News Story

Spotty Track Record Doesn't Stop State Agency From Doling Out Deals

General Motors has 'created' fewer jobs than promised on 5 of the last 6 MEDC-partnered projects

Despite a spotty record on positive job returns, the Michigan Economic Development Corp. is offering up more tax deals to try and create jobs in the state.

The MEDC's most recent beneficiary is General Motors Co., which announced recently it expects to create 1,500 jobs over the next several years at the company's Warren Tech Center. The MEDC is planning to amend an existing tax credit agreement to cover the project.

However, GM's track record with job projections involving the MEDC has not been good. In five of the six deals going back to 1999, GM ended up with fewer jobs than when the tax deal was offered. In all six cases, GM was given a tax incentive for "retained jobs," meaning the jobs were already in place and the incentive was to keep them from leaving the state. For example, General Motors got a tax deal with the MEDC in May 1999 for retaining 1,511 jobs. By 2009, GM had 1,290 jobs at the facility, according to the MEDC.

Not all the deals the MEDC supports are as easy to track. The MEDC's most recent annual report on jobs was released in October 2011. Yet, its data on job creation/retention for most companies only goes back to 2009.

By comparison, companies that received money from the federal government's American Recovery and Reinvestment Act of 2009 (the stimulus act) have to file quarterly reports.

"Despite recent legislation imploring the MEDC to become more transparent, it's impossible to tell how much taxpayers are supporting businesses and whether those companies are still in business," said James Hohman, fiscal policy analyst with the Mackinac Center for Public Policy. "The taxpayers are simply not able to track the effectiveness of the MEDC credits. You can’t even track if there has been any progress on these projects for the last three years."

MEDC Spokesman Mike Shore didn't respond to a request seeking comment.

GM also didn't immediately respond to a request for comment.


See also:

Michigan Capitol Confidential Coverage of the MEDC

GM Asks for More Tax Incentives

GM CEO: Customers Don't Pay High Enough Gas Tax

Economic Development a Campaign Tool