How can Michigan attract more businesses and jobs?
Those who work in the economic development field, and others, have ideas beyond alterations to the closing fund for large-scale business projects or creating a tax capture program for job creation.
Some suggestions:
Consistency
Economic development leaders want the state to pick a strategy and stick with it for a while.
It offered Michigan Economic Growth Authority tax credits in the 1990s and 2000s. Those went away in 2011 as part of a business tax cut, though automakers are still redeeming old ones into the next decade.
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MEGA was replaced primarily by the Michigan Business Development Program, which remains in place. The state added Good Jobs for Michigan, a tax capture incentive, in 2017. Lawmakers allowed it to lapse in 2019 and have debated bringing back something like it ever since.
The Strategic Outreach and Attraction Reserve was created in 2021 to subsidize large-scale projects and help prepare sites for development. It is up for a possible revamp and its future funding is uncertain.
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“Ideally, Michigan can find an incentive strategy that we can stick to for the long term so that companies and developers and communities can all learn how to best utilize these tools,” said Randy Thelen, president and CEO of The Right Place economic development organization in Grand Rapids.
“We’ve been changing them at such a frequency. … We’ve stopped them before companies understand them. We’ve stopped them before we know if there’s really true economic impact. We start over, and it’s these fits and starts that create confusion. When there’s confusion, companies tend to go where there’s more certainty.”
Regionalism
Economic developers and legislators are advocating for increased attention on regional economies.
“Our regions are quite different, and we need to be more focused on that, on what are the strengths of our regions. It’s not a one-size-fits-all solution,” said Maureen Donohue Krauss, president and CEO of the Detroit Regional Partnership. The Detroit region is not competing against other regions in the state, she said, but rather Cleveland, Columbus, Indianapolis, Atlanta and others.
Indiana has committed $1 billion to the Regional Acceleration and Development Initiative, with an additional $250 million from Lilly Endowment Inc. Each of the state’s regions collaborates to submit proposals for funding to boost the quality of life, place and opportunity.
In Michigan, Sen. Mallory McMorrow, who chairs the Senate Economic and Community Development Committee, is urging that the state create a 10-year economic development strategy in the wake of a report issued by Gov. Gretchen Whitmer’s population growth council. She is starting to do roundtable discussions in the Michigan Economic Development Corp.’s 10 prosperity regions so “the state’s strategy really supports each region.”
She has gotten feedback, especially outside metro Detroit, that there is too much focus at the state level on the auto industry and not enough emphasis on places like the Thumb and Northern Michigan.
“When people are looking to move, they’re not looking to move to a state, they’re looking to move to a city. … Once we get into that mindset of recognizing that metro Detroit and Grand Rapids and the Thumb and the Keweenaw (Peninsula) are all very different places but if we agree that our goal is the same, that every region wants to grow young, educated talent to build a workforce, what’s the answer to how to get there for each region and then support that with resources from the MEDC to be that connector?”
R&D credit
At least 36 states offer a tax credit for research and development. Michigan does not, though it once did before a business tax was scrapped and replaced, effective in 2012.
Both the House and Senate have approved bills to create an R&D credit, but they are on hold amid negotiations over other business attraction incentives.
“Ohio has it, and Indiana has it. Minnesota has it. We’re the only one in the Midwest that doesn’t have it,” said Paul Krutko, president and CEO of the Ann Arbor Spark economic development organization.
“It puts us at a competitive disadvantage when a company says, ‘Hey, we’d like to make an investment here of high-wage, knowledge jobs — which are supposedly the direction the state wants to go in — but they decide to place research and development activity in another state because they can book that work there and take advantage of the credit.”
Reverse scholarships
One recommendation in the population report is to pilot financial incentives for people to live and work in Michigan. It briefly mentions, for instance, “reverse scholarships” — assistance with student loan debt — but does not delve deeper.
Bob Trezise, president and CEO of the Lansing Economic Area Partnership, said the state should make an offer to people in or outside Michigan: stay or move here for five straight years and get reimbursed 20% of their tuition, room and board fees each year until reaching 100%. That would cost a lot, but he said the population projections are “very disturbing.”
“I’ll put any bet that anyone who remains here for five years falls in love and never leaves,” Trezise said, also calling for increased state spending on the startup ecosystem, neighborhood development, main streets, arts, culture, universities and wastewater treatment capacity.
He said he is not naïve about the budgetary implications, “but you have to spend money to make money.”
Innovation fund
Whitmer and others want to bolster the funding of early-stage startups and entrepreneurs by redirecting proceeds from Venture Michigan Funds to a new Michigan Innovation Fund. It would enable a handful of nonprofit “evergreen” funds to continuously invest in early companies as opposed to having to wait because they have reinvested their returns and need another return before investing in the next business, Krutko said.
“If we don’t have any resources, they’re going to look someplace else,” he said. “We don’t want to be the garden for the rest of the country. Other states come in and harvest our early-stage companies and say, ‘We can help you grow even further if you move to Ohio or you move to Texas or California or Massachusetts.”
‘Right to work’
Democrats last year voted to repeal a “right-to-work” law, letting private-sector unions again negotiate contracts that require union-represented workers to join or financially support a union.
Republicans and business groups say restoring that law would boost economic development efforts because some businesses refuse to expand into non-“right-to-work” states. The law harms Michigan’s ability to compete for investment and jobs, they say.
Critics of the law, which was in effect for 11 years, say it undermined workers’ ability to negotiate for better pay and benefits.
The repeal will remain in place unless Republicans regain control of both the Legislature and governor’s office.
