax structure that funds schools would be “radical.” He also said, in terms of equitable funding, that Proposal A has led to more equitable funding, and the tax sources that go to the School Aid Fund have been steady.
“There is indeed a need to improve school governance and finance,” he wrote in an email to workgroup members provided to Gongwer News Service after the meeting. “However, I and multiple other members of the group feel that changes in revenue must follow, not precede, improvements in accountability and performance.”
The K-12 workgroup also recommended committing to the “Michigan education guarantee,” that every student will graduate with the competencies needed to thrive and reimagining the role of teaching to enable educators to innovate.
Another key workgroup around housing and infrastructure made recommendations on Thursday. They also lacked specifics on funding, but said the state’s transportation funding model should be updated to “sufficiently fund and maintain the road network and support the development of a more robust and statewide transit system.”
On housing, the group said the state should develop and revitalize housing stock to align with needs and focus new development on creating vibrant and dense communities.
The group also recommended the state shift its economic development strategy to a more proactive one by investing in site readiness programming.
While the council is bipartisan – including Republican former U.S. Senate candidate and Secretary of State Terri Lynn Land and John Rakolta, Walbridge Chief Executive Officer and former U.S. Ambassador to the United Arab Emirates – legislative Republicans have been mostly critical.
House Minority Leader Matt Hall (R-Richland Township) slammed the recommendations Thursday. He said the education recommendations would result in a massive tax hike.
“From day one, I predicted the Democrats would push for the commission to recommend this exact tax hike to give them political cover,” he said. “Ignoring education, roads, bridges, and public safety comes with a price. Michigan is competing against states like Kentucky and Indiana that are lowering their taxes. Raising taxes in our state and making life less affordable will push people away and intensify our population decline.”
The Great Lakes Education Project called the K-12 recommendation “unserious.”
“The presentation today by the head of the Michigan teachers’ union outlined all the widely known problems in public education, did nothing to accept the blame for past failures, and instead issued statements about continuing to fund the exact system that has perpetuated the failure,” GLEP Executive Director Beth DeShone said in a statement. “Enough is enough.”
Lines Drawn in Debate Over Green Energy Siting Authority
The debate over siting authority for large-scale solar and wind energy projects began in the House on Wednesday with a committee hearing for the newly introduced Clean Energy and Jobs Act.
House Democrats Rep. Abraham Aiyash (D-Hamtramck), Rep. Ranjeev Puri (D-Canton Township), and Rep. Phill Skaggs (D-East Grand Rapids) presented the legislation– HB 5120, HB 5121, HB 5122 , and HB 5123 – at a press conference Wednesday morning. The press conference was followed up by testimony on the package during the House Energy, Communications, and Technology Committee.
The hearing, which lasted 90 minutes, drew out tensions between urban and rural communities, state and local government control, and Michigan’s present and future energy needs.
“All across the state there is an expressed desire to invest in a clean energy future,” Aiyash said during his testimony.
By focusing on clean energy, Michigan will be able to meet its climate planning goals and become a state that is producing its own energy instead of importing coal and other energy sources, he said.
“It will allow us to create jobs and opportunities for communities and working families all across Michigan,” Aiyash said.
Puri said the legislation would bring substantial economic benefits to the state and put Michigan’s regulatory landscape on par with other states.
“Medium and large-scale solar projects will open up good-paying union jobs all across the state,” he said.
“For farmers, this could be life changing legislation because this could help open up a steady and stable stream of income for family farms, which would provide an opportunity for these farms to remain in the family as they have for generations in Michigan,” he said. “Oftentimes, farmers and landowners have their hands tied by restrictive ordinances that really limit what they can do with their land. And so, this legislation just provides more opportunity for them to do and make their own choices.”
Puri also said that by pivoting to clean energy, Michigan can diversify and stabilize its power grid, making energy more reliable and affordable.
“These are crucial and imperative steps the state needs to take if it’s serious about competing in the economy of tomorrow,” Puri said. “We’ve talked about how this legislation can make Michigan a more attractive place to build, to live and to grow, which will in turn help retain our talent and help attract new talent.”
The legislation isn’t just important for tomorrow’s economy, Skaggs said. It’s needed now.
“At a time when we continue to see the negative effects of climate change, including the negative effects of climate change on agriculture from heavy storms to sweltering heat, it’s imperative that we ensure that we build this clean energy renewable future right her in Michigan,” he said.
Dan Scripps, chair of the Michigan Public Service Commission, also testified in support of the legislation.
“These bills represent a necessary shift in how we think about energy infrastructure, and indeed how we site energy infrastructure in Michigan,” Scripps said.
Current siting laws are the primary challenge in developing renewable energy infrastructure, Scripps said. He talked about DTE Energy’s attempts to build wind farms in 2017 and the problems the company faced with local ordinances.
“The company started with 10 possible areas, and this was quickly reduced to four projects due primarily to evidence of opposition, despite tremendous focus on community engagement,” Scripps said. “The company ceased development of three of these four projects mainly because the projects faced intense opposition. The remaining project has been built and will go online, but nearly four years after the project development started, there are still permitting details to be resolved.”
Scripps said the way to move Michigan forward has never been to adhere to the status quo. Throughout the state’s history, the Legislature has given the Public Service Commission authority to site natural gas pipelines, high voltage electric transmission lines, and carbon dioxide pathway pipelines.
“The legislation in front of us seeks to balance the interests of that state in reliable, affordable electricity with the interests of local communities by ensuring that communities and local units of government absolutely have a seat at the table and a voice in the process.”
“I’ve been contacted by countless constituents, countless township officials. What do I tell these township officials that have spent tens of thousands of dollars going through the process of crafting ordinances that pertain to these projects? What do I tell my constituents that have continuously voted these projects down?” Outman asked.
He also asked why the legislation required project labor agreements.
“That seems very unethical considering labor unions are probably some of you biggest donors?”
Aiyash pushed back, saying it would be unethical to make people work for “substandard wages.”
“We want to ensure that people who are going to do these jobs are going to be able to pay for the necessary things for their lives: to feed their families, to house their children, and to make sure that they have a little something left in the bank to be able to enjoy life in this great state,” he said.
Aiyash continued, saying the legislation creates options and doesn’t require developers to work through the Public Service Commission.
“We’re not telling local communities that they have absolutely no power,” Aiyash said. “The reality is this: we will not be able to sustain our state with our energy supply. We will not be able to have a reliable energy source if we are not going to look at large scale investments in solar and wind. That is not something that is speculative. That is an indisputable fact.”
In response, Outman noted that none of the large-scale solar or wind projects are likely to be built in the urban and suburban districts Aiyash, Puri, and Skaggs represent.
Rep. Jenn Hill (D-Marquette) said she had concerns about how broadly the bill was written, specifically in how it defines siting jurisdiction for “public benefit.”
Rep. Jaime Green (R-Richmond) said that all 21 municipalities in her district are opposed to the legislation.
“By usurping their local authority, you are essentially declaring war on these agricultural districts,” she said.
Aiyash said that perspective failed to acknowledge the history of energy production in Michigan.
“I grew up and still live in one of the most polluted areas of our state, and we have been asked to bear the brunt of generating coal plants and natural gas plants in our areas, and we have suffered the health impacts,” he said. “Now, we have an opportunity to build Michigan, to create jobs, to build sustainable energy supplies for generations to come.”
He clarified that he has met and intends on visiting communities that would be affected by large-scale clean energy projects throughout the process of working on the legislation.
“There’s a reality that in order for us to produce our energy supply in this state, everybody has to do their fair share,” Aiyash said.
Rep. Joseph Aragona (R-Clinton Township) asked about the decibel levels and distances from houses allowed by the legislation. He said that other places with similar legislation set the decibel levels lower and the distances farther.
The legislation seemed to be written so that developers could work around locals, Rep. Pauline Wendzel (R-Watervliet) said.
“We’re not only going around the electorate and the local elected official who are held accountable by the people, but we’re giving this power to unelected bureaucrats. I have a problem with that,” she said.
She asked if locals would be able to overrule what the commission suggested.
“They get a voice in the process, but they don’t get a veto,” Scripps said.
Ed Rivet, executive director of the Michigan Conservative Energy Forum, also spoke in support of the legislation.
“The current situation at the local level is completely untenable, unsustainable and must be changed,” he said. “Local officials are recalled, which is a citizen right, but they are brutal, and oftentimes, victims of lies, distortions and character assassinations. …We’ve seen families and friends divided. … We’ve seen threats, blackmail, vandalism … it’s not pretty and it has to change.”
Although Rivet agreed that the bills, as written, were overly prescriptive and needed to be more clearly defined, allowing the Public Service Commission to have oversight would ease the burden on local communities.
“We need to change something, but we should balance it as much as possible,” he said. “Local control should not be completely abrogated.”
Justin Carpenter, director of policy at the Michigan Energy Innovation Business Council, also spoke in support of the package.
“When developers decide to invest in a community, they do so with the understanding that they will be working with the people that live in and govern the community for a long time, and they wish to maintain a mutually beneficial relationship,” Carpenter said. “On a personal note, I grew up in agricultural land in Michigan, and if I encountered the problem of being told that I couldn’t do what I wanted with that land, I would be rather upset … this provides an option to allow that to be still a green space.”
The Michigan Townships Association strongly opposed the bills. Judy Allen, director of government relations for the organization, testifying against the package.
“MTA recognizes the critical role of renewable energy and does not oppose a well-planned, balanced transition to clean energy,” she said. “However, not all land nor all communities are the same. Local units of government utilize local land decisions through the planning and zoning processes provided under the law … what works in one township that has multiple wind turbines, wind parks now, is different than what might work in another township.”
Allen said the legislation, as introduced, had several problems, including no clear limitation on the amount of property that can be used, no specifics about enforcement or an indication of how emergency response would be handled.
Rep. Joey Andrews (D-St. Joseph) told Allen he’d like to find a middle ground between local and state control.
“We’ve heard about the 100 plus projects that have been started and then in mid-planning denied and so I just want to make sure that you’re open to conversations on how we can improve this process,” he said. “The way it currently exists, it’s just not working.”
Several residents attended the committee hearing in opposition to the bill.
Carol Sanborn, who lives in Lebanon Township, said that she and her husband did not want to see solar and wind power on their 80 acres of land.
“We are rural people coming from rural roots. We want our lands to remain prime farmland. We don’t want it polluted with monopoles,” she said. “Even though we’re against all this green energy, it’s being shoved down our throats, even though we want nothing to do with it – all for the greater good.”
Sanborn said she thought the governor’s push for green energy was nothing more than a pipe dream.
“We would be better off trying to find ways to use our regular utilities more conservatively,” she said.
Not all residents who attended the hearing were opposed to the legislation.
Clara Ostrander of Milan Township said that hosting a solar farm can save people from having to sell land that has been in their family for generations.
She said she tried to host a solar farm on her family’s land, but the local ordinance was changed before she could start the project.
“People in our township were spun into a frenzy because they were lied to by the people who didn’t’ want their view to change,” she said. “They should not get to decide what we grow or what we harvest, and that includes harvesting the sun for electricity. We need a responsible neutral party like the Michigan Public Service Commission to review these projects based on facts. Not fear or falsehoods.”
Rep. Joseph Fox (R-Fremont) attended committee to testify in opposition to the bill. He said that clean energy seemed like a way to make people pay exorbitant costs for energy.
“We, the House of Representatives, are here to represent the people,” he said. We’re not here to carry out a Green New Deal agenda.”
Michigan’s hesitancy to move forward with renewable energy infrastructure is costing the state jobs, said Robert George, the director of government affairs for the Michigan Laborers District Council, who testified in support of the legislation.
He said that according to May 2023 report out of Columbia University, 26 Michigan local governments have delayed or blocked utility scale developments, which was more than any other state included in the study.
“These actions have cost Michigan hundreds of millions of dollars in investments, thousands of jobs and prevented our state from increasing its energy independence,” George said.
The Michigan Republican Party put out a statement in opposition to the legislation on Wednesday.
“These aspiring tyrants seek to convince you that they are stripping your rights for your own good, because you lack the intelligence to understand,” the message said. “Fundamentally, whomever has to live with the results of a matter, should be the ultimate decision maker, not an unelected bureaucrat in Lansing.”
House Minority Leader Matt Hall (R-Richland Township) also put out a statement in opposition to the bill package.
“Democrats are taking the next step to ban natural gas, pivot to unreliable wind and solar power, and override local communities’ decisions,” Hall said. “They want to close dependable power plants and let the Whitmer administration force wind turbines and solar farms into communities against the will of local residents. Democrats’ unfair, overbearing mandates will rob Michiganders of their local control while forcing them to pay more for less reliable electricity.”
Although there were several others who wanted to testify about the legislation during the committee hearing, it was cut off for time.
There’s no set timeline for the legislation to move to the House floor, though energy remains a priority for the speaker, said Amber McCann, press secretary for House Speaker Joe Tate (D-Detroit).
‘You Can In Michigan’ Campaign Debuts
Michigan is adding a new message to its marketing and promotional efforts with a new, $20 million “You Can in Michigan” campaign launched Tuesday.
Gov. Gretchen Whitmer and officials from the Michigan Economic Development Corporation unveiled the new theme during a virtual news conference.
The idea is to complement the state’s other marketing campaigns with a new message tailored toward convincing people to relocate to Michigan. Pure Michigan will continue as the primary vehicle for tourism and recreation. Pure Opportunity will continue to focus on wooing employers to Michigan. The relatively new messaging that encourages people to move to Michigan based on the legalization of abortion also will continue.
“It’s the largest scale talent attraction campaign and effort in the United States,” Whitmer said.
MEDC President and Chief Executive Officer Quentin Messer said this campaign is personal to him as a native Floridian who could have gone anywhere but made Michigan his home.
The campaign will include television and digital advertising.
It is part of Whitmer’s efforts to reverse the state’s population slide.
Michelle Grinnell, MEDC senior vice president of marketing and communications, said all the state’s campaigns complement each other and tell the story of Michigan.
The “You Can In Michigan” campaign “is really about making sure people understand the type of wonderful life they can have,” she said.
The free market oriented West Michigan Policy Forum has called for broad-based tax cuts, like phasing out the income tax, as a means to boost the state’s population.
Asked about that concept, Whitmer said she wasn’t surprised some would suggest phasing out the income tax. She took a dig at Texas, a fast-growing state that does not have an income tax. There are many more components to a state’s growth than its tax climate, she said. There must be a climate overall that makes people want to live here.
“I often will joke, have you ever met a Texan, all they ever do is brag,” she said. “Our story is so much more compelling.”
Survey Suggests Biden Struggling in Michigan
A new poll from the Republican firm Marketing Resource Group hints at potential trouble for Democratic President Joe Biden in Michigan.
While topline poll numbers always are subject to margin of error and just being outright wrong, a question MRG asked 600 likely voters between Oct. 2-8 with a sample described as “+1 GOP” indicated Biden is failing to excite voters who lean Democratic and has work to do.
Respondents were asked whether they would vote for Biden or former President Donald Trump or someone else if the election were held today. Forty-two percent said they would either vote for Trump or leaned toward Trump while 35% said they would vote for Biden or leaned toward Biden.
MRG then tested how Democratic Gov. Gretchen Whitmer would fare and there is where the numbers were eyebrow raising.
Some 46% said they would vote for Whitmer or either leaned toward her while 40% said they would vote for Trump or leaned toward him.
In a statement about the poll, MRG said Trump’s lead over Biden can largely be attributed to softer support among Democrats for him compared to relatively solid support for Republicans for Trump.
“If the rematch takes place, it will be unique and considered like two incumbents running against each other; both have saturated name ID, records to defend having served in the same office, and voters have strong opinions one way or another about their candidate choice,” said MRG owner Jenell Leonard. “The waning support for President Biden from his base should be concerning to his party. It conveys they no longer have faith in their candidate; they lack the confidence that he can win re-election. This is a candidate problem, not a party problem.”
Whitmer’s numbers indicate she could be a viable national candidate, said Tom Shields, MRG senior advisor.
Seventy-five percent of the interviews were conducted with cell phones or cell phone dominant households. There is an error margin of plus or minus 4 percentage points.
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