Editorial

Ghosts Of Corporate Welfare Past To Suck $7.6 Billion From State Budget

Granholm administration economic development giveaways dumped multi-decade liability on taxpayers

In 2010-11, the last year of Gov. Jennifer Granholm’s second and final term, the state of Michigan approved 72 economic development deals with companies in what appears to have been a binge of corporate welfare handouts.

Some $2.4 billion dollars were promised to companies in 2011 under a since-discontinued program called the Michigan Economic Growth Authority (MEGA). Most of that went to a pair of car companies — $1.36 billion to Chrysler and $909 million to Ford.

No longer were politicians claiming to grow or transform the economy: These were so-called job “retention” deals, with the state paying companies for up to 20 years to maintain their state workforce numbers.

The MEGA program was discontinued in 2011, but the financial impact of its corporate welfare deals will fall on state budgets for decades. While the actual numbers are kept secret, much or most of the “credits” are simply checks written by the Michigan Treasury Department to the companies with the deals.

A recent report from the Senate Fiscal Agency states that Michigan taxpayers are still on the hook for these deals until at least 2032, at a cost of $7.6 billion. The agency estimates the payments represent a 4 percent to 5 percent annual hit to the state budget over that period.

Last year the state paid out $654.8 million under these MEGA deals. And from 2017 to 2032, the estimate is that future legislatures will have to budget more than a half billion dollars every year until at least 2028 and pay out a total of $7.6 billion through 2032.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.