Deputy auditor general says 2017 audit of MEGA credits limited by confidentiality; GM agreement cited

Laura Hurst, Michigan deputy auditor general, told the House subcommittee the Office of the Auditor General's 2017 performance audit of the Michigan Economic Growth Authority (the Mega tax credit program) found one formal finding on reporting and an observation about statutory limits to public transparency.

Hurst said the audit, released in September 2017, found that in fiscal years 2014 and 2015 "MSF's reporting did not include prior year tax credit information as required by law," and that the Michigan Strategic Fund (MSF) agreed to implement processes to address that finding. She said the audit also included an observation concerning confidentiality and statutory limits on disclosure: "The Mega Act requires information to be disclosed to certain parties. However, the Revenue Act prohibits disclosure of tax credit information to others outside the legislature." She added that the restrictions did not prevent the auditors from doing their work because agencies and participants provided the requested confidential information, but the restriction limited the level of detail the auditors could publish in supplemental schedules.

When asked for specifics, Hurst pointed lawmakers to the supplemental schedule in the audit (pages 15'53) and said one participant had negotiated confidentiality with the agency, which resulted in blank lines in the schedule for individual estimated credits while the report published only the total. "One of the companies entered this agreement with MEDC to say we wanna keep that amount confidential," she said, and the auditors reported the total for all agreements on page 53 rather than participant‑level amounts.

Representative Dylan Wigela asked whether legislators could view the confidential amounts. Hurst said she believed legislators could, but recommended confirmation with the Department of Treasury because the Revenue Act is the relevant disclosure law. She also told the committee that the auditors were held to the same confidentiality standards as the audited agency.

Committee members pressed Hurst on the logic of confidentiality for a corporation receiving public funds. Hurst said the confidentiality arose from a statutory definition of "financial or proprietary information" in the MSF act that allows agencies to keep information confidential if its release could cause significant harm to an applicant. She said the audit put forward questions for the legislature to consider about whether statutes should better define what tax information may be withheld and whether any exclusions should apply only to amounts of taxes paid rather than to estimated or capped credits negotiated with public funds.

Hurst closed by noting the office had not done a follow‑up performance audit since 2017 and that her remarks were limited to activities at the time of that report. Lawmakers in the hearing asked the Department of Treasury and MEDC for further information and suggested follow‑up with those agencies going forward.