Overview
This legislation establishes comprehensive economic development incentive programs in Michigan through the creation of two primary funds: the More Jobs for Michigan Fund and the Good Jobs for Michigan Fund. The programs are designed to attract and retain businesses by offering substantial tax incentives in the form of withholding tax capture revenues for companies that create high-wage jobs and make significant capital investments in the state. The legislation targets transformational economic development projects that would not otherwise occur without state intervention, focusing on job creation that exceeds regional median wages by substantial margins. The programs operate through written agreements between the Michigan Strategic Fund and eligible businesses, with strict compliance requirements and robust reporting mechanisms to ensure accountability and measure return on investment for the state.
Key Points
- Creates dual-track incentive programs targeting different scales of job creation and investment
- Focuses on high-wage job creation with minimum wage thresholds ranging from 135% to 175% of regional median wages
- Provides up to 100% of withholding tax capture revenues for periods ranging from 10 to 30 years depending on program and job type
- Excludes retail establishments, casinos, and professional sports stadiums from eligibility
- Establishes sunset provision prohibiting new agreements after December 31, 2032
Legal References
- Income Tax Act of 1967 (1967 PA 281)
- Michigan Occupational Safety and Health Act (1974 PA 154)
- State Housing Development Authority Act of 1966
- Management and Budget Act (1984 PA 431)
- Michigan Works One-Stop Service Center System Act (2006 PA 491)
Core Provisions
The legislation establishes tiered eligibility requirements based on job creation thresholds and wage levels. For the More Jobs for Michigan Program, businesses must create a minimum of 25 certified new jobs paying at least 175% of the prosperity region median wage. The Good Jobs for Michigan Program has multiple tiers: 25 jobs in counties with populations under 50,000 paying 135% of regional median wage; 250 jobs paying 150% of regional median wage; 1,000 jobs with facility investments exceeding one billion dollars; or a transformational tier requiring 3,000 full-time jobs with median wages at 150% of regional median and minimum facility investments of 20 billion dollars. The programs authorize transfer of withholding tax capture revenues to eligible businesses for periods up to 10 years for certified new jobs and up to 20-30 years for protected jobs, with the fund retaining up to 4% for administrative expenses. Businesses must maintain base employment levels throughout the agreement period and demonstrate that job creation would not occur without the incentive. The legislation requires businesses to complete first hires within 2-3 years of agreement execution and create all certified jobs within 3 years of first hire.
Key Points
- Minimum 25 certified new jobs at 175% regional median wage for More Jobs program
- Tiered thresholds for Good Jobs program ranging from 25 to 3,000 jobs with corresponding wage and investment requirements
- Maximum incentive periods of 10 years for new jobs and 20-30 years for protected jobs
- Up to 100% of withholding tax capture revenues authorized for transfer to eligible businesses
- 4% administrative expense retention cap from withholding tax capture revenues
- Minimum investment requirements ranging from $100,000 per protected job to $20 billion for transformational projects
- 90-day payment processing requirement for approved withholding tax capture revenue transfers
Legal References
- §90v (More Jobs for Michigan Fund creation)
- §90w (More Jobs program eligibility and requirements)
- §90x (Good Jobs program eligibility and requirements)
- §90y (Transformational job creation provisions)
- §90u (Withholding tax capture revenue transfer mechanisms)
- §90j (Good Jobs for Michigan Fund creation and administration)
Implementation
The Michigan Strategic Fund serves as the primary administering agency, working in coordination with the Michigan Economic Development Corporation and the Department of Treasury. The State Treasurer manages fund deposits and investments, with funds remaining in dedicated accounts that do not lapse to the general fund at fiscal year end. Up to 5% of withholding tax capture revenues may be allocated to the Michigan Strategic Fund for administrative expenses. The legislation mandates comprehensive reporting requirements including monthly reports to legislative committees and annual reports due by April 10 each year to the legislature, governor, and fiscal agencies. Annual reports must detail entities receiving assistance, job creation metrics, investment amounts, site visit information, bankruptcy notifications, and return on investment analyses. The Auditor General must conduct annual audits to verify the fund's financial sustainability and review job creation claims. The legislation requires public website disclosure of all loan details, contracts, agreements, and financial assistance information. Businesses must coordinate with local workforce development agencies and Michigan Works One-Stop Service Centers, providing detailed hiring and training plans as part of their applications.
Key Points
- Michigan Strategic Fund administers programs with MEDC operational support
- State Treasurer manages fund deposits, investments, and transfers
- Monthly reporting to legislative committees required
- Annual comprehensive reports due April 10 to multiple state entities
- Annual Auditor General audits of fund sustainability and job creation verification
- Mandatory public website transparency for all agreements and financial assistance
- Coordination requirements with local workforce development agencies
- 90-day payment processing timeline for approved revenue transfers
Legal References
- §90v(2) (State Treasurer fund management)
- §90v(3) (Non-lapsing fund provisions)
- §9(1) (Annual reporting requirements)
- §90y(12) (Website transparency requirements)
- §90y(14) (Site visit and compliance review requirements)
Impact
The programs directly benefit businesses seeking to expand or relocate operations in Michigan, particularly those in manufacturing, technology, and other non-retail sectors capable of creating large numbers of high-wage jobs. The legislation prioritizes businesses maintaining North American or global headquarters in Michigan and those with at least 30% of business activity in non-manufacturing sectors. Geographic preferences favor distressed or disadvantaged areas, with lower job creation thresholds for counties with populations under 50,000. The programs impose significant compliance burdens on participating businesses, requiring maintenance of base employment levels, detailed annual reporting, coordination with workforce development agencies, and submission of comprehensive hiring and training plans. Businesses face potential forfeiture of withholding tax capture revenues if they fail to maintain required employment levels or misrepresent information, with penalties including revocation of authorized employer status and potential 10% penalties on received revenues. The legislation includes a sunset provision prohibiting new agreements after December 31, 2032, requiring periodic legislative review and reauthorization. Administrative costs are capped at 4% of withholding tax capture revenues, with an additional 5% potentially allocated to the Michigan Strategic Fund for program administration.
Key Points
- Direct beneficiaries include businesses creating 25 to 3,000+ high-wage jobs
- Geographic preferences for distressed areas and small counties
- Businesses must maintain headquarters and significant operations in Michigan
- Compliance burden includes annual reporting, workforce coordination, and employment level maintenance
- Forfeiture provisions for non-compliance with potential 10% penalties
- Administrative costs capped at 4% of withholding tax capture revenues
- Program sunset date of December 31, 2032 for new agreements
- Maximum agreement durations of 10-30 years depending on job type
Legal References
- §90u(15) (Sunset provision)
- §90w(1)(a)(i) (Job creation thresholds)
- §90x(ii) (Small county preferences)
- §90y(1) (Headquarters requirements)
- §90u(d) (Misrepresentation penalties)
Legal Framework
The legislation operates within Michigan's constitutional framework for economic development incentives and tax policy, drawing authority from the state's power to promote economic development and create special funds within the state treasury. The programs integrate with the Income Tax Act of 1967, specifically section 51f regarding withholding tax provisions, creating a mechanism to capture and redirect withholding taxes from new jobs back to employers as economic incentives. The legislation establishes statutory definitions for key terms including certified new jobs, full-time jobs (35+ hours per week with income and social security tax withholding), base employment level, protected jobs, and qualifying investment and employment levels. Environmental compliance requirements reference the Michigan Occupational Safety and Health Act, disqualifying businesses with five or more environmental regulation violations in the past three years or inclusion in severe violator enforcement programs. The programs require businesses to demonstrate good standing in their state of organization, registration to conduct business in Michigan, and capacity to enter binding agreements. The legislation includes clawback provisions in written agreements, establishing contractual mechanisms for enforcement and recovery of improperly received revenues. Judicial review provisions are implicit through standard administrative law procedures, though not explicitly detailed in the legislation.
Key Points
- Authority derived from state economic development powers and tax policy framework
- Integration with Income Tax Act of 1967 section 51f for withholding tax capture
- Statutory definitions for certified new jobs, full-time jobs, and base employment levels
- Environmental compliance requirements under Michigan OSHA
- Disqualification for businesses with 5+ environmental violations in 3 years
- Contractual enforcement through written agreements with clawback provisions
- Good standing and business registration requirements for eligibility
Legal References
- Income Tax Act of 1967 (1967 PA 281), §51f
- Michigan Occupational Safety and Health Act (1974 PA 154)
- Michigan State Constitution, Article IV, Section 53
- §90w(f) (Certified new job definition)
- §90x(l) (Full-time job definition)
- §90y(j) (Base employment level requirements)
Critical Issues
The legislation presents several implementation challenges and potential concerns. The complexity of compliance requirements, including maintenance of base employment levels, coordination with multiple agencies, and extensive reporting obligations, creates substantial administrative burden for both participating businesses and state agencies. The 4% administrative expense cap may prove insufficient for effective program oversight given the complexity of verification and compliance monitoring required. The programs' reliance on withholding tax capture revenues creates potential fiscal impacts on state general fund revenues, though the legislation assumes these jobs would not exist without the incentives. The sunset provision requiring new agreements by December 31, 2032 creates uncertainty for long-term economic development planning and may limit the programs' effectiveness in attracting transformational projects with extended planning horizons. The legislation's exclusion of retail establishments, while protecting against subsidizing low-wage job creation, may disadvantage communities where retail represents significant economic development opportunities. Environmental compliance screening requirements, while promoting responsible business practices, add complexity to eligibility determinations and may create disputes over violation severity and relevance. The clawback and penalty provisions, including potential 10% penalties on received revenues, create significant financial risk for participating businesses and may deter some companies from participation despite the substantial incentives offered. The requirement for businesses to demonstrate that job creation would not occur without incentives creates subjective determinations that may be difficult to verify and could lead to disputes or inconsistent application.
Key Points
- Substantial administrative burden from complex compliance and reporting requirements
- Potential inadequacy of 4% administrative expense cap for effective oversight
- Fiscal impact on state general fund from withholding tax revenue redirection
- Sunset provision creates uncertainty for long-term economic development planning
- Retail exclusion may disadvantage communities dependent on retail economic development
- Environmental compliance screening adds complexity and potential for disputes
- Clawback provisions and 10% penalties create significant financial risk for participants
- Subjective 'but for' determination regarding job creation necessity difficult to verify
- 90-day payment processing requirement may strain administrative capacity
- Coordination requirements with multiple agencies increase implementation complexity
Legal References
- §90v(12) (4% administrative expense cap)
- §90u(15) (December 31, 2032 sunset provision)
- §90x(a) (Retail establishment exclusion)
- §90w(a) (Environmental violation disqualification)
- §90u(d) (Misrepresentation penalties)
- §90w(c) ('But for' requirement)