Jan. 26, 2024 | This Week in Government: Whitmer Proposes Repackaged Good Jobs Program

Michigan will seek to expand on its economic development goals with new tools in 2024, like a research and development incentive tax credit, the return of the Snyder-era “Good Jobs for Michigan” program, and the expansion of renaissance zone eligibility across the state.

Gov. Gretchen Whitmer announced the programs on Wednesday during her annual State of the State address.

Economic development made up a large portion of her speech, with new tools to help the state move closer to its existing economic development goals as a centerpiece.

“To keep winning, we must upgrade our economic development toolkit,” Whitmer said. “We can and must outcompete our neighbors.”

Whitmer also mentioned establishing an innovation fund, which she said would attract and retain younger companies, launch new startups, and, hopefully, create thousands of new jobs.

For the research and development credit, Whitmer said she wants to cement Michigan’s reputation as the home for leading innovations.

“Unfortunately, we are one of just a handful of states without a tax credit to incentivize R&D,” she said. “Every other Midwestern state has one. An R&D tax credit will unleash innovation while lowering costs for businesses.”

The Hire Michigan program, which would be a revamp of the Good Jobs for Michigan program started by former Gov. Rick Snyder, would aim to reduce payroll taxes for small and second-stage businesses.

“The value here is simple: the more you hire in Michigan, the more you should save in Michigan,” Whitmer said. “We had a similar, bipartisan program years ago that worked well. So, let’s bring it back – because everyone loves a throwback.”

The Renaissance Zones piece would aim to expand the program to areas that have been historically left out of the program.

“Renaissance Zones are strategically selected areas with lower taxes for businesses and entrepreneurs so we can drive investment and create local jobs,” Whitmer said. “We already have several of these statewide, but there are strict categories that define eligible projects within them. Let’s simplify these into a single, flexible category to incentivize growth.”

The innovation fund would provide money to high-growth startups. She said Michigan has no state-level mechanism to attract and retain younger companies, and the innovation fund might be the tool that leads them to Michigan.

“With the new Innovation Fund, we can launch hundreds of new Michigan-based startups and create thousands of jobs,” Whitmer said. “Together, we’re going to build the infrastructure for innovation so founders can start and build their companies here in Michigan.”

Quentin Messer Jr., CEO of the Michigan Economic Development Corporation, said he believes there is bipartisan support for the governor’s development goals, and the tools she proposed Wednesday will make the state more equipped to thrive.

“You can’t talk about innovation without talking about Michigan, so that’s why an R&D tax credit makes sense. I think the governor was very clear, and I think the previous administration (was clear) that the payroll tax makes a lot of sense because this basically says the more you pay, you incentivize companies of all sizes to grow and invest,” Messer said. “Some of those knowledge sector jobs that we want to (attract), that have fewer capital-intensive requirements, they are going to be able to grow here in Michigan. When you talk about the renaissance zone modernization, it allows us to be flexible and thoughtful with regard to scarce resources.”

Messer said he was encouraged by the governor’s ambitions and that the onus would now be on his colleagues to implement those tools.

“We are one of the few states in the Midwest, if not the only state, without an R&D incentive, and we put innovation on the map by what we’ve done, not only just mobility but also aerospace and defense, and also pharmaceuticals,” he said. “We are talking about bringing back tools that we previously had. So, we’re not talking about adding new tools. We’re talking about bringing back tools that were previously there. … This will allow us to make sure we’re able to focus and do more in place.”

He said the current schema of allocating dollars to economic development programs, whether for business attraction or community revitalization, comes from the same lineup of tools.

“If we’re able to have more tools with focus from business attraction, that allows us to have more dollars in the budget to focus on place and community,” Messer said. “That’s the rationale for why we needed to have more tools.”

Legislation creating the research and development tax credit passed the House in 2023 but is pending in the Senate.

House Speaker Joe Tate (D-Detroit) told reporters afterward that the state needs “to have a toolkit available for creating jobs, and I think that’s something that’s common wherever you live.” That includes a retooling of the Good Jobs for Michigan program by another name, he said.

“How are you creating those opportunities? Everybody wants to be able to see that. So, being able to diversify our economic toolkit, I think, is going to be important. Still, then, in addition to that, I think what you’ve seen this last year is going to tie into economic development,” Tate said. “So, creating a sustainable source of funding for the affordable housing development, as well as revitalization and placemaking grants. That all ties into economic development.”

Rep. Jason Hoskins (D-Southfield), chair of the House Economic Development and Small Business Committee, said the business community has been asking for tools like those proposed by the governor since he took over the committee.

“(They’ve been) asking for common sense tools that we’ll be able to use to attract and retain businesses to our state,” Hoskins said. “These are things that I really think will help set us apart from other states and countries.”

Hoskins said the Legislature is starting to craft laws that align with Whitmer’s goals right away.

“I’m going to be introducing the House version of the Hire Michigan bill tomorrow, and we’re going to be continuing work on the R&D tax credit,” he said. “I’m looking forward to doing great work on the innovation fund, as well; those heavy funding sources for those emerging businesses, those young startups, are going to be critical for moving our state forward.”

Economic development groups across the state urged enactment of the governor’s proposals.

Detroit Regional Partnership president and CEO Maureen Donohue Krauss said the lack of an R&D tax credit has been “a glaring omission in Michigan’s economic development strategy for more than a decade.”

“Companies are making historic investments in mobility, advanced manufacturing, and clean energy technology that Michigan cannot afford to miss out on,” Krauss said in a statement. “This credit will increase R&D in our state and help Michigan outcompete other states for innovative companies and expansion projects that create high-paying jobs.”

Not everyone was sold, especially as it pertains to the Hire Michigan plan.

The Michigan Association of Counties said the focus on economic development and increasing the state’s population is welcome but will not be as effective without more funding for local governments.

“The governor spoke about bringing people to Michigan, yet she said nothing about the communities they will live in and the quality of life that counties provide,” MAC Executive Director Stephan Currie said in a statement. “Talking points are fine, but there is no investment in the solid home life that Michigan residents appreciate. The strength and attractiveness of Michigan are built upon our assets, our outdoors, our quality of life, and our community spirit.”

The Mackinac Center for Public Policy said the proposals were more transfers of wealth than economic development proposals.

“Handing out favors to select firms never works to improve the state economy,” James Hohman, director of fiscal policy at the Mackinac Center, said in a statement. “Lawmakers should instead join an interstate compact to eliminate select subsidies rather than expand the preferences lawmakers give to a handful of businesses.”

Hohman also said policymakers should be skeptical of the new programs, including the Hire Michigan or Good Jobs 2.0 plan.

“Gov. Whitmer’s proposed job program has been a jobless program,” Hohman said. “Giving handouts to select companies is not an effective way to improve businesses in the state. Lawmakers should stop chasing headlines and instead look at broad-based reforms that have been proven to improve the state economy.”

Sen. Mark Huizenga (R-Walker), the minority vice chair of the Senate Appropriations LEO and MEDC Subcommittee, said the tools were nebulous in detail and that the best economic development driver would be a state with lower taxes, lower costs of ownership, and making state departments easier to work with.

“That’s the real solution. I believe in economic development, but when I was mayor of Walker, we worked really hard to build infrastructure and creating a landing zone for people,” he said. “That’s the kind of economic development I like because then you’re not picking losers or winners. We’re just saying, here’s a place we’re open for business, and we want to see this happen right now.”

He described Whitmer’s proposals as “another shiny, pretty new thing to toss out there.”

“Economic development is a component of bringing businesses to a community, but again, the most important thing is to create an ecosystem that says, ‘we’re open for business, we have infrastructure, we have roads, highways, bridges, rail, infrastructure that includes internet, gas, electric, water, sewer infrastructure,’” Huizenga said. “Those are the kinds of things … when it comes time for site selectors, they’re going go out and say, ‘This is a location I want to be in because the infrastructure is already there.’”

Republicans came away Wednesday evening unimpressed with the governor’s State of the State address, calling her proposals unserious, unsustainable, and little more than talking points at a time when Michigan ought to be focusing on long-term growth for businesses and families.

Members of the minority shredded the Democratic majority and Gov. Gretchen Whitmer for spending most of the state’s multibillion-dollar budget surplus during the most recent budget cycle, using up its remaining federal pandemic monies, boosting spending, and creating new programs.

Senate Minority Leader Aric Nesbitt (R-Porter Township) told reporters following the governor’s speech that her efforts were better suited for public relations than offering long-term solutions for Michigan residents.

“What we saw in the speech tonight was really a long list of promises that only have short-term funding that was attached to it,” Nesbitt said. “At the end of the day, she maxed out the credit card, increased bonded debt, and tries to do one-year funding programs.”

He said the school lunch program and others are short-term programs that will inevitably be laid at the feet of the next Legislature and governor to try and maintain.

House Minority Leader Matt Hall (R-Richland Township), who had no visible reaction when Whitmer gave him a shout-out during the speech, was similarly unimpressed with the governor’s proposal and her delivery. Whitmer’s remarks leaned heavily at times into a theme of 1980s classic rock lyrical puns to promote the policy “record” of the last year before delivering several policy recommendations for the upcoming budget.

“She puts together these greatest hits, right, but what we’re looking for is not a bunch of one-off strategies,” Hall said.

Hall said what needs to be put forward is a long-term economic growth strategy that can help the state reverse its population decline and become a more competitive state, which he said he did not hear Wednesday.

“We spent our entire surplus, and now they’re coming forward with all these new spending plans, … this is leading us down a road with tax increases, and that’s going to set us back,” Hall said.

Hall said the governor’s focus has been on carveouts for various constituencies when a broader strategy is needed.

“We need to step back; we need to look at how we create an environment in our state that’s going to attract people for the long term,” Hall said.

Rep. Bill Schuette (R-Midland) said the governor’s policies have made life more expensive for residents, from the energy policy passed last fall to the economic development incentives provided to major corporations.

He, too, took a potshot at the classic rock theme chosen by Whitmer.

“We’re committed to working on anything that actually makes us more competitive as a state, anything that will fundamentally make our state a more affordable place to do business and raise a family if the governor is willing to the table with those types of proposals, we’re willing to work with her,” Schuette said. “But … rattling off 80s songs is not going to actually solve the problems facing our state.”

Schuette said Republicans are willing to work on ways to help families afford what they need, using the example of child tax credit legislation he has introduced, which he said could be a productive area to explore.

Prior to the start of the speech, Rep. Josh Schriver (R-Oxford) posted on X, “Gretchen Whitmer should part from her alliance with Democrat Satanists and announce that she’s becoming a Bible-practicing Christian!” When Whitmer made her way up the center aisle of the House toward the rostrum, Schriver leaned over and handed her what appeared to be a Bible. Whitmer carried it for a few feet and then handed it to someone on the Democratic side of the House.

Sen. Ruth Johnson (R-Groveland Township) said she agreed with the governor that education is important, but she questioned the governor’s proposed approach to expanding access to higher education when K-12 students are struggling.

Johnson cited the state’s low rankings nationally in reading and writing scores for fourth graders and its low rankings in reading and math proficiency.

“The comments I’m getting from people that are presidents of colleges, our kids are coming unprepared,” Johnson said. “We can’t get them to college unless you can get them the basics done.”

Rep. Luke Meerman (R-Coopersville) said his thoughts during the speech were more on residents in his rural district struggling to put food on the table.

He also pointed to the personal income tax rate going up after the one-year reduction triggered by a 2015 law that he said will hurt constituents’ pocketbooks.

“I wasn’t able to get up and applaud much of what the governor was saying,” Meerman said.

Sen. Michael Webber (R-Rochester Hills) said he appreciated the governor touching on infrastructure, but he had concerns about the bonding method through which it is happening.

“Right now, we’re kind of robbing the future for the present in terms of the bonding for the roads,” Webber said. “It’s great that we’re doing some of the roads now because of the bonding, but in the long term, that’s not going to be sustainable.”

Webber said some of the governor’s ideas would be good but are not sustainable. He pointed to the community college proposal from Whitmer’s speech and to the school meals program for K-12 students and universal pre-K programs she has pushed for in the last couple of years.

In a statement, Rep. Pauline Wendzel (R-Watervliet) said the address was little more than talking points to attract future presidential primary voters.

“You’d think after serving in the majority for the past year, Democrats would figure out that governing is more than just reciting poll-tested talking points that resonate with national Democrat primary voters,” Wendzel said. “The governor’s entire speech was gaslighting Michigan residents into thinking she actually has a plan for long-term growth and making life more affordable for our residents.”

Rep. Mike Harris (R-Waterford) said in a statement that the governor sought to count losses as wins during her remarks.

“She triumphantly celebrated extreme energy mandates passed by Democrats that will jack up electricity prices for the families of Michigan and put all our eggs in the basket of unreliable energy like wind and solar,” Harris said. “In the dark and cold of winter, people want to know their lights and heat will stay on at home. They want to know whether they can afford their electricity bills. The governor praising a broken electric grid is an insult to the people of Michigan who will be stuck with higher costs and more power outages.”

Disputed Michigan Republican Party Chair Pete Hoekstra argued Whitmer has put the interests of foreign investments and green energy companies ahead of Michigan residents.

“With Whitmer’s repeated rhetoric about the free government programs she hopes to implement over the next year, it’s apparent our governor believes money grows on trees. But Michiganders won’t be fooled by her pie-in-the-sky promises – they know there is no such thing as “free” and that these programs will be funded with their hard-earned taxpayer dollars,” Hoekstra said in a statement.

Americans for Prosperity-Michigan said Whitmer’s proposals have moved the state back decades.

“Look around at the state of our state. People have left. Children struggle to read and do math. Income and property taxes are up. Personal income has plummeted. Decades of progress have been erased,” State Director Annie Patnaude said in a statement. “Michigan needs to embrace policies that harness the grit and determination of our families and job creators, not embrace policies that grow dependence on government with expensive schemes that hurt more than they help.”

The Michigan Freedom Fund also slammed the governor’s proposals as counter to improving the state’s economy and the wellbeing of its residents.

“Right now, it’s impossible to get ahead in Michigan. No matter how hard you work, the state is demanding more of your income at a time when Michiganders are earning less and less,” Mary Drabik, communications director for the Michigan Freedom Fund, said in a statement. “A patchwork of government handouts won’t give Michigan families the lasting stability they need to thrive. They need policies that give Michiganders a hand up – the opportunity to choose the education that best fits their child and doesn’t break the bank, to keep more of the money they earn, and an end to stripping away important rights and freedoms from families and local communities and giving them to unelected bureaucrats.”

Among the policies Drabik called out, she said the money for purchasing a new car would not cover the interest on most vehicle loans, and her housing plan would not provide enough to fund the 10,000 homes she wants built.

Gov. Gretchen Whitmer named two attorneys to replace the departing judges on the Court of Appeals on Thursday. The attorneys already work in different areas of state government.

Adrienne Young, an assistant defender at the State Appellate Defender Office, was named to succeed Judge Elizabeth Gleicher for a term beginning Feb. 20 in the 2nd District. Philip Mariani, a deputy legal counsel in the Executive Office of the Governor since 2019, was named to replace Judge Douglas Shapiro in the 3rd District for a term beginning March 15.

The appointments are for terms expiring Jan. 1, 2025, and are not subject to the advice and consent of the Senate.

Both Gleicher and Shapiro are in the final year of their current terms. Both turn 70 prior to the November election. That makes them ineligible for reelection under the Michigan Constitution age limit, which bars those 70 and older from running for judge.

By resigning now, Whitmer can appoint their successors and allow those successors to run for election this year with a ballot designation under their name that says, “Judge of the Court of Appeals.”

It is unheard of for an incumbent Court of Appeals judge to lose. Should both run for retention and win, they would serve six-year terms.

Both Gleicher and Shapiro were appointed to the Court of Appeals by then-Gov. Jennifer Granholm.

Young, of Birmingham, represents individuals convicted of felonies who cannot afford their own attorney. She is a former Birmingham Public Schools Board of Education member and a former Supreme Court clerk.

“I am truly humbled by the trust and confidence that Gov. Whitmer has placed in me and by the opportunity to serve in the seat that Judge Gleicher held,” Young said in a statement. “These are two bold women leaders who lift as they climb, and you can count me among the countless attorneys they have mentored and inspired. I am eager to continue my public service to our state in this capacity and look forward to working alongside the judges on this court who I have come to know and respect from my years at SADO.”

Mariani, of Ann Arbor, has worked in the governor’s legal counsel office since Whitmer first took office. He previously was an appellate attorney with the Mark Granzotto PC firm and clerked for former Supreme Court Justice Bridget McCormack. Mariani also was a litigator with the Hangley Aronchick Segal Pudlin & Schiller firm.

“The work of our Court of Appeals has a tremendous impact on the lives of Michiganders, the law of our state, and the quality of justice our courts provide,” Mariani said. “I am grateful to Gov. Whitmer for the opportunity to contribute to this vital work and am eager to continue serving the people of Michigan through it.”

A House committee heard pleas from Department of Environment, Great Lakes and Energy officials Thursday to repeal the Environmental Permit Review Commission, a body created almost six years ago with the power to overrule departmental permitting decisions.

The House Natural Resources, Environment, Tourism and Outdoor Recreation Committee heard testimony on SB 393, which would repeal the Environmental Science Advisory Board, and SB 394, which would repeal the permit review commission.

This comes a day after the Senate Regulatory Affairs Committee discussed HB 4826 to repeal the Environmental Rules Review Committee, also created in 2018 with the power to delay rules the department promulgates.

No action was taken on the bills.

Like Wednesday’s Senate hearing, EGLE officials said the permit review commission is a waste of time and resources.

EGLE Deputy Director James Clift said the permit commission has “served very little value” and meant little difference in department actions. But it has required money and time to provide the staff needed to run it.

Most of the time, Clift said, the review commission informs EGLE it is doing the right thing.

Where problems arise is in legal disputes and interpretation of statutes. But no one on the commission is an attorney with the expertise to handle those matters, Clift said.

The Michigan Strategic Fund Board approved more than $12 million in funds to revitalize the former Piquette Plant. The energy technology company Fortescue will create its first U.S. advanced manufacturing center at the site.

Fortescue, an Australian company, will use the Piquette Plant to manufacture EV battery systems. The production in the facility will initially be focused on North American customers, with a high potential for international sales based on expected economic and technical competitiveness and international customer requirements.

“By choosing Michigan for its first U.S. Advanced Manufacturing Center, Fortescue will create up to 600 jobs and build on our economic momentum,” Gov. Gretchen Whitmer said in a statement. “Report after report shows that Michigan is leading the future of advanced manufacturing and clean energy. Fortescue’s expansion in Michigan and so many of the other investments we are competing for and winning are helping us make communities across our state better places to live, work, and invest.”

The first battery line is expected to be installed during the first half of 2025. Production is expected to ramp up by 2030.

“Fortescue’s Advanced Manufacturing Center will breathe fresh life into the birthplace of the automotive industry,” Fortescue Energy CEO Mark Hutchinson said in a statement. “We are committed to investing in the next generation of green manufacturing projects that will help decarbonize business and heavy industry and, in turn, create a strong future for manufacturing jobs in the United States.”

Judith Judson of Fortescue told the MSF board that the company was attracted to Michigan because of its workforce talent in engineering and manufacturing and the opportunity to revitalize a historic site.

The project is aligned with the state’s goals to position itself as a global leader in EV manufacturing, future mobility, and clean energy, a press release from the governor’s office said.

Fortescue will invest an initial $35 million into the Piquette Street facility. To support the project, the Michigan Strategic Fund approved a $9 million Michigan Business Development Program performance-based grant, a 15-year State Essential Services Assessment exemption valued at $1,300, and a state tax capture worth $2,374,413 for brownfield activity reimbursement.

The project is also requesting more than $5 million in tax increment financing from the Department of Environment, Great Lakes and Energy to assist with environmental activities. The Detroit Brownfield Redevelopment Authority is offering an Industrial Facilities Tax abatement for up to $7,684,208.

The MSF also approved a $1.5 million Michigan Business Development Program grant for EcoG, Inc., a German company, to establish a North American headquarters in the Corktown Neighborhood of Detroit.

The headquarters will be in the historic Book Depository Building next to the former Michigan Central Station, home of Ford’s Michigan Central Innovation District.

The project is expected to generate $14.4 million in investment.

“Right now, there is unprecedented momentum behind the EV transition in the U.S.,” EcoG CEO Joerg Heuer said in a statement. “EcoG’s solutions are acting as the catalyst for manufacturers in the U.S., making it simple to introduce American-built products into the EV charging market and transforming the EV charging landscape across the country. We’re excited to contribute to this next phase from our new office in Detroit. We admire Michigan’s strong drive to transform the mobility industry and are excited to collaborate with other innovation leaders out of Michigan Central.”

On Tuesday, the Michigan Strategic Fund Board approved the third large project, a $2 million Michigan Business Development Program grant for Fifth Wheel Freight to expand in Michigan.

The company was founded in the Lansing area in 2012 and offers less-than-truckload and full-truckload shipping with growing capacities in international ground and air freight services. It plans to expand with a new flagship headquarters in the state.

The project is expected to generate a total capital investment of up to $40 million.

“This grant is a testament to the state’s commitment to fostering a robust job market, particularly in the logistics sector, which is the backbone of efficient and effective supply chains,” said Fifth Wheel Freight President Joshua Brawley in a statement. “As a privately-owned Michigan-based logistics company, we are excited to contribute to the economic growth and resilience of our local community through this initiative.”

The board also approved $1.6 million in grants for 21 existing SmartZones across the state and five new grants totaling $500,000.

“The new year brings new possibilities,” MEDC CEO Quentin Messer said Tuesday. “We’re fully excited, charged up, and ready for the opportunities to come in 2024 as we work together to let everyone know that they can make it in Michigan.”