House
Bills 4333 and 4334,
introduced last month will see a hearing in the House Tax Policy Committee on
the day state and federal income taxes are due. These two bills, sponsored by
Representatives Lee Chatfield (R-Levering) and Gary Glenn (R-Midland) would
prohibit MEGA tax credit extensions as currently allowed in the Michigan
Economic Growth Authority Act.
Since MEGA
credits were greatly expanded in 2008, the program has accumulated a
projected taxpayer liability of $9.38 billion. The Legislature
and Governor ended MEGA in 2011, but even with the program’s demise, state law
still allows the existing credits to be increased and extended. This bill
package would prevent this from happening in the future.
Under
this legislation, credits that have already been awarded will not be touched;
however, future administrations and legislatures will no longer be able to make
amendments to the credits in a way
that would extend these tax credits and create financial liabilities to future
generations of Michigan taxpayers.
The
$9.38 billion estimated liability is projected to be incurred over the next 17
years. For the coming fiscal year, the credits created a $325 million
state budget shortfall that legislators are currently working to solve.