• Legislators are debating next year’s funding for a quasi-governmental partnership that oversees billions in job-growth programs
• That spending is controversial; some lawmakers call it ‘corporate welfare, ’ others say subsidies are vital 
• Bridge dug into documents to lay out how the MEDC was created and how it functions

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Funding for Michigan’s controversial economic development agency remains a key hangup in the legislative stalemate over the state budget, with a government shutdown just days away if a deal can’t be reached.

Amid a year of scrutiny and a criminal investigation, the Michigan Economic Development Corp. is in the crosshairs like never before. The agency says it’s grown jobs, but critics say it’s fallen well short of promises.

The House proposes major funding cuts, while Democratic Gov. Gretchen Whitmer wants to retain money for mega deals. The Senate seeks to reallocate  some of the business development funding toward growth and small business programs.

“Let’s put new job-creating tools in our toolbox that will help us leverage our strong workforce and manufacturing heritage to compete against other states and countries,” Whitmer said last week as she warned about threats to Michigan’s economy.

The Democratic-led Senate also would reallocate much of this year’s $100 million in cash-for-jobs, shifting $40 million to what it calls talent partnerships. The House plan, following Republican-led scrutiny of more than $2 billion in state deals with low payback, would eliminate the mega-subsidy Strategic Outreach and Operating Reserve, along with other programs.

RELATED: 

• After $1B and mixed results, Michigan lawmakers cooling on corporate incentives
• Top 10 subsidies under Whitmer: Michigan spends $900M, firms create 4,200 jobs
• MEDC chief: ‘I was not aware’ of $20M state business grant caught in probe
• Michigan House Speaker Matt Hall ‘optimistic’ budget shutdown can be avoided

The overall House budget for the state would total $78.5 billion, while the Senate would spend $82.5 billion.

The proposed MEDC cuts threaten “so much of the progress we’ve made as a state in growing Michigan’s communities and businesses, delivering good-paying jobs, spurring entrepreneurship, and welcoming new residents,” MEDC spokesperson Danielle Emerson said.

Proposing massive cuts “was a great step in the right direction,” said state Rep. Steve Carra, R-Three Rivers, who chairs a House subcommittee on corporate subsidies managed by the MEDC.

By taking “a serious look at the MEDC,” Carra said, “we can look toward prioritizing money somewhere other than that.”

Bridge Michigan took a look at the structure of the MEDC as it faces a pivotal time: Besides the stalemate over the agency’s budget and an attorney general investigation into how it handled a $20 million grant to an insider, the electric vehicle battery industry — the central element to the MEDC’s largest job-growth deals — is flailing.

Information about the MEDC lies in a medley of documents across state websites that offer insight and data but few public assessments of performance outside of monthly scorecards.

Increased scrutiny

Criticism has mounted among leaders of both parties since the state established the $2 billion SOAR fund in 2021, which Whitmer seeks to rebrand and keep funding. As of Sept. 30, it’s projected to have a balance of $500 million.

Some lawmakers slam the agency for being secretive and spending billions in taxpayer money on speculative job growth. Residents also have pushed back on large-scale projects, resulting in ongoing litigation against two deals the MEDC celebrated.

Democratic leaders like state Sen. Mallory McMorrow, D-Royal Oak, have urged resident-focused reform to boost the overall state into a better job attractor. Others proposed a 10-year plan to balance mega-sized incentives with assets like transit and housing funds.

State House Speaker Matt Hall, R-Richland Township, has sought to eliminate the high-dollar subsidies. He set up the House subcommittee led by open-market advocate Carra and Democratic co-chair Dylan Wegela, of Garden City.

State Sen. Thomas Albert, R-Lowell, introduced a bill to eliminate SOAR and plans to introduce another to “responsibly dismantle” the MEDC.

“The state relies on corporate welfare with giveaways so costly that taxpayers will never see an adequate return on their investment,” Albert said.

What does the MEDC do?

The MEDC describes itself as a “unique, autonomous, yet quasi-governmental agency” that effectively boosted the state.

The strategy set by CEO Quentin Messer Jr. is to invest in people, revitalize places, and compete for and win projects.

“An incomplete budget proposal affects every fiber of that thread,” Emerson, the MEDC spokesperson, said.

Today, the MEDC:

• Employs 366 people, with 135 working in executive direction and support. The count is up from 287 in 2019.
• Oversees $1.6 billion in state funds for a range of programs to support job growth, community revitalization, small business loans and investment funds. Also runs state historic preservation, an intern program and tourism marketing.
• Administers legislative grants; leadership says lawmakers set the standards, not the MEDC.
• Issues bonds to aid developers and provides collateral to business borrowers.
• Develops economic development strategies, including SOAR. Job promises from SOAR once totaled more than 13,000, but no jobs were created through that program as of this time last year, the most recent public tally.

Among state allocations, the largest in 2024 were the development site readiness portion of SOAR, at $279 million, public infrastructure grants at $234 million, $150 million for targeted energy investment and $100 million for business attraction, with 70% dedicated to cash-for-jobs programs.

How MEDC is structured

Economic development was formalized in the 1980s with the creation of the Michigan Strategic Fund by the Legislature.

In 1999, the MEDC was created through a so-called interlocal agreement that allowed the Strategic Fund to transfer its finances and administration to the new “public body corporate.”

MEDC is a public entity and the state is financially accountable, but the corporation is legally separate from the state and maintains its own internal controls.

The state considers the MEDC one of five “authorities,” according to Michigan’s annual report. Others include the Mackinac Bridge Authority and the Michigan Early Childhood Investment Corp. MEDC is housed within the Department of Labor and Economic Opportunity.

Why is it called a public-private partnership?

While performing government functions and operating in the public realm, the MEDC also is authorized to “encourage and solicit private sector involvement, support, and funding for projects,” according to documents.

Bridge asked the MEDC whether private support for the agency would be publicly visible, but the MEDC did not respond.

The MEDC is negotiating subsidy deals outside of the public eye. That can include local tax abatements, state tax cuts, giveaway development land and other sweeteners that face a public vote at the end of the process.

Critics also have pointed to the use of non-disclosure agreements among public officials when companies are considering an area.

Who’s in charge?

It’s complicated.

Ultimately, Michigan’s governor appoints the 20-member MEDC Executive Committee to staggered terms. The committee hires the CEO, controls overall management of the MEDC and regulates its bylaws.

The CEO — Messer since May 2021 — also chairs the Strategic Fund board, which in public meetings authorizes grants, loans and other spending recommended by MEDC staff.

While the MEDC effectively runs economic development and its Executive Committee meets in public, the Strategic Fund board authorizes most programs. Notably, neither the MEDC Executive Committee nor the Strategic Fund board typically offers scrutiny or opposition during the public meetings.

The Legislature determines structure changes, including program funding. Lawmakers approved SOAR and research and development tax credits and ended the Film Tax Credit and MEGA programs.

Does MEDC create jobs?

An investigation by Bridge showed that, from 2019 to 2024, Michigan offered nearly $2.5 billion to companies to expand or build facilities to increase employment. From those deals, about $1 billion in taxpayer money had been spent. While 65,491 jobs were promised, 13,079 had been created.

The MEDC announces its job-creation awards via news releases. It also offers information during the Strategic Fund board’s public votes on awards over $1 million.

However, it does not publicly distill the results of those awards. Annual reports make note of contracts that are not finalized, as well as those canceled or revoked. Those are also not presented as a cumulative report.

Funding

The corporation’s operations are funded annually through tribal gaming revenue, which was estimated at $67 million for 2025. Fees and investments account for $7.7 million in revenue. Another $8.9 million was to come from interlocal and other revenue. Details on that were unavailable from the MEDC annual report.

The MEDC was expected to spend $82.2 million in 2025, with a bit over half dedicated to salaries and administrative costs. The rest went to program support.

Beyond the annual corporate budget, there’s annual Strategic Fund spending of state money, as noted above.

The corporation also holds investments and other assets, according to the most recent annual report. Among them: The American Center for Mobility property in Washtenaw County, which this spring was not making payments on its $35 million loan to the MEDC-formed business that bought the property with state funds.

Related funding

The Michigan Economic Development Foundation, a nonprofit run by Executive Director Rebecca Bahar-Cook, reported revenue of about $690,000 on its 2024 tax return. That was $70,000 less than the $760,000 in expenses.

Bahar-Cook, also a Michigan State University trustee, runs Capitol Fundraising Associates, according to her LinkedIn. The foundation paid her company $84,000 in 2024.

Whitmer has been connected to the foundation, including acting as chair in 2022, while she served as governor.

Accountability

Several online documents help track the MEDC and, by extension, the Strategic Fund’s work.

However, it can be a patchwork, with questions of overall performance and what that means for the state left unanswered.

The MEDC’s transparency page offers a number of reports going back several years.

A single annual report goes to the Legislature, detailing the most recent fiscal year’s activity. Other activity also is included, but completed or terminated projects are no longer represented.

Audits of the MEDC and Strategic Fund can be found on the auditor general’s webpage or in legislative reports on the transparency page.

Carra, of the incentive subcommittee, says MEDC leadership always attends meetings when asked to answer questions.

“I give them credit for that,” he said.

Partner rosters

That interlocal agreement that makes the MEDC possible involves a network of governmental local economic development groups from around the state.

Beyond them, the MEDC has corporate partners, largely the economic developers that speak for local projects.

Regional workgroups include some of those corporate partners. They also involve MEDC staff, contractors, state and federal agencies, along with DTE Energy and Consumers Energy.

Neither interlocal partners nor the collaboratives make financial contributions to the MEDC. Some may receive grant funding through MEDC or Strategic Fund programs.

Partners are urging lawmakers to keep MEDC funding in the next budget. Among them are Maureen Krauss, CEO of the Detroit Regional Partnership, and Economic Development Leaders for Michigan.

Reputation

The MEDC achieved accreditation in April by the The International Economic Development Council (IEDC). It is one among 86 North American economic developers to gain that distinction.

The council gave the MEDC six awards this year for programs that include the Talent Action Team, Michigan Scholars, Match on Main and the Office of Future Mobility.

The agency also touts that its “Make it in Michigan” plan drove it to the sixth-best state for business on CNBC’s America’s Top States for Business 2025 list. It’s the highest finish for the state, which moved up from ninth on the last list.

Controversy

Public scrutiny of the MEDC intensified in 2024 when reports detailed the expenses — including a $4,500 coffee maker — associated with a grant administered by the MEDC. 

The $20 million grant had been awarded to Fay Bedoun, an MEDC Executive Committee member. That grant prompted a raid on the MEDC offices and notice by the Attorney General’s Office that the target was Messer, the MEDC CEO, and another top administrator.

Beyond that, audits over many years have found issues with the MEDC and the Strategic Fund. A few have noted lackluster record-keeping, including one that noted insufficient “internal control over payable and receivable balances.”

What the MEDC says about its efforts

Initiatives are meant to be a long-term strategy for growth and prosperity, according to an MEDC statement.

“We are committed to working with partners in every part of the state to fine-tune our course and continue our momentum,” the agency said.

Meanwhile, the MEDC’s strategy was recognized by economic development leaders across the state, who are calling for the renewal or extension of existing statewide programs in seven of their top 10 priorities, Otie McKinley, MEDC spokesperson, told Bridge.

“These leaders agree that many of the state’s current efforts are working well and are worthy of continuing and consistent investment.”

What critics say

“I think that government would be wise to get out of the business of trying to interpret what is and what is not the best economic decisions for the state of Michigan,” Carra said, “and not give (taxpayer dollars) over to quasi public-private entity like the MEDC, working in tandem with big corporations around America, to try to tell us what’s best.”

When it comes to transparency, the MEDC can fully disclose some information, but other aspects are “frustrating” or even “misleading,” James Hohman, of the free-market advocate Mackinac Center for Public Policy, told Bridge recently. That includes whether the agency delivers outcomes on programs and projects that are announced.

“That’s something that lawmakers ought to demand more from the MEDC,” he said.

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