Political Investments: Diverted Revenue and Earmarks

The political considerations made for these programs are evident in the allocations for the programs, as well as the influx of additional spending areas. The funding levels are not the result of any economic analysis but rather that of political maneuvering. The 21st Century Jobs Fund programs purposefully diverts resources to political uses — promoting and investing in certain industries, not because they are economically more important to the state and to taxpayers, but because they are merely favored by politicians, for whatever reason.

Using the 21st Century Jobs Fund revenue for political purposes rather than strictly economic ones started before the bill to create the program was even passed. The original bill was introduced on July 6, 2005, and an amendment was offered on August 31 to give the Michigan Forest Finance Authority $25 million.[64] It certainly appears that this proposal was made for political reasons, as the goal of preserving jobs in the logging industry does not fit with the original intent of the 21st Century Jobs Fund program, and, more importantly, the sponsor of this amendment’s had been involved in transportation for the logging industry.[65]

Another example is Gov. Granholm’s veto of $10 million of 21st Century Jobs Funds money for the Agricultural Development program. She defended the action by pointing out that the Legislature restricted the type of produce half of the funds could subsidize, and that the reason for her veto was that she hadn’t agreed to that before the bills passed the Legislature. In other words, politicians were arguing over how much and which fruits and vegetables should be subsidized by a program whose aim was to make targeted investments in competitive technologies, advance manufacturing and life sciences. And in the end, Gov. Granholm vetoed spending this money for political and procedural reasons, not economic ones.[66]

Moreover, the $75 million that was originally intended to create consistent annual investments in select industries has been and still is frequently diverted for other purposes altogether. For instance, in 2017, $34 million of this money supports the Pure Michigan marketing campaign, which does not intend to support new targeted industries, but simply operates to promote tourism in the state through advertising, largely to the benefit of the existing tourism industry.[67]

In addition, another $21.6 million allocated in 2016 supports the business development and community revitalization programs, which replaced those funded previously by tax credits programs. These grants go to companies that previously would have been eligible for MEGA credits and are supported by general tax revenues. Only $19.4 million of the most recent $75 million for the 21st Century Jobs Fund went to “entrepreneurship eco-system” programs that, while not envisioned in the original idea of the fund, at least seem to carry some semblance of the intentions of the 21st Century Jobs Fund programs.[68]

There have also been questions in the past about whether the spending through this program has been motivated by the timing of elections. The initial allocation in 2006 was supposed to last for two years as an additional $75 million was not to be allocated until 2008. But most of the money was handed out before 2008, causing even the original bill’s sponsor in the House to become skeptical of the timing of when the money was spent. "I can't believe that we have blown the wad like this," Rep. Huizenga said to Lansing-based news service, MIRS. "We have a long, cold winter in front of us and they shoveled all the coal on the fire for tonight. This just does not make sense to me."[69]