Ann Arbor's Rick Snyder, Michigan gubernatorial candidate, says MEDC incentives 'out of control'
Ann Arbor businessman and Republican gubernatorial candidate Rick Snyder, the first chairman of the Michigan Economic Development Corp., released a plan today calling for a major restructuring of the MEDC.
Snyder, calling for "common sense" economic development policies, said he would seek to reduce the number of tax incentives distributed by the state to various industries.
"It's gotten out of control," he said in an interview. "There should be very limited use of tax incentives."
Michigan gubernatorial candidate Rick Snyder
Snyder said the state's 10-year, $2 billion 21st Century Jobs Fund - which was meant to create jobs by providing low-cost financing to entrepreneurial companies - was well intentioned, but mismanaged. The state didn't handle the spending process efficiently, he said.
"That's a great illustration of a misfire," he said.
Instead, Snyder, who served as the first chairman of the MEDC in
1999, called for the state to implement wholesale tax reform to make a
Michigan more competitive place to do business. He's previously called for the state to eliminate the Michigan Business Tax.
Snyder, former president of computer maker Gateway Inc., is CEO of
Ann Arbor-based venture capital firm Ardesta and former chairman of Ann
Arbor SPARK and Ann Arbor tech company HandyLab.
Snyder is running for the Republican nomination opposite several longtime politicians, including Attorney General Mike Cox, U.S. Rep. Peter Hoekstra and Oakland County Sheriff Michael Bouchard. Michigan Lt. Gov. John Cherry is generally considered the favorite to win the Democratic nomination.
Snyder's proposal comes as some state lawmakers are beginning to question the effectiveness of aggressive film industry credits and other economic development strategies the state has pursued.
"MEDC’s policy is to not engage in the political fray by commenting on campaign proposals," MEDC spokeswoman Bridget Beckman said in an e-mail. "And it would make for a very long year if we started now."
The state's business incentives have earned uneven remarks from economists, politicians and community members. Firms like Google, General Electric and Barracuda Networks have opened up operations in the Ann Arbor region in part due to tax incentives.
Barracuda, for example, has already hired several dozen workers for its operation on Depot Street in downtown Ann Arbor. Google, however, which got incentives in 2006 with a promise that it would hire 1,000 workers in Ann Arbor by 2011, is believed to have between 200 and 250 workers here right now.
“The reality is the amount of the credit is always tied to the number of jobs that are created and the value of the income taxes that will be generated by those employees,” MEDC CEO Greg Main told AnnArbor.com in August. “If there is no job created, then there is no benefit paid out because there is no tax revenue. It is a self-funded, pay-for-performance program.”
Snyder said Michigan's economic development process had gotten "politicized too much."
"It started the right way, got off to a good start and then became an opportunity for politicians to get involved in a process they don't belong in," he said.
Snyder's plan:
• Calls for the state to implement and publicize performance audits detailing whether its economic development programs are working.
"Incentive programs that do not add value to economic development or aren't worth the cost should be discontinued," the plan says.
• Calls for the MEDC to reduce its level of staff and rely more heavily on small business people for leadership on its board. The plan suggests that the board should be "led by an executive team of business professionals, not political appointees."
• Would require MEDC to rely heavily on a network of "regional
economic development partners" -- such as SPARK,
Kalamazoo-based Southwest Michigan First and Detroit-based TechTown --
to attract businesses and talented workers.
• Create a statewide program via a new Web site, startup.mi.gov, to
help grow Michigan's entrepreneurial community. This organization would
foster the creation of business incubators and other economic
development groups.
• Form an MEDC-led initiative to help small companies secure financing such as government grants, microloans and venture capital funds.
Contact AnnArbor.com’s Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter.
Comments
dswan
Fri, Dec 18, 2009 : 4:14 p.m.
It seems a bit early in the campaign to call Rick Snyder an 'empty' candidate. Let's give him a chance to present his ideas. Democratic front-runner Cherry has shown he's not capable of independent thought, instead opting to steal the 10 cent water bottle tax from his current boss. I for one would love to see a candidate promote eliminating the MBT while opting for a graduated income tax to help close the gap. In a state where the top 5% of earners now earn more than the bottom 50%, a graduated income tax could make a big impact. Unlikely to come from a Republican, but I still hold out hope. We can all agree that Bush's Tax Cuts only proved the 'trickle down effect' is smoke and mirrors. But didn't these cuts benefit individuals, not businesses - am I wrong here? I'd like to see the long term effects of business tax cut.
The Grinch
Fri, Dec 18, 2009 : 3:16 p.m.
M, it is a "proven concept" only to a point (see next para) and, even if it were true in all cases, it would take years for a growing tax base to cover the lost revenue that would happen through the elimination of the MBT. If you want "proven concepts" about what cutting taxes does to the revenue stream, Google "Laffer Curve". This is a widely accepted concept among macro-economists, and the state of Michigan is far past the point where cutting taxes increases revenue.
townie
Fri, Dec 18, 2009 : 3:16 p.m.
Proven concept? You mean as proven by George W. Bush? Trickle down economics was a major contributor to the recession and bank failures as the rich took their generous Bush tax cuts and put them into house-of-cards real estate investments, not business expansion. And how does the State balance the budget while these companies theoretically grow themselves to a point that their operations and employees make up for the lost MBT revenue? We do have a balanced budget requirement in the constitution, you know--a Republican accomplishment under Engler just before he blew town in his Buick, leaving a $300 million deficit behind. If this concept were to actually have any success, the payoff would be at least 5, but more like 10 years down the road. With no replacement revenue, eliminating the MBT is just empty rhetoric from another empty candidate.
M
Fri, Dec 18, 2009 : 1:50 p.m.
Re: Lost revenue from the MBT...Michigan businesses will grow their companies with revenue saved by eliminating the onerous MBT. As a result the tax base will grow through payroll taxes paid by employed workers. Rick Snyder understands this proven concept.
The Grinch
Fri, Dec 18, 2009 : 12:36 p.m.
Have legislative Republicans made clear how they're going to replace the revenue lost by the repeal of the MBT? If not, they're not really serious and just trying to score points.
townie
Fri, Dec 18, 2009 : 10:19 a.m.
A2Politico has had a few posts about SPARK, and Snyder's time there. http://www.a2politico.com/?p=2305 Those who are singing his praises may want to dig deeper. The emperor has no clothes.
The Grinch
Fri, Dec 18, 2009 : 8:56 a.m.
technojunkie, you might be right in the macro (though I doubt it), but when you look who wins Republican primaries (a process dominated by party activists and, in this state, that means the far right anti-tax wing), it is not moderate candidates who win.
voiceofreason
Fri, Dec 18, 2009 : 7:18 a.m.
It is really unfortunate that Snyder has very little chance of being elected. There are too many "anti-private sector" people in this state to elect the one candidate who actually has a chance to reform state government and right the ship.
Technojunkie
Fri, Dec 18, 2009 : 7:11 a.m.
@The Grinch: actually, conservatives are at least as annoyed by corporate welfare as anyone else. Making taxes simple and low for everyone instead of bribing specific politically favored companies makes a lot of sense. Snyder is my top pick.
The Grinch
Thu, Dec 17, 2009 : 9:38 p.m.
As I fear that A2grateful might be referring to my somewhat smarmy comments (among others), so let me be clear: I am quite impressed that there exists a Republican candidate for governor who actually appears to think that it's a bad idea to hand out tax cuts helter-skelter to businesses w/o any master plan for the state's economy and with little or no understanding for its impact on the state's revenue stream. For this reason alone Mr. Snyder deserves our attention. Unfortunately, this moderate position, not unlike that of then State Senator Joe Schwarz who ran for the Republican nomination for governor in 2002, will be rejected by mainstream Republicans in this state, as was that of Joe Schwarz. So Mr. Snyder, I applaud your political bravery and your willingness to tackle in an intelectually honest and fiscally sane way our state's economic problems. Unfortunately, that's not what the party activists in the Republican Party--the people who actually participate in the primary process--want to hear.
a2grateful
Thu, Dec 17, 2009 : 7:37 p.m.
It is always interesting when comments shift from a person's ideas to personal attack. Where is the commentary here about the problems with MEDC? What are the solutions? Part of Michigan's problem is that it no longer considers viable solutions, or even considers problems. Why discuss problems and resolutions when we can throw mud in rhetorical fashion? Whee! The ride down the drain is fun, isn't it? The destination to the bottom is far more entertaining than the landing. I hope we learn to enjoy being one of the 10 poorest states in the country, along with being 49 of 50 in economic development.
The Grinch
Thu, Dec 17, 2009 : 6:30 p.m.
"These are our choices for governor" someone asks? Yup, that's it. What accomplised and capable person in their right mind would want to be governor and deal with a perpetually gridlocked and (due to term limits) inexperienced and short-sighted legislature, a budgetary process that offer little room for maneuver due both to the Headlee Amendment and to constiutional limitations, and a collapsing stream of revenue? Yeah, that's a job that would attract just tons of qualified candidates.
The Grinch
Thu, Dec 17, 2009 : 6:27 p.m.
You mean there's a Republican out there who doesn't see blanket tax cuts for businesses applied helter-skelter as the solution to our state's economic woes? Perish the thought.
John Galt
Thu, Dec 17, 2009 : 5:43 p.m.
Of the list of "choices" above, I would tend to support Snyder before the others. We need to elect political outsiders, who have valuable experience in the business community to help with new ideas for job creation. We do NOT need more of the same failures (or apprentices to failures) we have been re-electing for years.
Top Cat
Thu, Dec 17, 2009 : 4:47 p.m.
Come on a2huron, that is not what I said. Be fair now. This state desperately needs change. Electing a Governor with absolutely no experience in the public sector, i.e. a rookie, is not a solution. I have extensive experience in both the public and private sector and I can attest that the dynamics are completely different. We elected a President who had not completed one term in the US Senate and this ain't turning out so great. Finally it is spelled "You're" not "Your".
a2huron
Thu, Dec 17, 2009 : 4:25 p.m.
Your absolutely right, Top Cat. Instead, we should keep in office the same recycled politicians that have either gotten us in this economic mess or failed to take action to get us out of it. We don't need something different now, do we? We need more of the same.
Top Cat
Thu, Dec 17, 2009 : 4:08 p.m.
I respect Mr. Snyder's sense of civic responsibility but really do not feel that this is the time to be supporting a political novice for Governor.
Tom Bower
Thu, Dec 17, 2009 : 2:59 p.m.
These are our choices for governor? So what specific "wholesale tax reforms" is Snyder recommending?