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2003 Senate Bill 824

Public Act 81 of 2004

  1. Introduced by Sen. Jason Allen (R) on November 4, 2003, to extend the Dec. 31, 2003 sunset of the Michigan Economic Growth Authority (MEGA) until Dec. 31, 2009. MEGA is authorized to grant tax credits to companies that promise (but are not required to guarantee) to create or retain a certain number of jobs. The bill would add a provision requiring the governor to appoint to the current eight-member MEGA board two members nominated by the Senate Majority Leader and the Speaker of the House, and essentially give these nominees veto power by requiring them to be in the majority of any actions taken by the board. The bill would also require that gubernatorial appointments to MEGA be subject to the advice and consent of the Senate. MEGA beneficiary firms would be required to make a good-faith effort to use Michigan-based suppliers and vendors when purchasing goods and services, and to disclose to the state the names of corporate officers, board members, and partners. Also under the bill, responses to Freedom of Information Act (FOIA) requests would require approval of the full board, rather than just the director. However the board only meets monthly, and FOIA requires requests to be responded to within five days. Financial or proprietary information about MEGA beneficiary companies is exempt from disclosure under FOIA. Finally, the bill would eliminate MEGA's power to impose administrative rules on participating businesses.
    • Referred to the Senate Commerce and Labor Committee on November 4, 2003.
      • Reported in the Senate on November 6, 2003, with the recommendation that the substitute (S-2) be adopted and that the bill then pass.
    • Substitute offered in the Senate on November 12, 2003, to replace the previous version of the bill with one which incorporates technical changes that do not affect the substance of the bill as previously described. The substitute passed by voice vote in the Senate on November 12, 2003.
    • Amendment offered by Sen. Dennis Olshove (D) on November 12, 2003, to make explicit the authority of MEGA to grant tax breaks to tool and die manufacturing firms. The amendment passed by voice vote in the Senate on November 12, 2003.
    • Amendment offered by Sen. Mark Schauer (D) on November 12, 2003, to strike out a provision which would eliminate MEGA's power to impose administrative rules on participating businesses. The amendment failed 16 to 22 in the Senate on November 12, 2003.
      Who Voted "Yes" and Who Voted "No"

    • Substitute offered by Sen. Mark Schauer (D) on November 12, 2003, to replace the previous version of the bill with one which does not include the MEGA board members nominated by the Senate Majority Leader and the Speaker of the House, the requirement for Senate approval of MEGA board appointments, or the provision which eliminates MEGA's power to impose administrative rules on participating businesses. The substitute would basically just extend the sunset on MEGA. The substitute failed 16 to 22 in the Senate on November 12, 2003.
      Who Voted "Yes" and Who Voted "No"

  2. Passed 38 to 0 in the Senate on November 12, 2003, to extend the Dec. 31, 2003 sunset of the Michigan Economic Growth Authority (MEGA) until Dec. 31, 2009, and expand the types of firms MEGA could grant benefits to. MEGA is authorized to grant tax credits to companies that promise (but are not required to guarantee) to create or retain a certain number of jobs. The bill would add a provision requiring the governor to appoint to the current eight-member MEGA board two members nominated by the Senate Majority Leader and the Speaker of the House, and essentially give these nominees veto power by requiring them to be in the majority of any actions taken by the board. The bill would also require that gubernatorial appointments to MEGA be subject to the advice and consent of the Senate. MEGA beneficiary firms would be required to make a good-faith effort to use Michigan-based suppliers and vendors when purchasing goods and services, and to disclose to the state the names of corporate officers, board members, and partners. Also under the bill, responses to Freedom of Information Act (FOIA) requests would require approval of the full board, rather than just the director. However the board only meets monthly, and FOIA requires requests to be responded to within five days. Financial or proprietary information about MEGA beneficiary companies is exempt from disclosure under FOIA. The bill would eliminate MEGA's power to impose administrative rules on participating businesses, and contains language authorizing tax breaks targeted at a facility in Greenville owned by the ElectroLux company which employs 2,000 workers and is scheduled to close.
    Who Voted "Yes" and Who Voted "No"

  3. Received in the House on November 12, 2003.
    • Referred to the House Commerce Committee on November 12, 2003.
      • Reported in the House on December 3, 2003, with the recommendation that the substitute (H-2) be adopted and that the bill then pass.
        • Reported in the House on February 4, 2004, with the recommendation that the substitute (H-5) be adopted and that the bill then pass.
    • Substitute offered in the House on February 19, 2004, to replace the previous version of the bill with one that uses it as a “vehicle” to make several additional changes to MEGA. The substance of the original bill is no longer included, because the changes it proposed have since become law as Public Act 248 of 2003, which was House Bill 5255. See House-passed version and amendments for details. The substitute passed by voice vote in the House on February 19, 2004.
    • Amendment offered by Rep. Judy Emmons (R) on February 19, 2004, to ease the employee expansion/retention requirements for determining whether a firm qualifies for a MEGA credit, in such as way as to allow the state to offer a credit for two Federal-Mogul Corporation plants which do not currently qualify for a MEGA credit. Specifically, Mega tax credits would be allowed for a firm that maintains 150 retained jobs at a facility, maintains 1,000 or more full-time jobs in Michigan, and makes new capital investment here. Under current law, higher job retention levels and specific capital investment amounts are required. Federal Mogul has intimated that without cost saving measures it may close the plants. These measures often come in the form of targeted tax cuts and union concessions. The amendment passed 106 to 0 in the House on February 19, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Scott Hummel (R) on February 19, 2004, to require a firm which receives a targeted MEGA tax credit in return for promising to create or retain a certain number of jobs, to pay back the tax savings if they fail to keep the jobs promise. The amendment passed by voice vote in the House on February 19, 2004.
  4. Passed 106 to 0 in the House on February 24, 2004, to ease the employee expansion/retention requirements for determining whether a firm qualifies for a MEGA credit, in such as way as to allow the state to offer a credit for two Federal-Mogul Corporation plants which do not currently qualify for a MEGA credit. The company has intimated that without cost saving measures it may close the plants. These measures often come in the form of targeted tax cuts and union concessions. The bill would also require a firm which receives a targeted MEGA tax credit in return for promising to create or retain a certain number of jobs, to pay back the tax savings if they fail to keep the jobs promise. It would expand a provision in MEGA that considers employees who are technically employed by another firm but are actually part of the workforce of a firm receiving MEGA tax credits (“leased employees”), to be counted in determining whether the firm qualifies for the credit under the employee expansion/retention requirements. The bill would allow firms with multiple sites to include employees at the different sites in meeting the expansion/retention requirements, and would liberalize the definition of high-technology businesses to make it easier for certain firms to qualify for tax credits. Note: The substance of the original bill is no longer included, because the changes it proposed have since become law as Public Act 248 of 2003, which was House Bill 5255. Instead, the bill is being used a legislative “vehicle” to make the changes to MEGA described above.
    Who Voted "Yes" and Who Voted "No"

  5. Received in the Senate on February 25, 2004.
    • Amendment offered by Sen. Ken Sikkema (R) on March 31, 2004, to expand a provision allowing firms with multiple sites to include employees at the different sites in meeting the MEGA expansion/retention requirements, so that it also applies to employees at a subsidiary company, and also slightly expand the definition of a "distressed business" that is eligible for a MEGA credit. The amendment passed by voice vote in the Senate on March 31, 2004.
    • Amendment offered by Sen. Ken Sikkema (R) on March 31, 2004, to allow MEGA credits for a company that is bankrupt but has an approved Chapter 11 plan of reorganization approved by the bankruptcy court and its creditors. The amendment passed by voice vote in the Senate on March 31, 2004.
    • Amendment offered by Sen. Ken Sikkema (R) on March 31, 2004, to target the expanded MEGA credit eligibility standards more precisely at the Federal Mogul corporation, while also keeping other proposed eligibility expansions. The amendment passed by voice vote in the Senate on March 31, 2004.
    • Substitute offered by Sen. Alan L. Cropsey (R) on March 31, 2004, to replace the previous version of the bill with one that eliminates a provision making MEGA tax credits contingent on a firm making a capital investment of $100 million and agreeing to maintain at least 1,500 jobs, and requiring a negotiated labor contribution. The substitute passed by voice vote in the Senate on March 31, 2004.
  6. Passed 36 to 0 in the Senate on March 31, 2004.
    Who Voted "Yes" and Who Voted "No"

  7. Received in the Senate on April 1, 2004, to ease the employee expansion/retention requirements for determining whether a firm qualifies for a MEGA credit, in such as way as to allow the state to offer a credit for two Federal-Mogul Corporation plants which do not currently qualify for a MEGA credit. The company has intimated that without cost saving measures it may close the plants. These measures often come in the form of targeted tax cuts and union concessions. The bill would also require a firm which receives a targeted MEGA tax credit in return for promising to create or retain a certain number of jobs, to pay back the tax savings if they fail to keep the jobs promise. It would expand a provision in MEGA that considers employees who are technically employed by another firm but are actually part of the workforce of a firm receiving MEGA tax credits (“leased employees”), to be counted in determining whether the firm qualifies for the credit under the employee expansion/retention requirements. The bill would allow firms with multiple sites to include employees at the different sites in meeting the expansion/retention requirements, and would liberalize the definition of high-technology businesses to make it easier for certain firms to qualify for tax credits. Note: The substance of the original bill is no longer included, because the changes it proposed have since become law as Public Act 248 of 2003, which was House Bill 5255. Instead, the bill is being used a legislative “vehicle” to make the changes to MEGA described above. Passed 38 to 0 in the Senate on April 1, 2004.
    Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Ken Sikkema (R) on April 1, 2004.
    • Moved to reconsider by Sen. Beverly Hammerstrom (R) on April 1, 2004, the vote by the Senate previously concurred with the House version of the bill, to allow it to be tailored even more precisely to its purpose of authorizing MEGA tax credits for Federal Mogul corporation. The motion passed by voice vote in the Senate on April 1, 2004.
    • Amendment offered by Sen. Alan L. Cropsey (R) on April 1, 2004, to put time limits on the time in which a bankrupt company must have its Chapter 11 plan of reorganization approved by the bankruptcy court in order to still be eligible for a MEGA credit. The amendment passed by voice vote in the Senate on April 1, 2004.
    • Amendment offered by Sen. Alan L. Cropsey (R) on April 1, 2004, to not require a bankrupt firm to have a Chapter 11 plan of reorganization approved by the bankruptcy court and its creditors in order to be eligible for a MEGA credit, but instead simply require it to submit a chapter 11 plan of reorganization to the bankruptcy court. The bill revokes the tax credits if the court does not act within two years. The amendment passed by voice vote in the Senate on April 1, 2004.
  8. Received in the House on April 1, 2004. Passed 105 to 0 in the House on April 1, 2004.
    Who Voted "Yes" and Who Voted "No"

  9. Signed by Gov. Jennifer Granholm on April 27, 2004.

Comments

Yeah, right!  by Anonymous Citizen on March 4, 2004 
A lot of good programs such as this one did for the soon-to-be former AB Electrolux employees.

Government should NOT be in the business of picking the winners and losers in the private sector.

This program should be abolished and the monies already budgeted towards it rolled back into the general fund where they can do more good.

MEGA LOTTERY  by Anonymous Citizen on March 4, 2004 
Win! Win! Win! Sign up for your MEGA credit here. Get rich!

If you are a corporation wanting to expand in Michigan, you may already be a winner!

Just fill out forms showing that you might have gone to another state, and MEDC will make sure you get MEGA tax credits and property tax abatements. Just pretend that the MEDC is responsible for bringing or keeping you here, and the endless wallets of Michigan taxpayers can be yours!!!

You can promise new jobs and not deliver! KMart and Aspen Bay did. We don't care -- it's not like it's our $37,000,000! We only take little amounts from all Michigan taxpayers, and they never notice!

But hurry and sign up today. We were going to expire, but now we are only wasting, er, investing in companies through 2009. Get yours now before it's all gone.

They just don't get it, do they?  by MCP-001 on November 15, 2003 
Despite the very articulate response by Senator Schauer, he (and judging by the rest of the recent vote, the rest of the Michigan Senate) still fails to grasp the inherent problem with programs such as these: It is not a function of government to, in effect, assume a role of central planners in Michigan’s economy.

This bill is putting Michigan on a slippery slope, which according to history will only ruin the state’s economy in the long term.

This bill should be voted down when it comes back from the House for final ratification, the agencies covered under this bill should be closed and their budgets returned to the General Fund so that they cannot be used to implement another similar program.

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