Michigan Public Radio Correspondent Rick Pluta asks an important question about a possible interstate compact to eliminate corporate welfare, “Why would other states buy into that?”
Lawmakers look at business subsidies as ways to attract factories, offices and jobs to their state. If they are correct about that. then dropping their programs would cost them something valuable. They wouldn’t be able to announce that they had attracted the next big thing to their state if they stopped offering deals to select companies.
But it could be that lawmakers are uncomfortable having to bribe companies in order to get them to come to their state. They’d prefer to compete over business climate policies and the quality of life in their states.
It makes sense to be concerned by growing business subsidy policies. States have created new and more expensive policies to transfer money from taxpayers to select businesses. Billion-dollar deals are now more common, as interstate subsidy competition drives up taxpayer spending. Lawmakers might prefer to spend this money elsewhere.
Or perhaps business subsidies offend their basic principles, as they should. Government is supposed to be run for the public’s benefit, and transferring taxpayer money to private interests who are working for their own private gain ought to rub people the wrong way. (As it did to 19th Century Michigan Supreme Court justice Thomas Cooley.)
Regardless of the reason, it is not so outlandish to believe that lawmakers might want to agree with each other to stop fighting over favoritism. Legislators around the country have introduced bills to agree with each other to stop in the past.
Michigan Gov. John Engler was one of those people. He and Illinois Gov. Jim Edgar tried to get states to agree to stop offering special deals to companies at the National Governor’s Association in 1992. “What happens all too often is a special deal gets cut for a special situation,” Engler said. “You’re always subject to one state being played off another.”
It is something that Michigan lawmakers have been asked to do for many years.
Business subsidies are ineffective at improving state economic trends, unfair to taxpayers and expensive to state budgets. It is good that state lawmakers are talking about working across state borders to stop offering them.
