Can Michigan Afford to Scrap its Film Production Tax Incentives?

Is Michigan in any position to push away growing business sectors? Do we no longer need help fighting the exodus of creative young talent from the state? Those are the questions we should be asking about Gov. Rick Snyder’s proposal to curtail film tax incentives.

A crew member works on a film shoot at the Michigan Central Depot in Detroit.

By now you’ve surely heard about the governor’s call to eliminate the film tax credits, the highest among states, and instead allocate $25 million a year for new incentives. By contrast, the state paid out about $60 million in film tax rebates in 2010 and approved $163 million during the year, said Michelle Begnoche, spokeswoman for the Michigan Film Office.

Already, we’ve seen one big-budget action film pull up stakes, with others likely to follow suit. What happens with Raleigh Studios, an $80 million production facility slated to open this spring in Pontiac, is a big question.

Snyder, who has never made a secret of his dislike for awarding business tax credits willy-nilly, says the state can no longer afford to keep paying out the film production credits. That position was bolstered by a report last year that found the incentives actually lost money for the state.

But that report didn’t take into account spin-off economic activity and revenue for local governments. So a report released Monday concluded that every dollar spent doling out credits generated $6 in new spending and led to thousands of full-time-equivalent jobs. From the freep:

“There is significant growth and economic activity,” said Larry Alexander, CEO and president of the Detroit Metro Convention & Visitors Bureau, which teamed up with its counterparts in Ann Arbor, Grand Rapids and Traverse City to commission the study late last year. “This is an industry that has not had a chance to mature (here) yet.”

I confess I’m not exactly impartial when I wave the movie-making flag. I’ve always had a fascination with film, and I briefly explored making the leap into the business a year or so ago when the recession hurled me into a wrenching job transition. And I get that picking sentimental favorites doesn’t make for good economic development policy.

But the movie business is a different animal, and I think it’s exactly the kind of thing the state needs at this time.

Film and television productions are bringing a badly needed morale boost to Michigan and are helping us be known for something other than dying, Rust Belt industries. Many of those big-name Hollywood actors dropping into the state are discovering what so many of us love about the state.

“If there was a film industry in Michigan when I was a teenager I would never have left home,” film industry professional Mike Binder wrote in a guest piece for the freep. “As far as I’m concerned Michigan is the greatest state in the country, bar none, and the people of Michigan, and of Detroit, have a class and a quality that I don’t see anywhere else I go. My friends out here in L.A. who have been shooting in Detroit and around the state the last few years have all said the same thing when they get back out here, so I know it’s not just me and my having had grown up there.”

The movie business is bringing something more intangible than dollars and cents: they’re earning us a second look from the rest of the world. And for this beleaguered state, that’s as good as gold right now.

What do you think?

Photo via Simon Davison.


Read 1 Comment

  1. In the same budget proposal, the administration is proposing to eliminate the Earned Income Tax Credit for low-income residents and tax pension income for seniors for the first time — effectively increasing the tax burden on those two vulnerable groups of residents. Gov. Snyder has been forthright in saying that everyone will pay a price in this budget, and this is proving true.

    He also clearly sees his proposal for replacing the Michigan Business Tax with a flat corporate profits tax as a better way to generate economic growth and create jobs.

    I enjoy the buzz that Hollywood has brought to Michigan as much as anyone, but granting these gifts to the film makers — while paying for them with higher taxes on the poor and the elderly — is something that policymakers in Lansing should reject in this time of austerity.

    Andy Hetzel

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