Whitmer seeks ongoing $500M per year for corporate welfare fund

Gov. Gretchen Whitmer seeks ongoing funding of $500 million per year for Michigan’s Strategic Outreach and Attraction Reserve for 10 years, according to her 2024 budget proposal.

Michigan budget director Christopher Harkins explained Whitmer’s budget priorities to lawmakers on Wednesday. Michigan uses SOAR funds to pay businesses to set up shop or expand in the state.

“SOAR has been successful in quickly returning Michigan to the forefront of major business investments,” Harkins said. “Projects had been approved statewide. Examples are right here in Lansing, in Big Rapids and in Metro Detroit.

Among the recipients of SOAR funds was Ford Motor Co., which in June 2022 was given $100 million to hire 3,030 factory workers. Two months later, Ford laid off 3,000 white collar workers, mostly in Michigan.

• Read: After getting $100M from Michigan to create 3,000 jobs, Ford announces 3,000 layoffs

The track record of state incentives in Michigan is poor, CapCon has reported. Rarely does reality live up to the promises of job announcements. As Jarrett Skorup wrote last year:

The most comprehensive analysis of Michigan select incentive programs found that job announcements rarely turn into jobs. Fewer than 20% of the jobs promised when new deals are made public come into existence.

Only 2.3% of deals produce as many jobs as advertised. While SOAR lacks a long track record, previous efforts have resulted in billions of dollars spent but very few jobs.

• Read: Michigan launches ‘new era’ economic development fund, but its history is one of failure

Whitmer’s plan would fund SOAR from corporate income tax revenues, according to budget documents. The funds would come from corporate tax collections the exceed $1.3 billion per year. Smaller sums would be spent on housing and community development, Harkins said.

“This ongoing revenue source will help to ensure that not only does the state have economic development dollars, but it's working to build the needs around housing and redevelop our communities as those workforce needs change and grow,” Harkins told lawmakers.