LANSING – While many leaders throw around taxation and the Michigan Business Tax as major impediments to attracting new business to Michigan, the slowdown in approvals of incentives is actually a much larger roadblock to making the state attractive to new companies, newly appointed Michigan Economic Development Corporation CEO Michael Finney said last week.
He said that fears about the integrity of MEDC’s incentive programs after the RASCO scandal during the Granholm administration, in which the state approved a felon’s application for an incentive to a company that did not exist, led to too much red tape and delay in the approval process, effectively labeling the state as inefficient to companies that must endure the new, slower process.
“The RASCO scenario did more to create an uncompetitive environment in our state than the tax structure,” he said. “Making companies wait is not business friendly.”
Finney, 54, said he hopes to avoid granting application approval to the wrong people in the future with newly instituted background checks for applicants, along with other review measures that should prove to naysayers that the MEDC has learned from prior mistakes.
The goal in business, and therefore at the MEDC, which he said he runs with “an entrepreneurial culture,” is not to avoid miscalculations, but to move past them as quickly as possible by taking “calculated risks” that lead to progress, Finney said.
“We are in the process of showing we have learned from our mistakes so we can eliminate red tape and get things going again,” he said.
Finney will soon have a broadened portfolio at the MEDC. As reported in Gongwer last week, Governor Rick Snyder will issue an executive order in the coming days that moves the economic development functions out of the Department of Energy, Labor and Economic Growth to the MEDC. Gongwer interviewed Finney prior to that story breaking.
To critics who say the previous administration greenlighted too many projects without oversight, Finney counters with quite the opposite opinion, saying he wishes the state had approved two or three times more projects.
“From what I’ve seen, RASCO was the only major award that shouldn’t have been made and the others were solid investments,” he said.
Though he’d like to see applications approved more quickly, Finney added that he thinks people sometimes put too much emphasis on incentives as a way to attract new companies.
“Incentives are an important tool to make a connection between our state and companies, but more importantly businesses need to consider the overall costs of doing business here,” Finney said.
Business taxes factor largely into those costs, he said, so even with Snyder’s plans to eliminate some tax incentives, his proposal to eliminate the MBT and replace it with a flat 6 percent corporate tax could mean Michigan would still have a competitive advantage over other states.
While he is in large part comfortable with the governor’s plans because he knows and respects Snyder from their previous interaction at Ann Arbor SPARK, Finney said also that his confidence stems from a belief that Snyder has a good grasp on what businesses want.
“It’s nice that I know the governor, but most important to me is that he has a history with economic development,” he said. “That creates a level of understanding that most (department heads) don’t enjoy with their governor.”
Finney said he can’t really elaborate until after the governor’s budget recommendation which programs he suggested for preservation, but said he is still evaluating the value of each program and the possible effects to the state of cutting each and plans to release the results of his analysis a month or so after Snyder makes his budget recommendation.
He did note, however, that he agrees with the governor’s and lawmakers’ support of Pure Michigan because of its high rate of return.
He said he also supports deploying more MEDC staff to support local partners, thus eliminating some of the repetitive efforts in reaching out to job providers.
By coordinating efforts with local partners, the MEDC will be able to stretch its resources further, said Finney, who added that he is targeting 10 areas (which he will name in the coming months) around the state for staff deployment.
As for the makeup of his staff and whether it is top heavy, as some have contended, he said he isn’t concerned about how many people are in administrative roles, but instead is focused on ensuring that he has staff to support his goals.
Finney said he has probably replaced most of the handful of executives who departed the MEDC when he began his tenure in January. Those people are in place to help lead the corporation with an entrepreneurial spirit, to make job connections for talented people, to engage local partners and to expand the Snyder administration’s goals of ensuring more economic development activities in urban areas, Finney said.
“We’ve organized ourselves in a way that will allow us to be highly productive and successful,” he said.
MARKETING MICHIGAN: Finney said he hopes to change the identity of the MEDC from a jobs-maker to the biggest promotional and public relations mechanism for the state.
He said the high quality of life and huge pool of talented workers are actually the job creators; it’s up to the MEDC to bring in new companies by developing marketing strategies that center on all of the great things the state has to offer job providers.
With that in mind, the department has a website in the works modeled after an Ann Arbor SPARK project, which Finney headed from 2005 until joining the MEDC.
The plan is to post jobs created by MEDC partners. For example, if the MEDC approves a project that creates 100 immediate openings in Ann Arbor for research and design professionals, the website would list the job postings, thereby helping job seekers and making the state attractive to companies that want the ease of filling positions quickly.
“This will create a seamless process for workers and companies,” he said. “As we successfully help companies launch, they will have immediate access to workers.”
Finney said he hopes to have the site, which will best other job portals with its comprehensive list of quality candidates, running within two to three months.
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