House Dem Leader Tim Greimel Lauds Chrysler’s MEGA Renegotiation

Automaker stepped forward to reduce MEGA credits, help state
Tuesday, November 24, 2015

LANSING — House Democratic Leader Tim Greimel (D-Auburn Hills) applauded Fiat Chrysler’s decision to renegotiate its MEGA tax incentives with the state, a move that will cap the amount the automaker can claim in tax credits through the year 2029. The scope of Michigan’s MEGA tax credit program had threatened to destabilize Michigan’s budget for years to come because of the uncertainty over when large corporations would claim the credits, and the size the claims would be.

“By agreeing to cap their credits and to continue investing in our state, Chrysler is doing its part to bring stability back to Michigan’s budget. I appreciate their commitment to Michigan and look forward to their future investments, ” Leader Greimel said. “The Michigan Economic Development Corp. was irresponsible when it handed out these credits, which made it extremely difficult for the Legislature to create responsible budgets. This agreement strikes a responsible balance between economic development incentives and requiring corporations to contribute their fair share to the state we all call home.”

Earlier this year, it was revealed that Michigan’s out-of-control MEGA program would take as much as $9.4 billion out of state revenues during the next 20 years. Because of the way MEGA credits are structured, it was impossible to know when corporations would cash in the credits, or the size they would claim. Michigan House Democrats called on major corporations holding MEGA credits to return to the table and renegotiate the agreements in a way that made it possible to anticipate when corporations would claim credits, and for how much. Under Chrysler’s new agreement, the automaker agreed to claim no more than $1.9 billion during the life of the agreement, which will now end in 2029, instead of 2031. Without this agreement, their claim could have been much larger. Ford reached a similar agreement with the state in June.

“As we approach Thanksgiving, I am very thankful that Chrysler did the responsible thing and renegotiated its MEGA credits,” Greimel said. “Michigan has always been proud of its automotive heritage, and I’m gratified — but not surprised — that Chrysler shows an equal respect for the state it calls home. In agreeing to these new terms, Chrysler shows it understands that Michigan, its residents and its corporations will only truly thrive when we all succeed together.”