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Gubernatorial candidates differ on economic development strategy

BY Sunday, March 04, 2018 05:46pm

LANSING –– The crowded field of candidates seeking to become Michigan’s next governor offer distinctly different views for how they would shape the state’s economic development policy. 

With the need for infrastructure investment, talent attraction and retention and tax reform dominating the policy discussion at every level, economic developers have good reason to pay attention to the various candidates’ policy proposals, even if they’d prefer to stay apolitical. 

“I tell people that economic development is a non-political activity,” said Jeff Mason, CEO of the Michigan Economic Development Corp. (MEDC). “Unfortunately, we operate in a political environment.”

Mason was one of several heads of state agencies to speak along with five gubernatorial hopefuls during a Capital Day event hosted by the Michigan Economic Developers Association (MEDA) in Lansing in late February.

While each of the candidates agreed on the importance of economic development for the state’s future, a clear contrast emerged between those seeking the Democratic and Republican nominations, but even candidates who share party affiliations differ in their approaches. 

Democratic candidate and former State Senator Gretchen Whitmer gave perhaps the most full-throated endorsement of ramping up the use of targeted tax incentives, saying that if elected she would “unleash the MEDC” to pursue a “52-week jobs blitz” in her first year in office.

In many ways, that strategy shares similarities with the incentive-based policies of former Gov. Jennifer Granholm — whose efforts were derailed by the economic downturn, according to Whitmer.

Meanwhile, Whitmer said that under Gov. Rick Snyder, the state has eschewed many economic development tools such as brownfield and historic redevelopment tax credits in favor of a strategy that embraces lower and simpler taxes.

“These are crucial pieces of the toolbox that communities need across the state,” Whitmer said. “I think the approach right now in Lansing has been a drag on Michigan’s comeback.”

Whitmer’s proposal to bring back a variety of tax credits and more targeted incentives stands in contrast to her GOP opponents, as well as her fellow Democrats seeking the nomination in the August primary. 

Shri Thanedar, an Ann Arbor serial entrepreneur who’s never held elected office, believes that his experience growing and scaling smaller companies makes him the right candidate to offer a “philosophical change” in direction for the state’s economic development strategy. 

Thanedar, who did not attend the MEDA event and spoke with MiBiz by phone, said he’d rather channel the state’s economic development dollars to invest in small businesses and provide incentives for entrepreneurial endeavors. 

“They don’t necessarily have to be a Google or Amazon,” Thanedar said. “Some of them will, some of them won’t. But just empowering people to do good for themselves, to learn and start businesses — I want to encourage more entrepreneurship and encourage small businesses, whether it’s technology startups or a print shop or a restaurant.”

During the MEDA event, many of the candidates and state officials discussed Amazon.com Inc.’s recent announcement of the list of top 20 contenders for the location of its proposed $5 billion second headquarters, a list that excluded bids from both Detroit and Grand Rapids.

Mason from the MEDC said he was “pissed off” when he saw that the Michigan bids weren’t being considered. 

But to Abdul El-Sayed, Detroit’s top health official and a progressive Democratic candidate for governor, the exclusion of Michigan from Amazon’s shortlist of contenders is emblematic of what’s wrong with the state’s economic development strategy. 

“The question we ought to be asking is: Why isn’t Michigan building Amazons of the future? Michigan used to be the startup economy of the world,” El-Sayed said, referring to Michigan’s former rise to dominance in the automotive sector. “We’ve gone very far away from that and what we see is that … very little of what’s new gets built in Michigan.”

A DIFFERENT APPROACH

On the GOP side, the leading candidates tend to favor more lax regulations, an improved business climate and better workforce development as opposed to tax incentives and targeted economic development initiatives. 

State Sen. Patrick Colbeck, R-Canton Township, credits the 2012 Right to Work legislation with much of the state’s economic recovery. 

An aerospace engineer by trade, Colbeck said that if elected he’d offer a “different sales proposition,” calling for broad-based reforms such as lower health care costs, lower utility costs and improved customer service at the state level. 

“It’s a fundamentally different pitch for how you pitch Michigan in this environment,” Colbeck said. “Instead of doing a portfolio of different programs that are out there, now we just say ‘Michigan is number one in cost of health care, Michigan is number one in cost of doing business…’ 

“The end game is to start promoting Michigan as the destination state for doing business.”

Many of Colbeck’s proposals align with the strategies of Lt. Gov. Brian Calley and Attorney General Bill Schuette, both of whom are seeking the GOP nomination. Calley and Schutte both called for more skilled trades training, agreeing that going to college shouldn’t be the only way to forge a career path for Michigan residents. 

“We need to have a renewed focus on apprenticeships,” Schuette said, touting actions by DTE Energy Co. to train future workers. “There are important jobs in welding and electricians and the list goes on and on. Not everyone needs to be a software engineer living in San Mateo, Calif. Now some will, and that’s great, but not everyone has to. We have to give parents choices and remove impediments to apprenticeships.” 

Calley seemed to agree, adding that more emphasis on hiring former felons and those with disabilities could help to bring more people into the state’s workforce and “redefine full employment.”

Ultimately, in his role as lieutenant governor, Calley said the Snyder administration’s efforts to improve the overall business climate have helped the state rebound. He argued that incentives should be used only for “transformational” projects.

“There’s a place for incentives, but it’s to make extraordinary things happen, not to make up for a bad environment,” Calley said. 

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EDITOR’S NOTE: This story has been updated to clarify the similarities that Democratic candidate Gretchen Whitmer’s economic development strategies share with former Gov. Jennifer Granholm. 

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