Proposed Michigan Budget Offers New Incentives for Job Creation

Gov. Jennifer Granholm unveiled her fiscal year 2009 budget last week, proposing to refinance a portion of the state’s general obligation and taxable tobacco bonds and reduce spending across nearly all state departments in order to finance new proposals without raising taxes.

 

In addition to the proposed use of $150 million in pension funds for Invest Michigan! (see related article in this issue), Gov. Granholm outlined several other TBED-focused during her State of the State Address (see the Jan. 30, 2008 issue of the Digest). One of those initiatives – the Michigan Job Creation Incentive – would be paid for by capitalizing on the sale of state bonds. Under the proposal, new businesses in the top 50 growing sectors are not required to pay any taxes the first year of the tax cut, and existing top 50 growth-sector businesses will get a triple tax credit on their Michigan Business tax.

 

To support the alternative energy industry throughout the state, Gov. Granholm recommends:

• The creation of four Centers of Excellence linking a university with a job-creating alternative energy company;
• Tax credits for wind developers to locate wind farms in the state;
• Creation of “Anchor Zones,” making anchor companies a partner in business attraction, providing tax credits to companies based on their ability to attract or expand their own supplier base in Michigan; and,
• A renewable portfolio standard that requires 25 percent of all Michigan’s electrical energy be generated from renewable sources by 2025.

Gov. Granholm urged lawmakers to allocate $40 million for the No Worker Left Behind Initiative, which was left out of the approved budget last year (see the Nov. 7, 2007 issue of the Digest). The program, which was originally funded by federal grants, offers training for displaced workers in high-demand areas. The governor is proposing a two-year, $1.8 billion stimulus package aimed at creating more than 28,000 new jobs, primarily in the construction field. This proposal accompanies the stimulus package for the current fiscal year, which includes $1.4 billion for projects at universities, community colleges and state parks.

 

Overall funding for the Michigan Strategic Fund would be reduced by $5.6 million from last year for a total of $160.8 million. The governor recommends $29.5 million from General Funds – a slight increase over last year. Of the total funds, $75 million is allocated from the 21st Century Jobs Fund. The governor recommends $7.4 million for economic development job training grants, focusing on skills that businesses need to compete in the 21st century.

 

In addition to an overall 3 percent increase for state-funded universities, the governor is proposing a three-part incentive based formula rewarding universities for returns on research and technology transfer, graduating students, and promoting greater participation among low-income students. Based on the funding formula, the state’s three research universities would receive the largest increases.

 

The budget recommendation also includes a 3 percent increase for the Michigan Agricultural Experiment Station (MAES) for a total of $35 million. The MAES encompasses the work of more than 300 scientists in five colleges at Michigan State University: Agriculture and Natural Resources, Natural Science, Engineering, Social Science, and Veterinary Medicine. 

 

The FY 2009 Executive Budget is available at: http://www.michigan.gov/budget/



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