Brownfield incentives – don’t throw the baby out with the bathwater

4 Mar 2011

The inevitable political pushback has begun.  Pensioners, charities, college students, and many others have begun to line up to challenge parts of Governor Snyder’s budget plans.  Last month, I told you that brownfield incentives were on the Governor’s cut list.  Despite the Governor’s business acumen, I must take issue with him here.  We all know the old adage that you have to spend money to make money.  That’s what incentives are and what they do.  One can quarrel about the amount of the incentives or the criteria for their award but one cannot quarrel with the results.  Hundreds of projects amounting to well over $4 Billion in investment, and construction jobs and other employment and property tax revenues have come from Michigan’s brownfield tax credit program.

The Governor seems fixated on tax rates to the exclusion of all else.  Incentives often weigh higher on many new businesses’ location decisions than do tax rates.  A recent report by Area Development reflected that when picking a site for a business, corporate tax rate ranked 6th in the factors to be considered.  Tax exemptions were 3rd and state and local incentives were 5th.  Perhaps the Governor has his priorities backward.    

The Governor should not be coming at this program with an axe but with a pair of scissors. He should be figuring out ways to obtain guarantees of employment and investment (which the program already requires) and tracking those to ensure that the benefits materialize.  He may want to tweak the program to ensure that it is affordable but really, how is a program that generates such an awesome investment result anything but a long term winner? The Governor should not eliminate a program that spurs growth, protects the environment and helps our core cities.  Anything else would be, well, throwing the baby out with the bathwater.

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