The future of economic incentives in Michigan, such as the Strategic Outreach and Attraction Reserve (SOAR) Fund, and the State’s strategy for spurring economic growth remains up in the air even as the debate over it has taken place largely out of public view.
On Sept. 4, the MichAuto Advocacy Committee had the chance to hear directly from someone shaping that debate when State Rep. Jason Morgan (D-Ann Arbor) joined us for the Third Quarter Committee Meeting to outline his and fellow Democrats’ vision to reshape SOAR and create new, community-centric funds to spur job growth and economic activity.
According to Morgan, incentives alone are insufficient to ensure Michigan is as competitive as possible in the cutthroat global arms race for talent and the fight to grow the state’s stagnant population. Therefore, House Democrats contend that Michigan should establish new resources to fund public transit and community placemaking improvements while setting more specific requirements for businesses that would receive incentives.
The specifics of HB 5768-5770 include:
- $250 million annually for a reformed and right-sized SOAR program with legislative oversight and stronger accountability and transparency provisions.
- $100 million annually for attainable housing through the existing Housing and Community Development Fund.
- $50 million annually for the Revitalization and Placemaking Program (RAP).
- $200 million annually for transit and mobility, to be administered through a newly created Transformational Projects Authority within MDOT.
This $600 million total fund would be appropriated over ten years and is billed as offering “a sustained, comprehensive economic agenda for Michigan.”
There are many different schools of thought when it comes to economic incentives. Libertarians posit that “government should not be in the business of picking winners and losers” and that a low regulatory and low tax environment is all the incentive you need. Those who deem themselves “corporate welfare” opponents argue that taxpayer money, real or yet to be realized, should not be used to prop up private sector developments but rather be invested in social programming and other traditional government-related activities, redounding to the long-term economic health of the state. Caught between these two stark and uncompromising visions, policymakers have carried on using incentives with mixed results for the last several decades.
The legislation proposed by House Democrats and outlined by Morgan during his visit with the MichAuto Advocacy Committee represents a fusion approach whereby incentives for private sector ventures are essentially conditioned on public sector investments, both by government and corporations.
Another key selling point for the package is establishing a “ten-year plan,” which would provide consistency for businesses and entrepreneurs when considering where to make investments around the country. This would be a welcome development as business leaders have long lamented the lack of a consistent strategy that has hobbled growth in the Mitten State.
It remains to be seen whether this package of bills will pass, let alone whether it can fulfill its promise of consistency and growth.