LANSING – A two-bill package changing up how the Michigan Strategic Fund could invest 21st Century Jobs Fund dollars began its trip in the Legislature Wednesday via a hearing before the House New Economic and Quality of Life Committee.

The panel considered, but did not vote on, HB 5099 and HB 5100, which had just been introduced the day before.

The bills allow the board to award grants and recommend loans, convertible loans, equity investments and warrants. Currently, the board is limited to grants and loans.

While the legislation doesn’t change the kind of investments that can be made – basic and advanced research, university technology transfer and commercialization of products still stand – the bills would take out the portion of $50 million in funds that would be dedicated to each venture and how the investments could be made.

The commercialization board could recommend an investment in competitive edge technologies by issuing a request for proposal, instead of the current peer-reviewed application. And if the project received federal funds that level of application would be sufficient to cover the review process.

The bills also add the word “intended” to the requirement the projects create jobs.

Officials from the Michigan Economic Development Corporation said the state’s efforts to diversify the economy are one of the most critical issues over the next few years as the auto sector itself diversifies and restructures.

To do that, MEDC’s Director of Projects Mark Morante told lawmakers, “we frankly need some relief from those requirements,” under the 21st Century Jobs Fund.

Ned Staebler, MEDC’s vice president of program administration, said with Chrysler emerging from bankruptcy and General Motors entering it there will be a “black hole of liquidity” for a period of time.

But even when demand picks up, Staebler said auto suppliers may be in a pitch keeping up if financial lending is not available.

“That equipment will be gone, those jobs will be gone and that manufacturing base will be scattered all over,” he said.

While the state is facing tight budget times, Morante said changing the law to allow flexibility in investments will allow the state to meet its diversification needs.

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