LANSING – Several Republican members of the Michigan House Commerce Committee took issue Wednesday with the proposed structure of a $100 million business development fund, while bringing up past criticisms of the Michigan Economic Development Corporation.

“The past administration had nothing but a slush fund through MEDC, and it was wrought with fraud and misuse of taxpayer monies,” Rep. Jeff Farrington (R-Utica) said.

Farrington said he had many concerns if this new program was the same as the old one, or slightly different.

“We would categorically disagree with your description of what our slush fund was,” said Mark Morante, senior vice president for policy, program management and government affairs for the MEDC.

Last month, the Senate overwhelmingly passed the three-bill package (SB 566 , SB 567 and SB 568 ) that puts the state’s new community revitalization program into statute. It would replace the state’s brownfield tax credit program, which will end this year.

The community revitalization program is part of a $100 million appropriation for the state’s targeted economic development efforts this coming fiscal year, including a business development program.

Farrington said the bill basically opens up the checkbook for the state to give money to large businesses – without much oversight – to entice them into district’s like his and put smaller, local stores out of business.

Transparency and accountability were also concerns of Rep. Jim Townsend (D-Royal Oak).

James McBryde, MEDC vice president of government affairs, said the use of taxpayers funds would be much more transparent under this plan than previously when they simply issued an annual report each November.

McBryde said upon the completion of a deal, the details of how much was spent will be posted on the Internet as well as the contract and the provisions in it on how the state could get its money back if needed.

Rep. Mike Shirkey (R-Clark Lake) said among several concerns he had was that seeing details of a completed deal online would come too late.

If a citizen saw that the state was contemplating giving money to a company, and they had information one of the people involved might be a scam artist or that the business was not a good investment, they wouldn’t be able to alert the state in time.

Morante said if they posted details prior to completion of a deal, they wouldn’t have any customers. That would allow other states to see which businesses Michigan was courting and swoop in and offer them a better deal, McBryde said.

Other members of the panel had questions on how the money would be dispersed geographically, and if it would be done politically. Morante said that has not been done in the past and they would only be giving out incentives on the best deals.

McBryde said another piece to this package is a 90-day review of potential deals, so they are properly vetted and don’t encounter another situation like RASCO.

Last year, Richard Short tricked the state into offering him a $9 million tax credit for the business he purportedly was starting. Citizens recognized him on the evening news announcing the deal as a convicted con man. Short, who never received any money from the state, was sentenced in August to 20 months to eight years in prison.

“We learned a powerful lesson from it,” McBryde said.

The committee heard testimony only on the bills and another hearing is expected to take place next week.

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