Introduced by Rep. Bill Huizenga (R) on July 6, 2005, to establish a government “Jobs for Michigan Investment Fund” to provide grants, loans, and various subsidies to public entities and private businesses engaged in the research, development, marketing and commercialization of various “competitive edge” technologies identified by the state. A "Strategic Economic Investment Board” composed of government officials and representatives of the types of organizations likely to receive funding under the program would allocate the money. The money for the grants, loans and subsidies would come from the sale or “securitization” of the revenue stream from the 1998 tobacco company lawsuit, proposed by House Bill 5048. This is a House response to Gov. Jennifer Granholm’s $2 billion "Jobs for Michigan" debt proposal, and the Senate’s similar $1 billion debt proposal. See also House Bill 5005, another subsidy proposal that would rely on selling the tobacco revenue stream.
Referred to the House Commerce Committee on July 6, 2005.
Reported in the House on July 13, 2005, with the recommendation that the substitute (H-1) be adopted and that the bill then pass.
Substitute offered in the House on August 31, 2005, to replace the previous version of the bill with one that incorporates changes reflecting the status of ongoing negotiations that continued even as this preliminary version of the bill was reported out of committee to "move the process along". The substitute passed in the House by voice vote on August 31, 2005.
Amendment offered by Rep. Bill Huizenga (R) on August 31, 2005, to tie-bar the bill to House Republican tax cut proposals, in particular House Bill 5108. This means this bill can't become law unless that one does also. The amendment passed in the House by voice vote on August 31, 2005.
Amendment offered by Rep. Tom Casperson (R) on August 31, 2005, to require that $25 million of the subsidy money be given to the Michigan Forest Finance Authority, which is the entity that contracts for timber cutting rights on state lands. The amendment passed in the House by voice vote on August 31, 2005.
Substitute offered by Rep. Bill Huizenga (R) on September 28, 2005, to replace the previous version of the bill with one that reflects negotiated changes. See House-passed bill. The substitute passed in the House by voice vote on September 28, 2005.
Amendment offered by Rep. Tim Moore (R) on September 28, 2005, to instruct the government committee and board that will determine who gets the subsidies to disregard any political contributions made by potential recipients of the money to candidates, PACs, etc. The amendment passed in the House (104 to 0) on September 28, 2005. [Vote Details and Comments]
Passed in the House (103 to 1) on September 28, 2005, to establish a government $1 billion “Jobs for Michigan Investment Fund” to give subsidies to public entities and private businesses engaged in various “competitive edge” technologies. The bill authorizes government ownership of private businesses and gets around a state Constitutional prohibition on this by placing these in a "permanent fund," which Senate Joint Resolution T of 2002 exempted from the prohibition, and which was described when presented to the people for a vote as applying to natural resources, veterans and state parks trust funds. Government officials and representatives of the types of organizations likely to get the money would make up a "Strategic Economic Investment Board” to allocate 70 percent of the subsidies (see Senate Bill 533
). The balance would be given out by the existing “Michigan Strategic Fund,” renamed the "21st Century Jobs Fund." The $1 billion would come from “securitizing” (selling) one-third of the approximately $280 million annual revenue stream from the 1998 tobacco company lawsuit settlement. This is the legislature's response to Gov. Granholm’s $2 billion "Jobs for Michigan" debt proposal. The bill also authorizes spending $60 million on “WiMAX” ventures, an untested wireless internet technology covering large areas. [Vote Details and Comments]
Received in the Senate on September 29, 2005.
Referred to the Senate Government Operations and Reform Committee on September 29, 2005.
Reported in the Senate on October 18, 2005, with the recommendation that the substitute (S-2) be adopted and that the bill then pass.
Substitute offered in the Senate on October 18, 2005, to replace the previous version of the bill with one that removes the $65 million grant to "WiMAX" internet service providers, replacing it with other more general earmarks, including $15 million to promote tourism, $10 million for a "defense contract coordination center," $6 million for "automation alley" in Southeast Michigan, $4 million to the Van Andel Institute in Grand Rapids, $2 million to promote movie production, $2 million to transfer new technology from universities to the private sector, in addition to $26 million added by the House for the forestry industry. These earmarks would come out of $400 million to be spent in the next year. Up to 5 percent of the $1 billion could be spent for "business development and marketing expenses," and another 4 percent could be spent on administration. The substitute revises other details governing how the money would be distributed, and to replace the previous version of the bill with one that does not require that the business tax cuts passed by the House in House Bill 5108 go into effect for this and related business subsidy bills to go into effect. The substitute passed in the Senate by voice vote on October 18, 2005.
Amendment offered by Sen. Cameron Brown (R), Sen. Ron Jelinek (R), Sen. Michelle McManus (R) and Sen. Gerald Van Woerkom (R) on October 19, 2005, to add a $10 million "earmark" to be spent subsidizing agricultural development. This would be added to other industry-specific earmarks (see Senate substitute). The amendment passed in the Senate by voice vote on October 19, 2005.
Amendment offered by Sen. Valde Garcia (R) on October 19, 2005, to give the governor the authority to appoint any member of the Michigan Strategic Fund board to be its chair, rather than the head of the Michigan Economic Development Corporation automatically assuming the position. This body will preside over the disbursement of the $1 billion authorized by this legislation. The amendment also has "clean up" language correcting and clarifying other provisions. The amendment passed in the Senate by voice vote on October 19, 2005.
Amendment offered by Sen. Valde Garcia (R) on October 19, 2005, to spend $40 million on the commercialization of life sciences in the current fiscal year, rather than $50 million, but still spend $50 million in each of the next four years. The amendment passed in the Senate by voice vote on October 19, 2005.
Passed in the Senate (34 to 4) on October 19, 2005, to establish a government $1 billion “Jobs for Michigan Investment Fund” to give subsidies to public entities and private businesses engaged in various “competitive edge” technologies. The bill authorizes government ownership of private businesses and gets around a state Constitutional prohibition on this by placing these in a "permanent fund," which Senate Joint Resolution T of 2002 exempted from the prohibition, and which was described when presented to the people for a vote as applying to natural resources, veterans and state parks trust funds. Government officials and representatives of the types of organizations likely to get the money would make up a "Strategic Economic Investment and Commercialization Board” to allocate the subsidies (see Senate Bill 533
). The $1 billion would come from “securitizing” (selling) one-third of the approximately $280 million annual revenue stream from the 1998 tobacco company lawsuit settlement. This is the legislature's response to Gov. Granholm’s $2 billion "Jobs for Michigan" debt proposal. The bill specifically authorizes spending $400 million in 2006, $75 million of which is earmarked for particular industries. It is tied to other business subsidy measures, in particular Senate Bills 359 and 521, but not to the House-passed tax cuts in HB 5108. [Vote Details and Comments]
Received in the House on October 20, 2005.
Substitute offered by Rep. Bill Huizenga (R) on November 10, 2005, to replace the previous version of the bill with one that reflects the agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to adopt modest business tax cuts and a scaled-down "21st Century Jobs Fund." Of the initial $400 million in subsidies for cutting-edge research or commercialization projects, $10 million would go to the state Agricultural Development Fund; $26 million to the state Forest Finance Authority; $15 million for tourism advertising; and $36 million for administrative costs, business development and marketing efforts. The annual $75 million appropriation in future would go to the “Strategic Fund,” which is basically the Michigan Economic Development Corporation’s legal mechanism for receiving funds. MEDC is the state entity that oversees its various business subsidy programs. The complete package includes House Bills 4972, 5047, 5048, 5095, 5097, 5108, 5109, and Senate Bill 633. The tax cut and business subsidy bills are all tie-barred together, meaning they all must become law or none do. The substitute passed in the House by voice vote on November 10, 2005.
Amendment offered by Rep. Andy Dillon (D) on November 10, 2005, to condition the granting of subsidies for the “commercialization of competitive edge technology” on sufficient qualified applicants applying for them. The amendment failed in the House by voice vote on November 10, 2005.
Amendment offered by Rep. Bill Huizenga (R) on November 10, 2005, to revise annual allocation of subsidies for the “commercialization of competitive edge technology.” In Fiscal Year 2007 $50 million would be authorized, then $30 million per year through 2012. The amendment passed in the House by voice vote on November 10, 2005.
Passed in the House (92 to 13) on November 10, 2005, to establish a scaled down program of business and research subsidies along the lines described in earlier versions of this bill, as part of an agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to also adopt modest business tax cuts. The revised version of this bill would use $400 million of "securitized" tobacco settlement revenue right away, and give $75 million per year for eight years from the remaining “unsecuritized” settlement revenue stream to the "Michigan Strategic Fund" for various business subsidies. Future legislatures would not be bound by the $75 million per year agreement, however. The tax cut is described under the final votes on Senate Bill 633, and details of the full package by a Senate Fiscal Agency analysis(pdf). [Vote Details and Comments]
Received in the Senate on November 10, 2005.
Passed in the Senate (35 to 3) on November 10, 2005, to establish a scaled down program of business and research subsidies along the lines described in earlier versions of this bill, as part of an agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to also adopt modest business tax cuts. The revised version of this bill would use $400 million of "securitized" tobacco settlement revenue right away, and give $75 million per year for eight years from the remaining “unsecuritized” settlement revenue stream to the "Michigan Strategic Fund" for various business subsidies. Future legislatures would not be bound by the $75 million per year agreement, however. The tax cut is described under the final votes on Senate Bill 633, and details of the full package by a Senate Fiscal Agency analysis(pdf). [Vote Details and Comments]
Signed with line-item veto by Gov. Jennifer Granholm on November 21, 2005, at the same time she vetoed a package of bills business tax cut bills associated with this bill (but not all tie-barred to it).
1) Rep. Hoogendyk's "no vote explanation" [by Admin003 on November 11, 2005] Rep. Hoogendyk, having reserved the right to explain his protest against the passage of the bill, made the following statement:
"Mr. Speaker and members of the House:
IF WE ARE GOING TO SECURITIZE TOBACCO SETTLEMENT DOLLARS, WE SHOULD USE THEM TO GIVE IMMEDIATE TAX RELIEF TO THE WORKING FAMILIES AND BUSINESSES OF MICHIGAN. WE SHOULD NOT TRUST A BOARD OF EXPERTS TO DOLE OUT DOLLARS AND PICK THE WINNERS AND LOSERS OF OVER $400 MILLION IN SECURITIZED FUNDS."
2) Sen. Brown's "journal statement" [by Admin003 on October 21, 2005] Senator Brown's statement is as follows:
I rise in support of the package before us. In doing so, I briefly just want to say that, of course, we must all appreciate the risk involved in leveraging securitized tobacco settlement dollars for the sake of job creation. Like the future of the economy itself, there is certainly uncertainty, but it is important, Mr.President, to keep one point of perspective in mind, and that point was emphasized by a previous speaker. To be sure, we are using taxpayers' dollars, yes, but these are not tax dollars. They are dollars that have come to this state through settlement, and because of that, we have more discretionary use of this money than if they were tax dollars collected from taxpayers.
3) Sen. Sikkema's "journal statement" [by Admin003 on October 21, 2005] Senator Sikkema's statement is as follows:
Since this is the last bill in this package, I want to offer my comments. I urge the members to pass it, and I'll explain why I'm supporting this enthusiastically.
With the passage of this package of bills, in my opinion, Michigan is making a major step forward in helping to diversify our economy. I think we're taking a major step forward in recognizing that Michigan's economic future and jobs future is going to look very different from our economic past in that we're taking a major step forward, frankly, in helping to change the economic culture of this state.
Now, a lot of the discussion, both on this floor and in committee and inside meetings, has been over the securitization--and I still stumble over that word--of a portion of the tobacco settlement that's due Michigan. It's an important discussion. There are different opinions on whether we ought to do that, but we shouldn't lose sight of the fact that that's the financing mechanism of a very comprehensive economic diversification package, and that's really the meat and potatoes of this package before us. It is very comprehensive. We're making a major step in creating more incentives to attract venture capital in this state by changing the Michigan Venture Fund, something this chamber started a couple of years ago. We're creating what's called a commercial pipeline for life sciences, which is a fancy way of saying a lot of states are doing basic research, but if you really want jobs and you really want companies coming out of life sciences research, you want to be the place in America for commercialization of that research. This life sciences pipeline concept hopefully will do that. It will make Michigan the place in America for products and drugs that need FDA approval. They can come here to go through that commercial pipeline to get that approval.
There's a bill in this package that we call angel investing. It's basically an incentive for wealthy individuals to commit some of their wealth to somewhat risky ventures here in Michigan, and the incentive is if you make money on that investment, we want you to roll that gain over and make similar investments in Michigan. That's part of this package--a critical piece.
Part of this package is a recognition that right now in Michigan, when a company expands by selling shares to get money to build and expand in this state, our franchise fees are onerous. There's a bill in this package to reduce those franchise fees so that doesn't happen. So that's not a barrier for economic growth.
There's a recognition in this package that we need jobs and expansion all across this state, not just in what I call the metropolitan or southern belt. That's important--that's where I'm from--but in rural Michigan and northern Michigan and the Upper Peninsula, we need job creation and expansion there. There's a deep recognition in this package with the Forest Development Authority and the Agriculture Development Fund and the commitment to tourism that they have to be part of our future as well.
There are pluses and minuses to doing this by committing some of our tobacco settlement versus a general obligation bond, which the Senate originally passed in June, but one of the advantages of doing it this way is that we can do it quickly. We can pass this bill. We can commit money virtually immediately to the various parts of this package, and I think that's an upside to this. There's a commitment. Again, we had this in the past, budget difficulties made us abandon this, but there's a commitment to recreate the capital access program, which is basically a program for the state to back up decisions banks make to loan to small companies that might be a little riskier than what they're used to making loans to.
I don't want members to lose sight of how comprehensive this economic diversification plan really is, and I am compelled to put this in some context. We're committing, in essence, a portion--about a third--of the tobacco settlement money that we get on an annual basis to this very comprehensive economic diversification plan. You know, it's not long ago--six years, in fact--where Governor John Engler said, "I want you to commit a portion of the tobacco settlement money--$50 million a year for 20 years--interestingly $1 billion--purely to do basic research in life sciences as an economic diversification plan." Now, I supported that. I thought it was a wise decision, but put this in some context. That Governor and the Legislature adopted it. We were willing to commit $50 million a year to life sciences just to do basic research with no commitment and no emphasis on job creation. This plan commits a little bit more of the tobacco settlement money--between $70 million and $90 million a year--to do a much broader, comprehensive job diversification plan/economic diversification plan that's focused on job creation in the new economy.
I've heard comments about government shouldn't pick winners and losers. I appreciate that, but it reminds me of something that occurred in the early '90s. A former Majority Leader, who happened to be John Engler, ran for Governor and basically said the same thing. I applauded him at the time. Government shouldn't create winners and losers. He opposed any tax abatement plans in Michigan. He got elected Governor. Four years later, he proposed the creation of what is now called the MEGA credits, specifically-focused tax abatements for specific companies. Now, some of us at the time almost fell off our chairs. In fact, I want to relate an anecdote. I was in a leadership position in the House when he proposed it. I went to a legislative conference in Washington, D.C., where I had colleagues from all across the country. President Clinton was President. Robert Reisch was Secretary of Labor. Robert Reisch came in to speak to this group of legislators from all over America--from almost every state--and he gave a speech bemoaning these tax abatement plans that states had, saying how they were bad. I was feeling pretty good because I was going to come back to Michigan and challenge John Engler and say, "We shouldn't do this." Then, at the end of his speech, he said, "By the way, how many of you states have one of those?" Every state raised their hand except me, and why was that? And why did John Engler propose, after he was critical of that kind of strategy, that? Because, at the time, we were losing our shirt to other states that had that arrow in their quiver. It's not a be-all and end-all. It does have some problems, but John Engler recognized--and I voted for it eventually--that you need a lot of arrows in the quiver or a lot of tools in the toolbox.
Now, let me say that this plan, which I support and am convinced can help the economic future of this state, is not complete. Something is missing from this plan and that something is a significant tax cut for Michigan businesses. That has to be a piece of our economic future if we're really serious about doing what needs to be done to reposition this state for economic growth. I am going to ask this Senate, within a matter of days, to pass a business tax cut.
Something else is missing from this plan. We do need to focus on education, both higher education and K-12. I hope that some time in the near future--I won't say days; maybe it's a couple of weeks--but I hope that the Senate can look at our scholarship programs in Michigan and actually expand, not restrict, our scholarship programs. I have been critical of proposals from this Governor that have been designed to sort of eliminate some of our scholarship programs. I take the opposite approach. I think you need to expand the scholarship offer.
Is this a perfect plan? It's not a perfect plan. It's got some downsides. Other things have to be done that I've mentioned, but I think it's time for this state to take some what I will call prudent risks to help change the economic culture of this state because the restructuring that's going on is not a temporary restructuring. It is a permanent restructuring, and it is high time that we get ahead of that curve.