More Changes under Gov. Snyder

Upon taking office in 2011, Gov. Rick Snyder recommended broadening the uses of the 21st Century Jobs Fund. He signed a bill opening up the targeted industries of the fund to include information technology and agricultural processing and to give broader discretion to the MSF Board in determining who could be awarded incentives.[58]

In addition to these changes to the 21st Century Jobs Fund, under Gov. Snyder, the state also stopped the practice of awarding tax credits to select companies, notably by eliminating the Michigan Economic Growth Authority program, and began using an annual appropriation to make cash grants to certain businesses instead. These new programs would require annual appropriation through the legislative process, and instead of digging deeper into general fund dollars, the state widened the uses of the 21st Century Jobs Fund.[59] Thus, the revenue stream for the fund began to be used to pay for the replacement programs of MEGA and other tax credit programs and not programs originally designed to be supported by the 21st Century Jobs Fund.

The Legislature appropriated $75 million to the 21st Century Jobs Fund for fiscal 2012, with $25 million pegged for “business attraction and economic gardening,” $25 million for “innovation and entrepreneurship” and $25 million for the Pure Michigan tourism advertising campaign. An additional $25 million from the general fund was allocated to the business attraction and gardening line item.[60]

This represented a major change in the use of economic development programs, including the 21st Century Jobs Fund money. What the state promised in tax credits to select companies and industries through certain economic development programs was to be accounted for in the state budget by subtracting these amounts from expected business tax revenues. In other words, the Legislature had to take into consideration the revenue the state would not be collecting due to targeted tax credits while attempting to establish the annual state budget. Furthermore, the discretion that the MSF Board had on allocating money through the 21st Century Jobs Fund was drastically reduced. Now, the Legislature was limiting the use of this $75 million for more specific purposes. Lawmakers had done so in the past — consider the earmarks in the original legislation — but this change also meant fewer dollars going towards the state’s speculative economic development programs.

The new programs funded by revenue from the 21st Century Jobs Fund included the “Centers of Innovation” program, aimed to “help stimulate the development of innovative technology clusters in areas where the State has competitive advantages in natural resources, workforce, supply chain, intellectual capital and other assets.”[61] The MSF Board allocated $7 million to the program and made one $5 million grant during the 2012 fiscal year.[62]

Under Gov. Snyder, the state also began operating several new programs as part of the 21st Century Jobs Fund. These include the Pure Michigan Venture Match Fund, the Pure Michigan Venture Development Fund, the Michigan Early Stage Funding Programs, the Entrepreneurial Support Services and Entrepreneurial Service Providers, the Michigan University Technology Acceleration and Commercialization Program, the Michigan Translational Research and Commercialization Program and the Capital Conduit program.

The changes to the 21st Century Jobs Fund program over the years have produced a program that spends taxpayer dollars but does not have a defined purpose or consistent goals — aside from the very broad goals of “diversifying the economy” and “creating jobs.” The original vision was to make steady investments in targeted industries and businesses with the intent of producing a positive return on investment.

As a 2010 MEDC report stated in reference to the 21st Century Jobs Fund early progress towards creating new jobs, “To achieve success, it is imperative that the state make a consistent, long-term investment in these efforts.”[63] It’s not at all clear that this would have led to a successful economic development program. But the programs of the fund have been under constant change and would fail to meet the standard of success given by its administrator at the time.