ACHTUNG: This is not a “fair and balanced” article. It is an editorial by the editor.

While many Americans rail against welfare queens and lazy poor people who game the system to collect money without working, too many overlook or ignore what may be a more costly process — corporate welfare.

Corporate welfare doesn’t seem to absorb as much public criticism and scrutiny, yet it costs taxpayers a boatload of money to benefit the rich at the expense of the middle class.

One of the best examples recently is the Switch data center in Gaines Township, which accumulated plenty of benefits in tax breaks, just to get them to locate here and now the company is asking for more. It is demanding common everyday taxpayers to help subsidize the business, state officials are all too willing to comply.

This, despite the abatements granted in 2016, when then-State Rep. Ken Yonker defended the State Legislature’s Santa Claus act by saying the company will bring jobs to the community. Where have we heard that song and dance before? Yonker told the Leighton Township Board that Leighton will continue to grow if the state can work out an agreement to bring the Switch data company into the former Steelcase pyramid.

The company, which had been doing business in Nevada, promised to bring at least 1,000 good-paying tech jobs. That’s fewer jobs than the Gun Lake Tribe has created with the Gun Lake Casino. At less cost.

Switch promised to turn the pyramid into a cloud data storage facility and invest $5 billion into the project. However, it insists on a waiver of sales, use and property taxes and has indicated that it has other offers, like in the State of New York.

This reminds me of a sports franchise owner threatening to leave to greener pastures unless the host city builds a new stadium. Don’t forget it wasn’t that long ago that Red Wings’ owner Mike Illitch insisted the cash-strapped City of Detroit chip in more than $200 million for Little Casesar’s Arena.

Yonker’s successor, State Rep. Steve Johnson, recently rose in righteous indignation in the State House to tell his colleagues about the evils of corporate welfare. This time. Mr. Johnson was spot on.

I know there are many local officials who have opposed the Gun Lake Tribe for having its land taken into federal trust and off the tax rolls. But the Tribe earlier this month announced a road improvement project at the Exit 61 overpass on 129th Avenue leading to Bradley. The key here is that the Tribe, which stands to benefit economically, has pledged to pay for 95 percent of the cost of the project.

The Tribe is promising to do what other big businesses do not do when they set down a brick and mortar business outside the city limits to avoid higher taxes. Then they require public tax dollars to widen the road and install a traffic light that were necessitated by the presence of the retail giant.

So as much as the Tribe and the Gun Lake Casino are criticized for taking property off the local tax rolls, they pay some of it back in the form of revenue sharing agreements. And when infrastructure improvements are made, they’re willing to pay for them.

The Tribe seems to be a much better corporate citizen than Switch.

 

2 Comments

Couchman
February 16, 2020
Anyone with a cursory knowledge of server farms, (buildings that house a large number of mainframe computers and a lot of telecommunications switching gear) knows that once they are built they have maintenance employees and use a lot of electrical power. Typically they are not teeming with 100’s of employees not related to keeping the servers up and running. Massive electrical usage is good since West MI has lost multiple large power users when Steelcase, GM and others closed factories and Consumer Power had excess generation capacity. However, there is a lot of fuzzy math law makers used to come up with the promised jobs using estimates of jobs created by companies other than Switch moving to Greater Grand Rapids to be close to Switch. The lawmakers decided to take money out of the state’s general fund to go to Caledonia Community Schools to make up for what Switch successfully argued was not their responsibility. That’s on top of the MI legislature giving Switch a sweetheart deal waiving taxes on capital equipment. When similar, smaller server businesses already in MI asked “What about us” our legislature quickly agreed to give them the same long term capital equipment tax breaks never considering how long it would take to recover the state revenues they gave away. Despite all the end of the world as we know it warnings we heard from casino opponents prior to its approval and opening in 2011 it appears the Gun Lake Tribe is living up to its obligations of contributing to the Hopkins and Wayland Union school districts while Switch got another tax break. All of MI is paying for the funds going to Caledonia Community Schools.
Pat
February 20, 2020
Couchman: This was a good article. It highlighted several interesting facts I had not heard before.

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