News Story

Beer Website Provides More Information About Taxpayer Investment Than The State

Deals that never materialize are not reported by the MEDC

The state of Michigan will give out an estimated $577 million of taxpayers' dollars this fiscal year in the form of tax credits to various companies.

But getting information from the state about those deals remains a challenge.

In at least one instance, a popular beer website sheds more light on what happened to a deal the state brokered than the state organization charged with its oversight.

In 2009 the Michigan Economic Development Corp. approved up to $723,000 in tax credits for the Michigan Brewing Co. to expand to produce Kid Rock's "American Badass" beer. The MEDC doesn't mention anything in its latest annual report about the deal.

But reports that Michigan Brewing Co. went out of business.

The transparency of the MEDC is a concern, said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

The MEDC only tracks deals when the companies report back on the jobs it has created. Deals that never materialized are not reported on by the MEDC.

For example, in 2008 the MEDC approved an estimated $827,000 in tax credits for Faurecia Interior Systems of Fraser. The company projected it would create 82 jobs with the expansion.

Five years later, the MEDC doesn't report anything on the deal.

"There needs to be better reporting that compares expectations with results," Hohman said. "You need to know whether these things are working out as planned and how much they cost."

Hohman said there is some good news. A new program, the Michigan Business Development Program, will issue grants instead of tax credits so information about recipients can be shared by the state. The MBDP replaced the state's MEGA program, which gave out tax credits.

Because MEGA used tax credits, the Attorney General and Treasury Department maintain that is protected tax information, said Kathy Fagan of the Michigan Economic Development Corporation.

Sen. Jack Brandenburg, R-Harrison Township, introduced Senate Bill 316 in April that would revise the tax confidentiality law and allow the state to release the information.

A phone message left at Sen. Brandenburg's office was not returned.

"The tax credits are a huge expense, but without disclosing their value matched with expectations, it's unclear what taxpayers are getting in return," Hohman said.


See also:

Deja Vu All Over Again For Auditor General Report On Select Subsidy Programs

MEDC Programs Consistently Fall Short of Initial Claims

A Bipartisan Disaster: Michigan 'Corporate Welfare' Program Rolls On

The State as Venture Capitalist: Michigan Fund Loaned $7.7 Million, Creates Only 20 Percent of Promised Jobs

'Green' Company Awarded Up to $120 Million Promised 70 Jobs — Creates Just Three Jobs in Three Years

State Program Awards $67 Million, Creates One-Third of Projected Jobs

Corporate Subsidy Program Lives On Despite Lackluster Results

Select Tax Breaks for State 'Renaissance Zones' Program Returns One-Fifth of Predicted Jobs

Michigan Government Program Gives $30 Million to Seven Universities, Creates Less Than Half of Projected Jobs

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.