Film Subsidy Supporters: Mich. Program a Failure

A 'race to the bottom'

A panel last March at the Milken Institute in California featured several film incentive boosters who admitted Michigan’s subsidy program was a bad call.

The panel was centered on what California should do with its incentive program. There were four pro-subsidy representatives: Fred Baron of 20th Century Fox; Rajiv Dalal with the Los Angeles mayor’s office; Kathy Garmezy of the Directors Guild of America; and Kevin Klowden of the Milken Institute. Joe Henchman of the Tax Foundation was the lone opposition.

Henchman pointed out that film incentive programs are a “race to the bottom” and don’t create permanent jobs because other states will match or raise the subsidies. He noted that Michigan’s original 40 percent subsidy was “unsustainable” and that production companies sold loyalty to the state but when it was cut back, “There was a cartoon-sized hole in the wall where they ran out of the state.”

During the discussion, Michigan’s subsidy program came up several times.

Klowden said, “[U]nder the circumstances, [the subsidies] might not have been the right call for Michigan.” He noted that Michigan was offering “extremely aggressive incentives” and implied the state was “engag[ing] in that race to the bottom.”

Garmezy, who is the head of a union that lobbies for subsidies in many states, said “nothing has ever been proposed in California that is in any way is an effort to race to where Michigan is. … We’ve never raced to the bottom in this state to try to meet Michigan…”

Dalal said Michigan was a state that "did not have proper infrastructure."

Michigan passed its program in 2008 and has appropriated almost $500 million. The state has fewer jobs today than it did prior to the subsidies.

The Michigan Senate recently passed a bill that would continue the subsidies indefinitely. The bill is now being considered by the Michigan House.


Here is the debate:

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.