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Michigan Governor Touts Jobs Costing Taxpayers $113,000 Each

In her blog on the Huffington Post last Thursday, Gov. Jennifer Granholm laid out the details about Michigan landing North America's largest advanced battery plant.

But Gov. Granholm didn't mention one fact: It was the $374 million price tag in federal and state subsidies it took to get A123 Systems to put its plant in Livonia.

Granholm stated the plan would account for 3,300 jobs, meaning the taxpayers paid about $113,000 per job.

"This company hit the jackpot and it is all at the expense of Michigan taxpayers," said State Rep. Tom McMillin, R-Rochester Hills. "It is all about headlines. This is money that all the other taxpayers have to pay. Those are the silent and forgotten losers. Government loves high profile winners and invisible losers."

A123 was awarded $249 million grant from the U.S. Department of Energy as part of the American Recovery and Reinvestment Act.  The company also received $125 million in state incentives as part of the 21st Century Jobs Fund.

The state pitches it as part of establishing Michigan as the place to be for the advanced battery business.

"Michigan is fast becoming the advanced battery capital of the world thanks to companies like A123 and global leaders in this industrial sector," stated Michael Shore, spokesman for the Michigan Economic Development Corp., in an e-mail. "We are pleased to have played a role in their growth and expansion here. There are now 17 advanced battery companies that have announced plans to a total of $5.8 billion in new manufacturing and R&D investments in our state. These investments are projected to create 63,585 new jobs in Michigan over the next ten years."

But the state's auditor general has shown that the MEDC's job projection can be often times way off the mark. A state audit found job projections by the MEDC only occurred 28 percent of the time.

Michael LaFaive, director of the Mackinac Center's Morey Fiscal Policy Initiative, said government has often failed when trying to favor one industry over another via tax incentives.

And the $374 million incentive?

"This industrial policy is on a scale that would make many European countries blush," LaFaive said.

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.

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EduJobs Bill a "Gift to Unions"

Many charter schools in Michigan will not be able to use about $15.5 million of federal dollars earmarked to prevent teacher layoffs because they use "contracted" staff, said a spokesman for charter schools.

At issue is how teachers are hired in the state.  Seventy-one percent of charter schools use employees contracted by a management organization, which allows them to avoid mandatory inclusion in MSPERS, the teacher retirement program, according to Gary Naeyaert, vice president of public relations and legislative affairs for the Michigan Association of Public School Academies.

The federal dollars were part of the Obama Administration's attempt in August to give states $10 billion in assistance, in part to prevent teacher layoffs. Michigan received $312 million.

Naeyaert said very few charter school teachers belong to a union.

"It seems the Obama Administration, while talking the talk about support for public charter schools and standing up to the defenders of the status quo, are actually allowing EduJobs funding to be a $10 billion gift to the teachers' union," Naeyaert wrote in an e-mail.

"What's the justice when they (public schools) can use it for a janitor and we (charters) can't use it for a teacher," Naeyaert added in a phone interview.

The state House of Representatives approved HB 5872 that approved the spending of the federal dollars. It is currently in the state Senate.

"It is probably more pandering to the special interests of the MEA," said State Representative Tom McMillin, R-Rochester Hills. "It doesn't seem right."

HB 5872 was the bill the spurred legislation by the GOP asking that all bills come with a 72-hour waiting period before being voted upon.

Many of the GOP state representatives complained the Democrats didn't give them enough time read a substitute bill introduced on the floor before a vote was called. The Democrats said they gave the GOP all the time they requested.

Abby Rubley, spokesperson for Speaker of the House Andy Dillon, didn't return a message seeking comment.

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.