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Michigan legislature approves $200 million for Billerud paper mill

Lansing, Mich. (From news reports) -- The Michigan House and Senate approved a $946 million supplemental spending plan Thursday night that will set aside about $200 million for the revitalization of an Upper Peninsula paper mill and another $150 million deposit into the state's business incentive program.

In addition to the $946 million, the bill, initially described as a "book closing" supplemental budget, would allocate $146.3 million to close out the 2021-22 fiscal year for a total of about $1.1 billion.

The bill passed 24-14 in the Senate, with four Republicans voting in favor, and passed 60-48 in the House, with several Republicans voting in favor and one Democrat voting against. The bill now heads to Democratic Gov. Gretchen Whitmer's desk for her likely signature.

The roughly $200 million in state tax dollars earmarked for the Escanaba Mill will supplement a $1.06 billion investment by Swedish parent company Billerud to expand paper product production at the mill. The project would help the mill retain nearly 1,200 jobs at the 2,000-acre site in Wells and Escanaba townships in Delta County.

The funding will be distributed through Delta County.

The money for the state grant, which requires the company to maintain at least its current job numbers over the next 10 years, was left unappropriated last year when negotiations between the Republican-led Legislature and Whitmer fizzled out during the December lame-duck session.

"The growth sector in paper products right now is in the packaging, and they are looking at putting in what amounts to the first of its kind type of production in the Western Hemisphere," Sen. Ed McBroom, R-Vulcan, said Thursday. "It's an outstanding opportunity for the whole state and, in particular, for the Upper Peninsula."

Rep. Jenn Hill, D-Marquette, said the bill would be an economic boost for the entire U.P.

"Folks, this is a no-brainer," Hill said. "The governor talked last night about providing young people with a reason to stay in Michigan. A big part of that is economic opportunity."

The $946 million "book closing" supplemental bill for the fiscal year that ended Oct. 1 moved through a joint House and Senate Conference Committee on Thursday afternoon, with $706.2 million coming from state tax dollars and $240 million from federal funds.

The budget touches on many priorities across the state, including about $200 million to help meet the needs of those struggling to find affordable housing, said Rep. Angela Witwer, the Delta Township Democrat who chairs the House Appropriations Committee.

"We reached across the aisle," Witwer said. "We hit business, workforce development, priorities that both caucuses have."

The bill had been criticized by some Republicans prior to the Senate vote as it swelled from the $148 million book closing initially proposed to a more than $1 billion total without committee hearings to vet the spending.

On Tuesday, the House sent the spending bill to a House-Senate conference committee with no money appropriated, an unusual move in the legislative process. Late Thursday afternoon, an amended bill was unveiled in conference committee containing more than $1 billion in new spending.

"This has not been a transparent process, and I feel it has been a disservice to the Michigan taxpayers who have been unable to find out what this bill contained until the very last minute," said Sen. Thomas Albert, R-Lowell, who previously chaired the House Appropriations Committee. "It has been a rushed process for reasons that have still not been explained."

House Republican Leader Matt Hall, R-Richland Township, also criticized the process that led to the budget's passage, arguing the "rushed" effort led to the paper mill grant initially being designated to the wrong municipality. The bill was sent back to a conference committee and corrected before passage in the House and Senate.

"What we were sold as a book closing and just a way to end the spending last year, to kind of reconcile some things, turned into a $1 billion Democrat wish list," Hall said.

The spending bill includes about $150 million for the business incentive program, known as the Strategic Outreach and Attraction Reserve Fund; $100 million for community revitalization grants; $150 million for an affordable housing tax credit program; $20 million for law enforcement training; and $25 million to prevent water shutoffs.

The additional deposit in the Strategic Outreach and Attraction Reserve Fund would bring its balance to about $890 million. At least two projects -- Gotion Inc. and Our Next Energy -- are waiting on the Legislature's appropriations committees to transfer out roughly $400 million from the fund.

"We're competing across the United States to keep good jobs in Michigan," Witwer said of the need for the program. "It is something that we have to do."

Also in the supplemental, $75 million in federal money will go toward the state's blight elimination program; nearly $115 million in federal aid for apprenticeship, business accelerator and employment barrier removal programs; and $50 million in federal funds to increase housing supply for middle-income earners.

Another $3.2 million will go toward Michigan's Independent Citizens Redistricting Commission to fund the group for the current fiscal year and likely bring to an end a lawsuit the panel filed against the Legislature over its funding last month.

The $200 million investment in Escanaba will allow the company to expand from paper production to paperboard and carton board used for packaging, according to the Michigan Economic Development Corp's December description of the project.

In December, the Michigan Strategic Fund board approved a Forest Products Processing Renaissance Zone request for the mill, relieving the Swedish company of paying nearly $29.4 million in property taxes over the next 15 years.

The mill is considered the largest manufacturing employer and economic driver north of Midland, according to the MEDC.

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