LANSING – A bill that would securitize $1 billion of the state's tobacco settlement money to fund technology and life sciences start ups, would instead primarily be used to fund business tax cuts under a plan introduced Wednesday by Michigan House Republicans.
Liz Boyd, spokesman for Michigan Gov. Jennifer Granholm, said the House Republican proposal puts corporate welfare interests above those of working men and women in Michigan – and certainly above the long term interest of the Michigan technology and life sciences.
House Speaker Craig DeRoche (R-Novi) said Republicans would rework wording into the current legislation to fit their new pro business model and bring it up for action next week. But the plan will run into heavy Democratic opposition.
The plan calls for $300 million of the securitization money to be earmarked for life sciences, homeland security, high-tech automotive and alternative energy, rather than the original $2 billion proposed by Gov. Jennifer Granholm. The remaining $700 million would then be used to cut industrial personal property taxes and bring the Single Business Tax rate down to 1.7 percent over four years. The Michigan Senate had proposed the $1 billion be used to fund promising Michigan technology companies.
DeRoche said the rift between the governor and Senate on business tax cuts had forced House Republicans into "fix it mode."
"This is a substantial change, but one that reflects the priorities that I have seen," DeRoche said. "We should keep the millions of jobs that are at risk in Michigan. We have to protect what we have. We've lived within the parameters that the governor said we could afford and we have lived within the parameters the Senate said we could afford."
However, Liz Boyd, Granholm's spokesperson, disagreed with DeRoche that this is a win-win situation for all sides.
"We are not interested in using securitization to fund tax cuts," she said. "To say we are surprised at his latest proposal is an understatement. This ($700 million) is not something the governor has supported."
Boyd said the governor supported the securitization only because it invested in Michigan's future with high-tech jobs. Boyd would not comment on what the governor thought of the $300 million left intact for high-tech job investment.
DeRoche said he had spoken with Senate Majority Leader Ken Sikkema (R-Wyoming) on the proposal, but not the governor. He would not comment on his discussion with Sikkema.
In a statement, Ari Adler, Sikkema's spokesperson said: "Sen. Sikkema is willing to work anywhere with anyone at anytime to complete a package that results in responsible tax cuts, economic diversification and jobs for Michigan residents. He is always willing to listen to different ideas on how to accomplish those vital goals. He does feel strongly that the Senate, the House and the governor must find a way to work together to take action by mid-November."
Senate Minority Leader Bob Emerson (D-Flint) said the House Republican proposal does not help all Michigan citizens.
"Instead of jobs and economic development, the House Republicans apparently prefer pork," Emerson said in a statement. "This would be taking funds currently benefiting all Michigan's citizens, and now they want to give it to their big business buddies. It's totally unacceptable."
Dan Farough, spokesperson for House Minority Leader Dianne Byrum (D-Onondaga), said that Democrats would have to discuss the Republican proposal in caucus before making an official statement.
Tricia Kinley of the Michigan Chamber of Commerce said the organization is enthusiastic about the proposal. "This is exactly the type of action we need. It's decisive and it guarantees tax relief," she said.
Chuck Hadden of the Michigan Manufacturer's Association, said manufacturing will provide the jobs of the 21st century rather than technology and life sciences jobs.
"I think we're better off taking care of manufacturing jobs than chasing jobs that may not be here," he said.
DeRoche said the House would look to restructuring the single business tax plan next year. The SBT runs out in 2009.
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