News Story

State's Corporate Welfare Arm Says Ex-Attorney General Approved Being Less Transparent

MEDC: AG gave 'informal verbal advice' about not disclosing tax information

Twelve weeks after being asked why it stopped disclosing the names of companies receiving public money, the Michigan Economic Development Corporation — the state's corporate welfare arm — says it did so upon "informal verbal advice" it solicited from the attorney general's office.

In 2009, the MEDC stopped disclosing the names of companies, and began only releasing information aggregated by industry.

A March 18 article published by Michigan Capitol Confidential delved into the issue. That article focused on three questions posed to MEDC Vice President of Communications Michael Shore about the policy change. They were:

1 — Who made the determination?

2 — Did MEDC ask for the ruling?

3 — Has it ever been made public?

Shore did not respond at that time.

In early May, Michigan Capitol Confidential posed the same questions to Shore again for a follow-up article. On May 7, he responded.

To the question, “Who made the determination?,” Shore said, “We received informal verbal advice from the AG’s office.”

To the question, “Did MEDC ask for the ruling?,” Shore said, “Yes.”

To the question, “Has it ever been made public?,” Shore said, “No, it was verbal.”

Michigan Capitol Confidential is now seeking more information on the “informal verbal advice” and any other pertinent information from the attorney general’s office, which was headed by Republican Mike Cox when the policy was changed.

Until now, there had been no explanation for this particular MEDC step away from transparency. The policy change first came to light in early 2009 and in May of that year, the Mackinac Center for Public Policy asked the agency why company-by-company information on tax credits was no longer publicly available. MEDC said the information would no longer be disclosed because it was considered confidential tax information.

At the time and over the following years, the agency did not explain how it came to this interpretation or whose legal opinion it represented. The issue and its implications for transparency has been the subject of other Michigan Capitol Confidential articles.

Legislative inquiries about MEDC’s policy change arose in February of this year during a House Tax Policy hearing, when it was revealed that past deals by the MEDC have left the state with $9.38 billion in tax-credit liabilities. Those tax credits, which often are paid in the form of checks from the state to particular firms, were handed out in the years after the agency changed its policy.

In his testimony to the committee, Jack McHugh, the senior legislative analyst with the Mackinac Center, pointed out that the MEDC had either regularly violated the law back when it used to disclose how much money it gave to each business, or it was now wrongly treating the information as confidential. The focus of the hearing ultimately drifted to other topics, however.

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.