Lawmakers Poised To Continue Corporate Welfare Fund
Program track record includes inaccurate job creation claims, little transparency
The state Legislature is considering giving more funding to a program that only delivers 19 percent of the jobs it claims to have created.
Legislation is on the House floor that would increase the 21st Century Jobs Fund, a corporate welfare program created under former Gov. Jennifer Granholm. Many House Republicans and Democrats oppose the seven-bill package, or aspects of it. Getting enough votes to pass the bills and send them to the Senate could be tough, but the thread of opposition preventing that from happening could soon prove very thin.
If the legislation reaches the Senate, passage seems highly likely since most of the measures have already been approved by that chamber in their original form.
The key bill in the package is Senate Bill 269, which would allow the 21st Century Jobs Fund to go forward until 2019 and increase funding for it from $75 million to $100 million. Without enactment of the legislation, the 21st Century Jobs Fund would cease to exist as of Oct. 1, 2015.
The fund is what Gov. Granholm referred to when she said in her 2006 State of the State address that the state would be "blown away." The program has had numerous subsidy failures and audit and reporting problems.
In the House Commerce Committee, Senate Bill 269 passed during the December session on a 12-7 bipartisan vote. Republicans on the panel who voted "yes" were: Reps. Frank Foster, R-Pellston; Jeff Farrington, R-Utica; Ben Glardon, R-Owosso; Gail Haines, R-Waterford; Rick Outman, R-Six Lakes; Wayne Schmidt, R-Traverse City; and Dale Zorn, R-Ida. Democrats on the committee who voted against the bill were: Reps. Jon Switalski, D-Warren and Henry Yanez, D-Sterling Heights.
Rep. Foster, who chairs the committee, said the bill package represents an improved program for the future; not a continuation of the current program.
"As chairman of the committee, I think different people may have voted for the bill and parts of the package for various reasons," Rep. Foster said. "For me, I was happy to support the legislation, with the caveat that it does provide additional transparency. We will continue to work for clawback (returning misspent dollars) provisions. No one wants to see any more of the kinds of audits that we've seen in the past. We need to move forward under Republican leadership to continue to add jobs to the private sector."
None of the other Republicans on the committee who voted "yes" responded to a request for comment.
Senate Bill 270 would allow the Michigan Economic Development Corp.'s deliberative panel, called the Michigan Strategic Fund, to use the 21st Century Jobs Fund money for whatever programs it desires. Senate Bill 271 broadens the grant limitations for the program.
When the package was first introduced in early 2013, it was presented to some lawmakers as a trade-off that would keep the 21st Century Jobs Fund going but with greater transparency. That part of the legislation is House Bill 4480, which has the potential to provide greater transparency, although in its initial draft phase it was criticized as being weak. At the time, lawmakers said House Bill 4480 was a "work in progress" and they were interested in changing the bill so that it would provide greater transparency.
In the fall of 2013, about six months after the legislation was introduced, the Auditor General released a performance audit of the 21st Century Jobs Fund that found that only 19 percent of the jobs the program originally claimed to have created actually materialized. That was in contrast to the 75 percent that those who operate the program had reported to the Legislature.
In spite of the Auditor General's report, the legislative package seemed on the verge moving out of committee in November. However, its progress was slowed somewhat when House Democrats started to publically criticize the bills on several counts, including the idea of expanding the program without establishing overall accountability.
When the legislation moved out of the House Commerce Committee House Bill 4480, the so-called transparency bill in the package, was the only bill to receive unanimous support. Some committee members who opposed Senate Bill 269 said they voted for House Bill 4480 because it would improve transparency a little bit over the status quo, not because they thought it provided enough transparency.
"I voted for that bill because when you compare it to what they're reporting now it would be a small improvement," Rep. Switalski said. "But it doesn't come close to providing the transparency that's needed. We should have real transparency and then hold them accountable based on their performance. If it turns out that they're not using the money efficiently that money should be paid back to the taxpayers."
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.
January 31, 2014, MichiganVotes Weekly Vote Report
Senate Bill 273: Impose licensure on "psychological associates": Passed 34 to 3 in the Senate
To impose licensure and regulation on "psychological associates," with license fees, continuing education mandates, a mandate to have accumulated 6,000 hours of experience prior to being eligible for a license, and other requirements imposed on potential new entrants to this profession by a board of existing practitioners.
Who Voted "Yes" and Who Voted "No"
Senate Bill 711, Extend Cobo sales tax exemption: Passed 34 to 1 in the Senate
To extend for another two years the 2014 sunset on a law that exempts from sales tax the purchase of tools and equipment by a contractor if these are used to fix or renovate Cobo Hall in Detroit.
Who Voted "Yes" and Who Voted "No"
Other newsworthy legislative developments
The Senate Finance Committee voted on party lines to approve Senate Bill 402, which would gradually roll back a 2007 income tax increase until the rate returns to 3.9 percent in 2017, down from the current 4.25 percent rate. According to the Senate Fiscal Agency, when fully phased in this would save taxpayers around $850 million annually. The bill is now pending before the full Senate.
In the House, House Bills 5265 to 5267 were introduced to cut the current 4.25 percent rate to 4.05 percent in 2016, and then reduce it by 0.1 percent each year, but only if in the previous year this tax has taken in at least $300 million more than it did the year before. The chairman of the House Tax Policy committee, who also is the sponsor of HB 5267, said he plans a committee vote on the bills by the end of February.
Another House committee approved House Bill 5108, which would repeal a state law that bans ticket "scalping" at sports and entertainment events. The bill is now pending before the full House.
SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit https://www.michiganvotes.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.
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