This article originally appeared in Crain’s Detroit Business May 28, 2024.

Lawmakers have authorized $4.4 billion in selective business subsidies this legislative session, and billions more are making their way through the legislative process. Gov. Gretchen Whitmer made road funding a major campaign plank, but roads are a lower spending priority than writing big checks to big companies.

Some have wondered whether there ought to be more transparency and accountability with taxpayer funding.

Of course.

While administrators compile huge reports on the state’s economic development programs, they are still unable to answer basic questions about them. It shouldn’t be difficult to tell residents how much of their money went to businesses and how many jobs that spending created.

Yet here we are.

The biggest offenders are the rules guiding the state’s selective refundable tax credit programs. The state made deals to give a few companies billions of taxpayer dollars. The credits give the company other people’s money but lack the transparency strings that apply to expenditures.

Administrators continue to claim that all the money collected by companies constitutes confidential taxpayer information. We wouldn’t want a person’s tax returns to be public, supporters note. But we also don’t give billions to normal taxpayers through refundable tax credits.

While legislation can provide a solution, it shouldn’t be required. The state constitution mandates that expenditures of public money are public records, and that ought to apply here.

There are other basic problems that should be fixed. Lawmakers and administrators are good at talking about these deals when they are announced. They are terrible at telling people what happens later.

Whether companies actually create jobs is something lawmakers should want to know. They announce subsidies with press releases and news briefs, and the deals get enthusiastic headlines. Yet there is a big difference between job announcements and actual jobs.

Take a recent example. Whitmer announced that supply chain manager NorthGate would get $1 million from the state to open a location in Burton that would create 374 jobs. The company already operated at a number of different locations in the state, and nowhere did administrators mention whether the company was moving people from one site to another. The automotive industry, after all, isn’t employing more people — especially in Michigan. Nor was the $1 million required to sway the company to locate in Burton instead of somewhere else. Northgate was eligible for state money regardless.

When the state ended its deal with the company without making payments, there were no headlines. Just a statement that the company was “unable to meet job creation requirements,” in a report published long after the state ended its agreement.

People are paying for jobs, not the appearance of jobs. They deserve more skeptical administrators and better reporting.

Getting better administrators is tough. They serve elected officials who want to make business subsidy deals seem positive and to minimize bad news. Better reporting is possible. The state could be required to keep a site detailing the current status of projects that received assistance. It could also be required to report when companies fail to meet their requirements.

That will at least let people know what happens after deals are announced, giving them a chance to hold representatives accountable for their job boasts.

People should be more skeptical of lawmakers who hand out taxpayer money to select companies. Corporate welfare is ineffective at creating jobs, unfair to the businesses that don’t get subsidies and expensive to the state budget. It’s worse when lawmakers fail to provide the basic transparency and accountability that people deserve. Administrators refuse to tell people how much of their money companies get. And they still can’t provide an adequate accounting of where that money goes or what taxpayers get in return.

If lawmakers want to continue corporate giveaways, there are many basic improvements to be made.

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