Score a big one for the Republican ideologues.
Mortgage king Dan Gilbert’s financial heft and expansive downtown vision apparently are no match for departing Speaker Kevin Cotter. He used a lame-duck session of the Legislature to let die two sets of tax-incentive bills pushed hard by business and state economic development pros.
The legislation is designed to attract large business investments, and, second, encourage “brownfield” development in the state’s urban centers, especially Detroit. Business backers of both packages are frustrated with the setback, but they’re not quitting.
“We’re going to keep fighting for this because it’s the right thing to do,” says Doug Rothwell, CEO of Business Leaders for Michigan. “Our competitor states continue to move forward. The longer we stand still, others will pass us. We’re kind of letting ideology stand in the way of making progress.”
No kidding. Doctrinal purity is a weak answer to competition, especially when rival states are prepared to play a long game by spending big to attract investment and tax-paying jobs. Michigan lawmakers are free to delude themselves into believing they can’t (or shouldn’t) play the same game, but the net result is unfulfilled potential, flat-lining population growth and more mediocrity.
The hangover from Granholm-era tax credits, extended to Detroit’s automakers in the darkest depths of the global automotive meltdown, scandalized enough GOP lawmakers into steadfastly believing that good policy is sufficient to attract new investment.
Too often it isn’t, say economic development professionals across the state. Michigan’s post-recession rebound, evident most in a surge of manufacturing jobs and the redevelopments of downtown Detroit and Grand Rapids, masks the competitive challenges weighing on localities across the state.
“Business climate has improved,” an economic development executive in west Michigan wrote me in an email. “But we still get asked ‘What will you do for me?’ It’s the way it works.”
Yes, it is, and mobile capital has options. The success of Gilbert’s $2 billion-plus play in downtown Detroit, a virtuous cycle of headquarters relocation and the acquisition of some 90 downtown buildings, creates a false sense of security. It also manufactures distinct whiffs of entitlement that are pure Detroit.
Namely, if the billionaire is willing to use his own money to renovate and reoccupy those buildings, he can certainly afford to “go vertical” on the Monroe Block or Hudson’s site without help from taxpayers. Not always.
Now, it’s true that Gilbert, chairman of Quicken Loans Inc., doesn’t cut a necessarily sympathetic figure in any quest for development incentives. Over the past six years, he’s demonstrated the capacity to invest private dollars to acquire and rehab downtown buildings; to reoccupy those buildings with paying tenants; to attract retail back to the city center.
What he hasn’t done are iconic projects (think, say, the Renaissance Center or One Detroit Center) that redefine the city skyline and further change the conversation about a city not long ago given up for dead. Ideology, meet reality.
More than a few Republicans favor the idealistic trope that you can get something (jobs and investment) for nothing. If tax incentives are nothing more than the state picking winners and losers, as Cotter suggested in a statement, and if the job of state lawmakers is to make Michigan economically competitive, why not drop the charade?
Join Texas and Florida by moving to abolish the state income tax altogether. Skinny the flat corporate income tax even more to show that Michigan is all business all the time, that it doesn’t need no stinkin’ incentives to become once again the entrepreneurial mecca it was a century ago.
Channel President-elect Donald Trump and declare war on crony capitalism because everyone knows Michigan generally, and Detroit more specifically, is a well-established magnet for investment — especially outside the auto industry.
No, it isn’t. And, no, they won’t. Killing the Gilbert-backed bills is a meaningless act of protest. Cotter can say he struck a blow against a proposition that would allow the “state to pick winners and losers,” and sympathetic Republicans (and a new speaker) can get another crack at moving the legislation in the new year.
Less than eight years ago, Michigan was ground-zero for some of the most spectacular corporate bankruptcies ever. Its largest city claims the dubious honor of being the largest in the nation ever to file Chapter 9 bankruptcy.
Its bleeding of manufacturing jobs during the Lost Decade likely will never be fully replaced, Cotter’s spin notwithstanding. That’s why Michigan Republicans ought to take another look at these bills soon, or next month, and reconsider a decision made too hastily.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.