A news service for the people of Michigan from the Mackinac Center for Public Policy

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Legislators Vote To Continue Special Subsidy Program Without Knowing Whether It Works

State Senate wants to extend $844 million program; bill heads to the House

The state senate overwhelmingly passed a bill extending the life of an $844.5 million economic development program despite the legislators not knowing how well the program was performing because of a lack of transparency.

Senate Bill 269 would extend funding for the 21st Century Jobs Fund an additional four years; it was supposed to sunset in 2015. It passed the senate by a 33-4 vote Oct. 31. The bill now goes to the House of Representatives. The 21st Century Jobs Fund was created using money from a tobacco company lawsuit settlement.

"It's not possible to get a clear picture of how well the 21st Century Jobs Fund is performing because the state doesn't report on the results on many of their projects," said James Hohman, a fiscal policy analyst for the Mackinac Center for Public Policy.

The Michigan Economic Development Corp.'s 2012 report stated the 21st Century Jobs Fund's Competitive Edge Technology Grants program gave out $137 million in grants and loans and created 999.19 full-time jobs.

But the information about the 21st Century Job Fund's performance is not clear.

For example, that 2012 MEDC report states that the company IA Inc./Three Fold Sensors reported negative 3.84 jobs.

Hohman questioned how a company could generate negative 3.84 jobs and wondered whether legislators know what taxpayers are receiving for their money that is invested in this program.

Sen. Rick Jones, R-Grand Ledge, said he supports more transparency on how 21st Century Jobs Fund money is spent. He voted "yes" on the bill to provide more money to the fund.

"I think the feeling that if we don't have some sort of mechanism in place to attract jobs in Michigan, then Indiana and Ohio and surrounding states will eat our lunch," Sen. Jones said.

But Hohman said these incentive programs are better at producing press releases than actual jobs.

The 21st Century Jobs Fund has been roundly criticized for inaccurate reportingrepeated failings of past companies subsidized, and the idea that bureaucrats are better at spending money through centralized planning than the private market.

The bill's future in the House is uncertain. 

"Our caucus is reviewing the reporting requirements and transparency for the 21st Jobs Fund and looking at some things that could improve upon the Senate bills, the majority of which were approved by the Senate prior to the latest audit on the program," said Ari Adler, director of communications for House Speaker Jase Bolger, R-Marshall. "As we have more information now than the Senate did when it voted, it wouldn't surprise me to see some amendments that could address shortfalls in the operation of that program."

(Editor's note: This story has been edited since its original posting.)

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See also:

Deja Vu All Over Again For Auditor General Report On Select Subsidy Programs

MEDC Programs Consistently Fall Short of Initial Claims

A Bipartisan Disaster: Michigan 'Corporate Welfare' Program Rolls On

The State as Venture Capitalist: Michigan Fund Loaned $7.7 Million, Creates Only 20 Percent of Promised Jobs

'Green' Company Awarded Up to $120 Million Promised 70 Jobs — Creates Just Three Jobs in Three Years

State Program Awards $67 Million, Creates One-Third of Projected Jobs

Corporate Subsidy Program Lives On Despite Lackluster Results

Select Tax Breaks for State 'Renaissance Zones' Program Returns One-Fifth of Predicted Jobs

Michigan Government Program Gives $30 Million to Seven Universities, Creates Less Than Half of Projected Jobs

St. Lawrence University economist Steven Horwitz discusses how the minimum wage was used to block immigrants from taking scarce jobs during the depression era. See more at "Raising the Minimum Wage, Lowering Opportunity."


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