That incentive would include taxpayer money for infrastructure improvements to a development site and cash subsidies to seal the deal — and match the kind of direct checks to corporations that southern states have been writing for years to GM's foreign-owned competitors.
These new taxpayer incentives for GM would be on top of the credits the company gets on its state business tax bill each year. That's because those incentives — known as Michigan Economic Growth Authority, or MEGA tax credits — date back to the Great Recession when then-Gov. Jennifer Granholm's administration wanted to keep GM and its crosstown rivals firmly planted in Michigan following GM's and Chrysler's government-managed bankruptcies.
The remaining value of GM's legacy MEGA tax credits were last valued in the 2020 fiscal year at $2.2 billion, according to the state development corporation.
The maximum cap of remaining MEGA credits GM could claim is $3.475 billion, according to an annual MEDC report to the Legislature.
The $2.2 billion in refundable tax credits can't be redeemed all at once. They have to be spread out annually through the 2029 tax year.
The MEDC estimates the state's total exposure to MEGA credits to top $498 million this fiscal year when Ford Motor Co., Stellantis (formerly Fiat Chrysler Automobiles) and two dozen other companies with legacy tax credits are added to the equation, according to an annual report on MEGA credits the MEDC is required to send the Legislature.
GM can claim its $2.2 billion in MEGA credits on up to 34,750 jobs based in Michigan as long as those workers are paid a minimum weekly wage of $1,300 or $67,600 annually. GM has more than 50,000 employees in Michigan, company spokesman Dan Flores said.
MEGA credits are calculated based on the state's 4.25 percent income tax rate and an employee's total compensation.
The final 10 years of GM's MEGA credits amount to $100,000 in total subsidies for each retained job, or $10,000 a year.
The Michigan Strategic Fund board amended GM's MEGA credits in January 2020 in an agreement the Whitmer administration reached to give the automaker more flexibility in the employees who can be counted toward the tax credits.
The Whitmer administration's agreement with GM requires the company to make an additional $3.5 billion investment in its Michigan facilities by 2029. Up to $2 billion of that additional capital investment can be in the $3 billion GM said it would spend to retool its Detroit-Hamtramck assembly plant into an all-EV plant, now known as Factory Zero.
In exchange, GM voluntarily agreed to a cap on its tax credits that reduced its total tax credits by $325 million over 10 years. Granholm's original job-retention MEGA credits did not put a cap on the value of the tax incentives, which ballooned over time as the automakers reaped record profits — and handed out bonuses to blue collar and white collar workers alike.
The Whitmer administration's deal with GM doubled the minimum weekly wage for workers who can be counted toward the credits from $650 to $1,300.
But what GM got out of the January 2020 deal with the Whitmer administration may prove equally valuable to the company.
The automaker's earlier agreements dating back to 2009 with the Granholm administration required GM to maintain a minimum of 4,000 employees in its Renaissance Center headquarters on Detroit's riverfront. The January 2020 deal with the Whitmer administration eliminated that location requirement — a provision that turned out to be fortuitous as GM sent home all of its RenCen-based employees home two months later when the coronavirus pandemic arrived in Michigan. Some 21 months into the pandemic, GM's corporate staff and C-suite executives continue to work from home.
The MEDC's previous MEGA agreements with GM capped the number of jobs at its Warren Tech Center that the company could claim for the credit. The deal the Whitmer administration struck with GM before the pandemic also removed the Tech Center jobs cap, which MEDC officials said in a memo at the time allows for "statewide job retention and (enables) the company to better manage its business operations."
"The amendments to the current MEGA tax credit will not only help secure existing workforce in Michigan but will also give the company the flexibility of allowing each Michigan location to compete with other global business units to attract new product lines into Michigan," the MEDC memo said.
Under the January 2020 amendment to GM's MEGA credits, the value of its credits is reduced to 75 percent if its number of eligible employees falls below 34,749 but remains above 27,875. If GM's workforce earning at least $1,300 per week falls between 21,000 and 27,874, the company gets 50 percent of its tax credit. If the eligible workforce falls below 21,000, the company gets no tax credit.
It's unclear whether GM is claiming the full credit.
The automaker has long been guarded in details about its MEGA tax credits with the state. When Gov. Rick Snyder's administration renegotiated the terms of GM's MEGA credits in 2015, state officials agreed to keep the remaining value of GM's tax benefits secret.
"GM does not comment on or disclose confidential MEGA tax credit filing details," the GM spokesman said Monday in an email to Crain's.