Supreme Court says State must disclose billions on tax incentives to GM and others

One of the continuing controversial issues in Lansing has been the value of tax credits and incentives awarded to corporations for investments made in plants and equipment in Michigan.  It’s been both praised and criticized under both Republican and Democratic administrations going back to Governor John Engler, through Jennifer Granholm, Rick Snyder and Gretchen Whitmer.  Now the State Supreme Court has ruled taxpayers deserve to know more about the numbers–and the hundreds of millions of dollars involved.   Here’s an in-depth look at the Court ruling and the implications from the non-partisan, non-profit newsroom of BridgeMichigan in Lansing:

Michigan must disclose the full value of tax credits issued to companies more than a decade ago under a multi-billion program designed to keep them from fleeing the state, the Michigan Supreme Court ruled Wednesday.

In a unanimous decision, judges ruled the Michigan Economic Development Corporation was wrong to redact “tax credit cap” information for General Motors Corp. when responding to a public records request in 2018.

The ruling is a “big win” for transparency and taxpayers, said James Hohman, director of fiscal policy for the free-market Mackinac Center for Public Policy, which filed a brief in support of the release of the information.

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“We’re talking about a huge amount of money – over $500 million a year – and people deserve to know who is collecting that money,” Hohman said.

At issue is the full potential value of refundable tax credits issued under the Michigan Economic Growth Authority (MEGA) program, which was created in the 1990s under Gov. John Engler but rapidly expanded in the 2000s  by Gov. Jennifer Granholm during the Great Recession.

The program was largely disbanded in 2011, but the state is still paying for old tax credits. As of last fall, the Michigan Strategic Fund estimated that outstanding credits could still cost the state nearly $5.6 billion through 2030.

As part of a 2020 agreement with the automaker, Michigan first disclosed that it could still owe GM as much as $2.27 billion through 2029. But it’s not known how many tax credits GM had already cashed in before that point.

Similarly, Ford in 2015 agreed to cap the total value of its tax credits at $2.3 billion.

In Wednesday’s opinion, the Michigan Supreme Court ruled that the state should have disclosed the full value of GM’s tax credit in 2017, when a man named David Sole asked for that information via a Freedom of Information Act Request.

The court also suggested an initial exemption claimed by the state could have violated the Michigan Constitution, which holds that all “financial records, accountancy, audit reports, and other reports of public moneys shall be public records and open to inspection.”

MEDC attorneys are “reviewing the opinion” and have “no further comment at this time,” spokesperson Otie McKinley told Bridge Michigan by email.

The Michigan Press Association, which joined a Mackinac Center Legal foundation brief in the case, celebrated the decision.

“The taxpayers of Michigan are well served when they can access information about how much of their money is being spent and why,” public affairs manager Lisa McGraw said in a statement.

Michigan continues to provide business incentives to companies willing to relocate or stay here, but those newer programs are generally more transparent than MEGA.

State lawmakers in March gave final approval to a $666.1 million incentive to build an electric battery manufacturing facility in Lansing and expand an existing plant in Orion Township.

Story from the non-partisan Newsroom of BridgeMichigan in Lansing

www.BridgeMI.com