Michigan economic development refundable tax credit (subsidy) “winner” GlobalWatt, Inc. faces a January 9 eviction from its Saginaw facility for failure to pay rent. In 2009, the solar module manufacturing firm was awarded $42 million in state and local government financial favors, thanks in part to applications that contained misrepresentations, as reported by the Mackinac Center in September 2010.
In its bid to gain government subsidies in Michigan, GlobalWatt misrepresented up-front incentives allegedly available to it from the state of Texas, suggesting that if Michigan didn’t produce some corporate welfare benefits the firm would instead locate there. But Texas officials told the Mackinac Center and other news outlets that no up-front cash was offered.
Although the city of Corpus Christi, Texas had earlier offered $2.8 million in incentives, these had expired six weeks before GlobalWatt signed a Michigan-subsidy agreement. The reported reason was the company’s failure to meet certain performance benchmarks.
Both the firm and government economic development officials promised to create 500 direct jobs in Michigan. In her 2010 State of the State address, former Gov. Jennifer Granholm boasted, “. . . GlobalWatt literally left Silicon Valley in California to set up shop in an abandoned auto plant in Saginaw Valley.” For the full speech, watch here: “GlobalWatt’s the Deal.”
In response to the Mackinac Center’s Sept. 29, 2010 expose, GlobalWatt said, “Our company is on track with its growth plans. We remain focused on building our business and leading the revitalization of the Saginaw . . .” Yet photos taken six days afterwards (see below) showed a nearly empty GlobalWatt manufacturing facility — where 60 new jobs were supposed to be by the end of 2010, according to one of the MEGA (Michigan Economic Growth Authority) agreements.
In June 2011 — just six months ago — the firm issued another press release stating, “We remain on schedule to build a new Michigan Solar Valley here and lead the revitalization of the Saginaw area by manufacturing and delivering state-of-the-art renewable energy products and applications.”
By the end of 2010, the firm appeared to have only a handful of staffers occupying a mostly empty building. Today, more than two years after signing Michigan-subsidy agreements, it is apparent that the proffered subsidies were not effective at creating new jobs for the state. The good news for Michigan taxpayers is that, due to its failure to meet certain MEGA milestones, GlobalWatt does not appear to have collected on any of the incentives promised
In 2011, Gov. Rick Snyder and the Legislature ended the selective tax break and subsidy program that permitted agreements with GlobalWatt. However, they have replaced it with a smaller program that will instead hand out direct cash subsidies to “winner” firms. As such, GlobalWatt probably won’t be the last “loser” picked for corporate subsidy by the Legislature.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
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2011 MichiganVotes.org Roll Call Highlights
MichiganVotes.org sends a weekly report to newspapers and TV stations around the state showing how state legislators in their service area voted on the most important or interesting bills of the past week. This final report of 2011 instead contains votes on a few of the most impactful laws passed during the year.
House Bill 4361, Gov. Snyder's business and personal income tax overhaul: Passed 19 to 19 in the Senate (Lt. Gov. Calley broke tie); Passed in the House 56 to 53
To replace the Michigan Business Tax with a 6 percent corporate income tax; eliminate several corporate tax breaks and subsidies; repeal a gradual cut in the personal income rate from 4.25 percent to 3.95 percent; scale-back the current income tax exemption for pension income; reduce the Earned Income Tax credit for low income workers by 70 percent; eliminate or reduce other income tax deductions and credits including the homestead property tax credit, personal exemption and dependent child credit; and make many other tax code revisions. The Senate version preserves some corporate tax breaks and subsidies.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
House Bill 4214, Increase power of distressed school and municipal financial managers: Passed 26 to 12 in the Senate: Passed 62 to 47 in the House
To greatly enhance the powers of Emergency Managers appointed to manage fiscally failing municipalities and school districts. EMs would could cancel union contracts, and school EMs would have authority over academic matters.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
Senate Bill 7, Mandate 20 percent government employee health benefit contribution: Passed 25 to 13 in the Senate; Passed 56 to 52 in the House
To prohibit local governments and public schools from providing employee health insurance benefits in which employees contribute less than 20 percent toward the cost, or which exceed certain dollar amounts, with a number of exceptions.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
House Bill 4408, Reduce future unemployment benefits: Passed 24 to 13 in the Senate; Passed 65 to 44 in the House
To reduce from 26 weeks to 20 weeks the amount of time that laid off employees can collect state unemployment insurance benefits.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
Senate Bill 806, Revise unemployment insurance: Passed 23 to 11 in the Senate; Passed 61 to 47 in the House
To revise various elements of the state unemployment insurance social welfare system, including employer payroll tax assessments; requiring beneficiaries to accept alternative work at lower pay, and more. This is part of the package authorizing state borrowing to pay off some $3.2 billion in unemployment system debt, owed because benefit payments exceeded payroll tax revenues.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
Senate Bill 165, Ban project labor agreements: Passed 26 to 12 in the Senate; Passed 62 to 47 in the House
To prohibit "project labor agreements" in state, school and local public construction projects. These require a non-union contractor to comply with union contract conditions and pay scales, which are often above market level.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
House Bill 4325, 2011-2012 K-16 Education budget: Passed 21 to 17 in the Senate; Passed 59 to 50 in the House
To appropriate $12.66 billion for K-12 public schools in 2011-2012, compared to $13.13 billion the previous year (an amount inflated by $420 million in “stimulus” money). Per-pupil grants were reduced around $100 for schools that adopt specified reforms, and another $100 for those that don't. The bill also appropriates $1.36 billion for state universities, compared to $1.58 billion the previous year.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
House Bill 4625, Make it easier to fire ineffective teachers: Passed 25 to 13 in the Senate; Passed 66 to 42 in the House
To revise the standards for granting a public school teacher “tenure,” and streamline the procedures for taking it away.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
House Bill 4627, Ban laying off less-senior teachers over "ineffective" ones (“LIFO”): Passed 20 to 17 in the Senate; Passed 68 to 39 in the House
To prohibit public schools from using seniority as the determining factor when making layoff or recall decisions (“last in first out”), and prohibit giving preference to a teacher rated "ineffective" over ones rated "minimally effective" or above.
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
Senate Bill 618, Eliminate charter school cap: Passed 22 to 16 in the Senate; Passed 58 to 49 in the House
To eliminate the cap of 150 on the number of charter schools that can be authorized by state universities, starting in 2015 (with 300 allowed in 2012 and 500 in 2013 and 2014).
Who Voted "Yes" and Who Voted "No" in the Senate
Who Voted "Yes" and Who Voted "No" in the House
Interested in all the Roll Calls from this year? Cumulative List of All Weekly Roll Call Report Votes for 2011
SOURCE: MichiganVotes.org, a free, nonpartisan website created by the Mackinac Center for Public Policy, providing concise, nonpartisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit https://www.michiganvotes.org.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
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