House Bills 4333 and 4334, introduced last month, were reported from the committee
by a 12-0 vote. These two bills, sponsored by Representative Chatfield (R-Levering)
and Glenn (R-Midland), would prohibit MEGA tax credit extensions as currently
allowed in the Michigan Economic Growth Authority Act.
Since the 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. This year, the credits created a $325 million
state budget shortfall that legislators are currently working to solve.
A significant amendment to this
legislation that was approved in committee was a measure to end altogether the
Michigan Business Tax by December 31, 2031.
When Michigan was struggling
economically and was looking at retaining business and job growth, the MEGA
credits significantly helped. Many
lawmakers now see these credits as an unnecessary burden on the state’s economy
while in the midst of a national economic rebound.