As the false choices go, the debate in Lansing over extending tax breaks for big-budget projects ranks among the best of them.
The companies are pushing to pursue a program that allows companies to keep at least some of the state income taxes paid by new hires from new developments. But the effort predictably comes up against accusations of “corporate cronyism at its finest,” in the words of one Democratic lawmaker — and a belief that public spending on infrastructure and public education is the best way. stimulate economic growth in Michigan.
There’s only one problem with that: Republicans and Democrats in Lansing have a proven track record of underdelivery. The roads in the condition that put America on wheels remain an embarrassment; the level of education in K-12 schools ranks among the worst in the country; public water systems struggle with lead-contaminated water and the high cost of sanitation.
None of this, and more, entices companies to invest in the state or its largest cities. Quite the contrary, which is why incentives like the Good Jobs for Michigan program are so essential to maintaining economic momentum a decade after the global financial crisis and the historic bankruptcies of two Detroit automakers.
In an ideal world, cities and states would not essentially pay businesses to invest in them, to create well-paying jobs, to drive demand for related services that combine to create a virtuous cycle of growth and spending. In an ideal world, Michigan’s legislature would rely on its failure to provide what Senate Minority Leader Jim Ananich, a Democrat from Flint, calls “grassroots blocking and grappling” of government.
But we don’t live in an ideal world. We live in a competitive world, where economic interests compete with political priorities, mutual suspicion and a predisposition to doubt the motives of rivals. Choosing not to compete is a legitimate, though often counterproductive, choice that equates to lost opportunities.
Rival states would gladly seize the chance to lay claim to a new assembly plant, a tech campus built around self-reliance and electrification, a landmark downtown development that promises to reshape the city’s skyline and further validating his narrative of reinvention.
Capital is more mobile than at any time in human history, energized by digital reach spanning the globe. It means investors have a choice, including mortgage mogul Dan Gilbert and Detroit’s three automakers – who together have pledged to invest billions in the city that so much of America has given up for dead. .
Gilbert’s real estate arm is not required to build on the Hudson site, which has been vacant since the 1990s. General Motors Co. is not required to convert its Detroit-Hamtramck assembly into an electric truck plant. Ford Motor Co. didn’t have to buy the decrepit Michigan Central Depot and make it the anchor of Blue Oval’s next-generation tech campus in Corktown.
And Fiat Chrysler Automobiles NV could have increased the production capacity of its next-generation Jeep Grand Cherokee outside the city. But he, like the others, identified the business and political benefits that come from reinvesting in America’s auto industry headquarters — and the incentives are helping.
Still, the skepticism is understandable. The Ford and FCA projects already underway stand in stark contrast to Ilitch Holdings Inc.’s failure to deliver promised ancillary developments with its billion-dollar, partially publicly funded Detroit District.
Broken promises fuel doubts that business leaders are unreliable partners, but not all business leaders are created equal. With the notable exception of the Ilitch Project and the notoriously difficult Moroun family, many high-profile projects are in the works because today’s leaders tend to do what you say you will do – and do it. at home.
The incentives are based on a crucial assumption: that new jobs create new tax revenues and that employers would not be entitled to any reduction in these revenues until the jobs are created. In other words, do what you say you will do and all parties win.
Until it realizes the utopia where incentives become unnecessary, the legislature’s job is to empower Michigan to compete for investment and hold potential investors accountable for the public money they receive. Anything less would be unacceptable.
Daniel Howes’ column airs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him Thursdays at 3 and 10 p.m. on Michigan Radio’s “Stateside,” 91.7 FM.