Michigan House Republicans
After MEDC doles out $10M to ineligible recipient, need for accountability in economic development even clearer
RELEASE|March 27, 2024
Contact: Mike Harris

Rep. Mike Harris on Wednesday called for more accountability for taxpayer-funded economic development programs after an audit found that the Michigan Economic Development Corporation (MEDC) paid $10 million to an undisclosed entity that hadn’t met the eligibility criteria.

Under the grant contract, the grantee was required to expend the entirety of an initial grant before receiving the second payment of $10 million, but Gov. Gretchen Whitmer’s MEDC provided the additional grant payment before the recipient spent the initial funds as required. Michigan’s nonpartisan Office of the Auditor General (OAG) found that the MEDC approved and paid the invalid grant because it didn’t have adequate processes in place to prevent the error. The OAG is currently facing a 28% budget cut proposed by the governor, threatening its ability to find similar failures in the future. Harris, R-Waterford, said the state needs more accountability measures, not fewer, to protect taxpayers’ interests in economic development deals.

“Michigan’s taxpayer-funded economic development has been marred by high costs and disappointing results — we pay too much for low-wage jobs that may not even materialize,” Harris said. “Awarding $10 million illegitimately is yet another example of the lack of respect for taxpayers that prevails in Gov. Whitmer’s approach to the economy. While Democrats dream up blueprints for economic development additions, they’re ignoring the fire inside the house. We need more accountability to detect problems and give taxpayers insurance against deals that turn to ashes.”

The audit comes as Whitmer and Democrats in the Legislature are pushing for changes to the Strategic Outreach and Attraction Reserve (SOAR) Fund, which the MEDC has used to subsidize large-scale projects for corporations, primarily electric vehicle battery plants. Democrats are also looking to revive a different program to allow businesses to capture income tax revenues from their employees, which they are now dubbing High-wage Incentive for Regional Employment (HIRE). Both proposals passed the Senate earlier this month, although Senate Democrats and the governor have exhibited disagreement about the details of the legislation.

Harris and fellow Republicans have emphasized that existing programs need more guardrails and legislative oversight to ensure that projects yield a worthwhile return on investment, create high-paying jobs, and follow through on their commitments. The $1.8 billion worth of incentives the MEDC approved for Ford’s proposed factory in Marshall originally cost more than $700,000 per promised job. Ford scaled back its job creation plans late last year, so if the incentives remain the same, they will cost more than $1 million per job.

Harris noted that the ineligible grant is just the latest problem uncovered by the auditor general. He reiterated his support for fully funding the OAG in the upcoming budget, despite the governor’s proposed $8.3 million cut.

“The watchdogs at the auditor general’s office have uncovered countless mishaps and misdeeds by Gov. Whitmer’s administration, and now she’s trying to put them on a leash,” Harris said. “Michigan must fully fund the auditor general and keep protecting taxpayers from fraud and waste on the part of state bureaucrats.”

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