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Low-Income Tax Credit, Pure Michigan Funding To Disappear Should Committee In State House Have Way

LANSING (WWJ/AP) - A special committee in the state House has voted Wednesday to strip the Michigan Economic Development Corporation (MEDC) of funding and put that money towards road repairs.

About $100 million that had been earmarked for economic development could be transferred to funds to pave potholes.

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Photo Credit: Pure Michigan

That action would slash $29 million in funding for the Pure Michigan campaign should the bill be passed by both the House and Senate.

Brad Williams with the Detroit Regional Chamber says the bad roads aren't doing the state any favors.

"When we get to the spot where our roads and bridges are in good shape, then the MEDC, then they have an opportunity to try to attract those businesses," said Williams. "The roads are a basic function of government and they are not an incentive for business to locate."

He says the Pure Michigan campaign and the MEDC are really important to the work that the chamber commits to as well - attracting business to the state of Michigan.

So of the funding cut, "we think that's a problem created and not the best solution," said Williams.

Williams says any road funding plan should involve new sources of revenue - so successful programs don't need to be cut and new problems created.

The committee has voted on a host of bills which would re-allocate some money toward road repairs.

Along with many other changes, the 12-bill package would earmark more than $442 million from the general fund for roads in the fiscal year starting Oct. 1.That number would increase to more than $792 million in the 2019 fiscal year.

Funds currently put toward economic development programs such as film incentives would also be shifted toward roads.

A state tax credit for low-income, working families would be eliminated to free up an estimated $117 million a year.

The plan would raise some new revenue by increasing the diesel tax from 15 cents to 19 cents to match the gas tax, then indexing both to inflation. Registration fees would be raised by $30 on hybrid vehicles and by $100 on electric vehicles.

Republican House Speaker Kevin Cotter put the plan forward a week after voters defeated a ballot proposal on May 5 that would have raised the sales tax from 6 to 7 percent to put more money toward roads. Cotter said he is open to negotiating with the Senate and Republican Gov. Rick Snyder on what a final funding plan would look like. Snyder and Senate Republican Majority Leader Arlan Meekhof have voiced support for an approach that would rely more on generating new revenue rather than dedicating hundreds of millions of dollars from the general fund and making other cuts.

Changes made to the House package in committee included addressing concerns that the popular tourism program Pure Michigan could be cut.

Michigan Economic Development Corp. CEO Steve Arwood warned the committee last month that taking $60 million generated through tribal gambling compacts and $75 million from the 21st Century Jobs Fund could mean the Pure Michigan advertising budget would have to be scaled back. New language notes that it is the intent of the Legislature that Pure Michigan will be not be funded at a lower amount than it was in the current fiscal year.

Cotter said he hopes to see the package receive a vote in the full House as early as next week, but Snyder has talked about reaching a compromise sometime in the fall..



TM and © Copyright 2015 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2015 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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