Archived Story

Business in Michigan, help for a hassle

Published 11:03am Wednesday, February 17, 2010

Niles Daily Star

Part 1

These days in Michigan, the unemployed have heard the stories that promote local programs, providing additional education, resume and cover letter writing tips and support in the search for work. For those who have a job, the knuckles have likely gone white in their efforts to hang on to them.

It’s rough waters in the state when it comes to employment, or the lack thereof.

Last week the state’s House Republicans released a report by their Jobs Task Force, a result of more than a year of research and statewide hearings from businesses large and small, industrial and agricultural, from scholars and economic development advocates.

This week the Star looks closer at that plan and asks area business-owners, industry professionals and others what they think of some of the initiatives being proposed in Lansing.

On reinvigorating jobs, state Rep. John Proos, R – St. Joseph, chairman of the task force, said one of the first things to focus on is tax credits and capping the amount of those credits available to businesses.

“At some point in time we may be giving away the store in tax credits and seeing little results,” Proos said last week.

Capping those credits would help in “leveling the playing field” and fostering competition.
“Currently, tax credits and tax abatements are critical to manufacturers,” said Shelley Klug, executive director of the Southwest Michigan Economic Growth Alliance. “Profitability is reduced through excessive taxation which in turn is prohibitive to any expansion involving real or personal property purchases. The abatements help lessen the tax burden enough to encourage some expansion that would not be feasible otherwise.”

Tonya Allen, owner of Advantage Plumbing in Niles, said the tax credit issue wouldn’t necessarily affect her business, going into its 10th year, as she hasn’t relied on state aid to keep her doors open.

Rather, she said, as the state looks to maintain the industries and businesses it already has, she’d like to see tougher regulation on licensing for professionals.

“In my business, personally, would be some type of regulation on making sure you have licensed plumbers, not just any Joe off the street,” Allen said. “Because then you’re trying to compete with someone who never has the kind of overhead,” or other businesses costs, the challenges only become more difficult.

“That kind of competition is bad,” she said.

Allen’s business employs nine and she is hoping to expand – but she said when she looks to the future, she doesn’t necessarily consider the state for help.

“We’re 100 percent on our own,” she said.

That’s not to say she couldn’t use a little help. Allen said it would be nice to have one central location to look for resources for businesses owners, information on what types of tax credits or abatements might be available to her, as well as information about issues like workman’s compensation and unemployment insurance – something the plan does address in its call for developing a central comprehensive Web site providing resources an information on permits, licenses and taxes for business owners.

“That would be nice to know if there are things out there, or what kinds of things are out there,” Allen said.

“You have to make money to get tax credits,” said Larry Barrett, president of Berrien Metal Products in Buchanan.

“It’s such a hassle to run a business,” he said.

Reducing and capping tax credits might be beneficial when discussing attracting businesses to the state, but he added, “it’s not what helps us to survive, what helps us to make more money.”

Many small businesses are trying to do just that. From manufacturing to retail and restaurants, it’s keeping the doors open for many business owners in Michigan.

“You need to encourage mining and manufacturing and agriculture,” Barrett said. “Those three things are serviced by service businesses.”

Issues that do affect Barrett’s metal fabricating business, named industry of the year at the Four Flags Area Chamber of Commerce awards banquet in 2008, include safety regulations.

The Occupational Safety and Health Administration (OSHA) and the Michigan Occupational Safety and Health Administration (MIOSHA) impose fines on businesses rather than help inform them how to fix where safety might not meet the necessary standards. Fines are just another hit on the bottom line.

For many companies, competition isn’t coming from neighboring states, but countries across the globe who are able to put out product without the same challenges and costs such as safety precautions and insurance.

Still, neither Barrett or Allen think bringing new businesses to Michigan would be a bad thing, an objective of capping tax credits and eliminating application fees.

“This is, of course, especially true when a company is considering relocating here from a lower-tax state,” Klug said. “We have to give those credits – if we don’t, somebody else will – it’s kind of a vicious cycle.”

Allen said she thinks as the state compiles resources, it would also help to develop a sort of data bank of area businesses so when new companies or existing companies need services or materials they can utilize local businesses and put money back into the local economy.

Barrett agrees.

“When you give a tax break to a company that’s looking for a home,” he said, “not only do they bring, say, 100 jobs to Michigan they probably will employ other services in the area like ours. It does have a ripple or trickle-down effect.”

The House Republican Strategic Task Force on Jobs unveiled a plan focusing on several aspects of employment in Michigan and outlining initiatives the task force believes will improve conditions, fuel competition and maintain the industries and businesses already rooted within the state.

Their initiatives are broken down into three core headings:

Reinvigorate – includes a capping of tax credits to foster more competition and award credits to projects with the best chance at success, insisting unused credits returned to state, removing application fees from applications for tax incentives to make bringing new businesses to the state more desirable, compiling an online bank of resources, provide reviews by local economic development groups of proposed projects.

Reinvest – includes aligning state prevailing wage law with federal levels, review and consider Right to Work Zones Legislation, reduce the Michigan Business Tax surcharge thereby allowing additional funds for health care and additional jobs, eliminate the personal property tax.

Reform – includes creating a more efficient Michigan tax tribunal, encouraging the MDEQ to approve permits to clean coal powered plants within the states and create jobs, implementation of technology that would allow recapture of overpaid or fraudulently paid insurance funds and prevent unemployment insurance funds, reduce liability of business owners during unemployment appeals, promote better customers service and evaluate progress.

SOURCE: House Republican Strategic Task Force on Jobs report

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