States face big price to nab GM small car factory

All three of the states competing to produce General Motors’ new small car have put together deals to lure the automaker, but budget deficits are raising questions over how much they can sweeten the pot.

Tennessee still hopes to land the plant, and GM’s requirements haven’t scared off Wisconsin or Michigan, even though both states are struggling with budget deficits.

Michigan is facing a potential $1.8 billion deficit in the budget year starting Oct. 1 that it can only partially fill with federal recovery money, and Wisconsin has proposed $2 billion in tax and fee increases and other measures to deal with the shortfall in its next budget year.

The states are eager to grab the roughly 1,200 jobs that could come with building the new vehicle. GM already has closed its factory in Janesville, Wis., and the factories in Orion Township, Mich., and Spring Hill, Tenn., will go on standby later this year, costing each state thousands of jobs if they don’t nab GM’s small car.

All three states are struggling to keep their economies going in the recession. None wants to give up those good-paying jobs — especially Michigan, where the unemployment rate is 12.9 percent and six other GM factories face being closed or idled by the end of 2010.

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