According to The Detroit News, former Gov. Jennifer Granholm made a deal with a group of wealthy and politically connected individuals in Oakland County to use state pension funds to guarantee $18 million they borrowed to set up a film studio in Pontiac, essentially making the pension fund the “co-signer” on the loan.

The “business model” for this studio was completely dependent on another of Gov. Granholm’s corporate welfare schemes, a subsidy program that paid up to 42 percent of film producers’ Michigan expenses. No reputable economist has ever defended these subsidies, which are pure “political development” programs, not economic development ones.

Thankfully, last year the Legislature supported Gov. Rick Snyder’s recommendation to greatly scale back these unlimited subsidies, and instead appropriate “just” $25 million for the handouts. That is, we’ll still waste taxpayer dollars on them, but fewer taxpayer dollars.

But not surprisingly, a business model that depends entirely on wasting the full, unlimited amount every year will have problems should the handouts become limited.

And so it is: The project Gov. Granholm backed with state pension fund money is unable to pay its debt, which means in a few weeks the state employee pension fund will have to cough up $630,000 from money set aside to pay future benefits to retired employees. Unless Gov. Rick Snyder and the Legislature reverse course on scaling back the absurd film subsidies, taxpayers could get stuck repaying the balance of the $18 million loan.

The plot thickened when Senate Majority Leader Randy Richardville, who has been working to reverse the scaled back program, said the following to the Gongwer news service:

"A few years ago we told some Michigan investors that if they invest in an industry that we would back them. And we gave them parameters and now we've changed that. We sent several businesses away that would help recoup that investment.”

By “sent several businesses away,” he means taxpayers stopped picking up 42 percent of film producers’ expenses. In other words, Sen. Richardville is using this default to lobby the governor and his colleagues to give more loot to film producers, insinuating that the state is breaking a promise by choosing to give away less loot instead.

Sorry, Sen. Richardville, but it doesn’t work that way. The individuals who finagled a state pension fund guarantee from Gov. Granholm are big boys who understand that their “business model” was in fact a purely political bet, not a business one, and the risks involved are likewise political as well as financial.

And now their political bet is coming up a loser.

Well, too bad. Rule one: When a state is digging itself into a hole, it should stop digging. Preventing a loss on one dirty deal by pouring more money into another one is no way to run a state government.

Late last night on a 5-4 vote, Bay City commissioners chose to repeal that city’s prevailing wage ordinance, something no city in Michigan may have ever done, to our knowledge. A prevailing wage law mandates union scale wages on government funded construction projects, regardless of who wins the bid.

Commissioners at their previous meeting amended the city ordinance to make all contracts under $100,000 exempt from the prevailing wage ordinance. I covered that story in a Jan. 10 blog post titled “Bay City Amends Prevailing Wage Ordinance.” It was expected that commissioners would confirm that vote at last night’s meeting, but things changed when the Associated Builders and Contractors Saginaw chapter dropped a lawsuit against the city it had previously filed over the prevailing wage ordinance itself.

The Masud Labor Law Group represented ABC of Greater Michigan, but because one of the city commissioners is a lawyer with that firm, she had to recuse herself from previous votes on the prevailing wage question. With the lawsuit being dropped last Friday, it freed up one more vote in favor of a total repeal of the ordinance.

About 14 other cities maintain such laws in Michigan, as does state government. Mackinac Center analysts have estimated taxpayers could save $200 million annually if the Legislature were to repeal the prevailing wage statute. Perhaps Bay City will be a catalyst for that.

“We are looking for opportunities for citizens to save money,” said Jimmy Greene, President and CEO of ABC of Greater Michigan. “The conversation around the country is about taxpayer dollars. When you know there is money to be saved by repealing such laws, officials should be obligated to do so. This is not about union or nonunion construction shops. It’s about saving taxpayer dollars.”

In this particular debate Greene was not a lone voice. None other than The Bay City Times weighed in on the issue last Sunday, describing the city’s prevailing wage law as “pure protectionism for union workers and the contractors who employ them.”

The commission will need to have a second, confirming vote at its next meeting, but Greene said he expects the same result.

It seems the tide is turning in labor debates. In other labor news the Indiana State Senate passed right-to-work legislation last night 28-22, though reports out of Indiana indicate that the House version of the bill will be the one that “actually drives the issue.”