Michigan, GM agree to cap tax credits, won’t specify amount

LANSING, Mich. (AP) – Michigan and General Motors agreed Tuesday to cap the state’s liability for lucrative tax credits but did not specify the amount, as the automaker committed to make $1 billion worth of capital investments in its home state by 2030.

The agreement approved by Michigan’s economic development board is the latest designed to help Gov. Rick Snyder and future administrations better budget for billions in tax incentives authorized when the state was hemorrhaging jobs.

GM qualifies for annual tax credits for retaining up to nearly 35,000 jobs in the state, good through 2029. Under the agreement, the automaker can claim a maximum level of tax credits but said the figure is proprietary information. Michigan Economic Development Corp. officials said they cannot share the figure unless GM agrees, because it is considered private taxpayer information.

Michigan reached pacts earlier this year with Ford and Fiat Chrysler, which released their cap levels. Ford can qualify for up to $2.3 billion in tax breaks. Fiat Chrysler is eligible for about $1.9 billion.

In February, the MEDC estimated the value of GM’s tax credits, initially granted in 2009 and amended five times, at $2.1 billion – though that was before it notified lawmakers of a big increase in the state’s overall liability for a number of incentive deals.

GM will be required to periodically forecast its estimated tax credits and will be unable to claim more in a tax year than projected.

State officials have reported trouble predicting the budget ramifications of the cumulative tax credit liability because of timing issues and uncapped growth in wages, health care benefits and businesses’ investment in an improving economy.

The state stopped awarding new business tax credits beginning in 2012 under a new tax code, in favor of direct cash incentives and loans, but the old credits will continue having an effect on the budget.

GM announced plans Tuesday to spend $356 million on a new engine line in Flint and driveline and powertrain components in Saginaw and Grand Rapids, saying the moves will create more than 50 jobs and help retain nearly 500 positions.