News Story

Michigan offered company $28B in corporate welfare, and still didn’t land it

Cash incentive offered to Micron was bigger than Michigan’s budget for state police and corrections

Michigan taxpayers were almost on the hook for $28 billion in corporate welfare and tax abatements to an Idaho-based semiconductor company, The Detroit News reports. But that company, Micron Technology, took a bid from New York State instead and will open its facility near Syracuse.

The Detroit News’ Beth LeBlanc reports that the Michigan Economic Development Corporation made an offer to Micron Technology in Sept. 2022. Between $4 billion in cash and site prep and $23.8 billion in tax abatements over 50 years, that’s nearly $28 billion in state incentives for “Project Copper,” as the deal was called. 

LeBlanc reports:

State economic development officials disclosed this week that they also promised Micron $277 million in direct incentives for its suppliers, more than $800 million for site preparation and infrastructure in Clinton County's Eagle Township and another $480 million in job training for the facility. The total upfront taxpayer investment, pending legislative approval, was more than $4 billion, according to the Michigan Economic Development Corp.

The state’s September offer also included a 50-year property tax break amounting to about $23.8 billion in tax savings for the company over the lifetime of the abatement, according to the MEDC. That tax break would be offset at least partially by a negotiated payment in lieu of taxes.

Michigan made “the largest known offer” of incentives in its history, and Micron still opted for New York. Micron says it will hire 9,000 people.

“The permission to pay less in property taxes or not at all is a very different thing than cash, and it was unclear how much less in property taxes New York offered,” said James Hohman, the Mackinac Center’s director of fiscal policy.

“The big lure is cash. Money up-front matters, and Michigan offered a lot more of it than New York. The takeaway that the governor wants is that Michigan needs to be able to write bigger checks. The takeaway that people should get is that Michigan shouldn’t be in the business of writing big checks.”

Despite the smaller offer, Project Copper is now Project Yankee, The News reports:

A few weeks after Michigan made its offer, Micron announced it would locate its $100 billion, 9,000-job semiconductor project in New York, a state offering the company $5.5 billion in incentives over the 20-year construction period. The 9,000 workers hired over the 20 years are expected to earn an average annual salary of about $100,000.

The News reports that the $2.5 billion in direct cash incentives Michigan offered Micron “would have exceeded the individual annual budgets last year of about a dozen state departments, including the Michigan State Police, the Department of Natural Resources and the Department of Environment, Great Lakes and Energy,” along with the Michigan Department of Corrections. 

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.