Bureaucracy is a booming business in Lansing. Courtesy | Creative Commons
It pays to be a bureaucrat.
Michigan’s $76 billion budget fuels special interests appointed to the state’s key economic development agency, the Michigan Economic Development Corporation. The MEDC hands out millions of dollars in economic incentives annually, while also wielding considerable power scheduling the pay out of economic grants.
The MEDC is a unique state agency in that it has an executive committee made up of private business owners and community stakeholders, meaning these individuals do not have to give up their stake in their companies to serve on this board. Members of the MEDC’s executive committee can still receive grants from the state legislature toward their private business ventures even while serving on the committee that negotiates their contracts.
One member and an appointee of Democratic Gov. Gretchen Whitmer, Fey Beydoun, received a grant for $20 million toward her nonprofit, Global Link International, according to an article reported by the Detroit News on March 20. Other businesses owned by members of the MEDC have also received grants.
Beydoun filed paperwork to incorporate the nonprofit 10 days after receiving the budget appropriation from the Michigan legislature on July 1, according to the Detroit News. The $20 million grant was a part of the nearly $1 billion “enhancement grants” lawmakers use to earmark special projects for businesses in their districts.
Recipients that receive these grants are required to provide additional quarterly reports and a final report when the grant term ends, the Detroit News reported Mach 20. Beydoun is not the only member to receive a grant in the 2022 budget. The president of the Regional Council of Carpenters and Millwrights, Thomas Lutz, who also serves on the executive committee received a grant of $5 million for skilled trades promotion, according to the Detroit News.
The budget listed Republican former Speaker of the House Jason Wentworth as the legislative sponsor of Beydoun’s grant, according to documents the Detroit News received from the State Budget Office. Wentworth told reporters he met with Beydoun about the project, but denied including her grant in the budget.
Beydoun told the Detroit News Wentworth was the sponsor. Meanwhile, the former chairmen of the House and Senate committees on appropriations, former Rep. Thomas Albert and former Sen. Jim Stamas, said they did not know how the grant got added to the budget. The Beydoun saga shows a lack of responsibility among legislators.
Several ethical questions arise from Michigan’s economic development appropriations process. For one, there needs to be more accountability on the legislature’s side to be forthright with the public about the appropriations included in the budget. There is also an apparent conflict of interest with members of the MEDC negotiating the terms of payout for grants that they received from the state.
During the consideration of the 2022 budget, the legislature added these “enhancement grants” hours before passing the budget early on the morning of July 1. The public and legislators had no chance to comment or really examine these appropriations thoroughly.
Like other state employees, members of the MEDC’s executive committee should have to follow the State Ethics Act. Specifically, members of the MEDC must recuse themselves from participating in the consideration of grants where they have a vested financial interest. Additionally, state lawmakers should exclude these members from grant consideration until their term has expired.
It is absurd that members of the MEDC’s executive committee can lobby state lawmakers for taxpayer-funded grants toward their private business ventures, while administering the payout of those same grants toward “state economic development appropriations.”
Either the MEDC can continue to administer the payouts of these grants while adhering to state ethics regulations, or the legislature should downgrade the agency to an economic advisory body to the governor.
It’s time to choose one or the other.
