Hohman said the state offers money to select businesses in an effort to create jobs, but such subsidy programs can be ineffective at job-creation, unfair to companies that get nothing and expensive to taxpayers. | Pixabay
Hohman said the state offers money to select businesses in an effort to create jobs, but such subsidy programs can be ineffective at job-creation, unfair to companies that get nothing and expensive to taxpayers. | Pixabay
James H. Hohman a writer analyst for the Mackinac Center for Public Policy, a free-market think tank based in Midland, Michigan, said more open information needs to be achieved in the state when it gives taxpayer-paid perks to select businesses.
“If Michigan lawmakers are going to keep handing out taxpayer money to select businesses, they ought to be more transparent about it,” Hohman said on the Mackinac Center website. “The state does an adequate job of disclosing some information, but there is much room for improvement.”
Hohman said the state offers money to select businesses in an effort to create jobs, but such subsidy programs can be ineffective at job-creation, unfair to companies that get nothing and expensive to taxpayers.
He said lawmakers can improve the process if people can find out who is going to get a subsidy before a deal is struck. In this way potential problems could be exposed. The state of Delaware has such a pre-deal disclosure rule, Hohman noted.
“This helps those who might be opposed to a deal to know that it’s coming and tell board members why they may have an issue with what the state offers,” he said in the editorial.
Hohman said disclosure of tax credits used to be provided in Michigan, but was closed off by legislators in 2009 and needs to be reopened again.
“Administrators expect that companies will collect $5.3 billion from taxpayers in this program, and people deserve to know where their money is going,” he said.
Hohman said under the present system in Michigan, with companies that pull up short of promises they made to create jobs, there is insufficient follow-up reporting to note the shortcomings. He added that 17 other states currently have such after-the-deal achievement reporting.
He recommended that when a deal goes sour, the money should be returned to lawmakers to re-budget for priority needs instead of handing it back to administrators to create more such deals.
Hohman asked lawmakers to consider accountability and transparency reform at next year’s legislative session.
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