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.)
The hearings may be little more than a smokescreen to cover "reforms" that are mere tokens, rather than a sincere effort to properly reveal the procedures responsible for this award. This is not cynicism but experience: We've been here before.
In 2003, Mark Hornbeck of The Detroit News authored what was then the first broad retrospective of the MEGA program's performance, called "Tax breaks shortchange state: $1.4 billion; business program gets minimal payback in jobs." Most Lansing politicians had supported the program and were mortified by the bad public relations. Then as now, the response was to announce hearings on the efficacy of the state's "economic development" apparatus.
The hearings were mostly a public relations event. All but one person invited to testify favored keeping the programs just as they were. They included MEDC officials, lobbyists and executives from firms that had been beneficiaries of the agency's selective tax breaks and subsidies. The one "token" exception was the author of this post.
In those hearings, legislators tossed softball questions that were essentially invitations for supporters to posture. Testimony from the sole dissenting voice - me - was bumped by the committee for lack of time. To their credit they invited me back the following week, but a scheduling conflict made this impossible.
Since 2003 the MEDC has become aggressively less transparent, and four systematic studies have been published concluding that MEGA is not an effective development tool. The Legislature should ask hard questions about both transparency and effectiveness. If instead these hearings focus exclusively on one embarrassing misstep, they should be seen and reported only as eye-candy for the TV cameras and intended to put the watchdogs back to sleep.
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