Michigan state government gives large subsidies to select corporations in the hope of creating new jobs — $4.4 billion in 2023 alone — but in the case of a paper mill in Escanaba, big promises led to a bigger disappointment for local residents.

“Today’s approvals will help us continue to grow our economy and compete for every good-paying job,” Gov. Gretchen Whitmer said in December 2022, as the Michigan Economic Development Corporation announced plans to award $29.4 million in public money to Swedish paper producer Billerud for an Escanaba mill.

The governor signed legislation the following month that allocated a total of $200 million to the paper project. The development corporation expected the subsidy “to generate a total capital investment of approximately $1 billion and retain at least 1,240 well-paying jobs.”

Less than a year later, Whitmer touted a smaller number.

“We’re transforming Escanaba’s Billerud Mill, supporting 800 good-paying jobs at the facility, and hundreds more during construction,” she told a local crowd in August 2023, according to the Upper Peninsula’s Radio Results Network.

In May 2024, however, Billerud said it would cancel the project.

It was a discouraging end for a deal the Michigan Economic Development Corporation had called a “historic investment” that “will help ensure continued prosperity for generations to come.”

“Such a project represented not just economic security, but also was leading a vision for future growth,” James McNeil, Escanaba’s city manager, told Michigan Capitol Confidential. He noted that members of the community made important personal and financial decisions in anticipation of the development.

News of the cancellation has prompted a renewed local focus on economic diversification, McNeil said, adding that the community hopes to get the MEDC’s help on other projects.

These efforts show that the community is determined to thrive and adapt, McNeil told CapCon.

“Despite this setback, it’s heartening to see ongoing generational investments in housing, downtown development, and public infrastructure,” he said.

Escanaba could have used the business. It is in Delta County, which had a poverty rate of 12.5% in 2023, according to the U.S. Census Bureau, and its median household income is almost $15,000 lower than the state median.

Another local official said the deal offered residents a cause for optimism.

“Through a number of owners, the paper mill has supported generations of workers and families across our region, drawing from several counties across the central Upper Peninsula,” Ronald Beauchamp, a member of Escanaba’s city council, told CapCon. The mill remains a strong community asset, he said. Beauchamp hopes for growth in the future, but he told CapCon he never gets his hopes up when investment news comes out.

Quintin Messer, chief executive officer of the MEDC, did not respond to a request for comment.

Between 1995 and 2012, only 2.3% of companies that were subsidized by the state’s main jobs program met their jobs target, James Hohman, fiscal policy director at the Mackinac Center for Public Policy wrote in a Detroit News op-ed.

Only one company created jobs through Good Jobs for Michigan, another government program that ran from 2017 through 2020, Hohman added.

Republican Rep. David Prestin, who represents Escanaba in the Michigan House, did not respond to an email seeking comment.

Gov. Gretchen Whitmer has supported more than $16 billion in corporate welfare, a survey of her voting and governing record shows. At the same time, Whitmer has heavily criticized Republicans for their own handouts to select companies.

Whitmer voted for $4.5 billion in selective business subsidies during her time as a legislator. As governor, she supported another $6.6 billion in taxpayer money to hand-picked businesses. She is also proposing, thus far this year, an additional $5.1 billion in corporate welfare.

In all, Whitmer has supported $16.2 billion in business subsidies since her first election in 2001 to the Michigan House of Representatives.

That is more than the entire amount raised annually by Michigan’s income tax, which brings in just $12.3 billion per year, noted James Hohman, fiscal policy director at the Mackinac Center for Public Policy.

Whitmer attacked subsidies to select corporations when she ran for governor in 2018, as Michigan Capitol Confidential reported. Gubernatorial candidate Whitmer released a campaign commercial telling voters she fought against “corporate tax giveaways” in Gov. Rick Snyder’s administration. 

“I’m tired of seeing corporations getting more tax breaks, while you get hit with a retirement tax,” Whitmer said in the commercial.

Whitmer also attacked Bill Schuette, her Republican opponent, for giving public money to private companies. “For years, Bill Schuette’s handed tax giveaways to the super-rich, putting Michigan taxes out of whack,” she said in a 2018 campaign ad.

In fact, Schuette’s corporate welfare track record was more modest than Whitmer’s. Schuette supported $888.8 million in handouts during his time in office. While serving in both the Michigan House and Senate, Whitmer voted for four times that amount.

As governor, Whitmer burned through a $9 billion budget surplus while vetoing a temporary cut in the gasoline tax and a cut in income taxes. Michigan Votes described one bill the governor vetoed:

To cut the state income tax rate for individuals from 4.25% to 4.0%; authorize a $500 nonrefundable child tax credit; increase the amount the state adds on to a refundable federal earned income tax credit for low income households that owe no taxes, from 6% to 20% of the federal amount; increase the income tax exemption for individuals age 67 and above from $20,000 to $21,800; authorize tax credits for disabled veterans, and more. The Senate Fiscal Agency estimates the bill would save taxpayers around $2.5 billion annually.

Whitmer did not respond to an email seeking comment.