Michigan governor proposes slashing film tax credits
Like the Clint Eastwood character in “Gran Torino,” a movie set in the Detroit area, the new governor of Michigan is telling Hollywood to get off his lawn.
Rick Snyder, a Republican who was elected governor of the Great Lakes State on a platform to curb spending, wants to gut Michigan’s film tax credit program, one of the most generous in the country. In his $45-billion budget plan, unveiled Thursday, Snyder proposed reducing or eliminating various state tax credits, including those awarded for filming.
If approved by the state’s legislature, the move would be a blow to Hollywood, which has flocked to Michigan in recent years to take advantage of the big tax breaks. Since offering a film tax credit of up to 42% in 2008, the state has attracted more than 100 movie and TV productions, including “Transformers 3,” the Hugh Jackman film “Real Steel” and the new ABC police drama “Detroit 1-8-7.”
Spending on film productions in the state mushroomed to $224 million in 2009 from $2 million in 2007, according to the Michigan Film Office. The program has been credited with creating jobs in one of the most economically distressed regions in the country.
The new governor’s clampdown on the state’s film tax incentives comes just as several production facilities are being built across the state, including a $76-million studio that Raleigh Studios of Los Angeles is building in Pontiac.
The studio is expected to open next month, said Mike Newport, director of marketing for Raleigh. “Are there concerns? Sure,” he said. “But it’s just a proposal right now. We know the governor is aware that we put a significant investment in the state.”
Shortly after Snyder unveiled the proposed state budget, the Michigan Film Office sought to put the best face on the news, noting that some money — redirected from a state jobs fund — would still be available.
In a statement, agency spokeswoman Michelle Begnoche said the film office “remains open for business and will continue our work to grow Michigan’s film industry. Under the governor’s proposed budget, $25 million would be allocated for film incentives beginning in 2012. We will work within this framework to make our film incentives more Michigan friendly for homegrown businesses and entrepreneurs while continuing to attract key projects to the state.”
Scrapping the current film tax credit, however, will make it hard for Michigan to remain competitive, said Jeff Begun, a partner in the Incentives Office, a Los Angeles firm that advises companies on film tax credits. “Michigan is going to be relegated to a minor role in the film industry,” he said.
Although wildly popular with filmmakers — the state approved more than $100 million in film tax credits last year — Michigan’s film program has come under fire of late. A report by the Michigan Senate’s Fiscal Agency recently concluded that nearly half of the expenditures that qualified for the state’s media production credits did not benefit the Michigan economy.
If Michigan does slash its film program, it won’t necessarily bring more jobs back to California because so many other states and foreign countries are still vying for the work. In fact, most states have kept their film tax credit programs intact and, in rare cases, increased them.
Still, film subsidies are drawing closer scrutiny as states face massive budget cuts.
New Mexico Gov. Susana Martinez recently proposed reducing that state’s film tax credit to 15% from 25% as part of a plan to balance the state’s budget.
Iowa Gov. Terry Branstad plans to dismantle the state’s incentives in the wake of a scandal there. And Nick Paleologos, head of the Massachusetts Film Office, also recently resigned in a cost-cutting move.
