LANSING – An audit heavily critical of the state’s main economic development program has actually helped the Michigan Economic Development Corporation as it’s been revising its own audit procedures, MEDC CEO Greg Main told a House panel Wednesday, even though the audit has resulted in some “adverse publicity” for the state.

Main told the House Tax Policy Committee that when the Michigan Economic Growth Authority began in 1995, there was actually no auditing of the tax credits going out to companies because so few businesses were taking advantage of the program and there was a close working relationship between MEDC staff and those companies.

But that started to change earlier this century, and the MEDC’s first run at an internal audit was conducted in 2005. The percentage of companies chosen for the audit sample increased the next year and MEDC decided a few years ago to do annual audits.

Since the auditor general came in, the MEDC has decided to do pre-tax credit audits, Main said, which not only let’s the state know more information ahead of credits being issued, but also allows the MEDC to have a better feel for how the economy is reacting.

And by the end of the year, MEDC will have reviewed every MEGA credit given out since 2006 under a review process outlined by the auditor general, he said.

“We found the actions and advice of the auditor general to be good. It doesn’t mean we agreed on everything, but for the most part we agreed. I feel real good on where we are at right now,” Main said. “We’ve gotten some adverse publicity about the whole thing.”

But lawmakers on the panel were wondering whether those reviews would mean any money to the state from companies receiving a credit that did not make good on the promises of jobs and wages for Michigan residents.

MEDC officials said while it’s still early, it’s likely the state is due back less than $5 million. The Department of Treasury will work with companies, like they do with other tax issues, to either have the company refile their return or make a payment to the state.

But Rep. Tom McMillin (R-Rochester Hills), who attended the meeting, said the state really won’t know what is due until the private firm reviewing the tax credits finishes its work by the end of the year. Based on the audit, it could be much more money, he concluded.

While the Republican-controlled Senate Finance Committee is pushing for a follow-up to the audit to ensure its recommendations are followed by the MEDC, Rep. Robert Jones (D-Kalamazoo) said the audit really showed which companies were being honest about how many workers they were able to hire and sometimes start-up businesses aren’t always as successful as they expect.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

a>>