New bills would fix corporate welfare problems

While lawmakers have ended the worst excesses of Michigan’s business subsidy programs, they are still likely to continue taking money from taxpayers and giving it to select businesses. A bipartisan group of Michigan House members introduced a package of bills to fix some problems with the policies.

Here why these bills are significant:

• Michigan is expected to give $500 million this year to a handful of companies that received deals from the Michigan Economic Growth Authority. The payments are considered confidential taxpayer information, so taxpayers can’t be told who collects their money and how much they get. The bills make this information public again.

• State officials are quick to report when deals are made, but reluctant to report when deals fail. And most job deals fail to deliver as expected. Of major deals struck between 2000 and 2020, companies created just 9% of the number of jobs announced by officials. The bills require the state to report immediately when companies do not meet their contractual obligations.

• Sometimes people get upset with their local officials about a deal that brings a project to their area only to find that the ink has already dried. They find they can do little or nothing about it then. The bills require the state to post the details of their deals well before they gain approval.

• Current law includes deadlines for reporting on business subsidy programs. Administrators often miss those, without consequence. The bills would prevent the state from paying out money when the reports are late.

• Companies often miss their job targets and seek to amend their deals. Administrators could let them keep their money even if they didn’t produce the jobs expected. Most of the time, though, administrators reduce their benefits in proportion to their original expectations. The bills ensure this practice continues.

These are all improvements to the way state subsidy business gets done. It doesn’t mean that the programs the state operates will now become effective. It does mean that people will get more of a say in what happens, will be told where their money is going, and be told what happens if a deal doesn’t work out.

Taking money from taxpayers to give to select firms will continue be a poor strategy to boost the economy. That’s why the package also creates a way to get rid of the practice nationwide. Lawmakers tend to point out that they need the programs to compete with other states. They do not. They can instead work across state lines to agree to stop subsidizing companies. The package includes an interstate compact to eliminate corporate welfare. Once Michigan and a sufficient number of other states pass it, they agree to stop competing over who can write the biggest check for the next business project.

No other state has even introduced such a bill this session, though similar compacts have been introduced in the past. I’m glad to see it restart here in Michigan.

The package is a way to improve state policy on business subsidies now and to set a path to end this bad policy nationwide

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