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SOAR Fund Recipients Must Ensure Longevity For Job Creations In Senate Budget Rec.

May 2, 2023

Article courtesy MIRS News for SBAM’s Lansing Watchdog e-newsletter

Corporations awarded grants from Michigan’s Strategic Outreach and Attraction Reserve (SOAR) Fund would need to ensure any promised job creations would still be in place after two to four years, under the Senate’s proposed Labor and Economic Opportunity (LEO) budget.

Earlier this year, the governor recommended a 10-year automatic funding stream for the SOAR Fund, Michigan’s tax-dollar-funded corporate incentive account. If corporate income tax collections ran over $1.3 billion, $500 million would be deposited into the fund.

Already, by signing HB 4001 in early March, Gov. Gretchen Whitmer has successfully secured a $460 million payment into the SOAR Fund for Fiscal Year (FY) 2023, $465 million for FY ’24 and $500 million for FY ’25.

“So I kept the SOAR funding, especially the $500 million, and we did take some of the language that the governor had in her recommendation, but we emphasized a lot of the conversations that are currently happening in economic development,” said Sen. Mary Cavanagh (D-Redford), chair of the appropriations subcommittee overseeing the state’s LEO and Economic Development Corporation budgets.

Thursday, Cavanagh’s subcommittee moved SB 194 by a party-line vote of 5-2. The Senate panel’s budget recombination was price-tagged at $3.17 billion for FY ’24, which is around $301 million more than what Whitmer requested and is $1.5 million less than the department’s FY ’23 budget appropriation.

Cavanagh told MIRS the SOAR Fund will be subjected to more safeguards, dealing with “community investment, environmental impact…and some of the conversations that we’re having (is around) not only investing in companies, but investing in communities and the workers that are going to be working those new jobs.”

She added that a provision in SB 194 confirms that the state is not permanently tied to changes in how the SOAR Fund operates, explaining the initial slate of safeguards is to unveil “a little bit of what our priorities are moving forward.”

The senator illustrated how she placed language in to ensure collaboration with community members was part of awarding money from the SOAR Fund. Under the item, after a certain number of years, local needs will need to be determined in a location where a SOAR Fund recipient is developing.

Improving access to transportation, installing resources for workforce development and offering childcare services could be among the community buy-in investments prioritized through SOAR Fund usage, according to Cavanagh.

Additionally, a corporation would be ineligible for a SOAR Fund award under SB 194 if it has unpaid environmental fines.

“I left it quite open as far as environmental, just because I do want the conversations to continue of what we would be comfortable as a caucus, and as a majority, on what we want to see in the future for businesses coming to Michigan,” Cavanagh said.

Also in the budget, the Senate panel dedicated $500 million in one-time General Fund dollars to create the Michigan Partnership Initiative, which the Senate Fiscal Agency described as being intended to back “transformational investments” and to leverage “intergovernmental coordination.” Other new creations proposed by the subcommittee consisted of:

  • $100 million in one-time General Fund money for “Transformational Public Infrastructure Grants.”
  • $40 million to support investments in Electric Vehicle infrastructure.
  • $35 million for “Michigan Community Development Financial Institution Grants” to support community development financial institutions, which aim to connect individuals with affordable housing and community services, as well as to facilitate economic opportunities for both people and small businesses.
  • $35 million for “Community Revitalization and Cultural Institution Grants,” delivering financial aid to public spaces and community centers.
  • $10 million for “Youth Entrepreneurship, Apprenticeships and Engagement Grants.”

The subcommittee did not include Whitmer’s requests for a $150 million “Insulin Affordability and Manufacturing Attraction Program” and a $100 million “Community Downtown Economic Development Program,” among other items.

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