The following two letters were sent on March 1, 2005 by Michael D. LaFaive, director of fiscal policy for the Mackinac Center for Public Policy. The first letter is addressed to state Rep. John R. Moolenaar, who is the representative for the state House district that includes Midland, Mich., where the Mackinac Center is headquartered. The second letter is to Michigan Economic Development Corporation President and Chief Executive Officer Don Jakeway.

The two letters concern LaFaive’s efforts to obtain information from the MEDC regarding the Michigan Economic Growth Authority.

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March 1, 2005

The Honorable John R. Moolenaar
District 98
Michigan House of Representatives
P.O. Box 30014
Lansing, MI 48909-7514

Dear Rep. Moolenaar:

The following is a brief history of my efforts to obtain answers to questions I have submitted to the Michigan Economic Development Corporation. I will also suggest why I believe the answers to these questions to be important.

The Mackinac Center for Public Policy has been researching state and local economic development issues since 1989. Last October, I decided to update some past research involving the Michigan Economic Growth Authority, so I began submitting information requests to the MEDC using the Freedom of Information Act.

By December, I had compiled a list of additional questions that I believed could not be answered through FOIA requests. One of these was prompted by a statement made by MEDC President and Chief Executive Officer Don Jakeway in Business Direct Weekly, where he stated that MEGA tax credits had created more than 28,000 jobs in Michigan. I found this claim difficult to substantiate, since the MEDC’s own figures, which are summarized on the MEDC’s "MEGA Credits" spreadsheet, had indicated that about 13,000 jobs could be attributed to MEGA tax credits.

In a letter dated Dec. 22, I asked MEDC Senior Vice President and General Counsel James R. Lancaster Jr. for permission to "set up a telephone call with (MEGA Program Manager) Jim Paquette (sic). I have a few questions I want to ask him. It probably won’t take more than ten minutes of his time."

In a letter dated Dec. 28,[2] Mr. Lancaster responded, "With respect to your request for a telephone conference (with) Mr. Paquet, I would appreciate if you would let us know what the subject of your call would be, with a brief list of the questions you would like to discuss so that we can be properly prepared. Upon receipt of this, I will pass it on to him and respond to this request."

On Jan. 1, 2005, I submitted 10 questions[3] to the MEDC pursuant to Mr. Lancaster’s instructions. I have not received a response. Since that time I have sent eight follow-up e-mails and made numerous phone calls to the MEDC. These generated no answers to my questions, though I did receive a few apologies. In an e-mail response to me on Jan.18, MEDC FOIA Coordinator Sara Galluch wrote, "[We] apologize for the delay in responding, however, Mr. Lancaster has been very busy and will return your call at his earliest convenience." I did not, however, receive a call.

In mid-January, I called Mr. Paquet directly. He told me that he had seen my questions and didn’t have any problems answering them, but that he had been instructed not to speak to me.

As you know, this lack of response led me to contact your office last month. Brian Shoaf of your staff subsequently called me and said that he had spoken to MEDC officials and that they had promised him I would receive a response by the end of the week. As if by way of explaining their delay, they also mentioned to him that I had not submitted my questions in the form of a FOIA. This was a peculiar observation; MEDC knew why I had not used a FOIA, and the office had seemingly agreed to answer the questions orally.

The MEDC did not contact me by Feb. 4, as they told your office they would. Still, because the MEDC had indicated to Mr. Shoaf that the lack of a FOIA had been problematic, I resubmitted my questions in the form of a FOIA,[4] choosing the most important of the 10 questions or so in my original request and then adding others.

My concerns about the efficacy of a FOIA were confirmed when I received a letter and some documents from the MEDC in response to my request. They did not provide information relevant to my sixth, eighth and ninth FOIA questions because "no such document exists."

Consider, for example, the eighth question of this FOIA. I requested "any summary document that would indicate MEDC or MEGA methodology for measuring job creation credits by tax year on its (the MEDC’s) ‘MEGA Credits’ Spreadsheet. This document should state whether or not ‘Tax year’ meant that jobs were created either by that year or through that year." I was asking, in effect, MEDC to explain how they calculate the numbers they publish. You can see, perhaps, why I thought a phone call was probably a better means of obtaining an answer than a FOIA, though I also thought it possible that MEDC had written its methods down.

I would add that while I still lack meaningful answers to several of my questions, a few of the documents MEDC sent me were useful and led to further important questions. I therefore submitted a follow-up FOIA on Feb. 17.

The most important part of this new request involved an e-mail that the MEDC[5] had provided in response to a question I’d posed about Mr. Jakeway’s estimate that MEGA had created some 28,000 jobs. The e-mail suggested that the difference between Mr. Jakeway’s figures and the MEDC spreadsheets involved jobs that had been, according to MEDC estimates, created indirectly by the credits.

I had hoped MEDC officials would explain how they determined this indirect jobs figure, so in my Feb. 17 request I asked for "one copy of any summary document that is used to tally indirect jobs purportedly created by the MEGA program by companies that have thus received credits." I also encouraged the FOIA officer to seek out one of the participants in the e-mail exchange, thinking this would help with the search.

On Feb. 28, I received a response to my request.[6] The MEDC informed me that no such document exists.

Before closing, I would add that the exchanges above are not the only instances in which I, like others, have had difficulty in obtaining information regarding MEGA. One other ongoing example involves my attempts to obtain copies of applications submitted by businesses to MEGA for tax credits that were not granted. The Mackinac Center began attempting to gain access to such applications about 1996; last year, I made a formal request using FOIA.

A few weeks ago I was given five applications from companies that had applied for, but were never approved for, MEGA assistance. I was told by an MEDC official that this represented all rejected applicants. Still, I wondered if this response was truly comprehensive, given that published reports indicate that MEGA screens out 90 percent of companies interested in MEGA. If even 10 percent of these companies actually submitted applications, there could be more than 200 failed submissions in MEDC’s files.

After I pointed this out to the MEDC on Feb. 9, I was told on Feb. 14 that my newest question had been forwarded to the proper MEGA individual for a response. I am still waiting for an answer.

Thank you again for your time and attention in this matter. I appreciate the help your office has already provided in communicating with the MEDC, and I would appreciate any further help you might be able to provide.

Sincerely,

Michael D. LaFaive
Director of Fiscal Policy

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March 1, 2005

Mr. Donald E. Jakeway
President and CEO
Michigan Economic Development Corporation
300 N. Washington Square
Lansing, Michigan 48640

Dear Mr. Jakeway:

I recently submitted a Freedom of Information Act request to the Michigan Economic Development Corporation. In its recent response, the MEDC indicated no documents exist that met the criteria specified in the third and fourth elements of my request (see enclosure). The MEDC response also suggested that I might resubmit my request for this information to you, and I am now doing so.

My inquiry was initially prompted by your November article in Business Direct Weekly, which stated, "Of the MEGA projects that have collected SBT credits for their projects to date, 28,812 total jobs have been created at an actual SBT credit cost of $75.1 million." I had obtained documents from the MEDC that listed only 13,541 jobs created for $75.1 million, and I had hoped to resolve the discrepancy.

It now appears the difference between the two figures is due to "spin-off" or "indirect" jobs that are attributed to MEGA projects, but that are not included in the MEDC documents I had been given. I wanted to verify that this was indeed the difference and learn how MEDC calculated the number of spin-off jobs created for use in your article.

I am resubmitting my request because I believe it is likely that some summary document does exist at MEDC that tracks the number of indirect jobs ascribed to the MEGA program. I suspect it partly because the MEDC sent me a copy of an e-mail from Peter Anastor (presumably of the MEDC) that claims the difference between the 13,000-plus figure and the 28,000-plus figure is the difference between direct and indirect jobs. If so, a document tallying the number of indirect jobs would probably exist.

I hope the MEDC can again review its documents to see if something exists in its files showing the estimated number of indirect jobs created and how these numbers are computed. If not, it would be great if someone could simply explain it to me orally. Thank you for your attention to this request; I appreciate your time and effort in this matter.

Sincerely,

Michael D. LaFaive
Director of Fiscal Policy



[1] A slightly modified version of this appendix was published on March 1, 2005 on the Mackinac Center Web site.

[2] This letter can be viewed on the Web site of the Mackinac Center for Public Policy at http://www.mackinac.org/archives/2005/medc122804.pdf.

[3] This letter can be viewed on the Web site of the Mackinac Center for Public Policy at http://www.mackinac.org/archives/2005/medc010105.pdf.

[4] This letter can be viewed on the Web site of the Mackinac Center for Public Policy at http://www.mackinac.org/archives/2005/medc012805.pdf.

[5] This document can be viewed on the Web site of the Mackinac Center for Public Policy at http://www.mackinac.org/archives/2005/medc102604.pdf.

[6] This letter can be viewed on the Web site of the Mackinac Center for Public Policy at http://www.mackinac.org/archives/2005/medc022805.pdf.