State’s '21st Century Jobs Fund' Spent $100 Million For Just 1,052 Jobs

‘…You’re going to be blown away’ promised previous governor about these subsidies

The state’s 21st Century Investment Fund (CIF) has spent nearly $100 million on various types of subsidies and other forms of involvement in businesses since 2006, yet only 1,052 jobs have been created or retained because of it, according to the fund’s 2015 report. In addition, some investment groups received millions through the fund but created zero jobs and no proceeds.

The state describes the fund as a program that “encourages the growth of emerging Michigan companies, diversifies the state’s economy by creating and retaining knowledge-based jobs and grows a community of investors to create a long-term, sustainable capital ecosystem within Michigan.” 

According to the report, $98.5 million in so-called “capital called for investments,” or money spent by the state, has been used for investments. 

 "In 2005, policymakers deluded themselves into putting tax money into high-risk investments to pump up the economy," said James Hohman, the assistant director of fiscal policy at the Mackinac Center for Public Policy. "Since then, there have been millions spent and little to show for it." 

Stay Engaged

Receive our weekly emails!

A number of examples are cited.

Nth Power IV, which the report lists as a venture capital firm in Detroit, got $8.9 million of a $10 million commitment from the state and created $400,000 in proceeds and zero jobs. 

Microposite, a company that produced environmentally friendly siding products before going out of business in 2009, got $1.6 million from the state but created zero jobs. The state got back $55,737 in proceeds. 

Quad Partners II received $9.8 million of a $10 million commitment for private equity investment from the state, but the investment created zero proceeds for the state and zero jobs. 

Relativity I also created zero proceeds and zero jobs despite receiving $6.1 million from the state’s investment fund. 

Midwest Mezzanine IV got $9.6 million and $6.3 million was returned to the state, but zero jobs were created. 

Not all the investments have been failures. Arboretum II received $7.1 million for venture capital yet had $78 million in proceeds for the state and also created 49 jobs.  

Arboretum III got $8.3 million for venture capital investments and created 199 jobs, but the state only got back $200,000 in proceeds, according to the report. Pegasus Fund IV received $9.1 million, got zero back in proceeds, but created 250 jobs. 

The investment fund uses four different types of investments: venture capital investments, private equity investments, mezzanine investments, and direct investments.  

The program was created by the Public Act 225 in 2005 and was sponsored by former Rep. Bill Huizenga, R-Zeeland.  

The fund’s updated progress report including 2015-16 is being released today. The Michigan Economic Development Corporation did not respond to emails seeking comment.

~~~~~

Your gift to Capitol Confidential supports investigative reporting in the public interest that includes a free-market point of view. Please consider a donation today to keep citizens informed about the challenges facing our state and nation.


Related Articles:

Return of the Mega Subsidy

The Allure of Corporate Welfare

Tilt from Tax Cutting to Corporate Welfare Renews Failed Approach to Economic Growth

Cut Corporate Welfare to Help Balance State Budget

MEGA 2 Hearing Demonstrates Desperation

New Corporate Welfare Proposal is Unfair

Stay Engaged

Simply enter your email below to receive our weekly email:

Facebook
Twitter

A non-insurance based health care model called Direct Primary Care is gaining traction in Michigan because it saves money and provides better access to doctors.

Related Sites