Bipartisan and Nonpartisan Concerns

Criticism of the MEDC itself has been bipartisan. During the administration of Gov. John Engler, Democratic Party members expressed pointed concerns about the inability of the Legislature to provide proper oversight of the MEDC.

According to a February 1999 Gongwer News Service article concerning the Michigan Jobs Commission, the predecessor to the MEDC, then-state Sen. Alma Smith, D-Salem Township, complained about the transparency problem, saying, "I don't think the Legislature should have to FOIA a department or agency to find out how money is spent."[120] Smith — now a state representative — has remained a consistent critic of the MEDC. In 2009, when asked by the Michigan Information & Research Service what she would do if she were elected governor, she replied: "One of the early things I would do is reorganize the MEDC (Michigan Economic Development Corporation). I have a problem with the unlevel playing field we create from business to business in Michigan, where we create some winners and some losers."[121]

There have been other Democratic critics as well. In 2000, state Rep. Joseph Rivet, D-Bay City, echoed Rep. Smith's sentiments and argued that the MEDC should lose its state funding, telling the Lansing State Journal, "Every time we try to hold these guys at MEDC accountable to the taxpayers, they claim to be a private agency outside the realm of public scrutiny."[122] Rivet was particularly angered by a Lansing State Journal report that the MEDC had bought each of its employees three monogrammed shirts from an out-of-state vendor. The purchase was apparently made to "boost morale"[123] and market the MEDC.

After Gov. Jennifer Granholm was sworn into office, members of the GOP sought greater transparency from the MEDC, most notably state Rep. Jack Brandenburg of Harrison Township. A frequent critic of the MEDC, Rep. Brandenburg called for its outright elimination in 2007. He argued that the MEDC was ineffective, contrasting the state's poor economic performance with the corporation's supposed success. He also complained that the MEDC was top-heavy with management, calculating that it had one vice president for every 10 employees at the time.[124]

To make the MEDC more transparent, Brandenburg successfully inserted two mandates into state law in 2006: a requirement that the MEDC cooperate with the Michigan Office of the Auditor General on audits of jobs the corporation had claimed to have created or influenced, and a requirement that the MEDC report annually to the Legislature how many of its staff made more than $80,000 per year.[*]

Republican state Sen. Nancy Cassis of Novi has likewise sponsored several pieces of legislation that would require additional information from MEGA. Senate Bill 71 would make MEGA more transparent and appears to address some of the concerns expressed earlier. For example, a summary of the legislation outlined by the nonpartisan Senate Fiscal Agency indicates that Senate Bill 71 would:

  • "Require MEGA to include additional information in its annual report to the Legislature.

  • "Beginning Oct.1, 2009, require MEGA to report to the chairpersons of the Senate Appropriations and Finance Committees and the House Appropriations and Tax Policy Committees, and the directors of the Senate and House Fiscal Agencies.

  • "Require the [Michigan Office of the] Auditor General to review MEGA's annual report to the Legislature and include comments with the report before MEGA could submit it."[125]

According to the SFA, Senate Bill 71 would also require the following in addition to the data that already must be included in the MEGA annual reports:

  • "The amount of capital investment required and the number of jobs required to be created or retained for each authorized business to be eligible for the tax credits under the Act.

  • "For each written agreement with each authorized business, the actual number of jobs created or retained, the total capital investment at that facility, and the total value of the tax credits received for that year and all previous years under the written agreement.

  • "The total capital investment for the credit under new written agreements entered into under Section 8(5)."[126]

The legislation passed the state Senate Feb. 12, 2009, and it was subsequently reported out of the state House New Economy and Quality of Life Committee on July 28.[127]

The state Office of the Auditor General, a nonpartisan government agency, has also expressed concerns about the job creation figures reported by the MEDC and its alter ego, the Michigan Strategic Fund. In 1993, the Michigan Strategic Fund was found by the OAG to have "overstated by 39 percent, the number of jobs created by the selected companies that received financial assistance from ... two programs [the MSF administered] in its 1991 annual report to the Legislature."[128]

Then, in August 2003, the OAG examined a job-training program administered by the MEDC. Although the program had been alleged to have created 635 jobs, the OAG found that total employment had actually decreased by 222. The OAG criticized the MEDC for not independently verifying jobs claims submitted to the MEDC by companies that had received job-training subsidies. These errors were discovered after a review of one small MEDC program.[129]

[*] In a subsequent budget year, Gov. Granholm recommended that both provisions be eliminated. The first provision was later weakened, but ultimately restored, while the second was eventually removed altogether. (Elizabeth Pratt and Maria Tyszkiewicz, "FY 2007-08 Michigan Strategic Fund Budget S.B. 239: Governor's Recommendation,"  (Michigan Senate Fiscal Agency, 2007).)

[120] "Report: Tracking Jobs Commission Spending to Become More Difficult," Gongwer News Service, February 19, 1999.

[121] "An Interview With Alma Wheeler Smith," Michigan Information & Research Service, July 2, 2009.

[122] Paul Egan, "Democrats: MEDC Should Lose State Funds," Lansing State Journal, February 12, 2000, 1A.

[123] Ibid., 5A.

[124] "Brandenburg: Big Cuts Possible for MEDC," Gongwer News Service, April 20, 2005.

[125] Suzanne Lowe, "MEGA: Annual Report - S.B. 71 (S-1) Summary as Passed by the Senate,"  (Michigan Senate Fiscal Agency, 2009), 1.

[126] Ibid.

[127] "Senate Bill 71 - Legislative Web Page," (Michigan Legislature, 2009), (accessed August 30, 2009).

[128] "Performance Audit of the Michigan Strategic Fund Oct. 1, 1988 Through Oct. 31, 1992," (Michigan Office of the Auditor General, 1993), ii.

[129] "Performance Audit of Selected Training Related Programs: Michigan Economic Development Corporation," 12-13.