Agency: Mich. must offer more tax credits

LANSING, Mich., July 22 (UPI) -- Michigan, struggling with an auto industry backslide, needs more economic growth tax credits to stay competitive, the state economic development agency said.

The U.S. Midwestern state has already given out all the 2009 economic growth tax credits it's allowed by law, so it's now at a disadvantage as it seeks to lure and retain jobs, Michigan Economic Development Corp. policy and legislative affairs Vice President Mark Morante said.

The state has nearly 60 applications and could forfeit about 15 next month to other states and countries if lawmakers don't vote quickly to ease the annual limit on tax credits, Morante told the state Senate Finance Committee, considering a bill to raise the annual limit.

"We're fighting an economic war with other states and we're out of ammo," he said.

Critics argue research suggests the Michigan Economic Growth Authority tax breaks, open to manufacturing and commercial businesses, don't actually create jobs, The Detroit News reported.

They also say state officials barreled ahead with the credits even though they knew they were nearing the legislative cap.

"In six months' time, MEGA has exhausted their giveaway refundable credits," said Republican Sen. Nancy Cassis of Novi, one of Michigan's fastest-growing cities.

"They knew they were up against the cap and kept spending and spending," she said. "If we grant their request (to ease the limit), will they come back in a month and ask for more?"

State officials say they've been especially aggressive with the program as the state suffers from the auto industry decline and seeks business expansions to stem the employment slide.