Lawmakers Say No to Business Subsidies

Michigan taxpayers are still paying off billions in business subsidies offered during the Granholm administration in a bipartisan manner. So it’s odd that last year, Republicans in state government were considering bills to put those types of programs back on the books. Fortunately, House Republicans ended their session without taking up the idea.

Before 2012, Michigan offered incentives to selected business projects through tax credits. These credits were “refundable,” meaning that they were worth more than a company’s tax liabilities and taxpayers would be sending these companies checks. In addition, these tax credit deals could last up to 20 years, meaning that it would be up to future taxpayers to come up with the cash to pay these subsidies.

As part of a Snyder administration endeavor, lawmakers decided to stop offering these kind of deals. They instead created a program of direct subsidies, which needs to be approved as part of the state budget each year. They also decreased the total level of taxpayer generosity going toward the companies.

But bills were introduced last year to reintroduce unbudgeted subsidies. One was targeted at residential and retail developments and another at business expansions.

We made the case — as we have for years — that these programs are unfair to other businesses that are not offered such deals and are more about creating press releases than actual jobs. We’ve also shown that they invite corruption and don’t justify their costs.

Our work did not seem to sway members of the Senate, who passed the bills with some dissent from Republicans and no dissent from Democrats. But House Republicans denied their passage, with Local Government Committee Chair Lee Chatfield, R-Levering, explaining, “I didn’t feel like it was the best direction for our state to take.”

It is good to see legislators take a “fair field and no favors” approach to developing the economy.