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Despite Costly Previous Failures, Michigan Governor Wants ‘Venture Capital’ Corporate Subsidies

Taxpayers would backstop favored firms’ losses

In 2003 state legislators in Michigan enacted a law authorizing what they called venture capital subsidies for certain business owners. The scheme ultimately cost the state $613,000 for every job it created, which in this case meant taxpayer dollars collected to pay for other state priorities went instead to repay lenders to failed companies.

In 2021, Gov. Gretchen Whitmer wants lawmakers to try it again with a similar program.

Before it was suspended by the Legislature and Gov. Rick Snyder in 2015, the state’s Venture Michigan Fund spent $450 million in funds repaying loans made by third parties to 52 companies, all to create what turned out to be 734 jobs, according to a 2018 Auditor General report.

But in 2003 the concept received praise from voices inside and outside government. Business reporter Rick Haglund wrote a story for Booth News promoting the concept. It downplayed concerns state taxpayers would be stuck with the bill when its beneficiaries fell short of their promises.

Haglund wrote: “Supporters of the state-backed fund say big losses are unlikely. Oklahoma, which has had a similar program for 10 years, hasn’t had to hand out any tax credits to make good on its guarantee, according to Jason Burr, an Ann Arbor venture capitalist who has studied the Oklahoma fund. Burr is treasurer of the Michigan Venture Capital Association.”

The 2003 story continued: “If state-backed funds don't meet their guaranteed rate of return, the state must make up the difference in tax credits.”

Only if investments went belly up would investors tap into money, dubbed “tax vouchers,” authorized to secure the funds. The program that became law used regular state revenue to cover the eventual losers, not pension fund dollars.

Eighteen years later, investors had claimed every one of the $450 million in tax voucher bailouts that had been authorized – exactly what the program’s corporate, government and media boosters insisted would not happen back in 2003.

Now, Crain’s Detroit Business is reporting that officials want to resuscitate the concept, this time funded by federal COVID-19 relief dollars collected by the state. The new plan is to dedicate $200 million from this source to very similar scheme with a new title, the “Startup Resilience Initiative.”

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.

News Story

To Teachers Union, Public Schools Are Part Of America’s ‘Systems Of Oppression’

A policy shift from promoting equal opportunity to preferred outcomes

Michigan’s largest teachers union wants public school teachers to actively combat what it calls institutional racism in their classrooms.

“Systemic racism is so deeply rooted in our history, culture and institutions that there’s no escaping it. Visible or not, its impacts are ever-present,” states a guide put out by the National Education Association on how to generate classroom activism around racial issues.

“Combating institutional racism and advancing racial justice in education and beyond is at the forefront of the NEA’s vision,” the guide states.

The Michigan Education Association’s website has a link to neaedjustice.org, which contains a resource guide on lessons for teachers and students.

The mission, according to the National Education Association’s “RACIAL JUSTICE IN EDUCATION” guide is to “break down the barriers to racial equity, and to prepare every student to succeed in a diverse and interdependent world.”

The guide states that avoiding the issue “communicates to students of color that racism doesn’t matter enough to warrant attention," while white students “often see racism being accepted and normalized, without acknowledgement or accountability.” It also states that the “lofty ideal of educational excellence and equity for all students, if it even exists at your school, may seem like a hollow commitment.”

The document describes racial equity as “the systematic fair treatment of all people, resulting in fair opportunities and outcomes for everyone.” The call for an undefined goal of “fair outcomes” suggests this is not the same as equal rights under the law.

The guide also advises teachers: "You probably don’t have to revamp your entire curricula or classroom practice. But there are many ways we can make room for addressing racial dynamics. Discussions in your classroom can even be stepping stones to addressing race in your school, school district and community."

It continues to teachers: "If you are white, you may be used to the privilege of not having to think or talk about race, especially your own. Push yourself to take some risks, which will likely lead to some rich learning. Your honesty and humility will help your students open up."

In Michigan, 65% of the public school students were white in 2020-21.

The MEA did not respond to a request for comment.

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.