After waiting nervously for Republican Gov. Rick Snyder to reveal what Michigan filmmakers hoped and prayed would be moderate tax incentive changes, their worst fears were realized when Snyder announced he was virtually trashing the program.
“The champagne corks are coming off [in rival states],” said doc maker Michael Moore, a member of the Michigan Film Office Advisory Council. “It makes no sense to eliminate a program that has actually been creating jobs.”
Instead of the 40-42% which brought Hollywood flocking to Detroit – with 202 features and TV series since April, 2008 — Snyder proposed allocating $25 million a year in film incentives from a jobs fund.
“There is an industry here, but it needs to move out of the incentive model,” Snyder said, drawing anger and disappointment from the industry and some politicians, who vociferously disagree with him.
The incentives elevated Michigan to third place, behind Los Angeles and New York in film revenues. Last year, the state approved more than $100 million in film tax credits, against revenue approaching $400 million.
However, a 2010 Michigan Senate Fiscal Agency report said that nearly half of the expenditures that qualified for the state’s media production credits did not affect the Michigan economy.
The slash could leave a number of Michigan companies in limbo, such as the new $80 million Raleigh Studios in Pontiac, which planned a ribbon cutting ceremony this spring.
Gov. Snyder’s action is not an isolated one as states suffer budget crisis, mediocre benefits and recurring abuses (with Iowa a shameful example of tax credit fraud).
New Mexico, one of the first and most successful states to offer incentives, has proposed to cut its tax rebate program, from 25% to 15%, under a plan to balance the state’s budget. Kansas, New Jersey and Arizona ended their tax credits last year. Rhode Island capped subsidies at $15 million annually and Wisconsin’s cap is set at a measly $500,000 a year.
With Michigan’s luminosity fading to black, Illinois is in enviable competitive position: It has a 30% tax credit with no sunset clause. Furthermore, it is rationally based on being applied solely to wages of Illinois residents and business done with Illinois companies.
Let’s hear those champagne corks pop!
