Lie of the Month: “We’re talking about introducing an entirely new industry to Michigan”

Pandora's Box Has Been Opened

Pandoras Box Image 2Actually, no. There are at least 28 third party data centers already up and operating in Michigan. The House Fiscal Agency thinks there are 40, but didn’t specify them. None of these 28+ existing data centers required the tax breaks just reported out of the Michigan House Committee on Tax Policy to get up and running.  But Switch SuperNAP does? Why?

The promoters of Switch SuperNAP’s tax break package launched their campaign back in November with a heavy emphasis on the ‘new industry’ angle. This whopper seems to have been originated by Switch’s spokesman Roger Martin:

“It is a tough issue,” Switch spokesman Roger Martin said. “There’s no question about it. We’re talking about introducing an entirely new industry to Michigan, something that is the future of this country and of this world. It’s a good, vigorous debate.”

Rick Baker CEO GRCoC 2Since the House Fiscal Agency released their 40 data center estimate, at least one Michigan media outlet scrubbed their story. Jim Harger at Mlive originally included this quote from Rick Baker in his November 30th story:

Rick Baker, CEO of the Grand Rapids Area Chamber of Commerce, said the tax breaks will help create a new industry for the state.
“This is not an industry that was top of mind for us as an opportunity. We did not have a policy in place,” he said.

Gone now. Rick Baker should have known at the time that his statement was a blatant falsehood. U.S. Signal, which operates three third party data centers [two in Grand Rapids] in Michigan, is an Executive Member of his organization. Harger undoubtedly got a tap on his shoulder from Dan Gaydou, the President of Mlive who just happens to be on the Board of Directors of The Right Place, Inc. – the major cheerleader for Switch’s tax breaks.

Speaking of The Right Place, Inc., their top cheerleader, Birgit Klohs, is still peddling the ‘new industry’ lie with a new adjective: crucial.  As reported in the celebratory Detroit News article on today’s passage of the data center tax breaks by the Michigan Senate:

Birgit Klohs, head of west Michigan’s The Right Place development agency, testified Wednesday that the tax changes would open Michigan’s doors to a crucial new industry.

Jeff Farrington ImageUnfortunately, once a lie is out there, it takes on a life of its own. This lie got regurgitated by Representative Jeff Farrington, the Chairman of the House Committee on Tax Policy just in time for yesterday’s vote:

Representative Jeff Farrington, R-Utica, chairs the House Tax Policy Committee. He says the bills set the stage to attract a new, modern industry to the state.
“We have a digital economy. We have a service-based economy, and our tax code is really one that’s set up for products from the 1930s and 40s. So trying to update it to be competitive with the other states.”

Now it is a generalization spread across the state by the Michigan Public Radio Network:

“Supporters say the incentives would help build a new industry in the state.”

You are the guest of honor at a festival of lies carefully crafted to create tax breaks for a select few, at the expense of the many. Not unique to Michigan, this charade is playing out across the country.

Electricty Image 2However the real issue with Switch’s SuperNAP Michigan is still the huge electrical load this center will place on the grid. Not shown in any of the PR images of the proposed data center.  Don’t believe us? Read what Site Selection magazine has to say about data center siting issues:

By one measure, power is the most important factor. Fifty percent of respondents in the latest (Spring 2011) Jones Lang LaSalle Data Centre Barometer, issued by the firm’s London-based Data Centre Advisory Group, rank availability of power as the most important factor in choosing a new data center, followed by location and efficiency of the center

Switch’s SuperNAP Michigan will be a 300+ MW electrical load imposed on the CMS Energy grid just as they decommission 950 MW of generating capacity. There is no plan to provide SuperNAP Michigan with power just as the EPA’s Clean Power Plan puts all of America on an electrical starvation diet. CMS customers are going to pay a whole lot more for the disruption of their electrical grid than just the tax breaks.

But a really good lie can carry the day in Michigan’s Legislature, without any regard for the public’s interest. Eight to five in the House Committee on Taxation yesterday:

Five Republicans for: Farrington, Maturen, Yonker, Iden, Webber
Four Republicans against: Somerville, Howrylak, Chatfield, Glenn

Three Democrats for: Clemente, LaVoy and Byrd
One Democrat against: Townsend

The Michigan House tax breaks have now been extended to all 28+ third party data centers in Michigan, but not to the multitude of captive data centers operated by tax paying Michigan companies. Same activity, same type of employees hired, but no tax breaks. Evidently not all data centers are equal in the eyes of the Michigan House.

Never one to be outbid, the Michigan Senate fixed this little oversight. Word just came in that the Michigan Senate just approved their version of the data center tax breaks. The Senate Fiscal Agency says their SB 616/617/618 tax breaks will apply to at least 331 firms, and possibly another 1,253 firms. Now we’re talking really big money.

Remember how Democrats held that the Michigan General Fund was far too precious to tap for road funding last month?David Knezek Image The Michigan Senate’s version of the data center tax breaks “added a [Democrat David] Knezek amendment under which the state would hold harmless, or protect, the School Aid Fund from the impact of the tax exemptions. While unspecified, it appears that money would shift from the general fund, the state’s main checkbook.”  Senator Knezek was among the Democrats who voted against using the General Fund for roads last month.  But now he moves to use the General Fund to back stop tax breaks for a select few businesses.  It is amazing just how much a legislator can ‘evolve’ over 30 days!

Pandora’s box has been opened.

You Betcha! (15)Nuh Uh.(0)

  11 comments for “Lie of the Month: “We’re talking about introducing an entirely new industry to Michigan”

  1. Sue Schwartz
    December 3, 2015 at 2:36 pm

    While being held as a captive audience in Lansing, a train of RINO's were telling us how a monopoly on electricity is good for the economy. Not one stated how necessary this monopoly is to all the super nap tax breakers; nor did they state that without this monopoly would "we" be able to support these super napper tax breakers. Recall was filed on one senator for his vote on the gas tax yesterday. You folks need to get started on your own super napper tax breakers in your own districts. Nuff said!

    You Betcha! (5)Nuh Uh.(0)
    • JD
      December 5, 2015 at 4:14 am

      Curious as to which Senator was targeted for recall and which legislators were 'unintentionally absent' in the super nap tax deliberations...

      You Betcha! (2)Nuh Uh.(0)
      • 10x25MM
        December 5, 2015 at 8:16 am

        Senate Journal 106 from Thursday [page 1,909] shows that the three data center bills - SB 616/617/618 - were rushed to the floor by Senator Kowall. Ostensibly a surprise to the Senators. Stamas and Colbeck were the excused absentees; Colbeck has tweeted that he was having surgery. Sen. Schmidt, who has been targeted for recall, voted for all three bills [page 1,910 et seq].

        All three bills got immediate effect by voice vote despite the roll call votes all being 21 / 15 / 2 [page 1,910 et seq]. A 21 / 15 vote is 58.33% of those present in favor. Immediate effect requires 66.67% of those present according to Article IV, Section 27 of the 1963 Michigan Constitution. Clearly those opposed were only posturing, or the 41.67% would have delayed immediate effect by a point of order. Such a point of order would have been the preeminent tactic of a competent legislator who was genuinely opposed.

        The Democrats made a lame protest [page 1,912]. The opposed Republicans were mute.

        You Betcha! (5)Nuh Uh.(0)
        • Corinthian Scales
          December 5, 2015 at 1:18 pm

          Ha! Stamas, and Colbeck.

          You Betcha! (2)Nuh Uh.(0)
        • JD
          December 7, 2015 at 2:24 am

          (10x25MM): "...Clearly those opposed were only posturing, or the 41.67% would have delayed immediate effect by a point of order. Such a point of order would have been the preeminent tactic of a competent legislator who was genuinely opposed.."

          I wish that points such as the above would be debated more among those of us who care about the legislative process. The few times I witness a patriot dive in to the actual details of how are lives are shaped it not only often educates me but much more importantly gives me hope.

          Our kids need hope right now and thank you 10x25MM for offering them it with your in-depth stories and analysis (as well as others).

          You Betcha! (1)Nuh Uh.(0)
  2. Jason
    December 4, 2015 at 5:34 pm

    They waited till a couple of nay votes were absent, and even though that may not have been deciding, it might have slowed the process till wiser heads prevail?

    You Betcha! (4)Nuh Uh.(0)
  3. JD
    December 7, 2015 at 2:34 am the way, when the MEDC isn't busy rewriting the tax code for never-before-seen industries?...they're busy wasting your money with 'reality' in places such as this:

    You Betcha! (1)Nuh Uh.(0)
    • Corinthian Scales
      December 7, 2015 at 2:51 pm

      So that's what Caitlyn Jenner has been up to.

      Old news, dude. Ford has been pissing money away on holograms and that buffoonery for decades in design, and guess what? They still need to make models.

      You Betcha! (0)Nuh Uh.(0)
      • JD
        December 8, 2015 at 6:51 am

        We are the ones (through the MEDC) paying for Ford's recruitment program (holograms or whatever)...not Ford.
        I'm also (apparently) not the only one who seeks to (often) get their point across using 'old news'.

        Caitlyn Jenner?..I have no idea what you are talking about (sorry).

        You Betcha! (0)Nuh Uh.(0)

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