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State’s tax break bigger problem than expected

Jake Neher

There are more than $9 billion in un-cashed Michigan business tax credits outstanding and waiting to play havoc with future state budgets. That’s $3 billion  larger than originally expected, and it was already a big problem.

State Representative Al Psholka, R-Stevensville, chairs the House Appropriations Committee. He says that leaves a lot of uncertainty hanging over future state budgets.

“We’ve got to find a way to provide some sort of certainty so that we can budget for this. What is the actual number going to be per year,” he said.

Pscholka says the state’s exploring its options to get that certainty. Part of the challenge is getting companies to waive tax record confidentiality.

State Representative Jim Townsend, D-Royal Oak, says the state should re-negotiate the credits with businesses.

“We need everybody to do their fair share and I think the corporate sector needs to be part of that,” he says. Townsend says the companies should get to claim their tax breaks, but the need is less urgent with the improving economy.

The state’s current budget shortfall is blamed mostly on companies cashing in more credits than expected last year. The state is dealing with that via budget cuts mandated in an executive order from Governor Rick Snyder and spending reductions and money transfers to be adopted by the Legislature.

Democrats opposed a measure just approved by the House to cover part of the budget shortfall by shifting money from a surplus in the School Aid Fund to the state’s general fund. 

Rick Pluta is Senior Capitol Correspondent for the Michigan Public Radio Network. He has been covering Michigan’s Capitol, government, and politics since 1987.
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