>> tax cut fever is here and Senator Jim Ronstadt is here to talk about it.

Our lead story the 7 billion-dollar investment from General Motors in Michigan.

We have sitting with us as we get into off the record.

>> Michigan Public television has contributed to the production cost of off the record.

>> thank you and welcome back to off the record.

It's nice to have you on board.

The only thing missing from the announcement earlier this week from general motors pending $7 billion in our state was a rendition of happy days are here again the governor was at the head of the line thrilled the.

>> thousands of employees right here in Michigan will help us make our home state the epicenter of the electric vehicle industry.

>> and there was no applause last September when Ford announced they were building electrical car battery plants not in Michigan but down the South it was a stunning loss of the governor and general legislators but General Motors here to bring a smile.

>> the CEO of General Motors was doling out the cash and creating jobs first in Oakwood and -- County.

The lake organ plant will be converted to build electric vehicles in Michigan.

>> it will create more than 2350 new jobs and retain approximately 1,000 jobs when the plant is fully operational in a 2024.

>> GM pumping money into an electric car plant outside the state capitol.

>> this will create more than 1700 new jobs when it is fully operational by late 2024.

>> it will pump money into modernization of two plans already in Lansing.

Work on the vehicle -- of the vehicles will have a huge impact on the state's overall economy.

>> the jobs will generate more than $35 billion in new personal income over the next 20 years.

That is 35 -- $35 billion in economic opportunity for Michiganders that will be spent at small businesses, invested in our communities to help them grow and thrive.

>> jet -- a General Motors is getting a host of tax breaks from a billion-dollar jobs incentive program created by the governor and Republican lawmakers.

This a public lawmaker has not -- Governor but he says this about that.

>> you may her that the government I don't always agree with each other but the economic well-being of our state a partisan matter.

High-quality jobs don't have a party affiliation.

>> the Republicans did work with a -- the governor what did you think when you heard this?

>> it's a huge sigh of relief.

You mentioned the Ford announcement was a rear blow that's real blow.

And the General Motors had taken these investments elsewhere obviously there is the political applications but this state may not be like the 60s and 70s in terms of just how tied it it to the auto industry but it is the star that stirs the drink in missions economy and the electric vehicle plants are the future and if Michigan doesn't get its share of them then it will be losing the anchor industry that it has had for so long.

>> while GM was pumping our dollars into the state we were pumping in into the tune of $800 million?

>> yes.

Ford selected a site outside of Michigan and it was dysfunctional we thought maybe the politicians were but it heads and couldn't come together on the sides of the package that a large automaker would need to stay here in Michigan and the legislature and the governor's credit work to -- work together to overcome this and do this package for GM and relay they did it quickly.

We saw this bubble up in December November December let's year and obviously it was a legislative process that they went through and -- I could say record time but pretty good.

>> we will all know someone who helped manufacture the vehicles of the future.

This is a quick political win for everyone here.

>> this is the first shoe to drop and there could be two to three more of other jobs being created as a result of this incentive packages is that correct?

>> we are hearing that and I guess they better hope so because the state just put a lot of chips on the table for that.

It is that particular tone of we can do this together.

The governor followed that in her state of the State address.

I have a question about the future of the incentives because they have been down this road before and when the economy tanked these incentives to bring in new jobs became incentives to retain jobs and that is harder to measure then new jobs.

>> a new wrinkle in the agreement between the company in the state is that there is some accountability written in here.

How does that work?

I we pouring bad money in and not getting jobs as a result?

>> there's a lot of sensitivity to this.

The state spent 666 million doubt that million dollars and handing it over to General Motors, two thirds of this incentive appeared they have to meet bench marks for this to continue through.

If it turns out five years that the auto industry tanked or something and major manufacture report bankruptcy again like 13 years ago there will be hell to pay over this.

There have been multiple attempts to keep the auto industry in the U.S. solvent, 70s, 2009 -- ten bailout.

They will have to keep a close eye on this because what happened with the last incentive is that it became about retaining jobs which is not nearly as a vital or as a that is growing and creating new jobs appear >> the governor had the state of the state message number four and what was your lead on that speech?

>> I felt like I was hopped in the Time Machine and we were going back to the Kumbaya of the 2018 campaign trail.

>> she didn't say you'll be blown away.

>> it felt like a tone of can -- congeniality that has not reflected what I have seen in the legislature the pass three to half year.

>> governor launches reelection campaign and is Emily's' point it was the governor who was very gung ho, let's do this together we can cooperate and create a better Michigan and the Republican response to the degree that there was one was we haven't seen that before and want of the things that I said on our broadcast was Republican response as she took our stuff.

>> she started with tax cuts and worked back.

>> basically she focused on narrow popular issues like the income tax credit and repealing the pension tax and basically the other part of it was pandemic, what pandemic.

A number of us counted up the number of references to co- -- Covid in indexing to the 2021 speech verse this one and it went from a whole heck of a lot to almost none and the pandemic was given basically one pack -- paragraph and was not a focus.

The governor did not give the speech in the usual place in the capitol because of omicron nine -- but it is not part of the discussion.

She says she feels like we have to push for it can't be the only thing were working on.

>> she set the tone for the speech in one sentence which basically said I am going to focus tonight on staff that unites us which takes off the table ever controversy in our town.

We won't talk about masks in the speech or vaccinations and we will not talk about our political differences and so it was an interesting tone set her to give her the latitude do not talk about anything bad.

>> and she did a good job.

She focused on her positive message and laid out what she calls kitchen table issues.

She really stuck to the issues that have made her a popular candidate in the pass.

I remember talking about the budget task going back to her time in the legislature and honestly set the stage for working with Republicans and getting something done in terms of tax relief but also nodding to some of her criticisms.

She addressed inflation in the sense that it's something that perhaps the governor doesn't have direct control over but something that Michiganders are dealing with right now and that has been one of the biggest criticisms of the bided administration that will trickle down to the governor.

>> that something else he did not mention was the name Joe Biden.

Let's talk at the tax cuts picked -- tax cuts.

How high is the temperature for tax cut fever right now, is it well over 100?

>> it is pretty high.

When the Democratic governor sent that centers her entire agenda on cutting taxes I think it's pretty high.

And obviously the Republicans really have held it did their fire on cutting taxes for some time.

This has not been legislature for all the the parties to have thrown up bunch of big tax cuts on her desk daring her to veto them but now you can see the chair of the house Appropriations Committee's Tom Albert working on something and Senator Ron Stead, the Senate finance committee, they're working on a sizable cut to the income tax.

It's a very high in the question will be similar to the appropriations where there is the ability to do something for everyone because of the amount of surplus revenue there is right now there probably is a weight to find something for everyone but the question is how big.

Revenues have been revised upward of 5.8 billion which is an unbelievable number compared to what was expected most of it is a one-shot deal.

There is a debate about what's ongoing, it could be 600 million to a billion and that is how much when you talk about cutting taxes that will be a key factor.

You don't cut taxes for one year.

>> that's a good point but the Legislature and the governor will be myopic and get through this year.

We want to give you these tax cuts but at some point they do have to discuss what about the year after?

Do you have the mind to sustain it?

We are on a roller coaster doing pretty good right we are strong are getting stronger but we've had times where we are weaker and getting weaker and so they need to be careful, let's bring in the state senator who happens to chair the Senate Finance Committee which is why he is rejoining us on this program.

How are you?

>> I am good.

>> it's good to have you back.

>> on a scale of one to ten or the chances that the state income tax rate will be rolled back to 3.9 percent or even lower?

>> with the governor's recent pivoting on taxes I would say probably 70.

>> why not nine or ten?

>> they were always be resistance from the other side of the aisle on reducing taxes that's just the way it is but we've never had the kind of money, surplus money that we have right now we are looking in all buckets at about $20 billion, this is mind blowing amount of money and back when the taxes were increased from 3.9 to 4.25 it was sold as temporary temporary temporary but all of a sudden they said it would be done in 15 now it's 22 still around but we do have that as our previous taxes.

Now we have $20 billion and I'm still hearing people we cannot cut any taxes but nope the people do need a tax cut, we have a raging inflation in the state of Michigan and if they close line five -- if we can find any trucks to go around the state delivering natural gas and propane this will escalate the prices in Michigan beyond belief.

We also right now have one of the highest inflation rates in the nation, 7.5 percent.

If we are tracking all of our have seen nothing in terms of what the inflation process is.

People here in the state of Michigan and Michigan need a tax break.

>> I understand you went through the history on the income tax but what Corporation needs a tax cut right now?

>> we are one of the higher tax rates.

Indiana is dropping their stock at three in their testimony we heard all the states that are getting rid of all kinds of taxes, reducing taxes, corporate taxes, in order to be competitive we have to start looking at not just one company this was great to get General Motors but I didn't hear anything from the panel, I didn't hear anything from the governor about why Ford said they are leaving Michigan and would not stay it was not incentives.

It was the highest energy cost of the Midwest and the nation.

I don't hear anything about let's take a look at that but whatever reason it seems off the table but I have spoken to so many saying we will not come to Michigan or believe in Michigan because your energy costs are out of sight.

Taxes are some of the highest.

Many states don't have income or property tax we have to be competitive not just one company but all the companies out there.

>> I understand the need for tax competitiveness and of course course services are a big part of what the Lord's companies and employers because they need to get employees here as well but since a lot of this is pointed out what is essentially one time revenue even if it's a lot are you open to a trigger for a replacement source of revenue once the one time funding dries up?

>> what you have to deal with all of this one time funding is a look at things that are going to be decades out that roads, bridges, infrastructure that we don't want to have to say we have to put another billion or two in the plan has to be long-term for the money that were get from the feds that were solving systemic problems not just one time fixes but we want to better judge as money comes in where we will have to spend money and we don't have surprises this will be looking at what are the one time dollars, where can they go systemically for the long range, what projections are we looking at in terms of the income will be even if there is a reduction what kind of surplus will be have in our rainy day fund and then maybe we.

We were talking about dropping decks down to 3.9 maybe it won't get their baby will be something less than that may be income taxes may other arrangements where you have to pay, there will be a live negotiation.

When I got asked at the beginning, what is my best to guess that we get something as well because the governor now seems open to income tax reduction and I think we could get something done retirement tax with already passed a bill that is across the board on all senior income, we don't believe in looking at different people and whatever their category is giving them a tax break we want to give across across the board tax break and I will have discretion and I hope she says yes let's seniors tax break.

Let's help them out.

>> but isn't there a contradiction between a systemic tax overhaul which is something that is permanent and tapping into one-time sources of funding even if the well is deep but eventually it will dry up?

There seems to be an inconsistency there appeared.

>> and is not.

-- there is not.

>> swirling every single corner of Lansing are people who want the money want money for everything from boat docks to libraries to restoring buildings and public companies, private companies, there are so many asks you can't even imagine.

These things get slipped through, it does that help us solve systemic problem that we may have to replace five to ten years out?

Let's look at the things that we have to spend money on.

Not to feel good things that somebody in Lansing wants but the systemic things, infrastructure that we have to spend money on, let's look at that then budget going forward we cannot go spending all this money slashing it wasting the money and now we have five years out, three years out O my goodness we should've fixed it.

Nope let's look at this in a whole holistic what will we need to solve for the long term with this money.

It's not a one-time fix than it's gone.

There is always that desire to splash the money out it has to be looked at very very closely.

I'm hoping the governor and the legislature can do that in terms of putting out long-term plans together with this money along with a tax cut.

>> this is estimated that the ongoing surplus is about 600 to $650 million.

This would reduce revenues by about $2.3 billion in the first full year, is that a concern to you that there such a gap between the ongoing surplus and what revenues would die or is it a positive that it forces reductions in spending and reduces the size of government?

>> some of both, as I indicated, what we passed end I'll be fling throwing it onto the governor's desk, we passed some things they have got to the floor the majority leader has already said that we will have some talks and negotiations on these things, it's not completed yet but in terms of making sure if you're making a tax cut that we have a plan to continue with that tax cut that means we will have to be really spending.

When I begin the chair finance committee I spent an entire we and going to complete budgets.

I went back to the staff and financing and will one other person had ever done that going to every line item and I've had as that in boilerplate there's a ton of expenses of that work with the regular budget so we have to make sure that the boilerplate items are looked at and that every single one of them is something that is absolutely necessary.

We do that then we can absolutely maintain the tax cut.

>> I also want to ask the economy right now despite inflation seems to be cooking pretty well.

But Tim and Rick and I said there was a substantial income tax made from 4.43.9 percent at the height of the .com boom which I just dated myself making that reference and did sell within a year or two with the economy falling apart and the auto industry thinking there was a double hit to revenue it was taking down year after year by X percent of a percentage point and all the lost revenue from the jobs and so forth, what about that?

Is there a way to design a tax cut to potentially take into account for when we have our first bona fide recession that we haven't had in quite some time?

>> I absolutely anticipate we will have a downturn.

We have one of the longest expansions in the world going back to nine tenths -- nine and ten at the economy has been an of how long this has lasted eventually it will go down they will decrease rates at the Fed incrementally but it will start having an impact and what we have to do is have discussion on all of this, how will we spend this a $20 million to make sure we are solving systemic problems, we need to put a lot in it that a lot of money in a rainy day fund for a downturn and we really do have to watch the spending, there has not been enough concern about the spending right now I was on a show with some Democrat Senators yesterday.

And they said we just got all this money we have to get it spent and I said nope nope nope that's not how you do it if you don't gush money all over the place because you have it it has to be done judiciously.

Every dollar has to be looked at so that we can cut taxes and we can make Michigan competitive and were doing it for the long term.

He quick >> Senator, you mentioned the retirement tax package that you already considered and that the governor and her speech was intentional about saying retirement tax instead of pension tax.

She even spoke about a family with a 401K K, are you encouraged at the governor is looking at a broader than just pension tax solution here?

>> I'm encouraged.

I spent the last few days of grinding through the most boring tax imaginable trying to figure this stuff out.

Were asking her to let's go across the board everyone treated the same with their retirement income and that she can come to that agreement then we will have a great retirement package for the seniors.

>> Hoosier candidate for governor?

>> undecided I'm still meeting with them all.

>> thank you for tuning into off the record.

We will see you next week right here.

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