News Story

Sun Not Shining on State Solar Subsidies

In 2009, then-Gov. Jennifer Granholm touted the $725 million Wixom renewable energy park project as “symbolic for Michigan in what we’re going to become.”

The new solar power companies were supposed to create 4,000 jobs in a closed auto assembly plant and provide a vivid example of Michigan’s economic transition from automobiles to green energy. In return the state approved a $100 million tax credit.

Two years later, Ford told the Wixom city officials the deal wasn’t happening.

Michigan Capitol Confidential took a look back at the nine solar power companies that were approved for state tax credits. Many have fizzled with reports that the companies are laying off employees at a time they were supposed to have been adding jobs.

For example, in 2009 a company from Georgia called Suniva announced it planned to open a $250 million manufacturing plant in Saginaw County. It was to add 500 jobs.

Media reports said the company is holding off plans for a Michigan plant after deciding not to pursue a Department of Energy loan.

Energy Conversion Devices and United Solar Ovonics are affiliated companies that have been approved for state tax credits for four different projects that were supposed to add about 5,700 jobs. Both companies announced layoffs this year.

Evergreen Solar opened a solar plant in Midland in 2009. The company announced in August it was filing for bankruptcy.

Gov. Granholm touted Suniva and Evergreen Solar in a Feb. 25, 2010, Huffington Post column in which she wrote, “Last May, I first posted here about how Michigan would lead the green industrial revolution. Some folks scoffed at that idea. They said I was too optimistic. They said Michigan would never lead in a green economy. We're working to prove them wrong.”

According to the Bureau of Labor Statistics, Michigan produced as many as 1,160 solar energy-related jobs in 2010. The state has 3.8 million jobs.

“Despite over a decade of subsidizing solar projects, the state has little to show for it,” said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

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.

News Story

Detroit Bridge: Political Patronage, or Power to the People?

MIRS has reported that all 12 Democrats in the state senate — only four of whom are from Detroit — will vote “yes” on a controversial Detroit-Windsor bridge, but only if the deal includes a wish list of “community benefits” being written by Sen. Tupac Hunter, D-Detroit.

What are these “community benefits”? The fancy labels like “employment training and related facilities;” “housing;” “economic development;” “green development initiatives;” and more sound nice, but the benefits of these programs are, at the very best, uncertain. Here’s what is certain: For the political system’s foot soldiers, these programs translate into jobs with the government or organizations funded by government. For the moneyed interests that bankroll the political system, it means “economic development” — business subsidies, sweetheart real estate deals, selective tax breaks, government contracts and so on. These benefits to the politically connected boil down to political patronage.

Is patronage the only way? The rationale for these programs is concern that bridge construction and operation will have a disparate impact on the surrounding area, for which there should be compensation. To the extent this is valid, here’s a better alternative: Give the compensation directly to the people affected, and skip the middleman politicians, bureaucrats and community organizers.

If property owners and residents themselves believe that yet another “employment training” program or “green development initiative” is the best way to rebuild their community, they can use this money to create those programs voluntarily.

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.

News Story

Amtrak Subsidies vs. Megabus Private Enterprise

Amtrak made statewide news recently with its announcement that it has set ridership records in Michigan. But one frequent critic of rail transit says that isn’t necessarily a good thing.

Wendell Cox, a public policy consultant with Illinois-based Demographia, says that Amtrak is a far more costly option when compared to Megabus, a private bus service that launched in April 2006 and operates in about 50 major cities.

For example, Amtrak reported that its Detroit-to-Chicago rail service, known as the "Wolverine," had a 4.9 percent jump in usage. 

If someone were to purchase an Amtrak ticket for a Nov. 7 trip from Detroit to Chicago and then return the same day, the cost would be $32 each way, or $64 round trip. But Cox cites a 2008 study by the Pew Charitable Trusts that reports Amtrak lost $55 per rider on each leg of the Detroit-Chicago route. Cox says that’s $110 per roundtrip that taxpayers subsidized in 2008.

By comparison, the same roundtrip from Detroit to Chicago and back again on Megabus would take two extra minutes each way, but the Megabus roundtrip ticket costs $25.

Cox said Amtrak subsidies are hard to track, but judging by the Pew study, the Amtrak subsidy for one passenger could fund more than four passengers on Megabus on the Detroit-to-Chicago roundtrip.

“High quality bus service, featuring on-board high speed wireless internet, costs passengers less between Detroit and Chicago and takes about the same time,” Cox said in an email. “There is a big difference, however. Train riders are subsidized by taxpayers, while bus riders pay their full fare. In a nation that needs to cut unnecessary spending, Amtrak should be at the top of the list.”

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.