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Tue September 14, 2010
Former MEDC chief weighs in on election rhetoric
By Mark Bashore, WKAR News
East Lansing, MI –
From 2005 to 2009, Jim Epolito's job was to help grow business in Michigan as CEO of the Michigan Economic Development Corporation. Epolito says he's undecided who will get his vote for Governor. He calls himself a "Milliken Democrat," invoking the long-time Republican Governor and his famously moderate politics.
WKAR's Mark Bashore sat down with Epolito to hear his thoughts on the candidates' economic ideas, and to ask him about the recent turmoil at his former agency. He first asked him about Republican candidate Rick Snyder's goal to 're-invent' Michigan...and whether Michigan needs re-inventing.
Mark Bashore: Rick Snyder's approach to the economy is to reinvent Michigan. He calls for a reduction of special interests, an overhaul of how government operates and a number of other measures. Does Michigan need reinvention?
Jim Epolito: Well, I think it needs transformation, and reinvention I guess is another word for that. Yeah, I think it does. I think we have to continue to grow and diversify our economy every way that we possibly can. We're not a singular automobile-centric state anymore. Pittsburgh, when I left there in 1980, was 95 percent dependent on steel. Today, Pittsburgh is five percent dependent on steel. So I mean, I think really that's the diversification, that seeds have to be planted, and reinvention is not a bad word.
Bashore: It seems widely accepted that Jennifer Granholm's working relationship with the legislature during her tenure with governor was less than desirable, and this is a person with previous experience in government. Rick Snyder has no past experience in government. If getting things done in the legislature is important, does it concern you that Snyder is such an outsider.
Epolito: You know, it doesn't concern me at all. People are elected to office and come from very different places, historically. So, we shouldn't be looking at somebody and saying boy, this guy is an expert in dealing with the legislature; as a result, he'd be a good governor. Or, this guy has no legislative experience and he would be a bad governor. There are so many attributes that go into being a good governor, I think lots of those need to be considered.
Bashore: Specifically, with regard to economic development in your former agency and Rick Snyder's former agency, the MEDC (Michigan Economic Development Corporation). Snyder says the state needs to stop picking winners and losers. Isn't that at the core of what the MEDC and the MEGA (Michigan Economic Growth Authority) board does?
Epolito: Well, you know, it's not a matter of picking winners and losers, it's a matter of coming up with a data-driven plan that leads you in certain directions of what part of the economy we really need to diversify. We worked those very hard. We did not make decisions easily; I mean, we really did a lot of due diligence to find out and a lot of research to find out what sectors should we be investing in, and that's where we went. And that's what guided the MEGA board, that's what guided the MEDC at that time.
Bashore: The Democrat, Lansing mayor Virg Bernero, calls for the creation of a state bank to increase lending to businesses. He also wants Michigan to cut its ties to several large national banks he claims don't lend enough in Michigan. Good idea or bad idea?
Epolito: Well, I think you have to really look at what these guys are saying, and ask yourself is this politics for the election or are these really sound policies? And I think that when you talk about cutting our relationship with big banks, to me that makes no sense. Banks are in a situation where they've made some huge mistakes in lending to people that couldn't afford those loans. That caught up with us; those subprimes caught up. And it caught up to the major banks. And at the same time, we were reducing the regulation in Washington over these banks. And so, they kind of when out of control. And now, they're trying to come banking. We need the banking system; we need a strong banking system in the United States. And this idea of having a bank for Michigan's small business, I think it makes sense on its face, but a lot of research has to be done to make sure that it's fiscally responsible and sound.
Bashore: Any concern that the government should be involved in the banking business?
Epolito: Well, that's a little bit of a concern of mine. You know, I'm a free market capitalist. I was president of the Accident Fund when we took it private from the state of Michigan, which was one of the largest privatizations of any state agency. So, I feel very strongly that there is a line where government can't be involved. But I think these questions about the MEDC or the question about the banking system really comes down to, you could stand by and just lower taxes and just wait for businesses to come to Michigan. But it doesn't work like that. Because every state, every country has economic development operations that are robust, that are strong and that are recruiting every day. Some of those from other states have offices right here in Michigan where recruit and try to cherry-pick our people out of Michigan and into their state.
Bashore: You describe yourself as a "Milliken Democrat" who is so far undecided on who you'll vote for. It would seem a guy like Rick Snyder who was endorsed by Governor Milliken would be your guy. Why are you still undecided?
Epolito: Well, let me just say a word about Governor Milliken. Governor Milliken was really the first governor in Michigan that I got to know and that I had the opportunity to work with. And I just thought he was the consummate gentleman. He was the absolute perfect public official, he was always graceful, he always had great civility, and he brought that to the office. So, you know, I am a Democrat, but the fact of the matter is on a lot of these votes, I'm changing. I'm really looking into who these people are and what these people are about, and what they're bringing to the process. And I'll just say this, Mark. I think this whatever you want to call it; these negative campaign ads, these "everybody is hating everybody else" is really hurting our country and our state. Everybody is looking for somebody to blame for the situation that we're in. And the fact of the matter is there's sure lots of people you can point fingers to. But really, government can't control 100 percent the economy, state or federal. And we need a higher level of civility in this state.
Bashore: Rick Snyder feels the MEDC has been mismanaged by the Granholm administration; he feels the agency needs greater transparency and accountability. Last March it was learned that the MEDC awarded $9 million in tax breaks to convicted embezzler Richard Allen Short for a startup in Flint. Greg Main, the current head of MEDC admitted the agency wasn't prepared enough to look into the operations of startups, and he moved on getting a private contractor to do background checks on future applicants. What can you tell us about the MEDC; the culture, the people, the process - whatever, that would help people understand how the RASCO situation and the more recent $3.4 million in overclaimed tax credits came to be?
Epolito: Well, first of all, it was my first foray into government, as president of the Michigan Economic Development Corporation. It was the hardest job I've ever had in my life; I put in the most hours working there, and what inspired me there most of all is the civil servants who worked there. I kind of had a view of state employees coming from the private sector that wasn't good; let's just put it that way. But then, when I saw the level of commitment, the level of education, the level of just "all in" for their state truly, these were noble civil servants trying to do the right thing for Michigan every day in a most competitive environment. And at a time when we would bring 1,000 or 2,000 jobs to Michigan, we would bring Google to Michigan, and all of a sudden General Motors would announce a 10,000 person layoff. And we had to, through that four year period there was nothing good written about the work that we were doing there. But at the same time we knew that we had to stay on target, we had to stay on plan. We had done significant research into how to grow Michigan and we did everything that we possibly could. As far as the Richard Allen (Short) situation with RASCO, I was not around during that time. But I will tell you this: that he never did get a $3.4 million MEGA tax credit. And this is what people don't understand. The MEGA board can vote and put that in place. But these folks have to create jobs in order to collect on that tax credit. At that time, they were doing spot audits, and now I understand it's gotten much more robust. But you're in an environment at the Michigan Economic Development Corporation where you have the legislature cutting your budget every year and cutting people every year. So your ability to really run a really fine-tuned audit program is not in place. And really, it's like taxation in general. We depend on the people of Michigan to pay their taxes. Do we catch everyone of them that do not pay their taxes? No. But the fact of the matter is we do our best to try to come back and audit and collect those dollars. No money was paid out; no tax credit was ever operated for this individual, and that's what I know. And we catch a lot of these people, not always on the front end, maybe we catch them on the back end, and there's a lot of people who try to gain the system. And so I think both Rick Snyder and Virgil Bernero, I think if they want to reinvent, I think we always have to reinvent, we always have to upgrade, we always have to look at it a different way. But I'll tell you this: I've never worked with a more dedicated group of people than I worked with at the MEDC.
Bashore: Nothing systemically seriously wrong with the agency, in your opinion, that you could tie to RASCO or the overclaims?
Epolito: No, no. Really, I mean, honestly I've worked with these people for four years. The people there are long time-serving civil servants. They could go to the private sector; that's what I always thought, and make a lot more money with a lot less hours put in. But they're very dedicated. They're very serious about their service to the state of Michigan, and I was inspired by that.
Bashore: Do you feel responsible to any extent for the standards or the culture that led to those events?
Epolito: No. I'll take responsibility for the time that I was there and the progress that we made. But we had a very airtight ship; the auditor general was in auditing our financials every year. We all got very high marks, the highest that you could possibly receive. I felt very good about that, and I always knew that there's a chance that somebody could come forward with a scam. And we tried to scrutinize that, but there's some very good scam artists out there. Unfortunately, this happened under Greg Main's watch, and really, it could have happened under mine also. But I think at the end of the day, no tax credit was awarded. No tax credit ever happened. He applied, he got approved, he got found out and nothing happened.
Bashore: Jim Epolito, thanks very much, good luck to you.
Epolito: Thank you Mark, I appreciate it.
Election 2010 - WKAR
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