Michigan Taxpayers Writing Check to Second Electric Car Battery Maker for $100 Million

Michigan Capitol Confidential ^ | 7/20/2010 | Jack McHugh

[MichCapCon]

The operators of another Michigan electric car battery plant, A123 Systems, will receive a $100 million cash subsidy from the state for a 75-acre facility the company has leased in Romulus. The subsidy will be in the form of cash because the plant has been granted "renaissance zone" status by the Michigan Economic Development Corp.

Declaring the facility a renaissance zone has the effect of converting a previously authorized $100 million "refundable" tax credit for the firm into an outright cash subsidy (rather than some-subsidy and some-tax break). The legislation authorizing the conversion was signed by Gov. Jennifer Granholm in May after being approved by votes of 99-7 in the House and 38-0 in Senate.

The A123 Systems renaissance zone award actually preceded one to the Korean firm LG Chem for a Holland plant, as reported in Michigan Capitol Confidential on July 2.

In 2009, the Legislature authorized $100 million "refundable" business tax credits for both A123 Systems and LG Chem.* "Refundable" means that the state will send the companies a check for however much of the credit remains after it cancels any Michigan Business Tax liability...

[MichCapCon]

MI ping

[gulfcoast6]

And one questions why the oil industry is being shut down here on the gulf????

[SonOfDarkSkies]

There's an old rule that "good ideas attract their own capital and bad ones go in search of subsidies, grants, and government assistance."

As a retired investment banker with years of experience in venture capital, I can safely say that the empirical judgment required to evaluate the promise of new venture investments is no where to be found in government or academia. Even professionals who work at it every day have a difficult time remaining clear headed and empirical when faced with a complicated proposal.

This is one of the reasons why Obama's stimulus was a complete waste of good money.

Only the free markets themselves in their vast and collective wisdom can come even close to knowing where money should be spent. Investors only do their best to mimic the free market system.

Governments send money to the contributors and cronies...and call it investment.

IMO, another $100 mil down the drain!

[AndyJackson]

a $100 million cash subsidy from the state for a 75-acre facility the company has leased in Romulus

This is why we are going nowhere economically. In a free market economy, when the owner of a vacant 75 acre facility has the ability to make some money in the future by leasing it to a start-up, when otherwise it would be worthless land, he has every incentive to do a deal whereby he and the startup share both the success and the consequences of failure. Since when was state subsidy money required to make a deal like this happen?

[BobL]

You’re making too much sense to post here - I may have to report you.

[nascarnation]

If I could do photoshop, I’d gin up one of those old Detroit crumbling factories with a huge “BARAQ’S BATTERIES” sign on the front.

[SonOfDarkSkies]

lol...I’ll turn myself into the authorities.

[BobL]

Yea, us Tea Party types have standards - the last thing we want the media to think is that we’re educated.