Review of Environmental Bond Fund Uncovers Inflated Costs, Misplaced Priorities

Results Bear Directly on Ballot Proposal 2

MIDLAND – A review of Michigan’s costliest environmental bond program, the Clean Michigan Initiative, reveals that far more funds are being spent on questionable economic development, recreation and beautification projects than upon tangible environmental improvements.

The findings of the study, conducted by the Mackinac Center for Public Policy, bear directly on the November ballot. Michigan voters must soon decide whether to approve another major environment-related bond measure, Proposal 2, which would authorize the state to borrow $1 billion for sewer infrastructure. A well-reasoned decision on Proposal 2 will depend in part, say experts, upon knowing how well the state has managed other bond funds as well as understanding the consequences of the state’s increased reliance on borrowing to finance environmental programs.

Voters approved the $675 million Clean Michigan Initiative (CMI) as Proposal C in 1998, with 63% in favor.

"The Clean Michigan Initiative was undoubtedly well-intentioned," said Diane Katz, director of science, environment and technology policy for the Mackinac Center. "But relying on bonds to finance the initiative unnecessarily inflated the state’s debt load. And program goals, while ambitious, have failed to adequately address Michigan’s most pressing environmental problems."

Among the Mackinac Center’s findings:

  • $48 million in CMI-funded recreation grants have been awarded to 214 various units of local government for swimming pools, roller rinks, tennis courts, ice arenas, and even renovation of a dairy barn and construction of a fish-cleaning station.

  • $47 million in CMI funding has been appropriated for 43 waterfront development projects, including $6.2 million for a cement "promenade" along the Detroit River and $85,000 to construct a parking lot in Mt. Pleasant.

  • $50 million in CMI funds have been allocated for state park renovations. Yet only eight years ago, voters approved an endowment fund for parks’ maintenance, the balance of which currently exceeds $96 million.

  • Borrowing to finance the initiative increased program costs by 60 percent. In other words, the state must repay $1.60 for every dollar spent on CMI projects.

"This debt service is troubling considering that Michigan’s per-capita debt relative to other states has significantly worsened in recent years, and now the Legislature is seeking to increase it by $1 billion more," said Katz.

Between 1990 and 2000, Michigan climbed from 36th to 24th among states in terms of the per-capita burden of state debt, according to the Census Bureau.

Until now there has been little measurement of CMI efficiency or effectiveness. The Clean Michigan Initiative Act requires a performance review every two years, but the auditor general has declined to conduct one. Nor have the state agencies that administer the initiative evaluated the success or failure of its various components. For example, there has been no evaluation of the $335 million allocation for brownfield-related cleanups. The Mackinac Center study found little evidence that spending at these sites has attracted hoped-for private investment in urban areas.

"The goal of these brownfield cleanups is to curb suburban sprawl by increasing the availability of unencumbered urban properties," Katz said. "But our research indicates that this objective goes unfulfilled.

"More progress might have been achieved had the state evaluated prospects for brownfield redevelopment before funding decisions were made," Katz added. "Instead, the Michigan Department of Environmental Quality essentially guessed whether tens of millions of dollars invested in cleanups would spur private investment and job creation."

The 32-page report, "The Clean Michigan Initiative: An Assessment," is now available in PDF format at or by calling 989-631-0900. The Mackinac Center for Public Policy is a nonprofit, nonpartisan research and educational institute based in Midland.