The Air Pollution Control Exemption Act has been in place for decades as Michigan has tried to encourage companies to install pollution-control equipment, but a BridgeDetroit review described a structure that leaves communities with few data points about what the exemptions cost and what pollution reductions follow. The report said local governments often do not know how much revenue they lose, face little obligation to document it for taxpayers, and have limited input on whether exemptions are granted.
BridgeDetroit reported that the state’s exemptions last indefinitely and cost local governments an estimated $200 million annually statewide, and it said the impact falls hardest on small municipalities with the lowest budgets. The review also found that two-thirds of municipalities that issued exemptions over the last decade had populations under 20,000.
In Sterling Heights, the BridgeDetroit review said the city ranks sixth among Michigan municipalities for property taxes lost to the Air Pollution Control Exemption law in the last decade, estimating $23 million in lost property taxes. The review said all of the exemptions it identified went to Stellantis for pollution control at the Sterling Heights Assembly Plant. Sterling Heights officials told BridgeDetroit they did not know how much the exemptions were costing the city in lost taxes and said it would take time to calculate the cost, while they also said they lacked information on how much pollution was being controlled as a result of the law.
BridgeDetroit said it based its estimates on Michigan Department of Treasury records, Tax Expenditure reports, and Air Quality Division inspection reports from the last decade. The review found that across Michigan, 333 exemptions granted by the state cost local governments around $1.2 billion in lost property taxes. It also identified per-resident figures in the municipalities that exempted the most, including Monroe, Port Sheldon, Frenchtown and River Rouge, while describing how some of those municipalities did not respond to questions about the program’s local effects.
Michigan Department of Treasury spokesperson Ron Leix described the reporting gap as a legal issue. “There is no statutory authorization for such reporting,” Leix said, referring to the lack of a requirement for municipalities to track and disclose the costs of the exemptions. The review said that differs from other kinds of tax abatements that are typically disclosed in annual financial statements.
The review also described unresolved questions about whether the exemption incentives are tied to measurable pollution reduction. According to the report, neither Monroe nor Sterling Heights has independently evaluated whether the exemptions led to measurable pollution reductions, and the state had not done so either. EGLE’s Chris Ethridge, assistant director at the Air Quality Division, said the program is old and that the likelihood of exemptions going to equipment that is not required by permit or regulation is “much less than it would have been when this program was enacted (in 1965).” Ethridge characterized it as “a very old program.”
At the same time, the story described how local officials and companies viewed the program through different lenses. Sterling Heights planner Alexis Richards pointed to public health costs from pollution, and Stellantis did not respond to a request for comment on whether the exemption influenced the facility’s location. Jena Brooker/BridgeDetroit reported that Stellantis’ spokesperson declined to provide a number of jobs associated with its local supplier, SHAP, when asked, and that the company has faced air-quality violations at its Sterling Heights plant, while the report also said Stellantis had received many certificates for exempted facilities statewide over the last decade and that exempted facilities elsewhere in Michigan had violations.
The broader reporting raised a policy debate about whether the incentives drive investment or whether they function as a subsidy for ongoing compliance. Jacob Whiton of Good Jobs First, in BridgeDetroit’s reporting, described a need to change the program so people can weigh the monetary costs against impacts on public services. “The exemption is quite unique in this regard: Despite the fact that it comes at the expense of revenue for cities and school districts and counties, companies never have to actually go before the elected officials of these local governments to get approval for the exemption,” Whiton said, adding that it matters for residents to see the tradeoffs when evaluating public investment and pollution-control decisions.
In its reporting, BridgeDetroit also noted that municipal responses to requests for comment varied. Some officials said they would welcome more local data and involvement, but others either did not respond or said the exemption’s approval process was handled by the state. The review said air quality enforcement rests with the state rather than the city, and it described how companies and state officials pointed to state permitting and compliance requirements as the key accountability mechanism even as the tax exemptions operate with limited municipal oversight.
The story was originally published by BridgeDetroit and distributed through a partnership with The Associated Press.