News Story

Michigan May Send Film Credits to the Cutting Room Floor

Bill looks to end subsidies, $500 million and no job gains later

House Minority Leader Tim Greimel, D-Auburn Hills, is calling for $12 million to be restored to the $50 million originally appropriated for film production subsidies in the current year. The money was cut by an executive order signed by Gov. Rick Snyder.

The news site MIRS reported that Greimel’s spokeswoman Katie Carey said the film credit program “has been a good job creator for the state.”

“I think if you did an investigation of all the tax credits, you'd find that with the film credits, that's one of the areas that has been a big boon for the state of Michigan for both job creation and economic vitality for local communities,” Carey told MIRS.

However, the Bureau of Labor Statistics doesn’t back up Carey’s claim.

According to the BLS, there were 1,537 “motion picture and video production jobs” in 2001 and 1,561 of those jobs in 2013, the latest year data is available (see image nearby). The state has spent $494.4 million on the film credit program from 2008 through 2014.

The governor's order to cut the $12 million from the film production subsidies was issued in response to an unexpected hit to state fund balances caused by higher-than-expected payouts to some corporations granted long-term tax credit deals, mostly under the previous administration. The order included some other modest cuts and was quickly given the required approval by the Legislature's appropriation committees.

Meanwhile, state Rep. Dan Lauwers, R-Brockway, has introduced House Bill 4122 to end the film subsidies. The Michigan Chamber of Commerce also called for the state to end them.

“This boondoggle currently costs Michigan taxpayers $50 million a year and even the state’s own economic development agency (MEDC) reported this costly subsidy failed in 2013 to create one permanent job,” said Tricia Kinley, senior director of tax and regulatory reform at the chamber, in a press release. “The time to end this wasteful spending is long overdue and we are urging the Legislature to take immediate action.”

Film credits, and industry-specific subsidies and tax breaks in general, erode the tax base and force the overall tax rate on everyone else to be higher, said Liz Malm, an economist with the Tax Foundation.

“An ideal tax system is one that has a broad base – that is, taxes everyone – so that rates can be lower for everyone. The tax code shouldn't favor one industry,” she said in an email.

Greimel’s office didn’t respond to an email seeking comment.

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.