Mich. economic agency defends itself after audit

By TIM MARTIN

LANSING, Mich.

The head of Michigan's economic development agency said it will defend itself Wednesday from lawmaker criticism after an audit said some companies that received tax incentives didn't live up to agreements on how much they would pay workers.

Michigan Economic Development Corp. CEO Greg Main said agency officials will detail their review and audit practices for the tax credits at a House Tax Policy Committee hearing.

The MEDC has been under fire since the auditor general report on Michigan Economic Growth Authority tax incentives was released last month. State Sen. Nancy Cassis, R-Novi, wants the auditor general to do a more thorough review of tax credits for the 2008 and 2009 tax years because much of the audit focused on earlier years.

Cassis called the report "troubling" and said further investigation is needed.

"To put Michigan back on the right track, we must regain confidence in state programs, like MEGA," Cassis said in a statement. "This is done by being watchful and accountable with taxpayer dollars."

But Main said the follow-up report Cassis ordered will just duplicate a similar review already has started within the MEDC.

MEDC officials are upset they didn't get a chance to testify at last week's hearing of the Senate Finance Committee, which Cassis chairs.

Main said the agency agreed with much of the audit, but he has issues with how it and the MEDC have been portrayed by some lawmakers.

"I think there was an attempt to impugn the integrity of this organization and the companies who have used this program," he said.

MEDC started audits of every tax credit awarded since 2006 before the auditor general report was released last month. Those audits, done with the help of an outside firm, are to verify job creation numbers reported by companies. The audits should be finished this year.

MEDC also began conducting pre-audits before issuing tax credit certificates to companies this year and doing criminal background checks on many types of tax credit applicants. Pre-audits include on-site visits and reviews of documentation needed for verifying the number of employees hired and wages paid by companies receiving tax credits.

Gov. Jennifer Granholm ordered the background checks after a convicted embezzler out on parole was awarded a $9 million tax incentive in March. The credit was rescinded before RASCO CEO Richard Short got any money, and he would up in jail.