News Story

Michigan Governor Touts Jobs Costing Taxpayers $113,000 Each

In her blog on the Huffington Post last Thursday, Gov. Jennifer Granholm laid out the details about Michigan landing North America's largest advanced battery plant.

But Gov. Granholm didn't mention one fact: It was the $374 million price tag in federal and state subsidies it took to get A123 Systems to put its plant in Livonia.

Granholm stated the plan would account for 3,300 jobs, meaning the taxpayers paid about $113,000 per job.

"This company hit the jackpot and it is all at the expense of Michigan taxpayers," said State Rep. Tom McMillin, R-Rochester Hills. "It is all about headlines. This is money that all the other taxpayers have to pay. Those are the silent and forgotten losers. Government loves high profile winners and invisible losers."

A123 was awarded $249 million grant from the U.S. Department of Energy as part of the American Recovery and Reinvestment Act.  The company also received $125 million in state incentives as part of the 21st Century Jobs Fund.

The state pitches it as part of establishing Michigan as the place to be for the advanced battery business.

"Michigan is fast becoming the advanced battery capital of the world thanks to companies like A123 and global leaders in this industrial sector," stated Michael Shore, spokesman for the Michigan Economic Development Corp., in an e-mail. "We are pleased to have played a role in their growth and expansion here. There are now 17 advanced battery companies that have announced plans to a total of $5.8 billion in new manufacturing and R&D investments in our state. These investments are projected to create 63,585 new jobs in Michigan over the next ten years."

But the state's auditor general has shown that the MEDC's job projection can be often times way off the mark. A state audit found job projections by the MEDC only occurred 28 percent of the time.

Michael LaFaive, director of the Mackinac Center's Morey Fiscal Policy Initiative, said government has often failed when trying to favor one industry over another via tax incentives.

And the $374 million incentive?

"This industrial policy is on a scale that would make many European countries blush," LaFaive said.

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.