Michigan’s independent Office of the Auditor General released on Wednesday its report on the taxpayer-funded Michigan Economic Development Corporation, noting “serious deficiencies” in the MEDC’s internal controls.

Notably, the OAG stated MEDC released the final $10 million of a total $20 million grant before receiving adequate documentation that nearly $3 million of the initial $10 million was spent as required.

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“In our sample, we identified one instance where the grantee, by executing the grant agreement, met the first milestone and received a $10 million grant payment,” the report states. “The release of additional funds was contingent on the grantee documenting it had expended all initial funds. MEDC approved and distributed an additional $10 million grant payment although the grantee did not provide support that $2.9 million in initial grant funds was expended.”

In its report, the OAG defined a “significant deficiency” in internal control “less serious than a material weakness” but did not rule out whether material weaknesses existed at the MEDC.

The report was released one week after Gov. Gretchen Whitmer unveiled a proposed budget that cuts the OAG’s budget by $8.3 million, or 28%.

“If the state is going to give our hard-earned tax dollars to big corporations in the name of economic development, there should be strong safeguards in place to protect those investments,” Rep. Ann Bollin, R-Brighton Township, said in a statement. “This audit uncovered a betrayal of the public’s trust and a disturbing lack of accountability from the MEDC. It’s unacceptable.”

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Bollin introduced a bill last fall that aimed to increase MEDC accountability for projects it funds through its Strategic Outreach and Attraction Reserve fund. House Bill 5137 would strip $725.3 million from the SOAR fund back into the state’s general fund.

“When the state invests taxpayer dollars on economic development, transparency and accountability are non-negotiable,” Bollin said. “I’m working to make sure those safeguards are in place and that every project demonstrates a clear and substantial return on investment for the taxpayers footing the bill. Anything less is simply unacceptable.”

Rep. Mike Harris, R-Waterford, also expressed dismay at the MEDC and Whitmer’s administration.

“The watchdogs at the auditor general’s office have uncovered countless mishaps and misdeeds by Gov. Whitmer’s administration, and now she’s trying to put them on a leash,” Harris said. “Michigan must fully fund the auditor general and keep protecting taxpayers from fraud and waste on the part of state bureaucrats.”

Harris continued: “Michigan’s taxpayer-funded economic development has been marred by high costs and disappointing results — we pay too much for low-wage jobs that may not even materialize. Awarding $10 million illegitimately is yet another example of the lack of respect for taxpayers that prevails in Gov. Whitmer’s approach to the economy. While Democrats dream up blueprints for economic development additions, they’re ignoring the fire inside the house. We need more accountability to detect problems and give taxpayers insurance against deals that turn to ashes.”