Wednesday, February 02, 2011

Republicans Raid 21st Century Jobs Fund to Pay for Pure Michigan

Robbing the future to pay for today - it's the Republican way. The party of instant gratification strikes once again, this time stealing from a long-term job creation fund to make some feel-good headlines on the Pure Michigan campaign right now. Ironically, it's the very tourism campaign that Republicans insisted must be cut just a few short months ago, but given the short attention span of the press and the public, chances are that will all be forgotten.

Long story short: Basically, the 21st Century Jobs Fund took our tobacco settlement money and applied it to a program that would provide the services necessary to diversify our economy into the predicted high-growth areas of the future; alternative energy, life sciences, advanced manufacturing, and homeland security/defense. Anything from early stage funding awards, to assistance with business planning, to access to venture capital - it was helping entrepreneurs and new business start-ups to grow in Michigan, and in turn create the foundation for our economy to move away from our reliance on the auto industry. Created before the Crash of '08, it was never meant to be an instant job creator, it was designed for long-term growth. And while there have been some bumps in the road due to the recession, along with the usual quibbles on jobs numbers, initial results have been very encouraging. From the executive report entitled "A Foundation For the New Michigan Economy", issued September of 2010:

More than 1400 companies have been assisted, and over 24,000 jobs have been created and retained. Additionally, the programs have helped Michigan businesses receive nearly 900 new patents and commercialize and license more than 400 new technologies. The Centers of Energy Excellence program recipients have received more than $360 million in funding to date from the federal government, and have begun the implementation of their projects, which will generate thousands of additional jobs in the coming years.

The $2 billion, 10-year initiative passed in 2005 with strong bipartisan support - but unfortunately it also created a cookie jar for the Republicans to raid every year so they didn't have to address our ongoing chronic budget issues. While the Rs constantly complained on one hand about all the "one-time fixes" for our budget problems, the other hand was busy stealing from every pot they possibly could to avoid the tough decisions - and the 21st Century Jobs Fund was no exception.

Unfortunately, with increasing budget pressures, annual appropriations for the 21st Century Jobs Fund have declined every year since its inception. In 2010, the appropriation ($28.5 million) was more than 60% less than the anticipated funding, and nearly 80% less than funding in 2008. If this trend continues, the early successes from these programs will be minimized and the long-term results from these investments will never be realized.

Eating the seed corn. $338 million in 2006-07 to $28.5 million in 2010, slowly but surely the Republicans started dismantling this job creation effort. When Snyder claimed in the State of the State Address that he was going to expand the scope of the 21st Century Jobs Fund, did anyone bother to ask him just how he intended to pay for it? Because from this vantage point, the cookie jar is nearly empty. $20 million is going to Pure Michigan alone:

Last year, the Legislature appropriated $10 million from the jobs fund for the ads and another $5.4 million from the 2010-11 general government appropriations bill, so HB 4160 simply authorizes another $10 million from the jobs fund to meet the $25 million mark.

But perhaps more importantly, supporters said the legislation also includes language authorizing tourism promotion as a permanent use of the jobs fund money.

43 states add small taxes or fees to car rentals to help fund tourism efforts, but instead of that simple and permanent solution, here in Michigan the Republicans are going to opt for grabbing the quick money to create a feel-good headline - without explaining that they are simply raiding from future investment and job creation to pay for it.

Snyder will present a budget on February 17th. It will be interesting to see how he keeps all these promises he has made to the concept of entrepreneurs "re-inventing" Michigan, because start-ups require investment and guidance to reach their potential. That executive report notes some funding previously appropriated is still being distributed under the various development programs created under the 21st Century Jobs Fund, but those dollars are certainly dwindling - and with massive budget cuts coming, it's hard to see how we continue these successful programs.

One positive thing to note though: The previous efforts with the 21st Century Jobs Fund (that included the 21st Century Investment Fund and the Venture Michigan Fund) are paying off in a big way. Maybe those seeds were planted deep enough to resist efforts to pull them up by the roots. Crain's Detroit Business reports that we are on a pace to set a record for venture capital fundraising for this year, and, after detailing the various successes and failures of venture capital firms from the past few years (including the plug being pulled on Snyder's Ardesta), the story concludes with a choice quote from Skip Simms, president and CEO of Ann Arbor Spark:

"The seeds planted a few years ago are starting to bear fruit," he said. "People made smart decisions when they started things like the 21st Century Investment Fund and the Venture Michigan Fund. It's a good example of economic development changing your culture. It doesn't happen overnight, but it happens if you are patient and do it right."

And you don't let the Republicans raid the investment cookie jar. Maybe we will get that through our collective heads someday - but given the events surrounding the ongoing saga of funding Pure Michigan, I'm starting to have my doubts.