MICHIGAN HOUSE REPUBLICANS | House bills protect Michigan taxpayers by prohibiting tax credit extensions

Reps. Glenn, Chatfield ensure state can’t extend costly MEGA credits

Michigan taxpayers are protected from additional financial liability due to budget-busting Michigan Economic Growth Authority (MEGA) tax credits under common-sense legislation introduced today that prohibits the state from extending the costly credits, state Reps. Gary Glenn and Lee Chatfield announced.

Since the MEGA credits were greatly expanded in 2008, the program has accumulated a projected taxpayer liability of $9.38 billion. The Republican-led Legislature and newly elected Gov. Rick Snyder ended MEGA in 2011, but even with the irresponsible program’s demise, state law still allows the existing credits to be increased and extended. Legislation introduced today by state Reps. Glenn and Chatfield prevents this from happening.

“No governor should be allowed to extend or increase these tax credits, not next year and not 15 years from now,” said Rep. Chatfield, R-Levering. “Although the current governor has no intention of extending these harmful tax credits, the reality is that a less fiscally responsible administration could come into office and put our state in greater financial jeopardy. We simply can’t allow that to happen – the stakes are too high. It’s up to us to make sure the mess created during the Lost Decade is cleaned up not only for current Michigan taxpayers, but for future generations.”

The $9.38 billion estimated liability is projected to be incurred over the next 17 years. This year, the credits created a $325 million state budget shortfall.

Rep. Glenn, R-Midland, said major employers who took advantage of the offer of tax credits in return for creating new jobs or retaining existing jobs are not to blame.

“The fact that the tax credits are being claimed by employers who upheld their contractual obligation to create or retain jobs is, on the one hand, good news for our economy and working families. Those employers aren’t at fault; they did what they agreed to do,” Rep. Glenn said. “The question is, was it a good policy in the first place, and certainly we must change the lack of transparency from the Department of Treasury about the supposedly unpredictable timing of the existing credits’ impact on our state budget, plus take steps now to ensure that taxpayers’ current $9 billion financial liability, and the length of that liability, is not increased even further.

“It’s important to do what we can to protect Michigan taxpayers now. It’s well past time for us to put a stop to the state’s ability to hand out blank checks and put future generations on the hook for billions of dollars. These important reforms will give us all a clearer picture about how to deal with and eliminate these looming financial obligations.”

House Bill 4333, sponsored by Rep. Chatfield, prohibits MEGA tax credit extensions as currently allowed in the Michigan Economic Growth Authority Act. HB 4334, sponsored by Rep. Glenn, prohibits MEGA tax credit extensions as currently allowed in the Michigan Business Tax Act.

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