Cap the Film Incentives and Kill the Film Industry in Michigan? Not Yet

In a March 29, 2009 Detroit Free Press column, film industry proponent and popular author Mitch Albom said that if legislators were to put a cap on the state’s refundable, unlimited film incentives, you might as well “kill” them altogether. He said that a cap “…effectively chases films away. No successful tax-incentive state has a cap like this, because no studio wants to be the last film in, then find out the money is gone. They can't plan that way. They just won't come.”

Film industry supporters insisted in numerous media outlets that mere ‘talk’ of capping the film incentives “sends a chilling effect to Hollywood.”

Flash forward to February 17, 2011. That’s when Michigan Governor Rick Snyder announced his spending plan for Michigan. It included a $25 million cap on film incentives. A month later, Albom told the Mackinac Center in an on-camera interview that Gov. Snyder’s proposal is “…the economic equivalent of turning the switch off” – a sentiment echoed throughout the media landscape in Detroit and beyond.

A March 8 Detroit News headline read, “Filmmakers May Move on if Snyder Tax Plan Passes”.

Variety opined, “Hollywood Wary of Michigan”.

These gloom and doom predictions of the demise of film production in Michigan so far seem to not have come to fruition.

Since the announcement of a $25 million film incentive cap, the Michigan Film Office has approved nearly $10 million in film credits.  

According to the Film Office website, the first movie approved for film incentives after the governor’s proposed budget was released was “The Five Year Engagement”. The news release stated that the film “was approved for an incentive of $5,263,464 on $12,532,056 of direct Michigan spend.” Then on March 31 it approved $1.8 million in incentives for the film, “Spy Kids 4”. A week later, the office announced $1 million in incentives for the third season of the HBO Series “Hung”.  And another $1.8 million in film credits will go to the producers of the movie “AWOL”.

This comes as no surprise to Michigan Budget Director John Nixon. In an interview with the Mackinac Center just days after the February 17^th budget announcement, Nixon said, “We fully anticipate Hollywood to take full advantage of any credit that we have to offer.”

James Hohman, a fiscal policy analyst with the Mackinac Center for Public Policy agrees with Nixon, comparing such targeted tax credit programs to a ‘feeding frenzy’. Hohman said, “If you’re putting out $25 million as bait, you’re going to catch something. Most people take advantage of the tax credits offered to them. I expect the film industry will fully use their $25 million.”

Hohman added that with the state facing a budget deficit of $1.5 billion, Michigan is ill-positioned to take part in the state-to-state one-upmanship with film subsidies.

Hohman said: “Obviously the film industry is not going away. If other states want to attract even more by offering more money, they can waste money if they want to.”

At least four film productions remained ‘unchilled’ by Gov. Snyder’s plans to cap the state’s film incentives, proving Albom and other film industry supporters wrong.

A new test, however, is emerging in the Michigan legislature. The House Appropriations subcommittee on general government last week completely wiped out the $25 million for film incentives.

Committee chair, Rep. Earl Poleski told the Jackson Citizen Patriot he is “not sure whether the cut will survive when it is taken up by the full appropriations committee in the next few weeks, but wants the debate.” He told the newspaper, “Michigan can certainly have a film industry without credits.”