Emails Show Shaky Grounds for Corporate Welfare Agency’s Transparency Shutdown

The official story from the Michigan Economic Development Corporation — the state's corporate welfare arm — is that its 2009 decision to stop disclosing how much money particular companies collect in tax breaks (and cash subsidies styled as tax credits) was based on informal verbal advice solicited from the attorney general's office. However, contemporary email records reveal that an even greater degree of ambiguity surrounded the agency’s leap away from transparency.

The emails from an exchange between MEDC officials are dated Feb. 13, 2009, and were obtained under the Freedom of Information Act. They document concerns about whether the AG’s advice would be made official (aka put in writing). Six years later, the informal advice has yet to be made public or official.

The emails suggest that the grounds for shutting down transparency were based on speculation. One email states that over the previous 13 years, Michael LaFaive of the Mackinac Center for Public Policy probably should not have been given data disclosing the amounts various companies had received.

The word “probably” is used twice in that same email, suggesting that even in an informal conversation among colleagues, the author felt it necessary to hedge the opinion. This could be construed as indicating doubt about whether the responses to LaFaive constituted sufficient grounds for putting behind a veil of secrecy critical information about an expensive and controversial government program.

The subject line on the email exchange was “RE: SB 71 and release of MEGA credit data,” which refers to legislation that had just passed the Senate with the ostensible purpose of increasing MEDC transparency. What follows are three emails among MEDC officials, with the names of officials receiving courtesy copies omitted.

The first email is from Mark Morante, who at the time was vice president of policy and legislative affairs for the MEDC. He is now the manager of the Michigan Strategic Fund, which is the MEDC's parent agency.

At 10:06 AM, Friday, February 13, 2009 -

From Mark Morante -

“Do we already provide company specific performance data upon request?? If so, let's now fight the issue in the House but still maintain we cannot release the actual certificate.”

The second email is from Peter Anastor, who was at the time the managing director of the MEDC; he is now the agency's director of policy.

At 2:22 PM –

From Peter Anastor -

“The problem here is that we used to provide specific tax credit amounts by company to the Mackinac Center. We have now been advised that providing that information is probably not allowed due to the Revenue Act restrictions. LaFaive, who was getting this information for the last 13 years, now thinks we are trying to play him, but in fact he probably should not have been getting that information by specific company for the past 13 years.”

“We can certainly provide the information in aggregate, but we have been advised to no longer provide the information by company. We also are able to provide the prospective data (board approved) jobs and credit amount by company, but just not the actual credit amount by company each year. We can even provide actual jobs created numbers by company by year, just not the tax credit amounts.”

The next letter is once again from Morante.

At 2:32 PM –

From: Mark Morante - “ouch. is treasury simpatico with our interpretation of revenue act restrictions?? . . . the AG’s office?? In writing?”

“I see the mac center's point (that hurt to type) if we've been giving them this data since the beginning of the program but now we are not.”

Michigan Capitol Confidential sent a copy of the emails to MEDC spokeswoman Emily Guerrant.

“What he (Morante) was doing was questioning if Treasury or the AG had weighed in officially (in writing) on the interpretation to no longer disclose the tax information,” Guerrant said. “Mark was VP of policy and legislative affairs at this time, and was not the one communicating directly with the AG’s office on the discussion. As to level of ‘concern’ on his part, I don’t know how to respond to that. He was simply bringing up the question to his colleagues.”

The attorney general’s office could have legitimate reasons for failing to put in writing its advice to stop disclosing company-specific information. For example, a company that believed its taxpayer confidentiality was violated could use such a document as evidence in a lawsuit against the state.

To the extent that a lawsuit was a real concern, the MEDC could have asked the Legislature to amend state law to clarify that the disclosures made over the preceding 13 years were proper. Instead, the MEDC chose to pursue more secrecy in its operations.

The MEGA program is costing this year's state budget over $800 million. Over the next few decades, taxpayers are on the hook for up to $9 billion. Even so, the state is not releasing the names of the companies involved.