Economic Development

One Sector Grew Last Decade: Corporate Welfare

Very few jobs to show for special favors, subsidies

Very few jobs to show for special favors, subsidies. … more

Trim Corporate Welfare to $0

Mark Schauer's Support for Corporate Welfare

He had lots of help from the GOP along the way

He had lots of help from the GOP along the way. … more

Occupy to Protest Mackinac Center

Group sends mixed message with its words, actions. … more

End of an Error

State's corporate welfare "authority" closing Jan. 1. … more

No State Favors For Fastest Growing Companies

No state corporate welfare went to these fastest growers. … more

Another MEGA Loser

In the latest government economic development failure in Michigan, Evergreen Solar files for bankruptcy. … more

Good, Bad and Ugly of Gov. Snyder's Budget

Gov. Rick Snyder’s first budget fell short of the “atomic bomb” promised by Lt. Gov. Brian Calley, in part due to the fact that a megaton of further spending and tax cuts were left on the table. Overall, the budget moves the state in a positive direction with greater tax simplicity, more transparency, less corporate welfare and fewer discriminatory tax policies.  … more

Gov. Snyder to Break Michigan's MEGA Habit

Although details are not yet clear, according to early reports Gov. Rick Snyder’s proposed Michigan Business Tax replacement appears to be good news for advocates of sound economic policy. … more

GlobalWatt Sells Someone Else’s Solar Panels – on eBay

Just in time to brighten the holidays, GlobalWatt, a Saginaw-based solar panel manufacturer, is selling five solar panels on the popular auction website, eBay. But GlobalWatt did not make the panels. A company in India did. … more

GlobalWatt Finds Colorado Partner

A Saginaw company under fire for problems associated with its application for tax subsidies in Michigan says it will partner with a Colorado company on a solar module project, according to WJRT-TV 12 in Flint. … more

Lack of Transparency at MEDC, MEGA

The Washington Examiner and San Jose Mercury News both recently cited Mike LaFaive, director of the Morey Fiscal Policy Initiative, about the need for transparency within government-run economic development programs. … more

Bad Week for Michigan Corporate Welfare Machine

On Thursday the plug was officially pulled on a monumentally hyped film endeavor in Allen Park called "Unity Studios." There were no press releases from the Governor's office or the Michigan Economic Development Corp. announcing the evaporation of the mirage. … more

Media Reporting on MEGA Investigation

WNEW-TV5 in Saginaw reports that questions have been raised regarding an "alleged preferential tax deal" involving the Michigan Economic Growth Authority and GlobalWatt Inc. … more

GlobalWatt's the Deal?

'Jobs' Fund: More Funds Than Jobs?

A Lansing company that received $2 million in state subsidies three years ago is hoping to expand from 12 employees to 14, according to the Lansing State Journal… more

Pay Attention to Candidates' Stance on Subsidies

When considering which candidates to vote for in November — regardless of the office — be sure to examine their stance on Michigan's growing empire of economic development programs, which selectively hand out subsidies and tax favors to politically favored industries and firms. … more

Government Press Release Journalism

MEGA Careful?

How much background research does Michigan's corporate welfare bureaucracy actually perform on the potential recipients of its selective tax breaks and subsidies? Due to recent embarrassments the amount may be increasing, but until now the answer appears to be, "Not much at all." … more

Michigan Taxpayers to Write $100 Million Check to Korean Battery Maker

Last week the the Michigan Economic Development Corp. upped the ante on a $100 million "refundable" business tax credit approved by the Michigan House and Senate for a subsidiary of the South Korean battery maker LG Chem. The MEDC in effect converted the credit into an outright cash subsidy from Michigan taxpayers by granting the plant's 120-acre site in Holland "renaissance zone" status for 15 years. … more

MEDC Failures Lead to Less Transparency

The Michigan Economic Development Corp. creates more job announcements than jobs, Michael LaFaive, director of the Morey Fiscal Policy Initiative, points out in this Lansing State Journal Op-Ed… more

Michigan Unemployment Woes Continue Despite Millions Spent on 'Economic Growth'

MEGA continues to be ineffective. … more

Lawmaker Says $150 Million in Unearned Tax Credits Given Out by State

A state house committee is looking into an Auditor General's report that the state's flagship economic development program may have given out an estimated $150 million in tax credits erroneously.
The State House Tax Policy Committee will hold a hearing at 9 a.m. Wednesday on the audit of the Michigan Economic Growth Authority program.
The MEGA gives out tax credits to approved businesses for jobs they create. … more

Special Deals Yield Far Fewer Jobs Than Projected

About nine months before an Auditor General's report questioned the accuracy of job projections in tax incentives handed to companies by the state, the Mackinac Center for Public Policy did its own study highlighting the problem.
The Mackinac Center study states that for every 1,000 jobs companies projected they would create, about 294 jobs were actually created, on average — about 29 percent.
That report was vindicated by the Auditor General report that was released April 23. The report looked at company projections from 2005 through 2007 and concluded that about 28 percent of projected jobs came to fruition. … more

State MEGA Audit Finds MEGA Problems

The Michigan Auditor General yesterday released a 72-page audit of the Michigan Economic Growth Authority program, finding that it is poorly administered. MEGA is the state's flagship "jobs" program, granting selective tax breaks and subsidies to particular firms selected to be "winners" by its staff.
The Auditor General's examination focused on reviews conducted by the agency that oversees MEGA. In other words, this was a review conducted to determine whether or not MEGA companies granted selective tax breaks have used proper "job count and salary information." … more
MEDC

Lawmaker Says 'Willful Neglect' Is the Rule at Embattled State Agency

The state's "flagship" economic development program may have doled out an estimated $150 million in tax credits erroneously in the last five years to companies that didn't meet the criteria due to a lack of oversight, according to State Rep. Tom McMillin, R-Rochester Hills.
McMillin met with the state Auditor General's office Tuesday after it released a report this week that said the state didn't follow up on company job projections that often fell short of required triggers to receive tax credits but still received the money.
The report comes a little more than a month after it was learned that the Michigan Economic Growth Authority (MEGA) board approved a $9.1 million tax credit to Richard Short, a convicted embezzler who was CEO of a company named Renewable and Sustainable Companies LLC (RASCO). … more

MEGA Jobs MIA in Flint

Jobs that were promised in exchange for state subsidies in three high-profile cases in Flint never came to fruition, according to The Flint Journal… more

Flight Plan

Attracting residential and commercial expansion to the Detroit Region Aerotropolis — some 60,000 mostly vacant acres between the Detroit Metro and Willow Run airports — should occur using private money, according to one Mackinac Center analyst. … more

Watchdog

A state legislator recently praised the Mackinac Center for its efforts to "hold the MEDC accountable." … more

Economic Development 'Chicanery'

The recent news that the state's Michigan Economic Growth Authority offered a convicted embezzler's company a $9.1 million tax credit has caused quite a stir in Lansing. Last week, legislators held hearings on how the Michigan Economic Development Corp., MEGA's parent agency, could have let someone with the embezzler's background be part of a multi-million-dollar selective tax break deal.
There is so much money sloshing around economic development programs around the nation — up to $50 billion or so as late as 2004 — that it would be surprising if there were not many questionable deals brokered by similar agencies across the nation. … more

A MEGA Blast From the Past

How deep does this hole have to get before the people demand that the political class finally turn its back on what are now clearly recognized are not "economic development" programs but a self-serving political development agenda? … more

MEGA Cliché 'Mistakes Were Made' Not Good Enough

In her first public statements since it was revealed that the Michigan Economic Growth Authority approved a $9.1 million tax credit deal for a convicted embezzler, Gov. Jennifer Granholm was quoted by the Gongwer Michigan Report as saying, "And obviously, a mistake was made, and it cannot happen again." … more

Let the Sun Shine In

Specific MEDC/MEGA Transparency Recommendations

This week, the Michigan House and Senate are both holding hearings on the Michigan Economic Development Corp. after a convicted embezzler on parole duped the Michigan Economic Growth Authority into offering his company a $9.1 million tax credit. The real issue they should examine is not whether the occasional criminal wins an "incentive" deal, but the lack of transparency that characterizes this entire operation. … more

MEGA Prescient

The parole violation arrest last week of convicted embezzler and Michigan Economic Growth Authority tax credit winner Richard A. Short has caused deep embarrassment for state officials. But for me it has occasioned some poignant reflection on two former colleagues, Martin M. Wing, Ph.D, and Joseph P. Overton, who co-authored the Mackinac Center's first MEGA study in 1995, with a third scholar, before the program even became law. … more

MEGA Show Trial?

The Michigan House and Senate plan to hold hearings this week on how a convicted embezzler on parole duped the Michigan Economic Development Corp. and Michigan Economic Growth Authority into offering his company — which was being run out of a Flint mobile home park — a $9.1 million tax credit. (This could have become a "refundable" credit, meaning the state would likely be writing checks to the embezzler.) … more

MEGA Jobs Announcements Symbolic Drop in the Bucket

The Michigan Economic Growth Authority yesterday approved its latest batch of tax credits to lure large business projects to Michigan.
Despite the press release, these big business projects are just not that consequential to Michigan's total economy.  … more

This Just In: Convicted Embezzler's Business Awarded State Tax Subsidy

The Associated Press is reporting that a convicted embezzler currently on parole has been approved for business tax credits under the state's Michigan Economic Growth Authority program. The article also noted that when the deal was announced, the embezzler, Richard A. Short, "shared the stage" with Gov. Jennifer Granholm.
Had the program managers performed even a cursory background check, they certainly would have discovered Short's past. … more

Employment Creation in Michigan Illustrates the Ineffectiveness of the State's Incentives

The latest Business Employment Dynamics numbers from the Bureau of Labor Statistics show that from the third quarter of 2008 through the second quarter of 2009, 778,025 jobs were created in Michigan and 1,144,655 jobs disappeared. Among other things, the figures starkly illustrate just how ineffective the state's economic incentive programs are. … more

Michigan's Economic Development Failures

Dome Magazine's cover story, "Desperate for Diversification: A brief history of Michigan's economic development strategies," correctly points out that Mackinac Center scholars have disagreed with the state's central planning attempts under both Republican and Democratic governors. … more

Citizens, Investors and Legislative Circus Poodles

We all pay a price when government treats investors, entrepreneurs and households as circus poodles made to jump through hoops in order to collect selective tax-break or subsidy "biscuits" handed out at the whim and discretion of bureaucrats and legislators. … more

American Greetings Says Goodbye to Michigan

Just one day after Michigan Economic Development Corporation director Greg Main claimed that Michigan can look forward to a brighter economy next year,  American Greetings offered a stinging repudiation of his agency's failed "picking winners and losers" methodology with the announcement that it would close its plant in Kalamazoo. … more
Michigan Job Gains, Job Losses and MEGA Job Announcements

Why State Economic Development Programs Fail to Fix Michigan

The Michigan Economic Growth Authority is the state's premiere economic incentive program and accounts for much of the state's "job creation" announcements.
But most of the job gains and losses in the state are unheralded. Consider this chart of quarterly job gains, losses and MEGA announcements. … more

Political Careerism the Root of Growing "Economic Development" Empire

History, economic theory and empirical research all demonstrate that discriminatory tax breaks and government subsidies don’t work to grow the economy or expand job opportunities. So why has Michigan’s political class greatly expanded the number and generosity of such programs? The special favors may do nothing to expand jobs for the people, but the growing empire of entities with the power to grant them creates hundreds of potential job opportunities for the political careerists who populate Michigan’s term-limited legislature. … more

Relationship Problems

Government employee unions should not be eligible for special tax breaks. Here's why.

The already problematic relationship between the State of Michigan and the Service Employees International Union is becoming more and more troubling as SEIU Local 517M reached terms for changes to their contract with the state of Michigan. As we have reported on this blog, another SEIU subsidiary, the Member Action Services Center, received $2 million in refundable MEGA tax credits last month. … more

SEIU/MASC: Curiouser and Curiouser

MEDC moved fast to secure a union operation for Michigan, but did they really need to?

MEDC moved fast to secure a union operation for Michigan, but did it really need to? … more

What's Hiding Under the MASC?

It's Not Easy Getting Answers out of the MEDC

The Michigan Economic Growth Authority has granted a $2 million tax credit to the Service Employees International Union that appears to be "refundable," meaning that it's actually a cash subsidy if this union operation has no tax liability. In that case, Michigan taxpayers would be paying for an SEIU office that could also be used for union organizing or political activism. The MEDC's response to persistent Mackinac Center attempts to confirm this has been, well, unresponsive. … more

MEGA Madness and Big Labor Contradictions

Dubious Michigan Tax Break to Union Raises Eyebrows

Ironically, a special tax break offered by the state of Michigan to a for-profit arm of the Service Employees International Union was arranged in part to address the union's complaint that it is at a disadvantage due to Michigan's "high labor costs" compared to two other states the SEIU was supposedly considering (one of them with a right-to-work law reviled by the union). This according to a document obtained by Detroit News business writer Daniel Howes ("State tax credit to labor union is baffling," Nov. 20).  … more

A MEGA Delusion

At a press conference Tuesday announcing several new recipients of discriminatory state tax breaks, Gov. Jennifer Granholm repeated a number of false or misleading statements about this state government's policy of picking winners and losers, and its effects as a substitute for genuine labor, regulatory and tax law reforms. … more

Politically Powerful Special Interest Gets Special State Tax Break

A business operation created by the politically powerful SEIU labor union will be granted a special $2 million tax break by the state of Michigan. … more

From South Detroit to Shockandawe

Politicians fudging on job stats is getting to be a habit

A pattern of sorts is starting to emerge: When one hears numbers of “jobs created or saved” by various government programs, it appears to be more and more likely that such numbers were pulled by someone out of the vicinity of his or her own back pocket. … more

MEGA Tax Credits Are Not Without Cost

Last August, the Mackinac Center released a study critical of the Michigan Economic Growth Authority. This was the second of two rigorous analyses of MEGA by the Center, and both found that - at best - the program has had no net positive job creation impact. Indeed, the latest results suggest that the program may actually destroy jobs. Not surprisingly MEGA apologists have bristled, and when compelled to respond, have done so with what could charitably be called a series of untruths about the program. … more

MEGA Stories

Michigan Economic Development Corporation CEO Greg Main boasted that he "would invite (critics) to take a look at the results (of the MEGA targeted tax break program)." We did. Twice. In depth and detail. We found that - at best - MEGA creates no new jobs, and on balance it may even destroy them on a net basis. Further, only 29 percent of the direct jobs promised by its deals ever happened. To date, the MEDC has not refuted a single point of fact, or produced independent, systematic evidence that its approach does squat to create jobs, increase state incomes or expand our economy. … more

"Slashing" Economic Development Staff? Please Sir, Can We Have Some More?

The Michigan Economic Development Corporation — the lead agency in a statewide "economic development" empire — is arguably the most ineffective, least necessary department in state government. Shrinkage of the agency's staff is good news; staff levels reaching zero would be excellent news! Alas, declines reported by a recent Detroit News article aren't quite what they appear to be. … more

Jobs Braggadocio

The Granholm Administration wasted no time after the Michigan Economic Growth Authority monthly rubber-stamp board meeting on Tuesday to start pumping out press releases bragging that more than 2,800 new jobs were coming to Michigan as a result of selective tax break deals for the latest gaggle of "winner" firms and projects. The MEGA-related jobs claims should be discounted by 71 percent, based on a recent Mackinac Center study that found only 29 percent of the jobs promised by past MEGA deals actually happened. … more

“Dis-Unity” Studios?

A news report from Detroit TV station WDIV seems to indicate that a $146 million film production studio has instead become a boondoggle for the city of Allen Park. … more
Political Class Desperation Index

Coincident Indicator?

More discriminatory tax breaks for the few won't fix Michigan

This chart might be called the "Political Class Desperation Index." The need for transformational reform of Michigan's tax, spending, labor and regulatory environments is indicated by the skyrocketing unemployment rate. The failure of the political class to buck special interests — including government employee unions — and finally undertake those reforms makes its members increasingly desperate to create the appearance of "doing something." Thus the massive increase in futile picking of winners (and losers) for receipt of discriminatory tax breaks and subsidies. These create diversionary "feel good" stories for local newpapers, but do nothing to reverse the state's economic decline — and may even accelerate it. ("MEGA" is the flagship program of Michigan's bureaucratic "economic development" empire.) … more

Center MEDC Study in National Spotlight

A recently released Mackinac Center study about the ineffectiveness of the Michigan Economic Development Corp. is receiving state and national media attention… more

Gov. Granholm Takes Washington Post for Ride on “Jobs” Numbers

In a profile that appeared in today's Washington Post, Gov. Jennifer Granholm misused data on her targeted business tax break and subsidy programs, the administration's primary response to a Michigan economy that has lost 632,600 payroll jobs since her inauguration back in 2003. The Post writes, "Since taking office in 2003, Granholm has created 163,300 positions, her office says," a reference to jobs directly attributable to business "incentive" programs. In fact, the most recent data indicates that MEGA, the state's flaghip corporate welfare program, can claim credit for just 7,755 new jobs during Gov. Granholm's six year, nine month tenure in office! … more

Trick, or Treat

The Michigan Legislature is this morning taking up House Bill 5275, a bill that authorizes a Michigan Economic Growth Authority business tax credit deal for a battery cell manufacturing facility. … more

The Michigan Economic Development Corporation: A Review and Analysis

Video by Kathy Hoesktra, Mackinac Center communications specialist … more

A MEGA Loss of Sunshine

Transparent Failures

Cartoon by Henry Payne

American Greetings Says Hello to More Incentives

Policymakers are quick to issue press releases about how many jobs will be created when they give discriminatory favors to certain businesses. Where are the press releases when those predictions fall short? … more

Playing Carnac with the Future

Bad Food at a Good Price!

Imagine a restaurant with second-rate food, surly waiters, slow service and high prices. When the manager sees a customer getting restless, he rushes over and offers a 15 percent price cut. … more

K-mart: Another MEGA Failure

Michigan Business Succeeds Without State Aid

In April 1995, the state created the Michigan Economic Growth Authority (MEGA), an agency empowered to issue tax credits to companies that promise to expand in or relocate to, Michigan. The evidence from seven years of MEGA operation suggests that Michigan has enjoyed economic development in spite of MEGA, not because of it. … more
Chart

Failed E-Business Deal Underscores Futility of State Economic Planning

Leaders of government "economic development" programs attempt to guess which companies will thrive and create new jobs. But the complexities of the marketplace make it impossible to predict which firms succeed and which fail. … more
Graphic

MEGA: Real Jobs or Smoke and Mirrors?

One state program takes credit for 74,000 jobs, but a closer look reveals its claims to be greatly exaggerated. … more

MEGA Problems: A New Industrial Policy Bureaucracy

In a stunning retreat from free-market principles, Governor Engler asks Michigan to join the bandwagon of states in which government picks the industrial winners and losers. The MEGA plan will not work, and may have unintended negative consequences. … more

MEGA Industrial Policy: An Analysis of the Proposed Michigan Economic Growth Authority

Michigan has seen stellar economic progress due to Governor Engler's free-market reforms. Is MEGA a reversal of the trend? Should government pick the winners and the losers? This report analyzes proposed MEGA legislation. 16 pages. … more

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