April 21, 2004
April 21, 2004
Governor Jennifer M. Granholm joined company executives and local officials at the State Capitol in Lansing and Federal-Mogul in Greenville to sign laws that will allow more flexibility in one of the state’s most effective business incentive programs. The legislation the Governor signed today amends the Michigan Economic Growth Authority (MEGA) act by allowing companies to count multiple job locations in consideration for the tax credit.
“MEGA is clearly the flagship of Michigan’s economic development efforts,” Granholm said. “I worked hard with the Legislature to make changes that will increase MEGA’s flexibility and effectiveness. From today onward we will better be able to address the challenges employers face in the fast-changing 21st -century economy, and retain more jobs for Michigan families.”
The statutory changes will greatly strengthen Michigan’s efforts to retain existing workers in Michigan, including those at Federal-Mogul. The company recently announced that it may cease operations at one or both of its plants in St. Johns and Greenville to relocate where operating costs are significantly lower, potentially eliminating up to 800 jobs. The new legislation allows a new incentive package anchored by a MEGA tax credit to be offered to Federal-Mogul to encourage the company to keep its operations and jobs in Michigan. In the future, the flexibility in the law will enable the state to intervene more quickly and more nimbly to retain Michigan jobs.
Administered through the Michigan Economic Development Corporation (MEDC), the MEGA program has the authority to award Single Business Tax Credits as incentives to companies choosing to grow in Michigan over competing sites in other states and countries.
Over the past eight years, the program has been instrumental in attracting 196 major new economic development projects and more than 100,000 new jobs to Michigan.
Until today the MEGA statute required a company to retain a minimum of 500 jobs at a single Michigan location to be eligible for the credit. As a result, companies with a total of more than 500 workers spread across more than one Michigan location, but not at any single site, were not eligible.
Key changes expected to benefit Federal-Mogul and other Michigan companies that maintain multiple locations in the state include:
• Jobs at multiple sites of a business or its subsidiaries may now be included in the job count;
• The minimum number of jobs retained at a single site is lowered to 150 from 500, with at least 1,000 total jobs at multiple Michigan locations.
• An exemption is allowed from the current requirement for the host community to provide a contribution, usually in the form of a tax abatement. This enables companies with multiple sites to receive a local contribution at some but not all of its sites to help lighten the burden of foregone taxes on the host communities.
Don Jakeway, president and CEO of the MEDC and a MEGA board member, praised the potential of the new law:
“Economic development tools become ineffective unless they are adaptable enough to meet the needs of our business customers,” he said. “Governor Granholm and our state legislators have truly stepped up to the plate in terms of making the changes to the MEGA program necessary to meet the challenges we face. I fully expect that these changes will save thousands of jobs for Michigan’s families.”
David Hollister, director of the Michigan Department of Labor and Economic Growth and chairman of the MEGA board, also expressed optimism that the new law would have a significant effect on the state’s job retention efforts.
“Governor Granholm has set forth a focused, seven-point plan for economic growth, he said. “This aggressive new law is another tool in our arsenal to help us encourage companies to continue investing in Michigan, and to keep Michigan workers employed.”
The Michigan Economic Development Corporation, a partnership between the state and local communities, promotes smart economic growth by developing strategies and providing services to create and retain good jobs and a high quality of life. For more information on the Michigan Economic Development Corporation’s initiatives and programs, visit the Web site at www.michigan.org.
