News Release: MEGA and MEDC Growing “Aggressively Less Transparent,” Says Center Analyst

Center database will fill gap by providing information about each MEGA deal

FOR IMMEDIATE RELEASE
Wednesday, July 29, 2009
Contact: Michael LaFaive
Director of Fiscal Policy
989-631-0900

MIDLAND — While the debate over public transparency at the state's "jobs" department — the Michigan Economic Development Corp. — intensifies, the Mackinac Center for Public Policy today released a Policy Brief titled, "MEGA, the MEDC and the Loss of Sunshine." MEGA, the Michigan Economic Growth Authority, is perhaps the state's highest-profile jobs program and is administered by the MEDC.

"The MEDC in general and the MEGA program specifically have gotten aggressively less transparent over the years," said author Michael LaFaive, director of the Center's Morey Fiscal Policy Initiative. "If the MEDC is so effective at creating jobs, as its myriad news releases claim, why would officials make it increasingly difficult to obtain data that substantiates their claims?"

Throughout the 20-page brief, LaFaive systematically explains how detailed reports once produced by the MEDC and its predecessor agency, the Michigan Jobs Commission, have been dramatically truncated. The brief includes a contrast between the annual MEGA activity report submitted to the Legislature in 1998 — which ran 19 pages — and one submitted in October 2008, which was effectively a two-page spreadsheet that failed to distinguish between direct jobs allegedly created by MEGA and the indirect spin-off jobs frequently touted by the MEDC in its press releases.

"There appears to be an inverse relationship between the decrease in MEDC transparency and the increase in the state's unemployment rate," said LaFaive. "As it becomes more evident that Michigan's 'jobs' department has failed, officials appear to be thwarting review by limiting the data they share with the public and the Legislature."

In response to this pattern, the Mackinac Center has created a database of MEGA deals acquired through the Freedom of Information Act over the years and archived information corresponding to each MEGA deal so the public, press and policymakers can quickly obtain MEGA-related documents. The Mackinac Center will keep this database up-to-date to ensure access to information involving past deals.

Among the brief's recommendations for improving transparency are: restoring information to summary spreadsheets truncated in 2001; producing annual reports as detailed as those produced by the Michigan Jobs Commission in the late 1990s; and requiring the state Auditor General to make comparative analyses between jobs promised by the MEDC through MEGA and those actually accounted for.

LaFaive is also co-author of "MEGA: A Retrospective Assessment," the Mackinac Center's 2005, 121-page study about the program. Using a statistical model, LaFaive and co-author Michael Hicks, Ph.D., proved empirically that MEGA "did not improve Michigan's per-capita personal income, employment or unemployment rate."

"To our knowledge, the MEDC has not responded to a single point of fact laid out in our study, yet the program continues and with far less transparency," said LaFaive.

The Policy Brief can be found at http://www.mackinac.org/archives/2009/S2009-05.pdf

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