LANSING – The Michigan House Local Government Committee won’t vote this year on legislation backed by Business Leaders for Michigan and the Michigan Economic Development Corporation that would allow selected businesses to keep income tax withholdings on incomes paid to newly hired employees, Rep. Lee Chatfield, the committee chair, said after hearing testimony on the bills Tuesday.

The committee took testimony on SB 1153, SB 1154 and SB 1155, but after the committee Chatfield (R-Levering) said it would be preferable to start fresh on the legislation next term.

Under the bills, the state could annually authorize up to 15 new agreements with businesses where those businesses, in exchange for creating at least 500 new jobs in the state (or 250 if they were paying 125 percent of the average wage in the county where they are located), would get to keep a portion of the income tax withholdings for those new employees instead of remitting those tax revenues to the state.

Rep. Amanda Price (R-Park Lake) said during committee she was confused as to why the state would go in that direction, especially during lame duck.

“We are going to put ourselves back into the same hole we came out of,” Price said, referring to the changes Republicans have made the last six years. “I am kind of shocked by this.”

Chatfield said there are still many questions on the Senate package, and the bills simply aren’t ready.

“We are coming off fresh from the MEGA tax credits and the hit it has given us in our state budget and I think some of those questions need to be answered in more detail before we are willing to start that trend again,” Chatfield said.

Tim Sowton, vice president of government affairs and public policy with the Business Leaders for Michigan, said the group’s goal is to make Michigan a top 10 state in jobs, personal income and a healthy economy, and he said the bills would help accomplish those goals.

“We believe this package is about creating more high paying jobs in this state,” he said. “We have done a tremendous job in this state based on the work of this Legislature and this governor getting Michigan back on the right track. We have added hundreds of thousands of new jobs.”

MEDC CEO Steve Arwood said he believes the legislation is responsible and effective. Arwood said it allows proper budgeting and allows the Legislature to expand the program if it goes above caps set in the bills.

He said while the state is still a brain center, it does have 76 percent of North American auto manufacturing, and with the advances in technology, new cars and providers will be created.

“The manufacturing of the future is not necessarily a birth right,” he said. “There are many places in this country that want that desperately because that are high paid jobs and jobs that spin out and create bigger economies as we advance to the future.”

Jeremy Hendges, with the Department of Talent and Economic Development, said all but two states do something to compete at this level of high paying jobs. He said he along with Arwood are generally “free market guys” but felt the state needs to do something to compete.

“The unfortunate reality in the climate we are in right now is that in order to compete with some of these other states, that is what they look at when the businesses are doing the market,” Hendges. “Yes they look at your tax climate, yes they look at the regularity climate, and kudos to the member of this committee and your predecessors over the past few sessions for giving us an incredibly compelling and competitive environment. But there is still a need to have at least something to compete with at this level.”

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