Representatives Ask for Attorney General Opinion on AK Steel

Michigan Strategic Fund board approved controversial tax credits

LANSING —State Reps. Stephanie Chang (D-Detroit), Abdullah Hammoud (D-Dearborn), Pete Lucido (R-Shelby Township) and Martin Howrylak (R-Troy) announced today that they are asking Michigan Attorney General Bill Schuette for an opinion about the legality of the  Michigan Strategic Fund board’s approval transferring Severstal North America’s tax credits to AK Steel. The legislators said that by going around the Legislature, the company may avoid answering questions about environmental protections for surrounding neighborhoods and could be violating Michigan’s Income Tax Act. Last session, Senate Bills 1162 and 1163 would have allowed AK Steel to claim MEGA tax credits that were awarded to the previous operator of the facility, but those bills did not receive a vote on the House floor. At their Tuesday, April 25 meeting, the MSF awarded both MEGA and brownfield credits without legislative approval.

“AK Steel has received several air quality violations from the Department of Environmental Quality since acquiring the Dearborn site — as recently as this February and last October,” Rep. Chang said. “The fact that this corporate tax break comes without any environmental protections or accountability adds even greater insult to the rushed, non-transparent process MEDC used to push through a proposal with questionable legality. This should have gone through legislative vetting and greater public scrutiny. We are hopeful that the Attorney General will weigh in on the legal issues at hand.”

 “Dearborn residents are concerned about this plant and its effect on air quality, and yet they’ve been deprived of having their say in this process just as the Legislature has,” said Rep. Hammoud. “Citizens and the Legislature should have had a say in this, but the MSF went around us and granted the tax credit agreement to AK Steel. I hope Attorney General Schuette will weigh in on this and argue for greater transparency so that residents and their elected representatives can have a say in these matters.”

“This whole process has been very convoluted,” said Rep. Lucido, “First, AK Steel wanted legislative approval, which is the proper venue for this request. However, when they couldn’t get it done through the legislature they go around us and get a dubious approval from the MEDC. With the implications in the business tax filings, and the jumping around the state government looking for what they wanted, it is proper for the Attorney General to review this matter to see if the law was broken.”

“The Michigan Strategic Fund Board’s decision sets a dangerous precedent by allowing a specific company to acquire a tax loophole without going through the legislative process to amend the Tax Code,” said Rep. Howrylak. “In light of the precedent set forth by this decision, it is appropriate to request the Attorney General’s legal insight to ensure transparency and equal accountability under the law.”

The representatives are basing their request for an attorney general’s opinion on AK Steel’s filing for the credit. AK Steel filed its first tax return after Dec. 31, 2011, under the corporate income tax. Nothing in the documents provided by the MEDC to the Michigan Strategic Fund Board indicates what authority is being used to reauthorize AK Steel to file under the Michigan Business Tax Act. This would appear to be a requirement for receiving the MEGA and brownfield credits they intend to receive under the agreement.