TESTIMONY OF JOHN C. MOZENA, PRESIDENT, CENTER FOR ECONOMIC ACCOUNTABILITY
BEFORE THE MARSHALL, MICH. CITY COUNCIL
MAY 1, 2023
My name is John Mozena, and I am the president of the Center for Economic Accountability. We’re an independent, nonpartisan and nonprofit organization that’s based here in Michigan but works around the country to try to bring transparency, accountability and market-based reforms to state and local economic development programs.
That’s why I’m here, at the request of some of your local residents, because transparency and accountability have been thin on the ground here during this entire process. I drove from Detroit because I thought it was worth sharing the perspective of someone who’s spent decades around economic development deals and spends their days immersed in this stuff – but is not going to profit from this project either politically or financially.
My background in this is that I spent decades behind the scenes as a consultant to economic development agencies, developers, manufacturers and others involved in these kinds of deals. Today, as a reform advocate, I’m quoted in the media around the country on an average of about once a week talking about these issues, from the Washington Post, Newsweek and The Hill on down.
So with that, let me start with the first thing that is clear to an informed and independent outside observer: This is a project that is happening to the people of Marshall, not for the people of Marshall. As is far too common among megadeals of this type, it was sprung on this community as a done deal, negotiated between politicians looking forward to Election Day, a company that’s negotiating “job creation” subsidies on one hand while announcing layoffs with the other and a state economic development agency that’s so literally controlled by big business that its executive committee chairman is the CEO of Dan Gilbert’s real estate company.
I would bet good money that the question “What’s best for the people of Marshall?” never got asked by any of those people in the room where this deal was being put together.
To believe otherwise requires that we trust that when politicians, bureaucrats and “business leaders” get together behind closed doors and decide to transfer millions or billions of dollars from taxpayers to a politically connected company, they’re really doing it for our own good.
It requires us to ignore the simple real-world evidence that giant subsidy deals like this are twice as likely in states where governors are up for re-election – like Michigan last year – as those where they aren’t. It also requires us to ignore the evidence that companies that make political donations are four times more likely to get subsidies like these than those that don’t.
These deals are about politics, not economics, and the simple fact is that they don’t really exist to create jobs. Instead, they exist to make voters believe that politicians are responsible for creating jobs.
If it were truly about the community, the people here and around Marshall wouldn’t only be hearing about the supposed benefits from their elected and appointed officials. They’d have been treated like adults, like full stakeholders rather than inconveniences, and they would have been given a clear, up-front assessment of both the costs and the benefits involved.
They would have been given some meaningful context for what the $1.75 billion total price tag really means. For instance:
- That’s more money than the state paid out in unemployment benefits to every unemployed person in the state in 2021, back when COVID was still keeping many people out of work.
- It’s more than an entire year’s worth of state revenue sharing to every single municipal government in the state, combined, or general fund grants to Michigan’s colleges and universities.
- They say this plant is “rural economic development.” Thing is, it’s going to cost Michigan the equivalent of three and a half decades’ worth of the state’s Farmland Preservation Tax Credit.
- It’s four times as much as the rest of us – every single homeowner in Michigan – was able to deduct in homestead property tax exemptions in 2021.
- Or, it’s also more than four years’ worth of the state’s tax credits for low-income and at-risk households, including things like the Earned Income Tax Credit and property tax credits for senior citizens, veterans and people with disabilities.
Think about that for a second – one company, one project, and it’s getting as much in tax breaks and other goodies for just one plant as the rest of us do in four years of our property taxes or tax credits for our low-income or at-risk neighbors?
I don’t think many, if any, of the people in this room could say that they came in here tonight with a gut-level understanding of just how much this one project was going to cost all of us who pay taxes in Michigan, or rely on the public services that our taxes fund.
And I would put it to you, the members of this Council that if your constituents and others in the impacted Marshall-area community didn’t understand what price they’re being asked to pay, then it’s a malpractice of democracy for you to go ahead and sign off on this project moving forward.
A decision like this, that involves fundamentally changing the fabric of this community, deserves – it demands – that the people of the community be treated as stakeholders who are part of the process with full and complete visibility into both the costs and the benefits of what’s being proposed.
That has not happened here. But it’s not too late. As someone who’s seen this go badly so many times over the years across the country, I’m asking you to please, take a step back and turn this process from one that’s happening to the people of Marshall into one that happens – if it does – with and for the people of Marshall.