By DRP President & CEO Maureen Donohue Krauss
Originally posted by Crain’s Detroit Business
As elected leaders debate Michigan’s approach to economic development, we can all agree that we need better jobs, increased investment in our communities, and improved public services for our residents.
However, we should avoid setting up a false choice that pits business development against community development; we need both. The private sector creates jobs that grow the tax base to fund improved services, just as amenities like transit and parks lead to more vibrant communities that attract and retain talent.
We need it all — but the best way to raise the revenue needed to pay for it all is through private sector growth — and that requires a long-term economic development strategy that incentivizes business to locate here and doesn’t change each legislative session.
As an organization dedicated to bringing jobs and investment to the 11-county Detroit Region, the Detroit Regional Partnership successfully recruits domestic and international companies interested in expanding in North America. Uncertainty created by frequent policy change undercuts our ability to attract businesses and jobs. So does Michigan’s lack of a consistent, long-term economic development strategy that transcends elections.
Development project timelines don’t flow neatly with legislative calendars or election cycles. Policies that impact projects, like incentives, must be shielded from frequent shifts and the tendency to “undo” what the other party or previous Legislature did. Companies’ expansion strategies span several years and election cycles. They must have clarity and consistency on the business landscape and available investments.
When the Legislature gets into a tug-of-war on incentives or changes the previous policy, we run the risk of starting a project with one set of economic development tools and finishing with another. Companies are not going to make major investments here with that type of uncertainty.
Yes, we need to invest in our communities, and remove barriers to employment, but undercutting private sector business growth isn’t the way to accomplish that. We have to come together to grow our economy and create more revenue, not fight over a shrinking economic pie.
The fact the Legislature allowed the Good Jobs for Michigan to sunset in 2019 — and four years later are debating the High-wage Incentive for Regional Employment or “HIRE” as its replacement — reflects a disjointed politics-driven approach to economic development, which is failing us, and has under both parties.
Good Jobs for Michigan worked for economic developers, and HIRE is a good fit for the 100- to 400-job expansion projects the Detroit Regional Partnership typically attracts, but it’s not enough on its own. We need to continue to incentivize businesses to locate and expand here.
For instance, research and development creates jobs throughout the entire product life cycle from concept to manufacturing — yet Michigan is one of the few states that doesn’t have a R&D tax credit. Creating one will help ensure that the companies that are creating the jobs of tomorrow, are doing it in Michigan.
The debate over the Strategic Outreach and Attraction Reserve or SOAR fund demonstrates to the business world that Michigan is not unified behind its economic development strategy. So far SOAR has delivered seven projects that are expected to create more than 11,650 jobs. Yet, less than three years after it was created, there are already calls to slash funding from SOAR and dilute its impact. This threatens to pull the rug out from under the Michigan Economic Development Corp. and economic developers.
Properly funding SOAR, creating HIRE and an R&D tax credit are good steps toward developing that long-term economic development strategy that transcends politics and lets businesses know they can thrive in Michigan.
