MEGA Credits Target of New Legislation

State Representatives Gary Glenn (R-Midland) and Lee Chatfield (R-Levering) introduced legislation this week that keeps the heat on the Michigan Economic Growth Authority (MEGA) tax credits that currently have an estimated $9.4 billion total liability in the state’s budget through 2031 when all credits have expired.

House Bills 4333 and 4334 propose to prohibit MEGA tax extensions as currently permitted under the Michigan Economic Growth Authority Act, and prohibit MEGA tax credit extensions as currently permitted under the Michigan Business Tax Act.

Both measures were co-sponsored by Representative Jeff Farrington (R-Utica), Chair of the House Tax Policy Committee to which the bills were referred. The credits have been a hot topic in Lansing since late last year when the credits were all but designated as the cause of projected budget deficits for the current 2014-2015 fiscal year and the upcoming 2015-2016 fiscal year.

In December, the Michigan Economic Development Corporation (MEDC) and the Department of Treasury estimated the total liability to be approximately $3 billion through 2031 when the credits would run out; however, those projections were based on an assumed 35 to 50 percent of the credits being awarded. When projecting based on 100 percent of the full value, the number rises to $9.38 billion.

The state will spend between $500 and $600 million per year until 2030, according to the MEDC, ending with $129 million in 2030 and $133 million in 2031. No new credits are being awarded under the Michigan Corporate Income Tax, which took effect in 2012.

posted by PAA Online , Friday, March 13, 2015 10:17 AM
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