Lawmakers authorized new business subsidies in December by creating an Innovation Fund to give money to select early-stage businesses. The law finances the program by redirecting $60 million away from the state’s General Fund and toward select recipients.
Michigan has a long record of spending money on new companies. Sometimes the state would use taxpayer cash to purchase a stake in a company. The latest effort, the Innovation Fund, does not ask the favored companies for a financial return. They simply receive grants.
The state’s record of turning taxpayer support into economic growth is not stellar. The state reports just 60 jobs from a 2006 attempt to boost new companies, for instance. Officials spent over $150 million spent on the program.
In other words, the state has some experience handing out money to start-ups, but it doesn’t appear it has used that experience to ensure it won’t waste taxpayer dollars this time around.
The $60 million pushes the total business subsidies passed last session to $4.7 billion. That’s well above the $1.1 billion authorized by the previous legislature and the most since the 2007-08 legislature.
Selective business subsidies are ineffective at creating jobs, unfair to other businesses and to taxpayers, and expensive to the state budget. Check out how Michigan senators and representatives have voted for or against subsidies at the business subsidy scorecard.
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