News Story

Film Subsidy Secrecy May Be Ending

The details of how film production companies have been spending taxpayer dollars has been kept private from the public ever since the state of Michigan opened its arms to Hollywood by offering the most lucrative film incentives in the country. But that veil of secrecy may be lifted, following the recent passage of two bills sponsored by Michigan Sen. Nancy Cassis, R-Novi.

The bills are now before the governor for her consideration. If she signs them, the question is whether the Michigan Film Office will be as transparent in the future as it says it wants to be.

One of the bills would change the state revenue law to state that the Michigan Film Office is permitted to release many of the details surrounding reimbursements that film companies incur while in this state if those companies receive taxpayer subsidies.

The Michigan Film Office says it couldn’t release information concerning taxes in the past. The film office says the law prevented it from doing so because the information was private, similar to an individual’s tax return. Instead, according to MFO spokeswoman Michelle Begnoche, the film office released an annual report that had each project’s estimated expenditure, as well as an estimate of the incentive credit,

“Our office has always been in support of increased transparency as long as a company's proprietary information is protected,” Begnoche wrote in an e-mail. “However, until there was a legislative change to this effect, our office had to administer the program as it was written in law.”

It appears that Senate Bill 796 and Senate Bill 889 could change that, meaning that many of the details regarding what Hollywood is being reimbursed for will no longer be kept secret.

Some of the expenses in other states have raised eyebrows. According to Tony Hozeny of the Wisconsin Commerce Department, the production company making the feature film "Public Enemies" spent a total of $5,626.15 for actor Johnny Depp's hairstyling during the portion of the filming that took place in Wisconsin. The production company received a tax credit for 25 percent of that amount, or $1,406.29.

However, there’s still confusion about a wording change in one of the recently approved bills. The confusion surrounds a section where the word “shall” was changed to “may.”

The Michigan Information & Research Service (MIRS) reported on the wording change and stated it “significantly waters down the effect” of the transparency bill. The concern is that “shall” is an order that must be followed by the state agency, while “may” is just a request that leaves the agency with the option to decline.

“There is a reason they changed it,” said MIRS reporter Jack Spencer, who wrote the article. “They weren’t trying to save two ‘l’s because they were running low on ‘l’s.”

According to Rep. Dave Agema’s office, SB 889 was changed in June by the Michigan House’s Tax Policy Committee.

State Rep. Pete Lund, R-Shelby Twp., serves on that committee and doesn’t recall the change being made.

Chris Jones, a legislative aide for Agema, wrote in an e-mail that the “shall” to “may” change leads to questions regarding just what information the bill would require the state’s Dept. of Treasury to divulge.

But Cassis said the attorney for the non-partisan Legislative Service Bureau assured her that the bills would accomplish their intent to create more transparency.

“The legal thinking is this information must be released,” Cassis said. “That’s what I’m holding them to. The proof is in the pudding as this becomes law and is tested. We got the ball so far down the field and now I’m calling it a touchdown.”

“That is why this is such landmark information,” she said. “It’s the heart and meat of what any of us what to know.”

And Cassis and Lund said that with the GOP controlling the House and Senate starting in January, if the word “may” became an issue, it could be easily fixed.

“The Democrats are not going to be running those committees,” Lund said. “We have control now. We need to actually do things. We need to make these things happen for the good of the state. If these people are taking tax dollars, they need to tell us where the tax dollars are going.”

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.