Columnist: Granholm urges expanding MEGA tax creditsPublished 1:04pm Friday, July 24, 2009
Hello, this is Governor Jennifer Granholm.
On Tuesday, I was pleased to announce that the Michigan Economic Development Corporation is helping seven companies grow in Michigan, creating or retaining up to nearly 15,000 jobs.
The companies include Magna Seating; it’s an automotive supplier who’ll locate in Highland Park. Attwood Corporation, a marine parts and accessories supplier, is going to move its Oklahoma operations to Lowell. And mortgage lender Quicken Loans plans to build a new headquarters in downtown Detroit.
Unfortunately, we’re in danger of losing for the rest of this year the economic development tool crucial to these companies creating or retaining jobs in Michigan. That tool is called the MEGA program. M-E-G-A. MEGA is an acronym for the Michigan Economic Growth Authority.
Tax credits that are approved by the MEGA board help Michigan compete with other states – and even foreign countries – for new companies or the expansion of present businesses. The Michigan Economic Development Corporation administers the MEGA program.
MEGA tax credits are performance-based. That means that a business can use the credit only if it creates or retains a certain number of jobs. The tax revenue that’s generated by a company receiving MEGA tax credits more than offsets the cost of the tax credits. So, it’s a win for Michigan.
Up to 62,000 jobs will be created or retained in Michigan from MEGA tax credits approved this year. These jobs are known as “direct” jobs since they’re created directly by the companies granted the MEGA tax credits. The 62,000 direct jobs will produce another 161,000 spin-off jobs. So you can see how important these credits are.
During these tough economic times, businesses face increased pressure to cut costs, and that may lead to relocating or consolidating. The Michigan Economic Development Corporation has been especially aggressive in persuading businesses that Michigan is the place they need to be.
Their efforts have been so fruitful that they’ve used up almost all the MEGA tax credits available this year under present law. If Michigan can’t award more credits until next year, we could miss out on tens of thousands of new jobs and even lose existing jobs.
But, thankfully, there’s a remedy. State Representative Ed Clemente of Lincoln Park introduced House Bill 4922 which increases the number of MEGA tax credits that can be issued in one year. Representative Clemente’s bill was passed by the House and is now before the Senate Finance Committee.
Expanding the number of MEGA tax credits will enable us to bring thousands of new jobs to Michigan, which we need right now obviously. I urge the state Senate to quickly pass House Bill 4922. Virtually every other state is out there competing for these companies with incentives. With the competition for jobs so fierce, Michigan can’t afford to be without one of its key economic development tools for very long.
Governor Jennifer Granholm, D, can be contacted at (517) 335-7858 or P.O. Box 30013 Lansing, Michigan 48909 The office of the governor also has a web site, www.state.mi.us/migov.