Updated: Legislature passes sweeping business incentive bills, some lawmakers sign NDAs

Updated, 2:15 p.m., 7:22 p.m., 12/9/21, with Senate votes and Whitmer comments

The Michigan House of Representatives passed a package of three bills on Wednesday that would establish incentives for businesses to move to and stay in Michigan, with the Senate passing its own bills Thursday.

The bills come after Ford Motor Co.’s decision alongside SK Innovation earlier this year to invest $11.4 billion and establish 11,000 jobs across various projects in Kentucky and Tennessee. All three bills passed the House Wednesday afternoon on bipartisan 83-21 votes after getting committee approval earlier in the morning. They now move on to the Senate.

On Thursday afternoon, the Senate passed substitute legislation for its own bills, SB 769, SB 770 and SB 771, that mirror the House package. The bills each passed 27-10, and did not fall on party lines.

Mystery surrounded the legislation that has become a top priority for Democratic Gov. Gretchen Whitmer and GOP legislative leadership during the final days of the 2021 calendar, with speculation that General Motors, which is headquartered in Detroit, is a top target. Some funding would likely come from unspent federal stimulus cash.

Some lawmakers who are crafting the legislation have signed non-disclosure agreements (NDAs) — an unusual step. Earlier this year, GOP officials leveled sharp criticism amid reports that the Whitmer administration used confidentiality agreements in severance agreements with top officials like former Department of Health and Human Services (DHHS) Director Robert Gordon.

House Speaker Jason Wentworth (R-Clare) declined to tell reporters if he signed an NDA. Sen. Ken Horn (R-Frankenmuth) confirmed to the Detroit News earlier this week that he did sign an NDA from the quasi-governmental Michigan Economic Development Corp. (MEDC).

“I did, and I still don’t know anything,” Horn said, as reported by the News.

The process was slammed by Libertarian former U.S. Rep. Justin Amash who represented the Grand Rapids area both in Congress and the state House.

This is cronyism and corporate welfare. It’s utterly corrupt for legislators to sign nondisclosure agreements connected to bills under consideration. These legislators are supposed to work for the people of Michigan, not secretively cut deals for a few corporate interests. https://t.co/YFWNJqHNrJ

— Justin Amash (@justinamash) December 9, 2021

State Rep. Matt Hall (R-Battle Creek) said the recent decision made by Ford was a “major opportunity missed for our state” and highlighted that  Michigan’s current economic development strategies “are no [longer] working.”

“The truth is, you can’t keep wishing for these types of opportunities to show up on your doorstep,” Hall said. “We can’t operate under the assumption that because we’ve had a strong relationship with a particular company or entity for decades, we’re going to be their first and only choice when they want to grow. Other states have been proactive in pursuing these opportunities, and it’s time for Michigan to do the same.”

Bobby Leddy, a spokesperson for Whitmer, called the plan “a once-in-a-lifetime opportunity to expand our economic development toolkit to ensure that the state is in a strong position to compete for unprecedented jobs and investment.

“Governor Whitmer’s top priority is working with leaders in the legislature and anyone else who wants to work with us to strengthen our state’s economy and put Michiganders first. The next year will determine the future of our state’s economy for the next 10, 20, and 30 years, so it’s important that we keep our foot on the gas to get it done.”

House Bill 5602, introduced by state Rep. Jack O’Malley (R-Lake Ann), creates the Strategic Outreach Attraction Reserve (SOAR) Fund, which aims to attract businesses to the state by helping them to create jobs and provide other financial assistance. The fund, which will lie within the Department of Labor and Economic Opportunity, will also have the ability to appropriate funds to two other funds. 

House Bill 5604 creates the “Critical Industry Fund,” introduced by state Rep. Ben Frederick (R-Owosso), also will receive funds from the SOAR Fund to assist businesses with costs associated with deal-closing, gap financing or other funds to add jobs or buy capital. 

House Bill 5603 creates the “Michigan Strategic Site Readiness Fund,” introduced by state Rep. Julie Calley (R-Portland), will use funds from the SOAR fund to provide grants, loans, investments and additional assistance to businesses to attract and retain them in the state. The grants, loans, investments and additional assistance will help with purchasing land for a site, site preparation, remediation or rehabilitation, infrastructure improvements and more.

Former GOP Gov. Rick Snyder’s administration mostly tried to shift Michigan’s economic development strategy away from targeted tax breaks for industries and instead concentrated on lowering overall business taxes with a 6% corporate income tax. One of the plan’s architects was former Lt. Gov. Brian Calley, Rep. Calley’s spouse, who is now president of the Small Business Association of Michigan (SBAM).

Michigan House Minority Leader Donna Lasinski (D-Scio Twp.) said in a press release that manufacturing is a defining part of Michigan and that these bills will help to ensure Michigan remains a leader in the manufacturing industry. 

“Manufacturing innovation is a defining part of our culture in Michigan — it’s in our blood — but for years now, we have been fighting an uphill battle to keep the good-paying jobs that come with it from slipping away,” Lasinski said. “Michigan’s future will be powered by electric vehicles and the next-generation manufacturing. We must invest in ourselves and win the siting of the plants of tomorrow.”

Any money that is in the SOAR fund at the end of the fiscal year will not slip into the state’s general fund, but will instead remain in the fund in hopes that a savings will be built over time to lure businesses into the state. Every year on March 15 that the funds are in place, a report will have to be presented to the state Legislature and governor regarding what has gone on with the fund. 

Any program that utilizes money from the funds will be required to meet certain project deadlines and benchmarks or the money they were provided will be halted. The governor, the Legislature, as well as the House and Senate fiscal agencies will have to be notified if a company makes additional requests or changes. 

State Rep. Joe Tate (D-Detroit) noted that companies that used to have strong ties to Michigan have left in recent years, and highlighted that this legislation will play a key role in bringing them back and supporting new companies, too. 

“We have to do everything we can to ensure that Michigan once again leads the charge of this auto industry renaissance to both retain the jobs we have and create new ones for future generations,” Tate said.