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Michigan film credits could cost state $2B over a decade

Extra credits given to women and minority-owned businesses

A Michigan House committee heard testimony on Tuesday on two bills that together would revive film credits, which have been defunct since 2015. The tax credit could take up to $2.075 billion from state coffers over a decade.

The legislation in question, House bills 4907 and 4908, would create a 30% tax credit for eligible film productions shot in Michigan. The credits are spelled out in House Bill 4908. They would cover up to 30% of “qualified spending.” Another 5% credit would apply if the production company or qualified personnel are women or minorities, per the House Fiscal Agency analysis.

The tax credits could cost Michigan at least nine figures a year for the next decade.

“For qualified productions that are at least 20 minutes in duration, the annual cap would be $100.0 million for the first three years, $150.0 million for the next three years, and $200.0 million for the final four years,” explains the House Fiscal Agency. No one production could receive more than 20% of the available credits in a year “unless the (Michigan film office) decides that a greater amount would be in the best economic interest of the state.”

James Hohman, director of fiscal policy at the Mackinac Center, testified against the bills before the House Economic Development and Small Business Committee.

“This is not going to be successful,” Hohman told lawmakers, citing the earlier iteration of the film credits.

“When you look at the economic performance of the state of Michigan, you can see that this expenditure did result in a gain of a couple of hundred jobs in the film industry,” Hohman testified. “In exchange for $500 million, that’s a terrible cost-benefit. But more importantly, when you look at both the creation and the dissolution of the program, it resulted in no change in Michigan's overall job trends, which is something lawmakers ought to care a lot about.”

Lawmakers took no vote Tuesday. House bills 4907 and 4908 are tie-barred. Both bills must pass for either to be enacted into law.

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.