News Story

Predictions of Success Are Public - Failures Are Secret?

Michigan Economic Development Corp. very open with predictions of success, growing more secretive with news of failure

When the state's flagship economic development corporation completes a deal that gives millions of tax incentives to a business, it trumpets the specific number of jobs the project is estimated to create. Yet, when asked whether those predictions come true, the Michigan Economic Development Corporation is now claiming that such information is private, despite giving the information out earlier in the year.

The effectiveness of the MEDC's tax credits has come under scrutiny in the past 18 months since the Mackinac Center for Public Policy and the State of Michigan's Auditor General have both done reports that found the job projections are rarely accurate. Both the Mackinac Center and the Auditor General found that only about 3 of the 10 jobs the MEDC claims will be created are actually produced.

State Sen. Nancy Cassis, R-Novi, held a hearing on the Auditor General's report. She questioned MEDC CEO Greg Main about the job projections put into the state's press releases, saying, "The press releases are an absolute disconnect with reality."

The MEDC's responses to requests for actual job creation data over the past half year shows a pattern of less transparency regarding actual jobs produced by companies. There are varying reasons given for the failure to produce the information.

On April 29, the MEDC did release actual job data information regarding a deal with Google when asked to by

But for another request on Aug. 16, a MEDC representative sent an e-mail stating, "I have looked, we don't have employee count information for Post It Stables."

That information would be necessary to determine whether the company qualified for tax credits it had been awarded by the MEDC in 2008.

On Oct. 6, the MEDC sent an e-mail regarding a request for the actual jobs produced by companies receiving tax credits. It read:

"...[T}he documents do not exist in any form known to the MEDC. Also, as you may or may not know, the actual credits and actual jobs created are not subject to disclosure under the Revenue Act."

The MEDC didn't respond to an e-mail seeking comment.

"The MEDC has been entrusted with awarding taxpayer dollars," said James Hohman, a fiscal policy analyst for the Mackinac Center. "They are happy to trumpet their job announcements but now claim that the actual jobs created are confidential. It is simply outrageous that they claim the program is a success, that they claim they are more transparent than ever and yet they refuse to give this basic piece of information. We've argued they should be posting their successes and failures online. It seems they keep hiding their failures."

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.