Only a third of expected private investment and a fifth of expected jobs have been delivered among six companies selected by the state of Michigan to receive special tax breaks.

An additional company is in the process of being removed from the program.

These tax breaks came as part of the state's Renaissance Zones program. Companies selected for the program have been exempt from the Michigan Business Tax, state education tax, personal and real property taxes, and local income taxes. 

"Renaissance Zones are selective abatements to areas and businesses that eliminate virtually all state and local taxes," said James Hohman, a fiscal policy analyst at the Mackinac Center for Public Policy.

"While it would be nice if policymakers extended this courtesy to all taxpayers, they would only like to grant these special favors to selected businesses and areas."

Seven companies have been granted Renewable Energy Renaissance Zone status. Excluding Energy Components Group, which is in the process of being removed from the program, over $826 million in private investment was expected among participating companies. According to the program’s latest progress report, only $268 million has been delivered.

As is the case with other government-run economic development programs, job creation has not come close to original program goals. While the program was projected to create 1,061 jobs, only 220 jobs have been created.

Some companies, such as Dow Chemical and Frontier Renewable Resources, have not reported a single new job as a result of receiving these tax breaks.

The Renaissance Zones program was created in 1996 by a bill signed into law by Gov. John Engler. The renewable energy category was added to the program in 2006 by Gov. Jennifer Granholm.

Renewable energy is one category among many for which a company can qualify for these special tax exemptions. Other categories of Renaissance Zones include urban, rural, military, agricultural processing, ethanol projects, pharmaceutical recovery, redevelopment, forest products and tool and die.

(The following is adapted from comments Mackinac Center President Joseph G. Lehman delivered at the Detroit Regional Chamber of Commerce’s Mackinac Island Policy Conference on May 31, 2012.)

The “Protect Our Jobs” initiative is a radical constitutional amendment that makes government unions more powerful than the Legislature, allowing them to set public policy in secret negotiations with their employer that lawmakers would be powerless to override.

Not only would this amendment lock in place collective bargaining laws for the public sector that are a burden on taxpayers, it would undo reforms such as the emergency manager law, requirements for government employees to pay a fair share toward their own health care costs and changes to teacher tenure laws that prohibit personnel decisions based solely on seniority.

If passed, it will drive up the cost of government services without making them any better and set up a rigged game designed to benefit a select few. It’s the kind of thing Michigan voters and courts have already rejected repeatedly.

Consider these three numbers: 49, 3 percent and three.

• Forty-nine is the number of states that will stay ahead of Michigan economically or surpass us if the amendment wins.

“Protect Our Jobs” makes unionized government a constitutional mandate. But this amendment doesn’t stop there. It also explicitly nullifies all past and future laws related to collective bargaining, except those related to strikes.

We can’t estimate the total cost of the amendment yet. But it’s clear that at least $1.4 billion of the savings the Legislature produced last year would vanish instantly.

Michigan lagged 49 other states in economic performance for about a decade. This amendment would likely put us there again.

• The next number is 3 percent. This amendment rigs the game in favor of the 3 percent of Michigan’s population who work in unionized government at the state, local or school levels. It’s only impact on the middle class is that they get to pay more so the 3 percent can shield themselves from the economic world of the 97 percent. Public-sector pay and rich benefits can keep going up while private-sector compensation stagnates.

And the amendment won’t help union workers at private companies because their labor rules are set by federal law. New companies won’t want to move here either if the amendment keeps us from becoming a right-to-work state.

• The last number is three. That is the number of times in the last decade voters or courts rejected similar schemes pushed by unions to rig the game in their favor.

Fifty-four percent of voters refused to carve collective bargaining into the state Constitution in 2002. Sixty-two percent of voters refused to mandate automatic annual increases in school costs in 2006, most of which would have gone to unionized workers.

In 2010, the courts rejected the Reform Michigan Government Now amendment after the Mackinac Center found the UAW’s secret PowerPoint whose title explained their true purpose: “Changing the rules of politics in Michigan to help Democrats.”

That’s three failed attempts to rig the game, already.

Unionized government ensnares people who don’t even work for government. One union tried to claim home-based day care owners were government workers, and started taking dues from them. Some $4 million was taken before the scheme ended after an 18-month court battle led by the Mackinac Center Legal Foundation. And the SEIU is still skimming $30 million and counting from people, including parents, who care for their disabled children at home with Medicaid assistance.

“Protect Our Jobs” would make abuses like these more likely and much harder to undo. It’s a radical plan to rig the game in favor of the 3 percent, which makes it inherently unfair, and voters may have the chance to reject this kind of thing for the fourth time come November.

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Joseph G. Lehman is president of the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.