What's Hiding Under the MASC?

It's Not Easy Getting Answers out of the MEDC

In earlier posts on the Michigan Economic Growth Authority's decision to grant a $2 million tax credit to the Service Employees International Union Member Action Service Center (MASC — get it?), we stated that the credit was refundable. To this point, we have yet to see any evidence that this report was incorrect. But a lot hinges on this point; a refundable credit means that the state could wind up paying as much as $2 million to the SEIU subsidiary even if they have no tax liability, which would be an especially disturbing outcome. So we have spent the last few days attempting to contact the Michigan Economic Development Corp. (which administers MEGA) and get the definitive word. The MEDC's response to this seemingly simple yes-or-no question has been unenlightening in some ways and very enlightening in others. It all depends on what you want to know.

It's worth noting that the MEDC's own news release announcing the decision to extend MEGA credits to SEIU/MASC and other business ventures referred directly to refundable credits, a strong implication that this was what the MEDC was offering to SEIU/MASC:

MEGA, the state's response to interstate competition for company expansions and relocations, may provide a refundable tax credit against the Michigan Business Tax (MBT) to companies expanding or relocating their operations in Michigan.

The problem was the tax law. Under the MBT's predecessor, the single business tax, many MEGA tax credits were not refundable. How the passage of the MBT in 2007 changed these credits wasn't entirely clear, and we came to the conclusion that the best way to know for sure was to check with the MEDC.

We have contacted Bridget Beckman, the MEDC contact person listed on that release, on three separate occasions, asking about the refundability of the MASC credit. Beckman has yet to respond, but yesterday, I did receive an email from Adam Robach, the MEDC's Freedom of Information Act coordinator. The message included an attachment, an MEDC promotional document that begins with the same language as the news release. (That publication is available here.) When asked for further elaboration, Robach sent me another e-mail with another attachment, this time, a section of the state law granting MEGA the authority to grant refundable tax credits. (Here's the reference, in case you are curious. Check out paragraph 5 in particular.)

From where we sit, it looks like the credit was refundable and the MEDC doesn't want to come out and say it — meaning that even if MASC has no tax liability, the state will be paying for the creation of an SEIU office that could also be used for union organizing or political activism. This is not out of character for the MEDC, though: The state's main granter of tax breaks to favored businesses is getting more and more opaque even as the state's economy continues to contract and jobs — supposedly the entire point of the MEDC's existence — get harder and harder to find in Michigan.

Now, it may be the case that Robach is doing the best he can — he's a FOIA coordinator, not a MEGA analyst. His job is to supervise the release of documents, not to interpret the MEDC's actions. But one cannot help but wonder why Beckman cannot call back and tell us what's going on here, or put us in touch with someone at the MEDC who can.

It looks like there's something pretty ugly hiding behind the MASC. We are determined to find out what it is.