News Story

Gubernatorial Candidates In Glass Houses On Corporate Handouts

AFL-CIO chief denounces Republican candidate for favoring corporations, but Democratic candidate gave away far more

As the election to select a new governor draws near, Democrats who attack the Republican ticket of Bill Schuette and Lisa Posthumus Lyons for favoring “wealthy corporate special interests” may need to consider a different strategy or risk looking hypocritical.

When gubernatorial candidate Schuette tagged Lyons as his lieutenant governor candidate, Democratic supporters started repeating talking points.

AFL-CIO President Ron Bieber was quoted by MIRS News as saying, “The Schuette-Lyons ticket sounds like the DeVos dream team for rigging the rules in favor of wealthy corporate special interests. Lisa Lyons spent her time in Lansing attacking the freedoms of working people and their families. She voted to give a massive tax break to corporations and balanced the budget by taxing the pensions of hard-working seniors and cutting hundreds of millions of dollars in education funding.”

When it comes to giving favors to corporations, few lawmakers have voted for them more often than Democratic gubernatorial candidate Gretchen Whitmer.

During her time in the Legislature, Whitmer voted for 98.1 percent of 30 new laws that authorized giving actual cash payments to particular corporations and developers, as determined in a recent policy brief published by the Mackinac Center for Public Policy. These 30 laws eventually resulted in the transfer of $4.5 billion in state taxpayer dollars to corporate interests. Whitmer opposed just one of the laws covered by the report, under which $87.5 million was given to private companies.

That doesn’t mean that Lisa Posthumus Lyons said “no” to corporate handouts though. Although she had fewer opportunities to vote on such measures, Lyons actually approved 100 percent of the laws that were passed during her six years in the House and covered by the study. Their passage had the effect of authorizing $280 million worth of corporate handouts.

Bill Schuette was a state senator for just two of the years covered by the Mackinac Center study, during which he voted “yes” on all three of the votes that were scored by it, resulting in some $224.2 million in cash subsidies to particular businesses.

The analysis looked at a total of 71 laws enacted since 2001 that authorized actual cash transfers to business owners, not just tax breaks or other benefits. Of these, 37 were considered “scoreable” votes. Many more corporate welfare bills were voted on during the terms of Lyons, Posthumus and Whitmer, and the three politicians favored most of them.

The Michigan AFL-CIO didn’t respond to an email seeking 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.

News Story

State's Corporate Welfare Partner Claims Thousands of Economists Support Stadium Subsidies

But economists uniformly oppose dinging taxpayers for projects like $125 million Kalamazoo facility

While calling for a $125 million proposed events center, the CEO of a local economic development group told the Kalamazoo County Board of Commissioners that thousands of economists say that publicly funded facilities are an economic boon for a region’s economy. But a look at research from scholars across the political spectrum finds little evidence to back up that claim.

“Sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation, those arguments most frequently used by subsidy advocates.” That’s the conclusion of a 2017 paper by economists Dennis Coates and Brad Humphreys. Coates, who teaches at the University of Maryland, and Humphreys, who teaches at West Virginia University, examined existing academic studies on the topic.

But Southwest Michigan First CEO Ron Kitchens expressed a different view at an Aug. 8 meeting when he responded to objections raised by Kalamazoo County Commissioner John Gisler.

Gisler expressed concerns that a new $125 million events center in Kalamazoo would shift economic activity away from areas outside the city of Kalamazoo. The city already has two centers which seat thousands of people for events; the proposed center would seat up to 8,000.

According to MLive, Kitchens told the county board, “There’s a whole litany of economists who I would equate to the folks who see the writing on the wall and they claim it’s a forgery. For every economist who says ‘This never works,’ there are thousands of them who believe that it does.”

At the meeting, Gisler cited William Kern, an economics professor at Western Michigan University, which is based in Kalamazoo. In a phone interview with Michigan Capitol Confidential, Kern said that economic impact studies put out by non-academics may talk about the benefits of publicly funded events centers and sports facilities. But the consensus among academic economists, he said, is that these projects don’t bring major economic benefits to the region.

“It’s either that [Kitchens is] appallingly ignorant of this research, which he should know about if he’s considering a project of this sort,” Kern said. “I more suspect that it’s just a case where he has his interests that he wants to promote and anything that stands in the way of those interests, he’s going to attempt to knock down.”

Kitchens told the county board that the area needs a new event center and asked for special favors for its construction. He asked the commissioners to approve a land swap to create a parcel big enough for the project. He also called for placing before voters a ballot proposal, which would levy a 1 percent tax on restaurant food and beverage sales in the county. The tax would, over 20 years, pay off debt incurred for the project.

Michigan Capitol Confidential reached out to Southwest Michigan First via email as well as a phone call, asking Kitchens to provide research describing the positive economic benefits of a publicly funded events center or sports stadium. He declined to comment.

A 2017 survey of economists from across the political spectrum found strong consensus that the costs of stadiums outweigh the benefits. In that survey, 83 percent of the economists either “agreed” or “strongly agreed” that, “Providing state and local subsidies to build stadiums for professional sports teams is likely to cost the relevant taxpayers more than any local economic benefits that are generated.” Only 4 percent disagreed while none were in strong disagreement and the rest were uncertain.

A 2011 book on sports stadiums subsidies written by the Brookings Institution’s Roger Noll and Andrew Zimbalist concluded that bad economic reasoning is used to give intellectual support for taxpayer-funded stadiums.

“A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment,” wrote Noll and Zimbalist. “No recent facility appears to have earned anything approaching a reasonable return on investment.”

About 10 years ago, Southwestern Michigan First proposed a new events center in Kalamazoo. The proposal failed.

In 1974, the Greenleaf Hospitality Group built the Wings Event Center in Kalamazoo. The facility has a seating capacity for 5,113 people during hockey games. When configured for a concert, it can seat up to 6,300. The county is also home to an expo center that can seat up to 4,500.

Gisler doubts that the county board will ask voters to support a 1 percent tax on restaurant meals.

“Right now I’d say it doesn’t look too favorable, but I’ve been wrong about these things before,” Gisler said. “[My constituents] were down on it whenever it first came up and now they’re really down on it.”

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.