Whitmer Isn’t Up for Cutting Corporate Incentives; Will Lobby DC Against Tariffs 

(LIVONIA) – Gov. Gretchen Whitmer took three questions from the press on Wednesday after her pre-K enrollment announcement, with the most significant comments being her preference to not get rid of corporate incentives such as the Michigan Economic Growth Authority (MEGA) credits against the Michigan Business Tax. 

The last question was asked by Detroit News reporter Beth LeBlanc, and Whitmer responded by saying any policy change would need to be “robustly debated” because the corporations had made decisions based on those commitments from the state. 

“I don’t want to upend big employers who’ve made long-term commitments based on what they thought was a commitment from the state of Michigan,” she said. 

However, the Governor did say there was room for negotiation. 

“I think there are probably always ways that we can make sure that our policies are smarter and achieve the goals,” she said. 

The comments come as House Republicans look for ways to prematurely pull the plug on the MEGA credits, which were contractually promised to several companies during the Great Recession as an incentive to bring or retain jobs in Michigan. House Speaker Matt Hall (R-Richland Township) sees the tax credits as corporate giveaways that should be paid for through the corporate income tax, not directly from the General Fund. 

On Wednesday, a new House subcommittee chaired by Rep. Steve Carra (R-Three Rivers), the Corporate Subsidies and State Investments Subcommittee within the House Oversight Committee, heard around 40 minutes of testimony from the House Fiscal Agency about the MEGA credits. 

The state gives these corporate incentives after Gov. Rick Snyder took office, but former Gov. Jennifer Granholm and the Republican legislature liberally used the credits in an effort to keep the state’s economy afloat during the Great Recession and the real threat of the Detroit automakers being driven into bankruptcy. 

The credits were multi-year contracts that started under Gov. John Engler in 1995, but accelerated in terms of dollars out the door with Granholm. Two-thirds of the value of the MEGA tax credits were approved between 2008 and 2011 in response to the Great Recession. 

The total MEGA tax credit liability (awarded plus estimated remaining liability) is $9.4 billion. Of this amount, $6.4 billion has been paid out, and the state owes an estimated $3 billion going forward. The state is scheduled to quit paying on them in 2032. 

According to the Michigan Economic Development Corporation (MEDC), there are 10 active credits with that number continuing to decline. The House Fiscal Agency is estimating the state will need to cough up around $514.7 million in MEGA credits next fiscal year (FY), $524.3 million in FY 2027 and $354.0 in FY 2028. 

The credits are made against the old Michigan Business Tax (MBT), which is basically used only by companies who plan to use their MEGA credits because the rates are higher than those of the current Corporate Income Tax (CIT). Carra’s plan is not to void the existing contracts, but to raise the MBT rates to the point that companies would be better off filing through the CIT and forgetting the MEGA credits. 

In one of the other questions posed to the Governor, Whitmer said she would be spending time in Washington D.C. to lobby against the Trump tariffs expected to go into effect against Canada and the planned cuts to the U.S. Department of Education (DOE). 

“I’ve got a lot of concerns about what’s coming out of Washington DC, whether it is tariffs, or education. We have built something to be proud of here in Michigan. We’ve got an economy that we’ve seen a lot of investment and job growth. We’re making strides in education, but I worry that these things will set us back,” she said. 

She called the decisions “capricious” and said there didn’t seem to be any long-term goal attached to cuts in the DOE or the tariffs. 

“If the goal is to onshore and strengthen American manufacturing, that’s a goal we can all get behind. But indiscriminate tariffs on our allies is going to put Michiganders out of work. It’s going to hit the Michigan economy further than any other state,” Whitmer said. 

Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter

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