The Trend Toward — and Away From — Transparency

The need for greater transparency in government programs has been widely recognized. President Barack Obama as a U.S. senator co-authored a law to place more federal spending data online. The Michigan Education Association, the state's largest school employee union, has called for better reports on the results of Michigan's economic development programs.[*] The Mackinac Center for Public Policy, a nonpartisan research and educational institute (and publisher of this Policy Brief), has initiated a "Show Michigan the Money" project that has encouraged scores of the state's municipalities, elected officials and local school districts to place their check registers online. The result of this consensus has been a general increase in the publication of detailed reports on governmental operations.

The trend toward transparent government appears to have been reversed, however, in the case of the Michigan Economic Growth Authority. MEGA is an "economic development" program in which the governor and the Legislature have empowered a board of political appointees to select businesses to receive tax credits against the Michigan business tax in exchange for creating or retaining jobs in their workplace that allegedly would not exist otherwise.[†] MEGA was established in 1995, and in its early years, the program produced reasonably detailed data on the businesses it selected, the jobs created, the incentives provided and so on. In the past few years, this data has become increasingly vague and difficult to obtain.[‡]

A similar loss of transparency appears to be occurring with the organization that oversees MEGA: the Michigan Economic Development Corp., a state-chartered entity charged with creating and retaining jobs in the state. Despite its quasi-private status, the MEDC is subject to government reporting requirements and the Freedom of Information Act. Still, it has become less forthcoming with information about the agency itself and about the high-profile Michigan Film Incentive subsidy, another economic development program under its supervision.

[*] In a May 28, 2009, Detroit Free Press Op-Ed co-authored by economist Patrick Anderson and MEA Executive Director Lu Battaglieri, the authors write of state incentive programs, "[T]axpayers deserve transparency to know that their money is being spent wisely - and right now, no one has the data to say whether or not our tax incentive programs are a smart investment for Michigan's future." (Patrick Anderson and Lu Battaglieri, "Why Are Michigan's Tax Incentives Leaving State So Poor," Detroit Free Press, May 28, 2009, 

[†] Prior to 2007, MEGA tax credits were granted against the state's single business tax, the forerunner to the current Michigan business tax. 

[‡] The MEGA enabling legislation was amended for the 20th time on Dec. 30, 2008. Another amendment — House Bill 4922 — would raise the cap on MEGA deals allowed per year and lower eligibility requirements for winning certain MEGA credits.