The Mackinac Center for Public Policy recommends a NO vote on the conference report for Senate Bill 844, the budget supplemental expected to be considered in both houses later today. We specifically oppose the $846.1 million line item for deposit into the Strategic Outreach and Attraction Reserve Fund.

First, the Mackinac Center has published a voluminous body of research over many years demonstrating that company-specific subsidies are ineffective, expensive, and unfair. Our opposition on this basis should be no surprise to anyone.

Second, the new appropriations exceed what is reasonable in a rapidly slowing economy, especially given the 7% increase from state funds already embedded in the omnibus fiscal year 2023 appropriations bills.

Third, while the structure of the SOAR fund is a modest improvement from previous programs that administered company-specific incentives, the Legislature’s experience with the General Motors and Ford deals demonstrate that the Michigan Economic Development Corporation is neither a competent nor trustworthy negotiator when it comes to large economic development agreements. This is on top of MEDC’s decades-long track record of wasting state resources on projects that never deliver their promised benefits for Michigan.

Fourth, this significant reduction of the state’s fiscal balance will make it much harder for the Michigan Legislature to reduce tax rates in a manner that benefits all Michiganders and improves the state’s underlying business competitiveness. Since January 2021, 24 states have reduced their personal income tax rates, with most also reducing their corporate income tax rates. Reducing operating costs for all businesses and making Michigan a more appealing place to work and live is the path to improving Michigan’s attractiveness to businesses and talent, not company-specific subsidies.

Finally, the Mackinac Center’s Michigan Votes website hosts a business subsidy scorecard that shows how each member of the Michigan Legislature since 2001 has voted on legislation that provides for company-specific subsidies. Last fall’s vote to establish and appropriate $1 billion to SOAR is the most recent vote included on the scorecard. Because SB 844 appropriates a total of $846.1 million toward company-specific subsidies, the vote on SB 844 will be included on that scorecard and scored at $846.1 million.

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