The state's "flagship" economic development program may have doled out an estimated $150 million in tax credits erroneously in the last five years to companies that didn't meet the criteria due to a lack of oversight, according to State Rep. Tom McMillin, R-Rochester Hills.

McMillin met with the state Auditor General's office after it released a report this week that said the state didn't follow up on company job projections that often fell short of required triggers to receive tax credits but still received the money.

The report comes a little more than a month after it was learned that the Michigan Economic Growth Authority board approved a $9.1 million tax credit to Richard Short, a convicted embezzler who was CEO of a company named Renewable and Sustainable Companies LLC. The Flint Journal reported that at the same time he was working on the MEGA deal, Short was scamming thousands of dollars from an 86-year-old neighbor with dementia.

The Auditor General report found several problems with the Michigan Strategic Fund's oversight of the MEGA tax credit program. The audit concluded that the MSF's procedures were "moderately effective."

McMillin said he was considering calling for legislative hearings to get more information and wouldn't rule out getting the companies to return the unearned tax credits.

The Michigan Economic Development Corp. didn't dispute many of the findings and vowed to fix the oversights.

"MEDC has implemented enhanced pre- and post-audit procedures, which include conducting onsite visits and validating individual payroll records, such as W-2s," MEDC spokeswoman Bridget Beckham wrote in an e-mail.

But critics were skeptical.

"The MEDC is failing in administrating the MEGA program," said James Hohman, a fiscal policy analyst with the Mackinac Center for Public Policy.

Hohman said the MEDC failed to verify the jobs claims made by companies and still gave out tax credits that were not justified by the agreements.

"Here's the state's flagship economic development program, the Auditor General is showing clearly the MEDC is not a good administrator, and are likely to have wasted taxpayers money," he noted.

McMillin called the Auditor General report "extremely troublesome."

"There was certainly a level of willful neglect," he said. "They certainly celebrated when people said they created jobs, whether they were actually created or not."

McMillin said he realized some of the errors may not have been on the scale of RASCO, but said he was concerned that there were similar attempts to defraud the state of money.

Beckham stated in an e-mail that the MEDC awarded about 600 MEGA tax credits and never encountered a situation like RASCO.

But McMillin said the Auditor General report shows that the state wasn't even looking for fraud.

"If you don't actually look at the documents, then you are not going to find anything," McMillin said. "When you turn a blind eye, anything can happen. They haven't seen it, but they weren't looking. ... It was the fox guarding the henhouse."

Among the findings in the Auditor General's report:

One company didn't meet the wage requirement to qualify for the tax credit. Instead, the company used its own projections to boost the average wage high enough to qualify and was awarded a tax credit of $185,675. The audit found that this happened with 3 of the 40 tax credit certificates reviewed. The Michigan Strategic Fund didn't dispute the finding in the Auditor General's report. Instead, they said they would amend their policy to allow projections to be used. (McMillin states that a single quarter's worth of higher wages were being extrapolated out as if the wage payments had been maintained for a full year.)

The MSF didn't get the detailed data necessary to validate tax credit certificates given to companies. The audit found 10 of the 15 companies reviewed didn't submit required information.

The MSF didn't always check data provided by companies through a third party or by requesting detailed employee records. The audit found that as many as 26 percent of the employees were potentially ineligible for the tax credits in the 15 audits reviewed. The audit states that the MSF approved $2.6 million in tax credits for potentially ineligible employees. The MSF didn't dispute the finding.

The original version of this story was posted online on April 27, 2010.

What's 410 feet tall, makes a humming sound and could be at a lake near you soon?

Answer: Wind turbines — an alternative source of power that is creating a stir on both sides of the state.

Lake St. Clair is the latest target for 160 wind turbines, according to State Rep. Timothy Bledsoe, D-Grosse Pointe Farms. Bledsoe said the turbines are as tall as a 40-story building and 50-plus turbines will be clustered together in each field. He said the turbines would be three to four miles off the shoreline.

"Overwhelmingly, there is anxiety of the location of these in Lake St. Clair," Bledsoe said. "Lake St. Clair is too small and too shallow to get reliable wind during the summer months. I'm highly skeptical of the wind potential."

Bledsoe said he has sailed on the lake and said the turbines would have a negative impact on recreational use of the lake.

"It would definitely be problematic in my enjoyment of the lake," he said.

SouthPoint Wind, the Canadian developer pitching the wind turbine plan, didn't return messages seeking comment.

But answers may be hard to come by involving wind turbines located offshore in fresh water.

The Great Lakes Commission is an agency that oversees development of the Great Lakes and works with the Canadian provinces of Ontario and Quebec.

Victoria Pebbles, program director for the Great Lakes Commission, said much of the impact of wind turbines on the water is unknown because it is a new technology. She said most of the research involved wind turbines in saltwater environments.

Communities on Lake St. Clair are not the first in Michigan to deal with the possibility of wind turbine neighbors.

There is a $4 billion plan to put wind turbines six miles off Grand Haven's shore on the west side of the state, according to the Grand Haven Tribune.

Roger Bergman, Grand Haven's mayor, said many of the questions residents have concerning financial and environmental impact have not been answered.

"So often all they are hearing is these concerns that may or may not be factual," Bergman said. "I don't have the facts. I don't know if it is true that these things do cause a problem in terms of fish and birds and things like that. ... It's awful easy to say, 'No. We don't want wind mills because we heard they are ugly or we heard they were loud.' It's important to get the facts. This could be a huge negative political football if we let it become that. It should be pretty straightforward."

Russ Harding, former director of Michigan's Department of Environmental Quality and current director of the Mackinac Center for Public Policy's Property Rights Network, said the turbines would be a "huge visual intrusion."

"Part of the reason you go to a lake is for the scenic beauty," Harding said. "It's like putting an industrial complex in a recreational area. "

And wind power is not efficient, Harding said.

"Our peak need for energy in Michigan is a hot day during the summer. That's when the wind isn't blowing. The very time you need it the most is when you generate the least," Harding said. "There is no wind farm anywhere in the world that operates more than 30 percent of the time."

"Wind is not a primary source of energy."

Nick Schroeck, executive director of the Great Lakes Environmental Law Center, said wind turbines are "part of the puzzle."

"We are potentially putting these things on a body of water that has tons of use that people recreate on and live around," he said. "We do have to have some wind energy development. We just have to be smart were we put them. We are going to put them somewhere."

The original version of this story was posted online on April 21, 2010.