Business Owner Says Value of State Incentives Is Wrong: State Appears Right

One recipient of government business incentives is angry at the state for publishing an "absurd" value of those incentives, according to the Michigan Information & Research Service. The incident illustrates the need for transparency over the state's economic development efforts.

One of the owners of Motown Motion Pictures stated that his company was not offered $120 million in assistance, but rather somewhere between $25 million and $30 million. To see who is right, you can read an overview of the deal from the Mackinac Center's transparency project here. An estimate of the company's total Michigan Economic Growth Authority credit amount on Page 10 of this document.

Since the estimated MEGA credit amount is over $100 million and the state offers additional Renaissance Zone and Film infrastructure incentives to the project, not to mention any other possible ongoing subsidies from the Michigan Film Incentive, I'm not sure the owner is accurate.

There is a way that the incentives won't reach as high as $120 million. The total value of the MEGA incentive — the largest piece — assumes that the company will produce an expected 3600 jobs. Over MEGA's history, companies rarely meet these estimates. Indeed, only 29 percent of the jobs expected at announcement are eventually "created." The total value of the incentives will be much less if the company does produce the jobs.

Does the company expect to deliver on only a portion of its job figures, or is the state missing something? The only way to really tell is to have all of the formal credit agreement information online, as well as the calculations on the expected cost to the state. Reports on the credits actually claimed by for each company each year are also necessary to give the program a proper analysis, but these are unavailable. We put some of the available information online, but the state has become less transparent in its economic development programs over time.

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