Mich. OKs more tax incentives after running out

The Michigan Senate voted Thursday to award more tax incentives for economic development projects this year - with a caveat - because the state used up its initial allotment months ago.

In exchange for being authorized to use extra tax credits, state officials would have to start reporting the number of jobs created or retained by any business that wins incentives along with other specific information.

The Michigan Economic Development Corp. currently gives lawmakers the total number of tax credits granted and jobs added in a year, which critics say makes it difficult to track whether individual companies have followed through on plans to locate to Michigan or expand. State officials say they cannot currently report the information because of privacy restrictions, though they will when the law is changed.

Democratic Gov. Jennifer Granholm, who has called for more tax credits, plans to sign the four-bill package - three bills are headed her way while the House next week is expected give final approval to the bill that would increase the number of available credit years from 400 to 485 in 2009.

The bill, which also would boost the number of high-tech or rural deals allowed each year from 50 to 75, passed on a 32-3 vote in the Senate.

The Mackinac Center for Public Policy, a Midland-based free-market think tank, recently released a study that found that from 1995 through 2004, less than one-third of jobs expected to be created by state tax incentives were actually created.

State officials stress that a business awarded a tax credit only can claim it if it hires or holds onto a certain number of workers over a period of time.

"If they don't keep up the bargain, taxpayers are out zero dollars," said Jim McBryde, vice president of government affairs for the Michigan Economic Development Corp.

Unlike other states, McBryde said, Michigan does not dole out cash up front to lure businesses that ultimately may locate in another state.

McBryde said the Michigan Economic Growth Authority, which awards state tax incentives, ran out of credits this year because it landed four big deals with companies planning to make batteries for electric and hybrid vehicles.

The legislation is sponsored by Rep. Ed Clemente, D-Lincoln Park, and Sen. Nancy Cassis, R-Novi.