LANSING – A

combination of steep reductions in the Michigan Economic Development

Corporation’s corporate revenues and a major cut to its business attraction

support from the Legislature mean the MEDC will be slashing jobs as the 2015-16

fiscal year approaches in October.

One of the

sources of corporate revenue shortfall was attributed, in a statement by MEDCCEO

Steve Arwood, to the Gun Lake Tribe, which has a dispute with the state regarding

terms of its compact and ceased making payments on June 1. The current year

operating budget impact is estimated to be about $7 million, Arwood said.

“It is

not known when the dispute may be resolved,” he said. “As this is a

biannual payment, the revenue implication could be double over a full fiscal

year.”

In light of

that, the MEDC is revising its budget plans for the remainder of the current

2014-15 fiscal year. The size of the staff reduction was not revealed, however,

two sources said the number under discussion was a 30 percent staff cut.

“It

goes without saying that the size and scope of our program must be

reduced,” Arwood said. “While staff details are currently being

evaluated, it should be understood by everyone that MEDC could be losing some

truly great, hard-working and talented people, who are committed to the

citizens of Michigan.”

Further

causing problems for the MEDC is that the Legislature approved a cut of $13.8

million ($5.6 million General Fund) from business attraction programs for the

upcoming 2015-16 fiscal year budget. There has been heavy criticism toward the

MEDC this year for how it has managed the state’s business tax credit program,

but when officials gave the green light to the MEDC budget in late May, they

gave no indication that played a role in the cut.

Arwood said

the primary lines of business and community development incentives are strong

despite the reduction.

Another

point of contention between lawmakers and the MEDC has been providing

incentives through the Michigan Film Office, which operates out of the MEDC.

But lawmakers have passed andGovernor

Rick Snyderhas signed into law legislation that phases out the film

incentive program while allowing the Film Office itself to stay open for

business.

The MEDC

could be the target for more cuts in funding as the House and Senate try to

find an agreement on a road funding solution.

A pair of

bills,HB

4607

*andHB

4608 *, allow a certain amount of 21st

Century Jobs Fund monies to be appropriated to a transportation fund, though

after seeing passage in the House, the Senate has not taken them up. SenateMajority

Leader Arlan Meekhof(R-West Olive) said it would be unlikely that the

Senate would, either, as the MEDC is an organization that helps drive new

revenue for the state.

“With

careful management and a focus on our core mission, we will continue to help

Michigan companies grow and expand in our state; attract new business

investment that creates new jobs in Michigan; invest in revitalizing our

communities; and market our state as one of America’s great destinations for quality

living and travel,” Arwood said.

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