LANSING – A revised estimate of what the Michigan Economic Growth Authority tax credits will cost the state shows an increase of nearly $3 billion to $9.38 billion through 2031, the Michigan Economic Development Corporation said Wednesday.
During a House Tax Policy Committee meeting, MEDC CEO Steve Arwood said the increase in projected liabilities comes from assuming 100 percent of the full value of the credits being awarded. Previously, credits were assumed to come in at the 35 to 50 percent range of value.
Although the tax credits have caused some unpredictability with the state?s revenues, leading to unforeseen shortfalls in the current and next fiscal year budgets, Arwood said the MEGA program was a success overall, though the state should go about economic development incentives differently in the future. The state has effectively shuttered the program in favor pay-as-you-go cash incentives.
To get a better handle on what the credits will cost the state each year, Arwood said there will be no further amendments to old MEGA credits that increase liability, credit holders will be asked to annually project a three-year credit redemption and that a credit liability process should be made part of the consensus revenue estimating conferences.
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