Michigan House Bill HB4426

Michigan 2023-2024 Regular Session

• Introduced: 4/13/23
• Refer: 4/13/23

Caption

State: interstate compacts and agreements; company-specific subsidy interstate compact; enact. Creates new act. TIE BAR WITH: HB 4425'23

Impact

The bill emphasizes the drawbacks of offering company-specific tax incentives by stating that these subsidies do not significantly influence a company's location decisions. Instead, it advocates for a shift toward investing economic development resources in universal infrastructure, which benefits all businesses rather than just a select few that negotiate for special subsidies. The Act aims to level the playing field by discouraging practices that provide unfair advantages to certain companies while placing a financial burden on their competitors.

Summary

House Bill 4426, known as the 'Company-Specific Subsidy Interstate Compact Act', aims to allow the state of Michigan to enter into an interstate compact concerning company-specific subsidies. This legislation seeks to address the competitive pressures faced by states in providing financial incentives to attract and retain large companies. It recognizes that such subsidies often do not offer a long-term benefit and can result in a detrimental cycle of bidding wars among states, ultimately leading to inefficient use of public funds. The Act thus proposes a collaborative approach among Midwest states to mitigate these challenges.

Contention

Notably, the Act proposes that member states commit not to offer new company-specific subsidies, aiming for a comprehensive compact that could eliminate these incentives altogether. Existing subsidies would be preserved but any modifications to them would be classified as new and therefore forbidden under the new agreement. Potential points of contention stem from the perceived loss of competitive tools for states trying to attract business, as well as the implications for states that rely heavily on these subsidies for economic development. Furthermore, while it advocates for collective action among states, the practicalities of getting full cooperation from all states could prove challenging.