The Michigan Senate voted to authorize spending $1.9 billion on a program to support developers and their building projects. If enacted into law, the bill would be the first addition to the business subsidy scorecard in 2025. The program, advocates say, secures “transformational” buildings. But it has failed to deliver on its promise, and lawmakers ought to have higher standards before giving it more to spend on developer subsidies.

Developers who get a deal under the transformational brownfield program get to keep 50% of the income and sales taxes generated by the people who construct the building and live and work in it afterwards. Developers get to keep those collecting those payments for up to 20 years afterward. They get to collect checks from the government, and the payments are called “tax capture.”

The setup obscures the costs of the program. It only gives money that the state supposedly would not have otherwise collected, the argument goes. Without the program, its defenders say, there would be no building to construct or taxes to collect.

Those who support the brownfield program are mistaken. Contractors work on many jobs throughout the year. People have options about where to work and live. When they work and live anywhere outside a brownfield property, their taxes go to the state government as normal. If they happen to live or work in a brownfield property, however, the government writes checks to its developer. This is a real cost for the state.

Lawmakers ought to be more careful when assessing their economic development programs. The recipients of taxpayer funding are not providing needed public services. They’re not providing charity, either. They are profit-seeking enterprises that collect money from other taxpayers. Lawmakers give them cash and other favors, ostensibly in hopes they will create broader economic benefits beyond the company’s bottom line. That other people will spend a taxpayer’s money better than the taxpayer is an extraordinary claim that deserves scrutiny.

It is tough to assess the costs and benefits of the program when the state does not disclose its payments to recipients.

Lawmakers wanted the deals to have an effect on the broader economic outcomes of the places that get deals. They put “transformational” in the name of the program, after all. A city’s economic trends are not secret, so the effects of “transformational” programs can be tested.

There haven’t been many deals. There were only two before a 2023 program expansion. A series of buildings in Detroit got the bulk of the awards.

Did the transformational brownfield program yield something that transformed Detroit? No.

Detroit is still the poorest of the largest 50 cities in America, with 34.5% of its population in poverty. The next poorest city, Memphis, has a 24.0% poverty rate. The national average is 12.1%.

Detroit also had the highest unemployment rate of all big cities in 2024 at 9.1%. The next closest city is Fresno at 6.4%. The national average is 4.0%.

Lawmakers have yet to authorize any new business subsidies so far in 2025, though they are trying hard here at the end of the year. Spending $1.9 billion more on developer subsidies would be the only addition to the Mackinac Center business subsidy scorecard this year.

Programs that deliver taxpayer money to other people in the private economy in the name of economic development deserve scrutiny. Lawmakers should take a closer look at the costs and benefits of this bill than they have received so far.

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