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2009 Senate Bill 773: Cap MEGA tax break quantity
  1. Introduced by Sen. Nancy Cassis (R) on August 26, 2009, to cap the number of new Michigan Economic Growth Authority tax break deals at 250 per year, and limit to 150 the number of new tax credits claimed by recipients of past MEGA deals who had not previously met the job creation/retention targets of those deals, and so had not “earned” business tax credits. The bill would also increase from 400 to 480 the number of MEGA deals for 2009 only, impose a penalty on firms that misrepresent information in a MEGA application, and prohibit MEGA tax breaks that reward a firm for moving from one Michigan location to another.
    • Referred to the Senate Finance Committee on August 26, 2009.
      • Reported in the Senate on August 27, 2009, with the substitute labeled "S-4." Among other changes this would prohibit tax breaks from being offered to a firm that would be competing against other Michigan businesses, and prohibit the MEGA board or staff from advocating that a potential tax credit recipient choose one Michigan location over another. In addition, it would expand MEGA transparency provisions, requiring that it include the following about each tax break deal in an annual report to the legislature: The identity of each company granted a tax break deal and the number of tax credits it has actually been issued; the actual number of jobs created or retained, and capital investments promised and made, by tax break deal recipients in the past year and all previous years under their agreements; the total value of the tax credits earned (for meeting the promises in a deal) in each year; a copy of each tax credit certificates issued; and more. Before submission the report would have to be audited by the Auditor General.
    • Substitute offered in the Senate on September 10, 2009, to adopt a substitute that includes the transparency provisions in the version recommended by the committee, but not the prohibition on offering tax breaks to a firm competing against existing Michigan businesses that do not get the same preferential treatment. Instead, this would just have to be disclosed, and the competed-against firms identified. This version was further amended to also reduce the previously-agreed job retention criteria that qualify the Federal Mogul corporation for MEGA tax breaks. The substitute passed by voice vote in the Senate on September 10, 2009.
    • Amendment offered by Sen. Gilda Jacobs (D) on September 10, 2009, to strip out a provision lowering the previously-agreed research and development criteria that qualify certain "high-technology businesses" to claim tax credits. The amendment failed 16 to 20 in the Senate on September 10, 2009.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Gretchen Whitmer (D) on September 10, 2009, to strip out the provision prohibiting MEGA from advocating for political reasons that a potential tax credit recipient choose one Michigan location over another; and replace the provision requiring disclosure if a proposed MEGA tax break recipient will be competing against existing Michigan businesses that do not get the same preferential treatment with one requiring it to state the "project’s effects on other Michigan businesses within the same industry". The amendment failed 16 to 20 in the Senate on September 10, 2009.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Deborah Cherry (D) on September 10, 2009, to revise the formula used to calculate the quantity of tax credits claimed newly claimed under past MEGA deals in a manner that expands the bill's proposed caps. Also, to strip out the provisions requiring MEGA to include a copy of each tax credit certificates issued in its annual report, and to disclose the identity of each company granted a tax break deal and the number of tax credits it has actually been issued. The amendment failed 16 to 20 in the Senate on September 10, 2009.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. John Gleason (D) on September 10, 2009, to require businesses awarded MEGA tax breaks to follow the state “prevailing wage” law, which requires a firm to pay wages based on union pay scales in a particular part of a geographic region. These wage rates may be above the market rate in other parts of the region. The amendment failed 17 to 19 in the Senate on September 10, 2009.
      Who Voted "Yes" and Who Voted "No"

  2. Passed 23 to 13 in the Senate on September 10, 2009, to cap the number of new Michigan Economic Growth Authority tax break deals at 300 per year, and limit to 85 the number of new tax credits claimed by recipients of past MEGA deals who had not previously met the job creation/retention targets of those deals, and so had not “earned” business tax credits. For 2009, the caps would be 400 and 85, respectively. The bill would also add increased transparency requirements to MEGA, including a requirement that its annual report provide data on individual company tax break deals, not just aggregate data; prohibit MEGA from advocating for political reasons that a potential tax break recipient choose one Michigan location over another; and require disclosure if a proposed tax break recipient will be competing against existing Michigan businesses that do not get the same preferential treatment.
    Who Voted "Yes" and Who Voted "No"

  3. Received in the House on September 10, 2009.
    • Referred to the House New Economy And Quality Of Life Committee on September 10, 2009.

Comments

Re: 2009 Senate Bill 773 (Cap MEGA tax break quantity )  by Admin003 on September 10, 2009 

 


Senators Jacobs and Gleason, under their constitutional right of protest (Art. 4, Sec. 18), protested against the passage of Senate Bill No. 773.


Senator Jacobs’ statement is as follows:


This was a very tough vote for me to take, certainly, because Federal Mogul is in my district. As minority vice chair of the Finance Committee, I need to look at the big picture. That is really what I try to do as I ended up pressing my red button. I really feel that this bill is regressive; it goes too far. We just revamped MEGA last year.


As I look at what other states are doing, and we want to be the most competitive state, I think we should be trying to strengthen MEDC as we move forward so that we are competitive with Indiana, Texas, and some of the other states that seem to be attracting more of our businesses.


It is with that in mind in terms of trying to strengthen our tools and our toolbox I voted “no” on this.


Senator Gleason’s statement is as follows:


I believe there were some misstatements made in regard to the opposition to my amendment with regard to the prevailing wage. It is not unusual to have documentation that fully explains that those jobs that typically incorporate prevailing wage saves money at the end of the job by completing it in a more timely fashion and under budget. Typically, the jobs that are bid out and utilize prevailing wage save money at the end of the day. Also there are less workers who are hurt, historically, using the highest skilled, most qualified, most safety-oriented workers in the state.


It was mentioned that there has been an exodus from Michigan to other states with job losses and losing workers. I think our first obligation ought to be to retain the most qualified and highest skilled from leaving our state and going to other regions. Only last year, this chamber with great wisdom voted on a boiler bill because we don’t even have enough contractors with prevailing wage employees to build the projects that we would like to implement here in the state because there has been an exodus of hard-hats from Michigan to surrounding states because they have to go there to go to work.


I am sticking up for the highest qualified, highest skilled, safest, and least expensive workers on behalf of my district and the state as a whole.



2009 Senate Bill 773 (Cap MEGA tax break quantity )  by admin on January 1, 2001 
Introduced in the Senate on August 26, 2009

The vote was 23 in favor, 13 opposed and 1 not voting

(Senate Roll Call 450 at Senate Journal 0)

Click here to view bill details.