Keep economic development under governor’s control
A convoluted bill in the Michigan House would change how the state’s top economic development agency is funded. Lawmakers want more control over allocation of the money, but giving them this authority would likely divert taxpayer and other funds from their intended purpose of business creation.
The Michigan Strategic Fund is administrated through the Michigan Economic Development Corp. and consists only of money from the Treasury. However, the MEDC itself has other funding sources, and it appears the intent of this legislation is to tap into them.
Rep. Martin Howrylak, R-Troy, one of the sponsors of the bill, says lawmakers want all MEDC finances to go through the Legislature. He says the bill would increase transparency and improve oversight of all economic development spending.
But the MEDC is accountable to the governor for its spending, and that’s how it should remain. As an executive function, the agency is more nimble and less vulnerable to political whims. The bill would be intrusive in the operation of the agency, and would subject every development expenditure to debate influenced by special interests.
If it’s transparency lawmakers are seeking, it already exists.
Strategic fund appropriations are approved in public sessions and are listed in a yearly report to the Legislature. The report is posted online and actions are also outlined in news releases.
Along with general fund dollars, the MEDC captures some special Indian casino tax revenue. That seems to be what has caught the attention of lawmakers. Those funds vary from year to year and are not part of the strategic fund. For fiscal year 2014-15, the total is about $46 million. The money comes to the organization through complicated compact arrangements that are approved and reviewed by the federal government.
The strategic fund and the MEDC have helped retain and attract businesses and jobs to Michigan. If lawmakers feel it is no longer a worthwhile investment, it should be scrapped. But companies subjecting it to Legislative meddling is not the answer.
In the current fiscal year, the strategic fund has allocated $129 million for business attraction and community revitalization and $25 million for entrepreneurial support, which is helping small businesses get started and obtain loans. There is also $29 million for the Pure Michigan campaign, among other expenditures.
From 2009 through 2014, the MEDC claims to have helped draw roughly $16 billion of automotive investment in the state.
The MEDC is an important tool in helping Michigan compete with other states that are far more generous in their tax credits and subsidies. It handles its functions well, and there is no need to change the way it operates.