News Story

Lawmakers Tackle Film Credit Transparency

State Rep. Tom McMillin, R-Rochester Hills, spent four hours sifting through the bills filmmakers had chalked up while filming in Michigan and submitted for tax credit reimbursement.

For the movie "Gran Torino," directed by Clint Eastwood and filmed in the Detroit area, McMillin saw hundreds of thousands of expenses for out-of-state airline tickets, as well as salary, pension and health care costs of the cast.

He saw the entire laundry list of what the filmmakers wanted to be reimbursed for up to 42 percent. What McMillin didn't see was what the state reimbursed and if it was following its strict rules for what qualified.

For instance, Janet Lockwood, director of the Michigan Film Office, has said alcohol would not be eligible for a tax subsidy. McMillin just saw overall bills for restaurants and room service, but not the receipts to know whether alcohol was included.

Some specific politicians are eligible to review the filmmakers' requests for tax refunds allowed by the state film credit legislation enacted in 2008 to induce moviemakers to come to Michigan.

But the public, who eventually pay for up to 42 percent of the filmmakers' expenses incurred in Michigan, are barred.

Sen. Nancy Cassis, R-Novi, has sponsored two bills to try to make the process more transparent by changing the
tax laws. Cassis wants some of the information to be reported on a Web site and the more detailed information to be delivered to political committees for review.

The House Tax Policy Committee held a Feb. 10 hearing on Senate Bills 796 and 889, both of which were already passed by the Senate.

Transparency has become an issue as the Michigan film incentive program may give back $120 million in 2011 and as two other states have had problems with their film credit programs.

In Louisiana, the director of the governor's film and television office pled guilty to conspiracy and bribery charges in 2007, according to the U.S. Department of Justice. Mark Smith, former director of the governor's Office for Film and Television Development, was accused of taking $67,500 in cash from a former law school classmate in exchange for $1 million in tax credits to that classmate's film company.

In Iowa, Gov. Chester Culver suspended the state's film tax incentives progam last year. Gov. Culver stated in a letter he sent to the Iowa Economic Development Board that he was troubled that "there have been insufficient procedures in place to assure a full and accurate accounting of expenditures. ..."

Mike Tramontina, the director of the Iowa Department of Economic Development, resigned on Sept. 18. The Des Moines Register reported that a criminal probe has been opened into the operations of the Iowa Film Office. The newspaper reported that unidentified filmmakers claimed expenditures as high as $650,000 that should not have been approved.

The Michigan Film Office said it has procedures in place that provide oversight in the reimbursement of expenses.

Anything purchased must be either donated to a charity at the film's conclusion or prorated for use in Michigan.

Nothing described as "personal" is allowed. For example, if an mp3 player was purchased, it would need to be donated or prorated at the end of filming. One film company had an auction of movie memorabilia in Michigan and donated the money to the local food bank in the Grand Rapids area.

Catered meals on sets are eligible.

The cost of renting production office space and rental cars from established agencies are eligible. The rental of camera and lighting and sound equipment is also covered as is the rent for a house or an apartment for an actor staying in town.

Vehicles are covered as long as they are in the movie. 

Additional Michigan Capitol Confidential and video coverage of the film tax credit program is available at, and

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.