An April auditor general’s report on the tax credits granted by the Michigan Economic Development Corporation’s Strategic Fund finds that some of the companies given millions in tax credits have not lived up to their job creation promises, and the board charged with overseeing the credits does not have an adequate system of monitoring for compliance, AP reports.
Last month the state’s economic development agency was embarrassed when it announced a $9.1 million credit to RASCO, a business headed by convicted embezzler Richard Short who was jailed for a parole violation the day after celebrating the tax credit in a ceremony that featured Gov. Jennifer Granholm.
According to AP the auditor general’s report was conducted last summer and covered the period from Jan. 1, 2005 through October 2009.
The auditor general’s review of 15 out of 27 MEGA tax credits awarded during fiscal 2008-09 found that two-thirds of the companies didn’t submit complete data needed so the Strategic Fund could validate the tax credits claimed. It also found that a quarter of the nearly 4,800 employees counted toward the jobs totals companies were required to meet were potentially ineligible, resulting in companies getting tax credits they likely shouldn’t have received.
MEDC has stated that it will adopt the report’s suggestions for improving data collection and validation and will work more closely with the Treasury Dept. to audit data supplied by companies that receive tax credits.
Last month the agency announced it would begin conducting background checks on those that request tax breaks.
Michigan currently gives out a total of $36 billion in tax breaks each year — more than 50 percent more than the state takes collects in taxes altogether.