State Taxpayers Giving Company $7 Million To Move 21 Miles
Insurance firm gets to keep income tax its employees pay
A company called Acrisure Insurance is moving from one Michigan community to another — and a state agency is giving it up to $7 million in taxpayer money to do so.
Acrisure, reportedly one of the top 10 insurance brokers internationally, plans to move its headquarters from Caledonia to downtown Grand Rapids in 2021. The Sept. 24 announcement came after an incentives package was approved by the Michigan Economic Development Corporation, a state agency that distributes tax breaks and subsidies to select businesses and industries.
But James Hohman, director of fiscal policy for the Mackinac Center for Public Policy, argues that the MEDC shouldn’t meddle in the private sector.
“The state’s efforts to compete for jobs by selectively targeting certain companies is unfair and ineffective,” he said. “These programs create job announcements, but the costs to lure companies come with an economic cost as well. The money used could better help the economy if left in taxpayers’ own pockets or spent elsewhere in the budget.”
Bryan Harrison, Caledonia Township supervisor, has a different perspective.
“It’s important to recognize we didn’t lose Acrisure to Grand Rapids; we kept them from leaving Michigan,” he said. “These jobs and the ones being created with the move will continue to help people in my community pay their mortgage and support our regional economy.”
Hohman disagrees, pointing out that the insurance giant’s scope is just not large enough to drive economic trends.
“Consider that Michigan added 829,900 jobs in 2018 and also lost 794,900 jobs, according to data from the Bureau of Labor Statistics,” he said. “Announcements to move 400 jobs from one area to another — and at taxpayer expense — can’t keep up with the turnover of the state economy. The larger economic trends are going to matter a lot more to Caledonia than whether the taxpayers are subsidizing the relocation of a single business.”
Nonetheless, Harrison is confident that Acrisure’s move will prove to be positive.
“Caledonia is not only a great place to live but we are a very attractive community for commercial and industrial investment,” he noted. “Township operations are financed largely by property taxes and the investment in brick and mortar remains here. I don’t expect the building they are leaving will stay vacant long.”
Under the subsidy deal, Acrisure will get up to $6 million in money called tax capture grants, which indirectly amount to letting it keep income tax paid by its workers. The company is getting another $1 million, called a performance grant, based on meeting certain criteria in a contract with the state. The insurance firm has committed to creating and maintaining at least 400 high-paying jobs and expects to invest $33 million in the city.
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.