The Governor’s Office and House Speaker Joe Tate (D-Detroit) are working behind the scenes to marshal support in the House for a 10-year, $6 billion economic development revamp that also includes dedicated annual allotments for transit, housing and local “placemaking.”
The new program, a rebooted iteration of the Strategic Outreach and Attraction Reserve (SOAR) Fund, moved out of a House committee Tuesday morning with substitutes and was debated inside the House Democratic caucus Thursday afternoon.
Ideally, advocates had hoped to see what is referred to behind the scenes as SOAR 2.0 passing through the House Tuesday, but reservations among most Republicans and a handful of Democrats is slowing immediate movement. Among the package’s main supporters are General Motors and developer Dan Gilbert, which hope to eventually access this money to transform Detroit’s landmark building, the Renaissance Center.
Substitute versions of the bills – SB 559, SB 562, HB 5768, HB 5769 and HB 5770 – are designed to make sure all areas of the state have access to public transportation dollars while putting an emphasis on projects that would come with substantial economic impact. They also tighten legislative oversight. The selling point is to offer SOAR, going forward, to projects that create a lot of good paying jobs and offer a good return on investment.
“Today’s progress on economic development delivers on our comprehensive vision to invest in people, uplift places, and win projects,” said Gov. Gretchen Whitmer in a statement Thursday afternoon.
“Since I took office, we have announced 38,000 new auto jobs and driven unemployment to historic lows. We have continued our focus on the kitchen table issues while growing and diversifying our economy. Together, we will secure the future of electric cars, semiconductor chips, technology, and clean energy here in Michigan, while delivering historic and long-overdue investments in housing and transit to make our communities better places to live, work, and invest.
“I am grateful to my partners in the Michigan House for their action today, and I look forward to reviewing this fiscally responsible economic development package when it reaches my desk.”
Before all five bills moved out of the House Economic Development and Small Business Committee, one Democratic member, Rep. Dylan Wegela (D-Garden City), testified against them.
Two Republican amendments to the bills passed, but Rep. John Roth (R-Interlochen), who brought forward both amendments, said there’s still more work to be done to get the five to 10 Republican members he believes are needed. He added that he doesn’t believe Republicans are anywhere close to supporting SOAR before the summer recess.
With Wegela’s continued opposition, the package may be put on hold, at least temporarily.
Prior to voting on the five total bills, including three House bills and two from the Senate, Wegela said that despite the effort by his colleagues to reform what he called a broken program, and the potential for historic investments in public transportation, he opposes additional SOAR money.
“For people watching who are unaware, this fund essentially operates as a corporate handout fund giving large payments to corporations,” Wegela said. “It is important to know that the SOAR funding was set to sunset at the end of next year.”
“This session alone, our body has already approved over $4 billion in corporate and business subsidies,” he said. “This would bring the total to over $6 (billion).”
Wegela said this is the largest amount ever set aside for that type of funding in a single vote.
The problem with this, he said, is that similar past economic development “hasn’t historically worked.”
Wegela told MIRS following his testimony that he feels the issue lies with calling these dollars economic incentives, instead of what he feels is the more apt description of corporate handouts.
“In what world is it that the Democratic Party has become the party of Reaganomics?” Wegela asked, adding that if Democrats pass film incentive bills, H.I.R.E. and data center tax cuts, “I think we start approaching a $10 billion number.
“It’s insanity, and I don’t know how else to put it, and I feel like I’m a crazy person,” he said, “but when I talk to people in my district, they’re with me, because they want their tax dollars to work for them.”
When asked if there’s ever a world where he can get behind the SOAR reform package, Wegela said he’ll never close the door completely, but in his mind, if there’s going to be this kind of infusion, it needs to be accompanied by conversations about raising the corporate income tax rate.
He said there also could be potential in restructuring the housing portion of the package so more money goes to public and social housing, rather than developers, “and kind of restructure the deal to where the majority of it, or the vast majority of it, stays in public hands.
But ultimately, he said “we can fund public transit in the budget tomorrow if we want to.
“We’re just making those conscious decisions not to,” he said.
Committee Chair Jason Hoskins (D-Southfield) said there were points during negotiations that he felt Wegela could possibly get on board, and he was encouraged by Wegela’s openness to having conversations, but ultimately, he said people vote for all kinds of reasons.
But he added, “I’ve seen miracles happen.”
Bar a miracle from Wegela, Roth said he feels some Republicans could be supportive of the package with more work.
His biggest priority is securing guarantees that the funding will make it to Northern Michigan, Roth said, but he added that there are still concerns about the package as a whole and the large dollar figure attached.
Roth said he believes between five and 10 Republican members could get on board if more work is done during the summer recess, but he said an attempt to move the bills during the budget process will not be supported by Republicans.
“I liked the overall layout, (the) things they want to do. I have no problem with that. It’s just the actual details,” he said, “And to see that much red ink on the proposals right now. We’ve got some time yet. We need to work that out.
“I’m not going to be number 56,” Roth said. “I can’t.”
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
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