'No Limit' On Film Industry Incentives Says Governor's Office

June 6, 2008
| By Pete Daly |
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LANSING — There is no plan to limit the amount of money the Michigan treasury will pay out in incentives to grow a motion picture industry in Michigan, according to a spokesperson for Gov. Jennifer Granholm. Meanwhile, the Michigan Chamber of Commerce has released a short video of its own, spoofing the plan to create permanent new jobs in Michigan in the production of television shows and feature films.

There is not a limit to the amount the incentives could total, said Liz Boyd, a spokesperson in Granholm's office.

"We have put in place the most aggressive film incentives program in the nation. We want to attract an industry and grow an industry (in) Michigan. This is part of an overall economic stimulus plan the governor outlined in her State of the State in late January."

Boyd said that as of June 3, the Michigan Film Office had 22 "signed/approved agreements" with film industry businesses that have pledged to spend $194 million in Michigan this year, in exchange for a 40 percent rebate of those costs (42 percent if the money is spent in a Michigan "core city"). Boyd said the agreements would equate to approximately $69 million in credits for the film industry, "assuming all of the approved projects come to fruition and the credits are claimed as estimated."

The incentives are "refundable tax credits" that cancel out any amount the production companies would owe in Michigan Business Tax. But the 40 percent credits will also be much more than the amount the companies would owe in MBT, so the excess amount is paid in cash to the movie companies.

Just how much will actually be paid out in incentives to the film companies is undetermined at this point because the complexity of the new MBT makes it very difficult to predict any given company's MBT liability when this tax year is over.

The incentives are apparently working, however. Since the legislation was signed into law by Granholm on April 7, scores of movie producers, including Clint Eastwood, have announced their interest in making a movie in Michigan this year.

Boyd noted that the incentive package legislation "received overwhelming bipartisan support in the legislature."

Qualified productions include movies, documentaries, television programs and computer games, but do not include a production that includes "obscene matter or an obscene performance." Other exclusions are productions primarily consisting of televised news or current events, live sports, political advertising, radio programs, weather or financial market reports, talk shows, game shows, commercials for anything other than another qualifying production, awards shows, fundraising productions, or videos for employee training or in-house corporate advertising.

Last week the Michigan Chamber of Commerce released a statement saying that the incentives "will result in Michigan tax dollars being used to subsidize out-of-state movie companies which are unlikely to make a permanent location commitment to Michigan. The movie incentives are now expected to cost Michigan hundreds of millions of dollars in revenue to be paid out in refund checks. In fact, in a recent briefing to the State Senate Appropriations Committee, Senate Fiscal Agency Director Gary Olson pegged the cost of new film production credits at more than $127 million, a figure offset by $10 million in income and sales tax receipts gained from those productions."

The Michigan Chamber also made a short video and put it on its Web site, "How To Lower Your Michigan Business Tax Liability … And Win an Oscar While You're At It." The video features State Rep. Chuck Moss, R-Birmingham, jokingly urging Michigan business owners who are worried about the impact of the MBT to become movie producers, who won't be paying any MBT.

The Michigan Chamber made the video, it said, "to make the point that it is time for the Legislature and Administration to get back to basics, put Michigan job providers first, and stop chasing trendy, industry-specific tax incentive programs that deplete Michigan's revenue resources at the expense of Michigan business and citizens. It's time to make Michigan's tax climate more competitive for job providers who have made a long-term commitment to employ people in Michigan."

Tricia Kinley, director of Tax Policy and Economic Development for the Michigan Chamber, said the video "is our fun way to make a very serious point, which is, how come Michigan employers are paying an MBT surcharge, or getting 500, 600, 700 percent MBT increases, while the state is sending rebate checks to out-of-state Hollywood filmmakers?"

Boyd said the movie industry incentives are "about growing an industry. It's about long-term growth, long-term production and job creation." She noted the package also includes incentives for companies that train workers for the film production industry.

Eric Williams, executive director for Workforce Training and Economic Development at GRCC, said that on the day in early April when Granholm signed the incentive package into law, GRCC held its first class in film crew production, in conjunction with TicTock Studios in Holland.

"While the number of jobs that could emerge vary depending on how successful the legislation is in attracting new productions, many of the resultant employment opportunities could pay $60,000 annually and above," said Williams.

TicTock Studios bills itself as "a fully financed and rapidly growing film and television production company with offices in Michigan and Los Angeles."

Last week, entrepreneurs announced plans to build a film studio in downtown Lansing that they said will offer an estimated 20 full-time jobs plus "an additional 100-to-300 high-paying freelance positions." Gillespie Group, a real estate development and management firm, and Ahptic Film & Digital, a production and post-production company, are partnering to build the 71,000-square-foot City Center Studios.

"This project is one of the most tangible results of the recent film legislation," said Ken Droz, creative and communications manager at the Michigan Film Office, the state agency that processes the applications for film industry incentives.

Lou Anna Simon, president of Michigan State University, said the university is "excited about the opportunities that this level of production company provides the city, the state and our MSU students."

When the American film industry began, it was based in the New York City area. However, the center of filmmaking soon moved to southern California because the mild, dry climate there allows year-round outdoor production. When asked if Michigan's climate is conducive to movie-making, Boyd said "numerous films have been made in Canada, in Toronto, because of the incentives and tax advantages for production in that country."

"I think, today, you're seeing films produced all over the country and all over the world," she added.

"One of the reasons why (film industry incentives) were included in the governor's economic stimulus package is because of short turnaround time. We can see direct results from this incentive program" already, said Boyd.

"We offer many incentives to grow industries and further economic development in our state. Much of it has to have a very long lead time and it takes years to see direct results." But she said the film incentives have yielded "a much quicker result. And I think our expectations are being borne out in what we are seeing."

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