About a year ago, Governor Gretchen Whitmer called on Michigan lawmakers to create a research and development tax credit for businesses and a new fund to support start-up companies in the state. On Monday, her wish came true.
Whitmer signed into law House Bills 5100 and 5101 to create the R&D tax credit. She also added her signature to House Bills 5651, 5652 and 5653 to launch a new innovation fund aimed at providing early-stage capital to startups. In her State of the State address last year, Whitmer called the two policy proposals a way to improve the state’s economic development tools.
She signed the legislation at Newlab in Central Michigan, home to over 130 startups according to Central Michigan Chief Operating Officer Carolina Pluszczynski.
“Both tools will help us grow our economy, create good-paying jobs in Michigan and lead the way for the future,” Whitmer said of the tax credit and innovation fund.
Under the R&D tax credit law, the Michigan Department of the Treasury can award up to $100 million in total credits in a year. Michigan joins 36 other states that offer tax credits to businesses, according to KBKG, a tax services company. The bills received bipartisan support in the Michigan House of Representatives, but passed on a party line vote in the Michigan Senate against GOP opposition.
The current state budget has already allocated $60 million to the innovation fund program approved by Whitmer to enable state economic development officials to award grants to venture capital funds and start-up support services aimed at retaining and attract more new companies to Michigan. The legislation passed with bipartisan support. Lawmakers who support the policy characterized it as a way to support entrepreneurship in the state.
Rep. State Rep. Alabas Farhat, D-Dearborn, who sponsored the innovation fund legislation, said the program will help Michigan retain early-stage businesses. “We had Republicans and Democrats come together to address the very real issue that Michigan entrepreneurs are leaving our state. They’re leaving it and it’s causing a brain drain,” he said.
Gov. Garlin Gilchrist II — a former entrepreneur — said he might not have left the state after graduating from the University of Michigan if a more robust infrastructure for innovators had been in place at the time.
“This is a historic moment in the history of this state. The future is bright,” said University of Michigan President Santa Ono, who predicted the innovation fund in particular would keep start-ups and graduate students in Michigan. at the bill signing event.
Whitmer said the new fund should be cause for celebration for Michigan taxpayers. “When we invest in an entrepreneur and his business makes money and creates jobs, it’s the people of Michigan who benefit,” she said.
Spokesmen for Republican legislative leaders did not immediately respond to requests for comment.
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Whitmer didn’t see other economic development measures she championed cross the finish line at the end of the last legislative session. Lawmakers did not send legislation to her desk to lower payroll taxes for companies that create jobs in the state. They also did not extend funding for a corporate subsidy program championed by Whitmer that has provided public funds to companies to create new electric vehicle jobs in the state.
In the final week of last year’s legislative session, Whitmer threatened to withhold her signature on the bill if lawmakers didn’t send up road funding legislation and economic development policies on her terms, an official familiar with the negotiations said. without authorization to speak publicly on the matter in. the time. While Whitmer got some but not all of the economic development policies she hoped for, lawmakers did not send her any road funding measures.
Whitmer told reporters that she plans to talk more about the need for long-term road funding on Wednesday, saying only that she hopes lawmakers get there on that front without giving specifics.
Contact Clara Hendrickson at chendrickson@freepress.com or 313-296-5743.
