Gov. Gretchen Whitmer’s administration has leveraged a state business incentive program to offer more than $1 billion each to eight different companies since it was created in 2021.
Records obtained by The Detroit News through “a protracted, 10-month public records process” revealed only two of the eight companies ultimately took the bait, while offers to the other five were either rejected or are still pending.
Both of the accepted $1 billion-plus deals are now in limbo, with a Ford battery plant in Marshall downsized and delayed, and a Gotion battery parts plant near Big Rapids that remains tied up in litigation and public opposition over environmental concerns and links to the Chinese Communist Party.
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The other billion-dollar deals involved Volkswagen AG, Stellantis, Samsung SDI America, Scout Motors, and Micron Technologies.
The revelations about Michigan’s Strategic Outreach and Attraction Reserve fund created by lawmakers in November 2021 to court big development projects came as no surprise to James Hohman, director of fiscal policy at the Mackinac Center for Public Policy.
Hohman noted that despite the massive offers of taxpayer cash and tax abatements, Michigan continues to lose out to states that offer far less.
“The states that are growing are not the ones that are writing the biggest checks to a company,” he told The News. “They should be looking instead at business climate and quality of life issues because that’s what matters.”
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Officials at the Michigan Economic Development Corporation, meanwhile, are defending the deals, which they said go through business, financial and legal reviews before they’re approved by lawmakers.
“We have been focused on making sure that we are growing the economy where we can utilize our competitive strengths that we have in the state in terms of advanced manufacturing, mobility and our clean energy opportunities,” said Josh Hundt, MEDC’s chief projects officer. “These and all the companies that we’ve made offers to under the SOAR program have fit within one of those areas.”
Michigan taxpayers will have to take Hundt’s word for it, as 100 pages of nearly 550 produced in response to The News’ records request were redacted by MDEC, which negotiates the deals through nondisclosure agreements that shield the details from taxpayers. The deals often include a mix of taxpayer cash, tax incentives, and site preparation funding.
Recent analysis by the Mackinac Center shows Michigan lawmakers have been doling out the taxpayer cash and prizes to corporations faster than any state in the nation, and it’s not even close.
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“From 2018-2023, Michigan spent twice as much on incentives as the #2 state,” David Guenthner, the Mackinac Center for Public Policy’s vice president for government affairs, posted to X in December, along with the data to back up his claim. “6x Texas, 8x Florida, 12x Tennessee.
“All of those states are lapping Michigan in job creation and population growth,” he noted. “Because MI pols would rather subsidize @GM & @Ford than fix the damn roads.”
An attached chart from IncentivesFlow, “a Service from FDI Intelligence,” shows Michigan spent $2.663 billion in taxpayer-funded economic incentives over the six-year time frame.
South Carolina, the next closest state, spent $1.6 billion, followed by California at $1.3 billion, Indiana at $1.215 billion, and Oregon at $1.013 billion.
Also in December, the Mackinac Center released a report exposing the futility of Michigan’s taxpayer-funded economic incentives during the first two decades of this century.
“Front page new stories in Michigan’s largest newspaper from 2000 to 2020 announced the creation of a total of 123,060 new jobs,” according to the report, titled Front Page Failures. “State reports show these deals created just 10,889 jobs in the end, a success rate of just 9%. Only one in 11 of the announced jobs in these front page stories ever came to fruition.”
The cost to taxpayers since 2000: $23 billion, with the bulk going to auto and auto parts manufacturers.
The Detroit News report illustrates that despite the failures in the past, efforts to give away taxpayer cash have only accelerated in recent years.
“In 2022, Michigan offered Idaho-based semiconductor company Micron Technologies a $27.9 billion incentive package: $4 billion in direct and indirect incentives and a roughly 50-year tax breath worth about $23.8 billion,” according to the news site. “But a deal never materialized in Michigan, and Micron instead chose to locate in Syracuse, New York.”
Public outrage over the secret agreements and high failure rate of Michigan’s business incentives has convinced a new Republican House majority to investigate corporate subsidies and state investments, with a dedicated subcommittee under the House Oversight Committee.
The subcommittee is among others focused on the weaponization of state government, child welfare, public health, foreign influence, and other issues.
“A government that works responsibly and in the best interest of the people has not been a priority in Lansing,” Rep. Jamie Thompson, R-Brownstown Twp., said in a statement last week. “We’ve seen hundreds of millions of taxpayer dollars going to projects with ties to China. We’ve seen taxpayer money used for severance agreements with state employees when departments have missteps. As all of this happens, there’s very little transparency or accountability guardrails for the people. These committees will provide that transparency and work to establish a system of state government that people can trust and know is working in their best interest.”
Rep. Brad Paquette, R-Niles, offered a similar perspective to The News, taking particular issue with non-disclosure agreements MDEC uses to hide details about the $1 billion-plus development deals from the taxpayers who fund them.
“(Non-disclosure agreements) need to go away,” he said. “No legislator should be signing an NDA. And all this information should be easily found for the benefit of the taxpayers.”