State eyes new loan fund to lure companies
BYLINE: Amy Lane
LANSING --
State officials are moving to create a new loan fund to sweeten business-attraction deals, using $34.1 million originally targeted for a second round of 21st Century Jobs Fund awards.
The Michigan Strategic Fund has scheduled an April 11 hearing on the proposal at Michigan Economic Development Corp. offices in Lansing, in the wake of last week's Strategic Fund board approval of a resolution to create the new program.
The proposed Choose Michigan Fund is designed to help Michigan compete with other states that provide upfront cash to companies as part of incentive packages to secure jobs and investment. While Michigan offers tax credits through the Michigan Economic Growth Authority program and other incentives, the state is at a disadvantage against more aggressive offers, the MEDC says.
The board that distributes 21st Century Jobs Fund money previously had requested that the Strategic Fund allocate the $34.1 million for the next round of Jobs Fund competition, and the MEDC as recently as last month said it expected to start a second round of competition this year.
But Mike Shore, chief communications officer at the MEDC, said state officials have ``heard from a number of businesses that they are being approached by states to move operations, and that they are being promised cash.''
One time it came up was in Germany, during recent meetings between Gov. Jennifer Granholm, MEDC President and CEO Jim Epolito, and business executives.
``It would be our weapon against those states that can write a check for cash to support companies moving,'' Shore said.
He said program fits with the economic-development intent of the 21st Century Jobs Fund.
The Choose Michigan Fund would capitalize loans that the state would make as a companion to loans from financial institutions. The idea is to provide companies with immediate funding, tied to a MEGA tax credit that could repay the loan as the jobs are created. If the jobs are not created, the company would still have to repay the loan from its own resources, according to state documents.
``They will receive money up front that they otherwise would have gotten as tax credits later on,'' Shore said.
The Choose Michigan Fund is the latest use to surface for the $34.1 million; last month, the state Senate passed legislation to shift the money to the state's general fund.
Lawmakers work on estate tax
Changes are in store for Gov. Jennifer Granholm's proposed estate tax.
In her State of the State address, Granholm proposed a tax that would be applicable to estates valued at $2 million or more, while family farms and some businesses would be exempt. The tax would generate about $119 million in 2008.
Rep. Paul Condino, D-Southfield, sponsor of one of the estate-tax bills in the Legislature, said he and House Speaker Andy Dillon, D-Redford, are working on amendments to the legislation. One change would be to provide a tax credit for significant charitable or philanthropic contributors.
Condino said the lawmakers ``want people to be welcome'' in Michigan and do not want to cause them to leave the state to protect their estates.
He said he and others have been meeting with business representatives to talk about the legislation and air their concerns. House Bill 4377 is likely to change significantly before it comes up for a hearing in the House Tax Policy Committee, Condino said.
Comings and goings
* Richard McLellan has retired as a member in the Lansing office of Dykema Gossett P.L.L.C. The retirement was official April 1, but McLellan said he will continue to serve Dykema clients on a limited basis through the rest of the year.
Amy Lane: (517) 371-5355, alane@crain.com