Updated: Economic development leaders urge Whitmer to stay the course

Updated: 12/12 at 11:15 a.m.

As Michigan’s next governor prepares to take office next month, Gretchen Whitmer has met with leaders about keeping the economy moving in areas across the state.

Birgit Klohs is the president and CEO of The Right Place Inc., a West Michigan business and economic development organization. She told reporters in Grand Rapids today that she met recently with the Democratic governor-elect and her transition team as part of a group of several economic development experts.

Business groups, including the Michigan Chamber of Commerce, have largely supported the tax and economic policies of Snyder, who’s term-limited this year. The Republican is a former CEO who prioritized cutting business taxes during his two terms. He also axed some targeted tax breaks, like film incentives, but he approved others, like for redeveloping blighted sites.

“The state of Michigan, particularly when changing governors, sometimes has the tendency to reverse course or question the validity of doing statewide economic development,” Klohs said after an economic forecast event hosted by her organization. “All of us unanimously — and there were eight or nine of in the meeting — were cautioning the incoming administration that by not signaling full support for economic development strategies, that we would potentially put in jeopardy the progress we have made to date.”

Klohs added that “economic development is bipartisan, by its definition.” She noted that her tenure at the Right Place is now entering its fifth gubernatorial administration and each has brought changes in economic development policy.

The Whitmer transition team did not immediately respond to a request for comment this afternoon. While it’s unclear what economic development policies the governor-elect might pursue, as a candidate, Whitmer said she would “unleash the MEDC,” referring to the Michigan Economic Development Corporation, the state’s main economic development organization. Without going into specifics, Whitmer said that would include pursuing a “52-week job blitz” during her first year in office, according to an MiBiz report.

Executives at the MEDC say they expect their work to continue under the new administration.

“We look forward to working with Governor-elect Whitmer and her team, as well as our local and state partners, on the continued economic growth of Michigan,” Jeff Mason, CEO of the MEDC, said in a statement.

Klohs said focusing on education and workforce development are paramount right now. She also said we need to maintain the state’s competitiveness. That means, at least in part, continuing to offer tax incentives for expanding companies or those looking to move to the state.

She acknowledged that no one, including herself, likes handing out tax breaks to companies. But Klohs said they’re needed to attract investment that might otherwise go to other states. She added that she believes Michigan’s portfolio of incentives is “modest” compared to many other states like Alabama and Tennessee, adding that those states are working daily to lure businesses from Michigan, particularly in the automotive supply chain sector.

“We have incentives that have worked for us,” Klohs said. “They are not giveaways, there are performance indicators in those incentives. If you don’t perform, you don’t get the next level of incentives. And if you didn’t perform and you already got your incentives, we have something called clawbacks. And we have clawed back money from companies that did not live up to their promises.”

But some experts disagree with Klohs. Tim Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, released research earlier this year that showed that at least 75 percent of companies receiving an incentive — whether through a grant or a tax break — would have made a “similar decision” regarding where to locate their company even without the incentive.

Bartik has said that he doesn’t believe all incentives are necessarily bad, but rather that his research concludes that their necessity tends to be overblown.

“But here’s the thing: People like to claim that we only give incentives when they’re needed to tip the location decision,” Bartik said. “The only way you really could do that is if you could read the minds of the corporate executives making the decision and know what they would have done without the incentive.”