Cassis film industry incentive unaffordable

February 14, 2010
| By Pete Daly |
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The chairwoman of the Michigan Senate Finance Committee said she will soon introduce legislation taking aim once again at the Michigan film industry incentive signed into law by Gov. Jennifer Granholm almost two years ago.

In an interview with the Business Journal, Sen. Nancy Cassis, R-Novi, said she will introduce shortly “some bills that will deal once again with all the refundable credits, all the money that is being refunded through the Michigan business tax, creating winners and losers — the largest of which is the film subsidies."

"It's expected that the cost of these film subsidies — giveaways — could be $98 million this year … and another $120 million in 2011," said Cassis.

Cassis said the cost to Michigan of all the state's refundable business tax credits is "up to $350 million."

Cassis was involved last year with a bill attempting to amend the film industry tax credit. It passed the Senate and went to the House, where Democratic leadership "just let it sit. They've ignored it," she said.

The impact of those proposed changes "was, in many respects, meager," said Cassis. In core Michigan cities, the film production tax credit is 42 percent of expenditures, but the proposed change would have reduced it to 37 percent.

The existing law excludes television commercials production from the tax credit, but the bill Cassis supported would have added commercials, although capping the total credits for them at $15 million per year.

In early February, Cassis wrote in an opinion piece published in Oakland County that Michigan is "on the brink of facing its toughest budget year yet and some difficult decisions are looming as we grapple with a staggering $1.6 billion deficit."

She cited a report from the Tax Foundation, a Washington, D.C., research organization, which said the incentives offered to the film industry in a number of states are out of control and do not spur economic growth. She also repeated her claim that Michigan’s film incentives "will mean a net loss of $98 million this year and another $120 million in 2011."

Cassis also took aim in January at independent film producer Michael Moore. She said Moore's latest production, "Capitalism: A Love Story," may be in line to receive up to $1 million in film industry subsidies from Michigan, and she noted that, in 2008, he made comments critical of the tax credit for film productions.

Ken Droz, a spokesman for the Michigan Film Office in Lansing that promotes Michigan locations for movie productions, said the $98 million number used by Cassis is "absolutely not" correct. He said the total value of tax credits and refunds awarded to the movie industry for films shot in Michigan in 2009 will probably be "little more than half that." On the other hand, he said the amount spent in Michigan by movie producers last year was "over $200 million."

Droz said he has read the Tax Foundation research paper published in January that criticizes movie production incentives.

"There were some definite inaccuracies in there," he said.

"The name of the whole thing is jobs and economic activity. That's all anyone is trying to do" with the encouragement of movie productions in Michigan, said Droz.

"We have to assuage the fears of film makers constantly, when the rhetoric (against the film industry incentives) continues so publicly," said Droz.

He said he wants the movie industry to know that "the program (in Michigan) is intact. People think it's already been capped."

Rick Hert, executive director of the West Michigan Tourist Association and the founder of the West Michigan Film Office, spends a lot of time trying to recruit movie productions to West Michigan, because, he said, they are good for the economy and they are good for the tourist industry.

Hert also works with producers who are trying to locate equipment and crew members for projects in Michigan.

Ask Hert how the movie biz is going and he rattles off names of producers and movies that were recently made in Michigan or are being filmed now or that may be filmed soon.

In December, he said, some movie scenes were filmed in his house.

"I have so many projects, sometimes I have trouble keeping track of them," said Hert.

Like Droz, Hert said that every time there is proposed legislation to change the film industry incentives, it sends “shock waves” through the film community, because many producers are now aware of the advantages of filming in Michigan.

Deb Havens, chair of the West Michigan Film & Video Alliance, said the refundable tax credit for film production "gives us, of course, a competitive edge to attract films and producers here, people who would never, ever have considered Michigan for a film project — and we're talking people like Clint Eastwood and Drew Barrymore."

Both Eastwood and Barrymore have been involved in major feature films shot in Michigan in the last two years.

While there is uncertainty about the future of Michigan's film industry tax credits, "the thing is, we know we will have incentives through Jennifer Granholm's term of office. What happens after that is hard to say," said Havens.

The Michigan incentives are just that, she said. “They are a way to introduce Michigan to a new industry, in an attempt to diversify the industry that we have here," said Havens.

However, Havens does not think Michigan would always need incentives to lure film productions here.

"It wouldn't be necessary if we could get a foothold so that we did have facilities here and we did have the capacity to staff films of a variety of budgets," she said.

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