News Story

Spotty Track Record Doesn't Stop State Agency From Doling Out Deals

General Motors has 'created' fewer jobs than promised on 5 of the last 6 MEDC-partnered projects

Despite a spotty record on positive job returns, the Michigan Economic Development Corp. is offering up more tax deals to try and create jobs in the state.

The MEDC's most recent beneficiary is General Motors Co., which announced recently it expects to create 1,500 jobs over the next several years at the company's Warren Tech Center. The MEDC is planning to amend an existing tax credit agreement to cover the project.

However, GM's track record with job projections involving the MEDC has not been good. In five of the six deals going back to 1999, GM ended up with fewer jobs than when the tax deal was offered. In all six cases, GM was given a tax incentive for "retained jobs," meaning the jobs were already in place and the incentive was to keep them from leaving the state. For example, General Motors got a tax deal with the MEDC in May 1999 for retaining 1,511 jobs. By 2009, GM had 1,290 jobs at the facility, according to the MEDC.

Not all the deals the MEDC supports are as easy to track. The MEDC's most recent annual report on jobs was released in October 2011. Yet, its data on job creation/retention for most companies only goes back to 2009.

By comparison, companies that received money from the federal government's American Recovery and Reinvestment Act of 2009 (the stimulus act) have to file quarterly reports.

"Despite recent legislation imploring the MEDC to become more transparent, it's impossible to tell how much taxpayers are supporting businesses and whether those companies are still in business," said James Hohman, fiscal policy analyst with the Mackinac Center for Public Policy. "The taxpayers are simply not able to track the effectiveness of the MEDC credits. You can’t even track if there has been any progress on these projects for the last three years."

MEDC Spokesman Mike Shore didn't respond to a request seeking comment.

GM also didn't immediately respond to a request for comment.

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See also:

Michigan Capitol Confidential Coverage of the MEDC

GM Asks for More Tax Incentives

GM CEO: Customers Don't Pay High Enough Gas Tax

Economic Development a Campaign Tool

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

Proposal 2: More Power for Government Unions

(Editor’s Note: The following is excerpted and abridged from the text of a speech delivered by Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center, to various groups around the state about the ballot proposals on the Nov. 6 ballot. We'll post one part each day this week explaining Proposals 1 through 5.)

Monday: Proposal 1 a Referendum on PA 4

Today: Proposal 2, The 'Collective Bargaining' Amendment

A “yes” vote on Proposal 2 would allow government union collective bargaining agreements to supersede state laws. It would make passing a right-to-work law impossible, repeal existing laws like “paycheck protection” and “dues check off” and probably cost taxpayers at least $1.6 billion in projected savings annually.

It also would abrogate in some way 170 Michigan laws, and over time make Michigan’s Freedom of Information Act all but worthless. A no vote rejects this union power grab.

Here’s part of what the proposed amendment says:

"No existing or future law of the state or its political subdivision shall abridge, impair or limit …” unions’ ability to “negotiate in good faith regarding wages, hours, and other terms and conditions of employment.”

In other words, mandates written into government collective bargaining agreements will hold the power of constitutional mandate. No past, present or future law could change that.

If Proposal 2 is adopted, passing a right-to-work law — where workers need not financially support a union to work in a unionized environment — would be impossible. Americans are migrating to right-to-work states because of more job opportunities in those states. Paycheck protection and dues check off reforms for government employees would be repealed because these affect union dues collection and so are explicitly written into the initiative.

Paycheck protection prohibits unions from spending member dues on political campaigns without an employee’s express consent. Dues check-off requires government workers to give written permission to have union dues automatically deducted from their paycheck and delivered by their employer to the union.

If Proposal 2 passes, other solid labor and fiscal reforms could be reversed, costing Michigan taxpayers some $1.6 billion in annual projected savings, according to my colleagues F. Vincent Vernuccio and James Hohman.

It is also conceivable that unions would use their new powers to limit citizens’ access to government information through the Michigan Freedom of Information Act. Under Proposal 2, nothing would prevent government unions from inserting a collective bargaining agreement provision prohibiting disclosure of government documents, regardless of FOIA. They could even prohibit making public the collective bargaining agreement itself, and this provision would trump the requirements in Michigan’s Freedom of Information Act.

A "yes" vote on Proposal 2 would protect government employees unions directly, raise the cost of public services dramatically and ultimately place real limitations on acquiring government information. A “no” vote would reject the scheme.

For more information on the Nov. 6 ballot proposals, please see www.MIballot2012.org.

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.