Sunday, May 17, 2009

Promises to create new jobs fall short

Many tax incentives go unused because firms fail to deliver on pledge

Michigan's major economic development tool has produced only about 24,000 new jobs over its 14-year life, a Free Press examination has found.

State officials also say the program -- tax incentives granted for jobs that are created or saved -- has retained more than 43,000 positions.

The state, however, has shed more than 700,000 jobs since the decade began. In March of this year alone, 25,000 people in Michigan joined the unemployment rolls.

Overall, the Free Press found that when it comes to job creation projects in Michigan, reality often falls short of promises.

Each month, state economic development officials trumpet business expansions and relocations that have won tax credits because they will add jobs in Michigan even as the auto industry's slump makes that difficult.

The Free Press studied 195 of these incentives awarded from 1999 through 2005 and found that slightly more than half of them were not fully utilized or never used at all because companies failed to create enough jobs to claim the tax credits.

The Michigan Economic Development Corp. defends the incentives, which have cost $411 million, noting that companies benefit only if they create jobs. "It has had a big impact," said Peter Anastor, the agency's manager of community and urban development.

But Michael LaFaive, a director at the Mackinac Center for Public Policy, said: "This is a job announcement program, not a real jobs program." More here.

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