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April 17, 2009

Governor Announces Battery Tax Credits

On Tuesday, Governor Jennifer Granholm announced the Michigan Economic Growth Authority has approved tax breaks that will bring four battery manufacturing facilities to Michigan. The tax incentives are intended to give Michigan a leg up on the rest of the country for the future construction of the next generation of automobiles. Governor Granholm said, “This is really our Michigan effort to lead in the production of the next vehicle, the electric vehicle.”

Two of the companies receiving tax credits will partner with General Motors and Chrysler. LG Chem-Compact is teaming up with GM for their battery production. The manufacturer will receive a $100 million state battery tax credit as well as a $25 million state tax credit. An estimated 300 jobs should be created.

A123 Systems Incorporated partnered with Chrysler for their battery production, receiving a $100 million battery tax credit along with a $25.2 million state tax credit. The A123 facility located in Livonia is expected to create roughly 885 jobs.

John Controls-Saft Advanced Power was given a $100 million battery tax credit coupled with a 15-year state tax credit of $48.5 million for its Holland facility with the intention of creating 498 new jobs.

Finally, KD Advanced Battery Group was awarded a $100 million battery tax credit and a $44.6 million state tax credit with the intention of hiring 885 new workers.

Sen. Jason Allen (R-Traverse City) says that this legislation, which allowed for up to $550 million in tax credits, will “put Michigan at the forefront of where it needs to be.”

The battery initiative is expected to create approximately 6,700 jobs once in full operation.

Parole and Commutation Board Restructured

Governor Granholm’s newly restructured Parole and Commutation Board positions were finalized on Monday. The Board is comprised of members of the Parole Board, officials of the Department of Corrections, and private attorneys.

This is yet another attempt in the continuing efforts by the Governor to reduce correctional facilities costs. There are currently 11,500 prisoners incarcerated who are eligible for parole. The cost to house a prisoner is $33,000 a year. By moving more quickly to parole eligible inmates the Governor is hoping to save over $300 million a year.

Parole Board members are as follows:

Barbara Sampson of Detroit, James Atterberry Sr. of Benton Harbor, Paul Condino of Southfield and Laurin Thomas of Dimondale appointed for terms expiring November 30, 2010. Miguel Berrios of Grand Rapids, Charles Brown of Frankenmuth, appointed for terms expiring November 30, 2011. Anthony King of Troy, Stephen Deboer of Hastings and Artina Tinsley Hardman of Detroit, appointed for terms expiring November 30, 2012.

Corrections members are as follows:

Jodi DeAngelo, Assistant Deputy Warden at Scott Correctional Facility and David Kleinhardt, manager in the Office of the Parole Board, appointed for terms expiring November 30, 2011. David Fountain, manager of the parole services section, appointed for a term expiring November 30, 2009. Lisa Gettys manager of the Office of probation ad Parole Services, and Sonia Amos Warchock of Jackson a parole violation specialist, appointed for terms expiring November 30, 2009

Jobless Benefits Increased

On Monday, Governor Granholm signed legislation that will extend the period for which a person qualifies for benefits while unemployed. The bills signed into law will lengthen the jobless benefits time frame by seven weeks. The increase in benefits will be paid for with federal stimulus dollars. Governor Granholm also asked that the legislature take up legislation that would provide benefits to others who do not meet the current criteria for unemployment benefits. If passed, HB 4785 and HB 4786 would allow for an additional $138 million in federal money to come to Michigan.

The measures would expand the definition of eligibility to include those who are currently not seeking full-time employment but are in job retraining programs or are currently working part-time. The business community has voiced strong opposition to the expansion making passage of the expanded program difficult.

MARCH UNEMPLOYMENT – 12.6

Combine a not-so-bright forecast for the automotive industry with a national economic slump and it is not surprising Michigan’s unemployment rate reached 12.6 during the month of March. Interestingly, the rate has only been reached once, and that was 26 years ago according to a report released by the Department of Energy, Labor and Economic Growth. December of 1983 was the last time our State experienced such a dramatic job loss. At that time the jobless rate was close to 12.7, which is slightly worse than today’s situation. Michigan’s trend matches the national unemployment trend as it also took a turn for the worse in March, reaching 8.5 percent – a .4 percent increase.

Last year at this same time, Michigan’s unemployment rate was 7.5 percent but has since increased a full 5 points with most of that increase since the month of December.

"The weakness in the auto industry along with the national recession have severely impacted Michigan's labor market over the past year," said Rick Waclawek, director of DELEG's Bureau of Labor Market Information Strategic Initiatives. "Recent job loss nationally and in Michigan has increasingly affected a wide spectrum of industries, with a higher share of cuts coming from the service sector."

RELATED TOPIC – STATES REVENUES DOWN SHARPLY

In a related issue, Michigan’s revenues were down by a much steeper margin than state officials had expected according to figures released Wednesday by the Senate Fiscal Agency. March revenues were down 17% from the same time last year. Since March of 2008, state revenues decreased 17 percent to $995 million. While expected by many, this statistic was $125 million lower than had been projected, furthering the states fiscal crisis.

Two important state regulated funds took a hit in revenue. The General fund and School Aid fund decreased by $200 million and $125 million respectively, leading the decline, and also reflecting the increase in Michigan’s unemployment rate. Revenue collected from the state’s income tax was down a staggering 68.5 percent from last year (the reduction also reflects larger tax refunds from the same time in 2008).

The bright spot was the state sales tax which increased by 3.9 percent in the month of March. That stated, total sales tax collection for 2009 is still down from 2008 levels.

As a result of the declining revenue numbers, Governor Granholm and the legislative quadrant leaders (Speaker of the House Andy Dillon, Senate Majority Leader Mike Bishop, House Republican Leader Kevin Elsenheimer and Senate Democratic Leader Mike Prusi) met yesterday to review a proposed executive order ($80 million dollars) and discuss options to address what appears to be a nearly $800 million dollar shortfall for the current fiscal year. While no agreements were reached, budget numbers for this fiscal year, for 2009-2010 and for 2010-2011 continue to reflect the negative effect of the national and state economic slump.

PAADVISORY BRIEFS

Auto Work Group Established by Senate GOP. Republicans in the Senate formed and auto workgroup to review steps and issues to support the auto industry. Named to the workgroup is Senate Majority Floor Leader Alan Cropsey (R-DeWitt), Sen. Randy Richardville (R-Frenchtown Twp.), Sen. Jason Allen (R-Traverse City) and Sen. Bill Hardiman (R-Kentwood). The group was formed because of the crisis the auto industry is enduring and how the state can better prepare for what happens to companies at a corporate level and the impact those decisions will have on Michigan’s population.

Paul Welday Formally Announces Bid for Congress. Former Oakland County Republican Chair and Chief of Staff to former Congressman Joe Knollenberg, announced Wednesday he will run for Congress the 9th U.S. House District in 2010. Mr. Welday made his announcement via Facebook and Twitter while also appearing on a Detroit-based radio show. Congressman Gary Peters defeated longtime seat-holder Joe Knollenberg in 2008.