News Story

State Agency Has 52 Employees Who Earn More Than $100K

State Rep.: 'The MEDC's track record in picking winners is poor'

Promoting corporate welfare can be lucrative.

There are now 52 employees of the Michigan Economic Development Corp. with annual salaries of $100,000 or more.

That is a roughly 60 percent increase over the 31 MEDC employees that topped $100,000 in 2010, the last year Jennifer Granholm was governor.

The Michigan Information and Research Service, a Lansing political newsletter, reported the new MEDC salary numbers, which it said it obtained from the MEDC. In its article, MIRS made a distinction between the 12 "public" MEDC employees who made $100,000 or more and the 40 "corporate" employees who made $100,000 or more. Corporate employees at the MEDC are primarily paid from Indian gaming revenues, which are not subject to legislative appropriation. The MEDC has 335 employees.

MIRS also reported that the annual salary of MEDC president and CEO Michael Finney was $257,500.36. In 2012, Finney was the top-paid state government official, but in 2013 Jon Braeutigam, a deputy treasurer and chief investment officer became the most handsomely reimbursed with a $333,300 salary, according to MIRS.

"The MEDC should be focused on creating private sector jobs not inflating public sector salaries," said House Democratic Leader Tim Greimel, D-Auburn Hills.

House Democrats have been critical of the MEDC under Gov. Rick Snyder, saying the agency has not been transparent regarding the true performance of its projects — a position the Mackinac Center for Public Policy has held for a number of years.

Officials from the MEDC declined to comment.     

Rep. Greg MacMaster, R-Kewadin, and Rep. Wayne Schmidt, R-Traverse City, who are running to replace Sen. Howard Walker, R-Traverse City in the 37th State Senate district, had different reactions to the news that 52 MEDC employees make $100,000 or more.

"I'm concerned that the MEDC at times skews the playing field by picking winners and losers, taking resources in the form of taxes from some corporations, including Indian gaming, and then giving them to other businesses," Rep. McMaster said. "In this way, businesses succeed or fail not because of the inherent quality of their goods and services, but due to their ability to successfully lobby elected officials and bureaucrats. That’s not free enterprise.

"[The] MEDC's track record in picking winners is poor, with underperformance of job creation the norm. I would like to see this improve," Rep. MacMaster continued. "But the final insult is that taxpayers fund the MEDC to the tune of $200 million a year, including multiple $100,000-plus jobs for officials, and $257,500 for last year’s highest paid employee in state government. Did the MEDC achieve the desired benchmarks to warrant the salary increase they received? I haven't seen anything to support it."

Rep. Schmidt said the MEDC is needed for Michigan to successfully compete for jobs and that the agency's salaries do not appear to be out of line.

"When looking at the MEDC you need to realize that we are competing against, not only other states, but other countries," Rep. Schmidt said. "No other state has disarmed and no other country has disarmed. States that we complete with, such as Texas, Alabama and the others, have agencies that are their equivalent to our MEDC. In just the automotive sector alone, we’re talking about 500,000 jobs that we’re competing for. I’m not willing to lose those jobs to other states, and especially not to other countries.

"When I was the chair of the [House] Commerce Committee we constantly worked to make sure that MEDC remained lean and efficient," Rep. Schmidt continued. "Most of the MEDC employees [the corporate ones] are not paid through general fund dollars that come from the taxpayers. They are paid from funds that come from tobacco fund dollars or Indian gaming dollars. If you look at what they are paid and make a comparison, you’ll find that it is consistent with what employees of the same sort agencies in other states are paid."

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.

Commentary

Michigan’s Renewable Energy Mandate Causing Harm, Probably Unconstitutional

The state cannot feasibly have a 30 percent mandate

Michigan wind energy promoters have used the state’s recently released report to conclude that 30 percent renewable energy generation is readily achievable.

But this is a distortion of the report.

While the paper says it is “technically” possible for Michigan to generate 30 percent of its energy from renewable sources, the report’s list of caveats to that statement paints a starkly different picture.

A look at the report shows that not only is 30 percent is wildly unrealistic, but Michigan’s current mandate of 10 percent by 2015 is causing economic and physical issues already. It is also probably unconstitutional because of the limitations written into the law.

How close is too close?

Regarding wind turbines, the report says:  

“[S]etback distances [from turbines to homes] need to be greater than 2 km [1.25 miles] in hilly terrain.

Every operating Michigan wind plant currently has setbacks that are far closer than the recommended 1.25 miles. In fact, this proposed distance is currently five times farther than the setbacks typically found in Michigan wind plants.

This large setback effectively precludes all onshore wind development in Michigan unless a developer is willing to buy and bulldoze every house within that radius. Such a strategy would certainly eliminate human health impacts from turbines noise, preserve more agricultural land and allow greater turbine density. But wind developers adamantly refuse to do so.

How loud is too loud?

Regarding noise, the report has bad news for wind developers who regularly declare wind turbine noise limits of 45 or 55 dBA as “safe” and no louder than a library.

“[I]t would be advisable for any new project to attempt to maintain a mean sound level of 40 dBA or less outside all residences as an ideal design goal.”

In 2011, the Michigan Wind Working Group Technical and Health Committee recommended lowering the state’s old turbine noise limits from 55dBa to 40dBa. Wind developers then declared 40dBa  a “project killer.” After discussing the problematic nature of the committee’s proposed noise limits behind the scenes with Michigan Public Service Commission staff, the head of a group pushing wind energy in the state even asked state employees to “delete these types of emails.” The group was then disbanded just prior to releasing a report calling for the lower noise limits.

But now, regarding wind turbine noise and health effects, the sate’s Renewable Energy Report says:

“Our results suggest that utility-scale wind energy generation is not without adverse health impacts on nearby residents....”

There have been many problems reported from families in homes near Michigan’s wind plants, resulting in a lawsuit from 17 residents in Northern Michigan. One family near Ludington said it has had to move to the basement to sleep to avoid the noise and lights from a turbine less than a quarter of a mile away. Similar reports and litigation have occurred in Huron, Missaukee and Delta Counties.

Despite wind developers vigorous claims to the contrary, the state now concedes that utility scale wind turbines constructed too closely to people’s homes can make them ill.

Michigan instate wind generation mandate unconstitutional?

Regarding the constitutionality of Michigan’s mandate, the report says:

“Michigan’s current RPS provisions regarding where renewable energy could be located were characterized as unconstitutional in a federal circuit court of appeals.”

There have been multiple lawsuits between states regarding renewable energy. Michigan’s current renewable energy standard forces the 10 percent mandate to be met only by instate sources. Some say the state cannot force consumers to bypass cheaper available renewable energy available from nearby states.

Michigan wind is far more expensive than other Midwestern states like Iowa,

Technically achievable?

So is it technically achievable to have 30 percent of Michigan’s energy coming from renewable sources? Only with a lot of money, a bit of eminent domain, and a huge change in the current law or the U.S. Constitution.

The state would first need to free up $28 billion to build the more than 7,000 turbines needed to reach 30 percent net wind generation. Incidentally, that much money could replace almost every coal plant in the region with clean gas-fired generation, which provides electricity much cheaper than wind while drastically reducing emissions.

Next, the state would have to locate these turbines 1.25 miles from any home in the proposed project and keep the noise below 40dBa. Since 7,000 turbines would place a turbine, on average, in every fifth square mile in the Lower Peninsula, that is a lot of homes to buy and bulldoze.

The state would then likely have to convince the U.S. Supreme Court that the Commerce Clause of the Constitution need not apply to that already uniquely privileged class: industrial wind developers. Or change that part of the Constitution.

And finally, one would need to develop a wind turbine that could out compete production in Iowa and Minnesota despite those states’ tremendous advantage in wind resource. The federal government labels the vast majority of land in Michigan “poor” or “marginal” for wind production.

Any one of these obstacles spells trouble for Michigan wind. But taken as a whole, the report shows that not only is 30 percent an unrealistic projection, but that the state’s current 10 percent mandate is in trouble.

Kevon Martis is the senior policy analyst for the Interstate Informed Citizen’s Coalition Inc., a bipartisan grassroots renewable energy watchdog group based in Blissfield. The IICC is not sponsored by any industry or advocacy group.

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.