Michigan Economic Development Corporation: The End May Be in Sight

In my 30 years as a full-time employee with the Mackinac Center, I’ve seen Michigan’s policy landscape change greatly, but one constant has been the state’s corporate welfare apparatus. This includes the Michigan Economic Growth Authority, created in 1995, and the ever-present Michigan Economic Development Corporation, launched in 1999. Neither program should have been created, and both may — finally — be nearing their end, thanks in part to Mackinac Center efforts.

These entities are supposed to create jobs and wealth by approving special favors, including subsidies, tax credits, and abatements for politically favored businesses. The evidence indicates, however, that they may instead retard growth, especially when opportunity costs are considered. (An opportunity cost is the cost of not choosing the next best alternative.)

Lawmakers have recently made efforts to put both MEGA and the MEDC to rest. MEGA, shuttered in 2011, continues to pay out on old promises and will eventually sunset its payouts. The MEDC may end sooner, as a recent scandal has ignited renewed criticism from elected officials.

The MEDC came into being when Gov. John Engler created it out of the Michigan Jobs Commission. The new agency issued a vision statement promising that “well-paying jobs will be plentiful, and skilled and trained workers will be available to fill them.” It was not to be.

In the 2000s, the MEDC authorized billions of subsidies to select companies and industries during Michigan’s one-state recession. While the economy improved slightly over the next decade, it did so only after a new governor reined in the MEDC’s work. Maybe that’s just a coincidence, but evidence suggests it is not.

The Mackinac Center tirelessly studied and catalogued the failures and scandals of the MEDC and its programs, publishing half a dozen full studies about them between 2005 and 2020. This scholarship, plus op-eds, blog posts, social media advertising and legislative testimony, served as the Mackinac Center’s bulwark against the MEDC and its counterproductive corporate handouts.

The MEDC hasn’t helped its own reputation over the years, enduring scandalous episodes of its own making. In 2010, for instance, it approved

more than $9 million in business tax credits for a fake company run by a convicted felon who was on parole for financial crimes. The felon even appeared onstage with Gov. Jennifer Granholm to celebrate the award.

In 2024 we published “Front-Page Failures,” arguably our most influential corporate welfare study to date. It examined 20 years of Detroit Free Press headlines that trumpeted economic development deals. James Hohman, the Center’s director of fiscal policy, compared the job promises in those headlines with the number eventually credited to the companies by the state.

The result: just 9% of promised jobs came to fruition.

The study has been widely cited this year by media outlets and lawmakers. It helped block efforts to expand corporate welfare during the 2024 lame-duck session and continues to inform debate in Lansing.

Many House Republicans have cited the study. So have media outlets, including Michigan Public, CBS Marquette, WILX, WSJM and The Detroit News. Hohman has done more than 30 media interviews about corporate welfare issues in the last year, 11 of which were about the study itself. The Center’s related videos and online content have earned 150,000 views on social media.

All this work has helped shift the Overton Window toward eliminating the agency and the programs it operates.

Sen. Thomas Albert, R-Lowell, introduced a 53-bill package that would eliminate the MEDC and some other corporate welfare programs. His legislation would also increase legislative oversight and transparency for what remains. A group of House lawmakers also introduced legislation to eliminate the MEDC. Gov. Gretchen Whitmer has vowed to veto these efforts, but she should not. The MEDC is demonstrably ineffective, as the Mackinac Center has repeatedly shown.

The legislative effort is aided by the MEDC’s newest scandal. It is now under criminal investigation by the Michigan attorney general for a $20 million grant awarded to a Whitmer donor and former MEDC executive committee member who then misused the funds. In August the attorney general herself stated on WDIV’s “Flashpoint” that MEDC funding should be stopped until oversight is better.

For decades, the MEDC has flailed as Michigan’s fortunes declined. It has embarrassed itself and the state through mismanagement and poor performance.

If lawmakers follow through on their efforts, the MEDC will become part of Michigan’s past, not its future — and the Mackinac Center will have played a significant role in its demise. IMPACT!.