MIDLAND, Mich. — The state of Michigan gives away hundreds of millions of taxpayer dollars in the form of corporate subsidies each year, but not all the payments or the documents related to them are public records. By failing to disclose this information, the government violates the Michigan Constitution, according to a brief filed yesterday at the Michigan Supreme Court by the Mackinac Center Legal Foundation and the Michigan Press Association. The court specifically requested the Mackinac Center to file a brief.
The case before the court, Sole v. Michigan Economic Development Corporation, considers whether the state must disclose how much companies receive from taxpayers in “refundable tax credits” — which are cash payments provided to companies to help pay for their tax liabilities.
The Michigan Economic Growth Authority, created in 1995, has distributed millions in cash through refundable tax credits to a fortunate few businesses. However, in 2009, the state stopped disclosing this information in public records. Currently, only a handful of lawmakers receive reports on the total amount of taxpayer dollars provided to companies, and if they disclose it to anyone outside the Legislature, they can be fined $5,000.
The complaint in this case originated with an unfulfilled Freedom of Information Act request to access information related to tax credits the state provided to General Motors. The company has made a net profit of $59.7 billion and received permission from the state to claim billions in tax credits over a 10-year period after GM filed for bankruptcy in 2009, but the total cost to taxpayers is still unknown.
The Mackinac Center and Michigan Press Association argue that this directly violates a constitutional provision that demands all of the state’s financial records be open to the public.
“That’s a lot of dollars,” said Lisa McGraw, public affairs manager at the Michigan Press Association. “We think taxpayers have a right to know where those dollars went.”
“The Michigan Constitution requires that the state be transparent with its financial records,” said Patrick J. Wright, vice president of legal affairs at the Mackinac Center. “The Michigan Supreme Court should hear this case and uphold transparency, particularly when we’re discussing budget-busting items costing billions of dollars.”
The Mackinac Center has tracked Michigan’s corporate welfare programs for decades. You can learn more about our work here.
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