Rep. Dylan Wegela, D-Garden City, took on members of his own party, including Gov. Gretchen Whitmer, during a committee meeting in the Lansing Capitol last week.

At issue is whether Michigan taxpayer dollars should be used for corporate handouts.

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Wegela has consistently and forcefully argued against subsidies given to private companies in testimony given to the House Economic Development and Small Business Committee on Tuesday.

Specifically, he objected to a bill package that would circumvent sunsetting the state’s Strategic Outreach and Attraction Reserve next year, and earmark tax income for specific projects rather than placing the monies into Michigan’s General Fund. The SOAR program would also be rebranded the Make It in Michigan program.

House Bill 5768 aims to direct $550 million in corporate income taxes collected by the state toward specific programs through 2035. If the CIT exceeds $1.2 billion, the following programs would benefit accordingly, according to independent analysis by the House Fiscal Agency:

House Bill 5768 would extend $550.0 million in CIT earmarks set to expire at the end of FY 2024-25 for another 10 years (through FY 2034-35) but change the distribution of funds. The
following distributions would be made, in the following order, under the bill beginning in FY 2025-26 (after CIT revenues reached $1.2 billion) through FY 2034-35:

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• Up to $100.0 million (an increase of $50.0 million from current law) for the Michigan Housing and Community Development Fund.
• Up to $50.0 million for the Revitalization and Placement Fund.
• Up to $200.0 million for the Michigan Mobility Trust Fund.
• Up to $250.0 million for the Make it in Michigan Fund (formerly known as SOAR
Fund).

Wegela preceded his remarks by calling the state’s economic giveaways a “broken program.”

He praised the bills’ “attempts to make historic investments in public transportation because we can do that and we should do that now anyway in spite of these bills.”

But, he added, he opposed the bills overall.

Wegela preceded his remarks by calling the state’s economic giveaways a “broken program.”

He praised the bills’ “attempts to make historic investments in public transportation because we can do that and we should do that now anyway in spite of these bills.”

But, he added, he opposed the bills overall.

“The reason I’m opposed to the bills is the lack of guardrails that it has around the housing funding but more specifically the additional funding for SOAR projects or what under this package will be called Make It in Michigan,” he said. “For people watching who are unaware this fund essentially operates as a corporate handout fund, giving large payments to corporations. It is important to note that the SOAR funding was set to sunset at the end of next year and, if these bills pass, it will bring an additional $2.25 billion to the fund over a 10-year period. This is the largest amount that will ever [have] been set aside for that type of funding in a single vote.  In fact, the majority of this bill’s funding or 41.6% of it is allocated in this way.”

Wegela noted that the Democratically controlled Michigan House had already approved more than $4 billion in corporate business subsidies in the 2024 session alone.

If HB 5768 becomes law, the total would be more than $6 billion.

“The problem is that this type of economic development hasn’t historically worked,” Wegela continued. “In 2021, we gave a billion dollars to GM to create 4000 jobs and now GM has since delayed that project and continuously announced separate job cuts and buyouts.”

He reminded the Committee that Michigan in 2002 and 2006 contributed more than $110 million to fund the expansion of General Motors’ transmission plants in Ypsilanti and Warren. Only a few years later, Wegel noted, GM shuttered both plants and moved its transmission lines to plants located in Mexico.

“The point is this and I won’t belittle it but we have decades of evidence that this type of quote unquote economic development does not work and does not return the investment that is promised and at some point I implore all of us we have to stop gambling with taxpayer dollars and we have to stop allowing corporations to hold us hostage and  instead invest in the things that we believe in by putting public dollars in public spaces.”

Despite Wegela’s objections, the bill package was passed by the Committee and will now travel to a full vote by the House.

Gov. Gretchen Whitmer praised the bills’ passage.

“Today’s progress on economic development delivers on our comprehensive vision to invest in people, uplift places, and win projects,” Whitmer said.

“Since I took office, we have announced 38,000 new auto jobs and driven unemployment to historic lows,” she added. “We have continued our focus on the kitchen-table issues while growing and diversifying our economy. Together, we will secure the future of electric cars, semiconductor chips, technology, and clean energy here in Michigan, while delivering historic and long-overdue investments in housing and transit to make our communities better places to live, work, and invest.”

Whitmer concluded: “I am grateful to my partners in the Michigan House for their action today, and I look forward to reviewing this fiscally responsible economic development package when it reaches my desk.”