LANSING, MI (WLNS) – Recession-era tax incentives credited with heading off auto layoffs in Michigan are now cutting into state revenues when the budget could be flush with a rising economy.
One day in 2010, the state provided a massive $2.9 billion in tax credits if Detroit’s car makers agreed to keep factory jobs on their home turf.
But the bill for the deals – and ones in other states that used incentives aggressively – is coming due and providing a lesson in their downside.
Even with a halt in new credits, Michigan is liable for $9.4 billion in old credits, which may reduce revenue $500 million annually for the next 15 years.
The budget outlook is also grim in Oklahoma, which awarded credits to wind energy developers and other industries to spur its economy.