LANSING – The money Michigan will have to commit to future economic development incentives will depend on the nature of personal property tax reform, but officials are looking to increase the initial $100 million appropriation, Doug Rothwell said Monday.

In an interview with Gongwer News Service, the chair of the Michigan Economic Development Corporation’s Executive Board and president and CEO of Business Leaders for Michigan said it’s unlikely the current appropriation will be adequate enough to compete with other states in years to come.

Michigan’s step to a corporate income tax, among other changes that take effect January 1, increases the state’s competitiveness to be a top 20 state, but elimination of the personal property tax would improve that even further, Rothwell said. Incentives will be benchmarked to the competitiveness of the tax structure, which is somewhat fluid right now as the Snyder administration works on the personal property tax reform it will present to the Legislature shortly.

Going to an appropriations process and eliminating some of the tax credit economic development programs were important to reorganizing the structure of MEDC from a business attraction function to an economic gardening model, but the state still needs enough incentives to keep it competitive, Rothwell said.

“We were going to have to boil it down to the core, and if we need to build it back up a little bit we can, but we need to get the tax environment right,” Rothwell said of the current incentive program.

While MEDC staff is working with the executive board on a monetary recommendation for the 2012-13 fiscal year, Rothwell said while more money would be sought, he doesn’t believe the figure will be “dramatically different.”

In terms of the state’s economic future, Rothwell said he’s hearing from members who are positive about Michigan and where it’s headed. That thought has been driven by the governor and Legislature dealing with important issues and getting beyond the dysfunction that plagued Lansing for several years.

“The bad news is the national economy is really putting a cloud over the state,” Rothwell said. “That could really be a drag on what should be a very good Michigan recovery all things being equal.”

While there is nothing the state can do to change what’s going on at the national level, Rothwell said state leaders should continue making forward progress on issues such as personal property tax reform.

BLM supports elimination of the personal property tax, but members are realistic it will probably take several years to accomplish that, Rothwell said. While phasing the tax out over time would help communities adjust to that new reality, Rothwell the time period shouldn’t be too long.

“We put in place a 10-year phase-out of the SBT (Single Business Tax) and look at what happened,” he said.

The prolonged phase-out of the SBT, which initially was to die over a 23-year period, led to its replacement with the Michigan Business Tax that wound up as loathed as the SBT.

There also will probably be “some amount” of replacement revenue to keep some communities from having severe adverse impact from the tax’s elimination. However, Rothwell said businesses don’t want to shoulder more taxes to achieve personal property tax relief.

House Speaker Jase Bolger (R-Marshall) has supported the idea of using expiring battery credits to spend on personal property tax relief, and Rothwell said that is one good idea.

As for the Legislature’s involvement in another high-profile matter – authorizing the New International Trade Crossing – Rothwell said that issue is part of a larger movement to make Michigan an alternative gateway to the Midwest other than Chicago.

“You need a bridge; you need a rail tunnel; you need the Aerotropolis development; you need a rail yard. You need all of it to take advantage of this logistics gateway people are so excited about,” he said. “The bridge is just the first piece of it.”

Should the Legislature fail on the NITC legislation (SB 410 and SB 411 ), Rothwell said that would harm the other projects.

Governor Rick Snyder has proposed leveraging the $550 million the Canadian government has offered for Michigan’s share of construction costs accessing the new bridge toward the state’s federal transportation funding and Rothwell said businesses are hoping to hear how more efficiencies like that can pave the way for increased federal dollars in the special message on infrastructure next week.

But business leaders don’t have any expectations in the current economy that Snyder will propose massive tax increases to pay for road and bridge improvements.

While that may be a short-term reality, Rothwell said businesses want the governor to outline a long-term path that includes increased investment in this area.

That investment will help the state with trade.

In March, BLM will host its first-ever CEO summit in Detroit and the group is busily preparing for that forum. Rothwell said participants will hear “straight talk” from business leaders about how the state can leverage its assets and prepare for future.

The state has focused on doing the basics right for so long it’s easy to “lose sense of what the future holds,” Rothwell said. “Michigan’s got a terrific future.”

The CEO summit will also include some former Michigan business officials discussing why they took their companies to other places and why.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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