Michigan lawmaker gag orders on tax deals blasted as 'culture of secrecy'

• 32 members of the Michigan Legislature have signed confidentiality agreements for economic development deals, according to records
• Lawmakers on both sides of the aisle, including some who have signed NDAs, are now calling for reforms
• General Motors has argued the confidentiality agreements are critical for advancing potential economic development projects

LANSING — An effort in Michigan to reform the use of non-disclosure agreements in taxpayer-subsidized economic development projects has some unlikely allies: Lawmakers who signed the deals themselves.

"I didn't gain anything from having signed one except learning how broken the process is,” said Sen. Mallory McMorrow, D-Royal Oak, who inked a confidentiality agreement last spring but is now proposing “desperately needed” guardrails as chair of the Economic and Community Development Committee.

Forty-four Michigan lawmakers have signed five-year confidentiality agreements with the Michigan Economic Development Corp. since 2021, when Gov. Gretchen Whitmer Whitmer signed bipartisan bills to create the Strategic Outreach and Attraction Reserve Fund, a business incentive program. 

That includes 32 out of 146 current state lawmakers, according to records obtained by Bridge Michigan through a Freedom of Information Act request. Bridge requested the documents in October but the process was slowed by delays from the MEDC, the state’s primary economic development arm. 

The use of deals has prompted controversy nationwide, and unsuccessful efforts to ban their use in states including Illinois, New York and Florida.

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While some argue the confidentiality deals are necessary to lure job creators intent on keeping plans under wraps, critics contend they're inappropriate for government officials asked to fund and approve lucrative tax incentives.

“You’ve just pledged to keep your constituents in the dark, not truthfully answer questions in the news media and to have secrets that you can't or won't share with your colleagues,” said Rich Studley, a former CEO of the Michigan Chamber of Commerce who in 2022 led a ballot initiative that will soon require lawmakers to disclose their personal finances.

Michigan voters want “more transparency, more accountability – and what politicians in Lansing are doing is just the opposite,” Studley said. 

‘Culture of secrecy’

Records show Whitmer and her full executive office team are subject to a confidentiality agreement signed in 2019 and subsequently amended to cover more than 20 potential developments, many referenced only by code names like Project Copper, Zaney Bread, Peregrine Falcon, Elephant and Elektra.

Whitmer has defended the decision, telling reporters "there is a lot of proprietary information that is shared as states are vying" for major economic development projects that could bring “massive investment” and jobs. 

Michigan has landed some of those developments, like Project Zaney Bread, a Lansing-area EV battery plant that GM and South Korean battery maker LG Energy Solution are building with the help of a $666 million SOAR incentive. 

But the state has missed out on others, like "Project Copper," a semiconductor manufacturing campus proposed for mid-Michigan that spawned several NDAs, including confidentiality deals signed by U.S. Rep. Elissa Slotkin and former U.S. Rep. Peter Meijer.

Micron Technology of Idaho chose to build in New York despite Michigan’s massive $27 billion incentive offer first reported by The Detroit News. 

Many of the confidentiality agreements signed by state lawmakers were vague and broad, prohibiting them from discussing "any potential development project identified as confidential either orally or in writing by the MEDC or staff thereof."

They were signed by some of the most powerful officials in the state Legislature under both Democratic and Republican control: Senate Majority Leader Winnie Brinks, House Speaker Joe Tate, House Minority Leader Matt Hall, former Senate Majority Leader Mike Shirkey and former House Speaker Jason Wentworth.

Some of those lawmakers subsequently voted to fund the SOAR program at $500 million per year. And lawmakers who serve on the powerful House or Senate appropriations committees, including current chairs who have each signed NDAs, vote on each SOAR award the state ultimately hands out. 

Signing an NDA was a mistake, according to Sen. Thomas Albert, a Lowell Republican who agreed to a confidentiality deal in 2021 when he served as House Appropriations Committee chair.

"Instead of fostering true communication with legislators, non-disclosure agreements tie their hands and add to a culture of secrecy," Albert said last fall, proposing legislation to bar state officials from signing them.

But there is value in the confidentiality deals, which allow officials to learn about potential projects important to the state but give companies a space to discuss plans "without showing their hand to their competitors or talking about certain technology that they have or are acquiring," Brinks, D-Grand Rapids, told Bridge. 

The Senate majority leader has signaled a willingness to consider reforms, however. As has Tate, the House speaker and Detroit Democrat, who told Bridge he thinks it’s a “worthwhile discussion” to have.

"I understand the concern that people raise about transparency," Brinks said in a December year-end interview. "I'm certainly willing to have a conversation about what is the best way forward. I don't think we should just be assuming that NDAs for everybody is the best course."

‘A tricky balance’

While lawmakers consider NDA reforms, one of Michigan’s largest employers has already warned them not to go too far. 

“If there’s not confidentiality” to protect proprietary information, “we will not come in and have those discussions,” General Motors Inc. lobbyist Brian O’Connell said in committee testimony last fall. “If there are leaks in the process, it jeopardizes a project and we just simply walk away.”

GM issued that warning as the Legislature began to debate a potential overhaul of the SOAR program, which Whitmer created with former GOP legislative leaders in 2021 to lure “critical” industries to the state and fund site preparation. 

Democrats who now control the Legislature want to add a third element: Local community benefits. A plan introduced last fall would direct 20 percent of the subsidy awards to community revitalization. 

As part of that ongoing debate, Senate Democrats floated a possible amendment that would limit which state officials could sign non-disclosure agreements, rather than prohibiting them altogether, as GM has warned against.

McMorrow, the Senate Business Committee chair, suggested restricting NDAs to two lawmakers who would be given non-voting seats on the Michigan Strategic Fund Board, which approves SOAR incentives before they reach the Legislature.

Those two lawmakers could be “trusted and empowered”  to serve as a “gut check” for colleagues who would not sign NDAs but still want to know as much about a project as possible before voting on incentives, McMorrow said. 

“It’s a tricky balance to strike,” she acknowledged. 

In her experience, McMorrow said the NDA she signed did not actually give her access to information she couldn’t have read in a newspaper. But regardless of whether the larger SOAR legislation advances, NDA reform is “necessary,” she said. 

“More and more legislators, even those who have signed in the past, are looking forward and saying, ‘I don't know that there's an upside to doing it,’” McMorrow said. “‘So I'd rather not because it erodes trust with my constituents.’”