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Requiem for a dream?

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Demonstrators at a rally in Lansing, MI.

Demonstrators at a rally in Lansing, MI.

It’s no secret that Michigan is in a financial mess. Rumors have been flying this summer about proposed cuts or caps for the Michigan film incentives. The Michigan Information Research Service (MIRS), the oldest legislative reporting service in the state, announced early in August that the Governor would propose a 12% cut to the 42% rebate, eliminating the competitive edge that brought 35 films to Michigan in 2008.  According to the MIRS, cutting 12 percent under the Governor's offering would save $7.8 million. The Senate also has a plan to cap the credits at $50 million, which is projected to save the state around $98 million. Of course, those numbers are based on estimates of what the state owes to producers, not reality.  

The state brought in $125 million in approved budgets in 2008, which qualified producers for only $48 million in rebates. As of the end of August, Michigan Film Office Director Janet Lockwood reports that all films that have submitted, some 25 projects, have been paid a total of $32 million. That money goes to film companies, not individuals. The real figures are rarely used in claims that the state can’t afford the film incentive. In fact, the real issues that fueled the incentive program in the first place are lost in the budget debate: diversifying Michigan’s economy, keeping our creative and talented young people in the state, and generating hundreds of millions of dollars to develop infrastructure and income for our state businesses and individual paychecks.   

Economist Dr. Paul Isely, chair of the economics department at Grand Valley State University’s Seidman College of Business, says both sides are trying to resolve long-term problems with short-term answers. “We need to be asking ourselves what is the current economic status of our state? Do we have what we need to move us into the future? Whether we are talking manufacturing or a new film industry we need the systems in place to train and educate our people, we need the infrastructure in place to provide the services we think will be needed in the future, and we need investors and venture capital to propel business forward. Those are very different questions from ‘how many jobs can we create next year?’”  

Isely says he finds no fault with any of the studies that have been done about Michigan’s film industry, whether the largely supportive MSU study commissioned by the Michigan Economic Development Corp, or the highly critical Mackinac Center report. “I have more trouble with the interpretations people are making based on these studies,” says Isely.  “I guarantee no matter what new industry you are looking at, job growth will be small in the first few years.” 

Critics of the film incentives often charge that the state should not be betting on “winners or losers” in Michigan’s economic future. Yet Michigan’s film incentives were enacted precisely because of the immediate positive impact film incentives have had on the economies of other states. According to Bob Brown, Producer and Managing Partner, Charity Island Pictures, the incentives legislation was “exhaustively researched,” to give the state the best chance to grow this industry here. Brown, a Michigan filmmaker since partnering with Jeff Daniels on “Escanaba in da Moonlight,” did a state-by-state comparison of film incentive programs to determine what Michigan would need to offer in order to beat the competition.  

Brown looked especially hard at Louisiana and New Mexico, the states that had made the greatest economic and workforce gains thanks to their programs. “My job in doing the baseline study was to figure out where Michigan stood competitively,” says Brown, “and then offer a series of recommendations for how to proceed.” His research led to what former State Representative Andy Meisner from Ferndale declared was “the most successful incentive program ever offered in the state.” 

Meisner and other legislators like Representative Bill Huizenga from Zeeland, who once led the charge to introduce the motion picture incentives and educate the legislature on the benefits of the program, have been term-limited out of office. That has left a vacuum for opponents of the incentives to fill.   

In response to the drumbeat to cut or cap the incentives, Michigan Film Alliance Director and Founder of the P.A. Bootcamp Mark Adler had already been planning a rally in Lansing to show support for them. Though the House was one day short of coming back into session, Adler’s plans were in high gear. “We were told that the house would in fact be in session,” said Adler. “Then several weeks prior we were told they had changed to the 19th. We decided that since our audience was the media and that House members would hear about it, let alone the logistical issues, we'd go.” 

Rally attendance on August 18 didn’t exceed 100 at any time, despite news reports to the contrary, but the impact was significant, according to Adler. “We tracked just under 20 news stories that the AP wire carried around the country,” he said, “including stories in several business publications, even in Canada.” Adler says the most important result was the clear evidence that the incentives are supported by Michigan’s production crews on the east and west sides of the state. Whether anyone in Lansing is paying attention to that fact is not yet known. 

The Governor, House Democratic and Senate Republican leadership are meeting behind closed doors to slice and dice the budget due October 1. They will discuss raising taxes on cigarettes and water bottles and cutting and capping the incentives. According to the MIRS, all parties are banned from talking about what is on the table until an agreement is reached. However, they may still be listening. We urge you to take action that will make an impact on the discussion, talk to the people in charge as well as your legislator. The principle negotiator contact information can be found below: 

Governor Granholm  (517) 373-3400 
Senate Majority Leader Michael Bishop  (517) 373-2417 
Speaker Andy Dillon  (517) 373-0857 
Senator Minority Leader Mike Prusi  (517) 373-7840 
Senator Mark Jansen, Appropriations  (517) 373-0797 
Senator Ron Jelinek, Chair of Senate Appropriations (517) 373-6960 
Senator John Pappageorge, Vice Chair of Senate Appropriations (517) 373-2523 
Representative George Cushingberry, House Appropriations Committee Chair  (517) 373-2276 
Representative Richard Hammel, House Appropriations  (517) 373-7557 
Representative Kevin Elsenheimer, House Minority Leader  (517) 373-0829


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The title of the original bill was film "subsidy."

This means for every dollar submitted for reimbursement by the film production company, the Michigan taxpayer gives them something like 40 cents back.

But, this forty cents does not stay in Michigan.

Essentially any money sent out of Michigan, however, means less money to circulate locally and to provide local Michigan jobs.

The end result is an unemployment trade-off: jobs are lost in local communities to provide work or jobs in the new target industry.

Is this good or bad?

It is good only if Michigan continues to produce quality films that replace the lost jobs (but without any further Michigan taxpayer subsidies).

But something tells me this won't happen. If continued film subsidies are needed, when hundreds of Michigan families may have no heat or shelter this winter, then this whole process needs to be rethought.

One must admit that times were much better when the film subsidy became law.

Raising taxes, taking more money from local communities, resulting in more local unemployment, at this time may not be our best answer.

 We all need to put the interests of Michigan famalies before our own interests.

Thanks for your comments - and as a fellow Michigander, I share your concern for our state's welfare. That's why it's important to remember the film industry grew from $2 million in 2007 to $125 million in just eight months thanks to the film incentives. Can you name one other industry that in less than a year created additional new investments totalling over $140 million that 4 new studios are bringing to Southeast Michigan? (A better question is how can the west side get a significant cut of some of that trade?) Ultimately, the state can benefit if we do NOT cut the incentive, or cap it. That will guarantee that film companies continue to bring budgets here that could total as much as $400 million dollars or more. Imagine a cash infusion of that size into our economy - just about what Louisiana was bringing in before Michigan created it's own attractive incentive program. So far, just a third of that amount spent in Michigan in 2008 has meant that restaurants, hotels, and a range of retail businesses have been able to stay afloat financially thanks to the budgets of 32 films shot here last year. Over 40 films are being produced in 2009. Legislators should eliminate incentive programs that don't work rather than the one bright shining light in the state's otherwise dismal economic landscape.