States Urged to Abandon Competitive Business Incentives
The competitive race among states to attract businesses using public funds is under scrutiny, as a prominent GOP state House leader calls for a collaborative approach to end this costly practice. Representative Bryan Posthumus (R-Rockford) has proposed that states unite in a formal agreement to cease the use of public funds for enticing companies to relocate.
Speaking on the Michigan Public Television show “Off the Record,” Posthumus highlighted the detrimental cycle of states spending millions to attract businesses from each other. “It just becomes a race to the bottom. We’re essentially buying jobs from other states to come here,” he commented. “Other states are trying to buy jobs to take from Michigan to go there and they’re using tax dollars to do it. It just doesn’t make sense.”
This suggestion comes in the wake of the Legislature’s decision to withhold funding for Governor Gretchen Whitmer’s primary economic development initiative in the new state budget, following bipartisan criticism of the state’s extensive use of incentives. Leaders from both parties, including the governor, are set to discuss alternative economic development strategies.
State Senator Jeff Irwin (D-Ann Arbor), a member of the Senate Appropriations Committee, remarked on the longstanding nature of the interstate compact concept, noting its presence for approximately 20 years. He acknowledged the difficulty in persuading states, particularly larger ones like Texas, that have integrated business subsidies into their economic strategies. “I think that one of the reasons why it’s a struggle to get states to kind of lay down their arms, so to speak, with respect to cash on the table for companies is because there are some states that have just leaned so heavily into the strategy and don’t seem willing to walk away from it,” Irwin explained to Michigan Public Radio.
Despite acknowledging the challenges, Posthumus remains hopeful about the prospect of such an agreement, stating, “Maybe it’s pie in the sky, but that’s what I would like to see. I think corporate welfare is not the way that our state or our country should be going.”
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