Michigan is a big spender on long-term economic development subsidies, which have often benefited large and well-established companies like Ford and General Motors. Before being dissolved in 2012, the Michigan Economic Growth Authority (MEGA) approved billions of dollars in tax credits for corporations that the public will continue paying well into the 2030s.

In late 2021, the state established the $1 billion Strategic Outreach and Attraction Reserve (SOAR) Fund to compete with other states for large investments. Details were late to emerge, as lawmakers crafting the enabling legislation had signed non-disclosure agreements. Weeks after its creation, General Motors was awarded $666 million in SOAR funding to support four projects across the state. In the two years since its creation, the state legislature has deposited an additional $1.17 billion in the fund, now referred to as the Make it in Michigan Fund.

This funding has been a large component of recent megadeals in the state, including subsidy packages to Ford and General Motors worth more than $1.7 billion each.

Another state program, Brownfield Tax Increment Financing, rebates state and local taxes to developers. In summer 2023, the state significantly expanded the Brownfield TIF program by allowing local brownfield authorities to capture state sales and use taxes and by doubling the cap on total tax capture from $800 million to $1.6 billion.

At the local level, Detroit and other larger cities continue to award tax breaks to large projects they hope will generate new employment and revitalize disinvested areas.

For instance, in 2023 the Detroit City Council approved $750 million in TIF reimbursements and property tax abatements for a $1.5 billion downtown mixed-use redevelopment project. The development is a joint venture between Olympia Development, a subsidiary of Illitch Holdings, and the New York-based Related Companies.

Many subsidy awards are approved by the Michigan Strategic Fund (MSF) board and are administered by the Michigan Economic Development Corporation (MEDC), a private-public agency that also markets the state.

Major subsidies are well disclosed in the MSF-MEDC annual reports, including outcomes and clawbacks. The state Tax Expenditure Reports includes the cost of tax-based subsidies.

Major subsidies are structured as grants or refunds and thus only some programs are reported under GASB 77, MEGA tax credits among them. The state reimburses school districts for the lost revenue but about 70% of school districts still reported forgone revenue of $66 million in 2020, even after the reimbursements.

Michigan contracts with a private or a university institution to evaluate its major subsidies every four to six years. Separately, the Mackinac Center for Public Policy, a free market think tank, has been doing rigorous evaluations and analysis of the state subsidies as well, showing the ineffectiveness of those programs. One study found that the state subsidies cost taxpayers on average $600,000 per job.

Our database tracking corporate misconduct, Violation Tracker, scours 450 federal, state and local agencies in compiling resolved civil and criminal cases against companies. See the list of state agencies from which we collect information in Michigan.

Last updated December 2023.

For more information, contact Jacob Whiton at [email protected].