A big economic development project in Grand Rapids seems to have Republican lawmakers rethinking their opposition to industry-specific tax breaks.
GOP economic theory
In the early to mid-2000s, Republicans mocked former Democratic Governor Jennifer Granholm over her backing of tax credits that benefited particular industries (think movie tax credits, alternative energy or next-generation batteries) and the idea of the government picking economic winners and losers.
Just this year, in his second inaugural address, Republican Governor Rick Snyder reiterated that, under his watch, Michigan is getting out of the business of industry-targeted tax breaks.
“We are focused on creating the best environment and climate for success, and letting free enterprise work.”
In the ‘cloud’
But, fast forward to present day and reports that a big data center, a Nevada-based company called Switch, is eyeing a local building in suburban Grand Rapids, a landmark visible from the highway, known as “The Pyramid.” Steelcase built it for a project that didn’t work out and it could now have new life as a “cloud” data storage center.
These centers are big business. They house the servers that hold digital business records and massive amounts of our personal digital photos, videos and music.
The data storage business has proven it knows how to squeeze economic enticements out of states.
An Associated Press survey found that states have offered more than a billion dollars in incentives over the past decade (and those are only the incentives they could track.).
A change in tune
Now, there is no official confirmation that a deal is in the works - in fact, many wouldn’t even know about Switch looking into Grand Rapids, had it not been for a chatterbox west Michigan lawmaker.
But, we know a deal is in the works because west Michigan Republican lawmakers are now clamoring to sponsor bills to grant special tax breaks to, you guessed it, data storage centers.
These are the same Republicans who once complained about the effects of Granholm-era tax breaks.
These are the same Republicans looking to dismantle the Michigan Economic Development Corporation and the state’s so-called “corporate welfare” strategy.
A little history repeating
It appears these Republicans have adopted the tax break religion and we’ll be keeping a close eye on whether Governor Snyder joins them. If he does, he would be in good company in changing his tune on tax breaks.
In 1990, John Engler campaigned for governor, promising, among other things, an end to government using tax incentives to pick economic winners and losers.
But then, in 1992, Michigan came up on the losing end of a big competition with lots of jobs at stake when GM closed its iconic Willow Run plant and shifted production to Texas.
Engler announced “no more Willow Runs” and embarked on an aggressive policy of tax incentives to lure and keep manufacturers because the stakes were huge and consistency is a lot to expect of anyone.