Questions and Answers

IMPACT ON MICHIGAN BUSINESSES

• Any company who currently has an agreement and decides to retain that package in lieu of changing to the flat tax, that agreement will be honored. Any projects that are currently in the system will be evaluated based on the Governor's direction moving forward.

IMPACT ON MICHIGAN’S FILM INDUSTRY

• A cap will allow Michigan to ensure we are getting the best value for our money. It will put an end to uncertainty about Michigan’s future financial obligations under the program and provide us with a benchmark to measure the program’s success. At the same time Michigan is able to continue offering a competitive incentive within that cap to attract key projects to the state and leverage entrepreneurship opportunities within Michigan’s film industry.

IMPACT ON OTHER PROJECTS AND INITIATIVES

• The Snyder Administration has created an Office of Urban Initiatives to proactively address issues in Detroit and the rest of Michigan’s major urban centers. In addition to Detroit, we will look to establish offices in Grand Rapids and in the Flint and Saginaw areas. “Urbanists” now have an unprecedented advocate in Lansing. We will also work to support entrepreneurs as they revitalize Michigan cities one neighborhood at a time. Thriving, dynamic cities are critical to Michigan’s future success.

• All existing advanced battery tax credit agreements will be honored. As for the future of the advanced battery industry, it looks promising. Electric and electric-hybrid vehicles such as the Chevy Volt and Ford Focus have energized the auto industry, and we anticipate that, as demand for those vehicles grows, so will Michigan’s advanced battery industry. Suppliers will choose to locate and grow in Michigan because they will want to be in close proximity to automotive manufacturers.

IMPACT ON MICHIGAN’S ABILITY TO COMPETE

• The Snyder Administration’s budget proposal calls for eliminating tax credits and exemptions, but not all economic development incentives. MEDC will have an annual incentive budget from which to work and will develop programs that are simple to explain and simple to execute and track. We will consult with the company to understand what they need for their business and what the state needs to do to win their business, working closely with workforce development, local taxing authorities and other sources of business growth incentives to present a complete package to the company that we're hoping to retain and/or attract. A lean and efficient state government that optimizes the overall business climate in the state by addressing all needs equally is more likely to positively influence the economy and create jobs than over-emphasis on one tool such as tax credits.

• We will be working from a tax advantage with the new corporate tax and will be working from a more desirable and simpler tax base. Businesses make their site location decisions based upon a wide variety of factors - the availability of tax incentives is only one of those many factors, and not necessarily the most important. The overall business climate, state-supported infrastructure, land and building availability, tax structures, and access to markets are but a few that also enter into the decision process. Michigan can compete for these businesses on many levels besides just tax credits.

• Over the past several years the state has committed heavily to a number of tax incentives that will become a significant cost to all taxpayers in coming years and these benefits are heavily concentrated in a few industrial sectors that may or may not pan out in terms of real, long-term jobs. The new business tax structure will reduce the tax burden on all businesses regardless of industry. The approach of economic gardening is in keeping with our strategy to support Michigan businesses by removing unreasonable costs and regulatory burdens.

• The new business tax will be flat with minimal exemptions and exceptions. It will be the first time in decades that Michigan businesspeople will be able to calculate their taxes on the back of an envelope. We are talking about a simple, straightforward policy that virtually anyone can understand and act on with certainty.

• Michigan’s broad expansion of incentives has not achieved what the state most needs--recognition that it offers a great base for any business. We offer unique advantages: a high-tech workforce, world-class research universities, thousands of new graduates in the sciences and engineering, and an industrial R&D base that is fertile ground for innovation and entrepreneurialism. But we can’t tell that story to people until we break down the old stereotypes. Only a wholesale change in our treatment of all businesses will break down those barriers.

• Cooperative efforts to advance economic development are one answer. Communities around the state are forming regional organizations, pooling resources in pursuit of specific goals such as tourism campaigns or the stimulation of new business or industrial development. This team approach to economic gardening allows more effective marketing of the area to prospective business owners or residents.
  

ELIMINATION OF TAX CREDITS, INCENTIVES

• MEDC has been working closely with Governor Rick Snyder and his staff to create an economic environment for Michigan which is a "win" for our companies and a "win" for our state. We support the “value for money” approach to budgeting that Governor Snyder is employing and will be using the same sensibility and deal structuring as it relates to business gardening and attraction. Until the state budget is finalized and we know what budget MEDC will be working with, MEDC will work within the intention and framework of the Governor's budget direction.

IMPACT ON MEDC AS AN ORGANIZATION

• As called for in Governor Snyder’s State of the State address, MEDC has already initiated an organizational restructuring that decentralizes MEDC staff and is better aligned with how we will work with regional and local economic development partners and our Michigan-based companies.

• MEDC is much more than the credits that relate to the Michigan Business Tax. We employ many more tools and tactics for successful economic development than the credit programs which are going away in favor of a flat corporate tax. Those that will continue include:
• Strategic marketing of the state to business, tourism and talent audiences;
• Economic gardening activities with a focus on leveraging "buy Michigan" opportunities, product and services exporting, export attraction;
• Supporting and growing the entrepreneurial ecosystem;
• Supporting and redeveloping our core urban cities;
• Supporting and creating tools for our regional and local economic development partners;
• Attraction to and retention of talent by Michigan;
• Connectivity and tech transfer support to Michigan universities and colleges; and
• Loan and federal programs.

• Economic gardening is a strategy of fostering entrepreneurship and the growth of in-state businesses rather than “hunting” for business investment by offering credits to out-of-state companies. It is Governor Snyder’s contention that credits will not lead to job creation as effectively as the “hands-on” nurturing of our existing local businesses will do.