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State business incentive fund overhaul bills get House committee hearing

Texas Department of Transportation

Michigan bills to reshape a business incentives program received a first hearing Tuesday before a House committee.

The legislation would rename the Strategic Outreach and Attraction Reserve, or SOAR, Fund to the “Make it in Michigan Fund."

The SOAR Fund is currently made up of two different pots of money. One is the Critical Industry Program (CIP). The other is the Michigan Strategic Site Readiness Program.

The legislation heard before the House Economic Development and Small Business Committee would add a third category, the Michigan 360 program.

Bill sponsors say Michigan 360 would focus on community development as a piece of any business incentive package.

Representative Jason Hoskins (D-Southfield) said it’s important to consider issues like housing as part of economic development.

“We want to make sure that we took that into account. That if you are a business and you want to come to our great state ... that when you come here, there is some benefit to the state, there is some benefit to the community that you are going to be coming to,” Hoskins said.

Under the package, a Michigan 360 investment would make up at least 20% of the amount awarded through the proposed “Make it in Michigan Fund.”

The SOAR Fund was originally created with bipartisan support. But it has also historically faced bipartisan opposition.

Critics have questioned whether the program, implemented to chase large-scale economic investment from major companies after Ford chose to invest billions of dollars in new electric vehicle manufacturing plants in Kentucky and Tennessee in 2021, has ever actually tipped the scales in Michigan’s favor.

Those opposed to the SOAR Fund have argued Michigan could better spend its money than by giving multi-national corporations millions -- sometimes hundreds of millions -- of dollars in incentives and tax breaks.

This year, votes to free up money for SOAR projects have largely fallen along party lines. Republicans have argued the program needs more legislative oversight and has become political.

“The only visibility that Legislature has in the SOAR process, is the appropriations transfer step. And by the time we get to that moment, it’s likely too late to have any influence. There have already been press releases, there’s been a ribbon cutting, it’s just an up or down yes vote,” Senator Mallory McMorrow (D-Royal Oak) said during Tuesday’s committee meeting.

McMorrow, who co-sponsors a Senate version of the bill package, argued the legislation would make changes to give lawmakers a greater role in that process. Those include providing the majority and minority parties in both chambers with non-voting spots on the Michigan Strategic Fund Board, which would oversee the “Make it in Michigan Fund.”

Democrats in legislative leadership already agreed to give the minority party some representation on the strategic fund board earlier this year as part of a compromise for some Republican votes on separate legislation.

Not everyone, however, is on board with the increased legislative role in the process.

Brian O’Connell is state government affairs regional director with General Motors. He defended the state as becoming a leader in attracting economic development through initiatives like the SOAR Fund.

O’Connell said the company is concerned that the bills wouldn't make lawmakers on the Michigan Strategic Fund board subject to non-disclosure agreements. He said those agreements are crucial to successful deals with the state.

“If there’s not confidentiality and proprietary, we will not come in and have those discussions. And we do not see protections in place where if there is a member on that board, that there is (non-disclosure agreements) and confidentiality. If there are leaks in the process, it jeopardizes a project and we just simply walk away,” O’Connell said.

State officials have come under heavy criticism in the past for signing non-disclosure agreements that shielded big incentives from public scrutiny.

The bills would also allow for the claw-back of unspent incentives money allocated through the Michigan 360 program. The package would push that remaining money back into the general fund. Currently, money that gets clawed back or repaid goes back into the SOAR Fund.

Other parts of the package would set parameters on who could receive certain monies, disqualifying businesses who have unpaid pollution or environmental contamination fees.

During Tuesday’s hearing, business groups expressed some concerns with the direction and ambition of the legislation.

“We think this package has become too bloated and not streamlined in order to be competitive,” Mike Johnston, of the Michigan Manufacturers Association said.

The bills remain in committee for potential changes.

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