22-05-2025
Michigan House subcommittee interrogates economic development deals as companies fail to deliver
Rep. Steve Carra (R-Three Rivers), chair of the House Oversight Subcommittee on Corporate Subsidies and State Investments on May 21, 2025 | Kyle Davidson
As Michigan Republicans continue to take a magnifying glass to economic development spending, the House Oversight Subcommittee on Corporate Subsidies and State Investments invited James Hohman of the free-market Mackinac Center for Public Policy to offer his analysis of the state's Strategic Outreach and Attraction Reserve (SOAR) Fund.
Hohman, who serves as the Mackinac Center's director of Fiscal Policy, walked committee members through a collection of several projects through the state's critical industries program, comparing the number of jobs promised with the jobs delivered.
As he broke down each agreement, Hohman repeatedly noted that these deals were structured to deliver short-term payoffs for companies, and were not tied to job creation, with many deals tying the bulk of their funding requirements to a company's capital expenditures, or money a company spends to buy, maintain or improve their assets.
Additionally, not all deals move forward, with Hohman pointing to a $100.8 million dollar deal with Ford made in 2022 as an example.
Hohman urged lawmakers and members of the public to bring more skepticism to these deals, noting they often fail to deliver on their promises.
'There's a massive difference between what gets announced and what actually happens when it comes to living up to expectations,' Hohman said.
'A lot of them wind up with no jobs at all. Some of them do meet [or] exceed expectations, but when you look at the rhetoric behind the deals, when they're getting made, there's rarely even an acknowledgement that deals might not deliver on their pledges,' Hohman said.
If companies fail to create the jobs they promised, the state has to wait years before it can ask for its money back, Hohman said. If they eliminate jobs after the deal concludes, the state has no way of getting its money back, he said.
Additionally when asked about the level of transparency offered into these deals, Hohman said they were meeting the minimum standard of transparency, publishing an annual report on how much money was offered, how much the company received and whether they created the jobs that were announced. However, the report's schedule leaves the status of most current projects unknown, while sometimes forcing people to wait 18 months to learn an agreement didn't move forward.
Overall the state has allocated $1.46 billion in taxpayer funds to create 14,779 jobs, Hohman said. While lawmakers clearly had ambitious plans for the program, those goals have not panned out, he said.
And while the companies receiving this funding will likely create jobs to fill the buildings they've built using state funding, the number of jobs they create will depend on an uncertain future, Hohman said.
'My major takeaway for you is that if you're going to continue operating the critical industry program, more of the deal needs to be based on actual job creation. When you have deals that consistently fall apart, that fail to deliver, you should not be paying them until they finally do the things they're obligated or that lawmakers expect them to do,' Hohman said.
This would not require a change to the law, Hohman said, only a change in expectations for lawmakers, asking them not to approve projects based on capital expenditures rather than job creation.
While there are a number of areas where the Mackinac Center believes these dollars could better benefit residents, Hohman offered his support for House Republicans' road funding plan, which draws the bulk of its funding by reallocating or eliminating funding set aside for economic development, including $500 million set for automatic deposits into the SOAR fund.
Despite the issues with the program, State Rep. Laurie Pohutsky (D-Livonia) raised repeated concerns about ensuring criticism of the program was accurate. While some press releases may be disingenuous in promising to deliver jobs, SOAR funding that is allocated for site readiness should not be expected to create jobs.
'You can't put 2,000 jobs in a site that is not ready for 2,000 jobs,' Pohutsky said.
While the SOAR program is not the best use of the state's money, there are enough flaws that are not based around promises made in press releases, she said.
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