Bill Would Add Paid Members to State's Corporate Welfare Agency

Michigan's corporate welfare infrastructure could soon find itself larger if a new group of up to 10 members is added to a board as part of legislation in the House Commerce Committee.

House Bill 4998, as originally drafted, would place members of this new group on the Michigan Strategic Fund payroll for up to two years. However, Rep. Wayne Schmidt, R-Traverse City, the sponsor of the bill, said the legislation is probably going to be changed and that most likely the appointees would not be given paid positions.

"I agree with that and other possible changes, including those discussed at the hearing that would bring about greater transparency," he said. "That's the advantage of having a legislative process with hearings."

The Michigan Strategic Fund is the deliberative body of the state's corporate welfare arm, the Michigan Economic Development Corp. House Bill 4998 would create this new informal work group under the heading of the "entrepreneur-in-residence" project. The members of the group would likely function primarily in an advisory capacity.

According to the House Fiscal Agency analysis of House Bill 4998, the responsibilities of the entrepreneurs-in-residence project would include: improving outreach by state government to the private sector, strengthening coordination and interaction between state government and the private sector on issues relevant to entrepreneurs and small business concerns, and making state government economic development programs and incentives simpler and easier to access, more efficient, and more responsive to the needs of entrepreneurs and small business concerns.

"As corporate welfare becomes increasingly unpopular with the public, Michigan's 'Subsidy/Favor Industrial Complex' seeks new ways to defend its turf, and that's what this bill is all about," said Jack McHugh, senor legislative analyst for the Mackinac Center for Public Policy. "But co-opting a handful of friendly faces to give a veneer of legitimacy to corporate welfare would be like appointing Gov. Chris Christie as Surgeon General to lecture Americans about diet and exercise.

"Here's what people need to understand about these programs," McHugh continued. "Their managers never offer any systematic evidence that giving handouts and discriminatory tax breaks to a handful of politically favored developers and corporations does anything to grow the state economy, raise incomes or increase overall employment. To the contrary, they typically duck and weave to hide the kind of data that would show whether it works or doesn't. If it did work they wouldn't hide this behind a smokescreen of anecdotes and distractions."

However, Rep. Schmidt said his legislation could potentially put the strategic fund more in touch with the private sector and vice versa.

"As we work to get Michigan's economy back on track, the entrepreneurs-in-residence program might be a good one to help people (potential entrepreneurs) to navigate through the complexities of the process," Rep. Schmidt said. "They (members of the new group) could act as mentors and that might help bring some fresh faces into the process.

“These people could also serve as sort of advocates and intermediaries between government officials and the public," he added. "For instance, they could report back and say, 'this or that is not what's working in the private sector.' "

The bill, as drafted, also specifies that all departments and agencies would be required to cooperate with the strategic fund and any entrepreneur-in-residence as necessary to facilitate the project.

"We are not going to unilaterally disarm ourselves as we compete for jobs with other states like Texas or Virginia," Rep. Schmidt said. "These programs have been far more effective under Gov. Rick Snyder than they were under the former governor and we are working to make them even more effective and transparent."