FILE - General Motors

(The Center Square) – Orion Township officials approved a tax abatement for a planned $1.3 billion General Motors factory. 

Orion Township Treasurer Donni Steele told The Center Square that GM’s abatement total isn’t yet known because the proposed value of the facility hasn’t been determined but that GM’s savings will be “substantial.”

GM applied and received an Industrial Facilities Tax (IFT) abatement for a $1.3 billion investment with a max term of 12 years plus three years of construction.

The Detroit News first reported the story.

Counting all millages in Orion Township, homestead properties pay 33 millages, but industrial facilities pay an extra 18 mills for a total of 51 mills.

The IFE allows GM only to pay half of each millage charged, including fire, police, library, county parks. The New obtained a GM abatement request for 12 years of tax abatement – the maximum allowed – plus three years of construction.

Steele said she sees the deal as a “win-win” because she says the project wouldn’t have happened without the subsidy.

“We don’t lose money on our fire and our police and our safety path and all those funds because we would never have that investment to begin with if they hadn’t built that [facility],” Steele said in a phone interview.

Steele said she’s “elated” GM chose to build in Orion’s existing factory site and hopes GM invests in “terrible” nearby roads.

“We get a tax base, they’re using already-existing land, we create jobs and new taxes to fund our things, and if they fix the roads, Orion Township wins, wins, wins, wins,” Steele said.

In a Dec. 8, 2021 letter to GM’s Global Manager of Economic Development Candace Butler, Michigan Economic Development Corporation (MEDC) leaders estimated it will offer the Orion development $428 million in state and local support, according to the letter obtained by The Center Square signed by CEO Quentin Messer and Executive Vice President Josh Hundt.

The push to give away taxpayer money to large, private car companies follows Michigan-based Ford choosing to build a pair of electric vehicle factories in Tennessee and Kentucky valued at $11.4 billion.

The GOP-dominated Legislature pushed through economic incentive packages for Michigan to remain a heavyweight in the future of transportation.

John Mozena, president of the Center for Economic Accountability, a nonprofit organization for transparent economic development policy, told The Center Square that Michigan is “addicted” to subsidizing the auto industry.

Mozena cited Crain’s Detroit, which reported GM is still sitting on $2.2 billion of Michigan Economic Growth Authority (MEGA) tax credits.

Mozena cited the risk of concentrating too much power in the auto industry, pointing to when GM and Chrysler abruptly cashed out credits, leaving lawmakers scrambling to pay out business subsidies.

“We’re not just putting all our eggs in one basket; we’re subsidizing the basket, and that doesn’t seem to make sense,” Mozena said.

Mozena questioned why Michigan was subsidizing GM, which reported $137 billion in operating revenue when Michigan’s entire state budget was $56.8 billion.

Mozena cited an Upjohn Institute for Employment Research study that concluded between 75% and 98% of all subsidized investments would have happened without the subsidy.

GM spokesman Daniel Flores welcomed the tax reduction.

“GM sincerely appreciates the support the Orion Township Board of Trustees showed by approving our tax abatement application this evening,” GM said in a statement. “ Securing all available tax incentives plays a critical role in any business case moving forward. Approving our tax incentive application is certainly a positive step forward, however, the proposed project is not approved. I’m not going to speculate on GM leadership making a final determination on the business case under development.”

Staff Reporter

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.