The Michigan Film Office, under Gov. Jennifer Granholm’s watch, appears to have under-reported by 31 percent the amount of money it gave out to Hollywood’s film producers, according to James Hohman, fiscal policy analyst at the Mackinac Center for Public Policy.
According to Hohman, about $72 million in tax credits were not included in the 2008 and 2009 reports put out by the Michigan Film Office. Hohman caught the budgeting mistake when he examined the latest 2010 report put out by Michigan Film Office and compared it to the 2008 and 2009 reports. He found that the numbers didn’t add up.
“Bureaucrats can’t really be trusted to measure the effectiveness of their programs, including in this case, the most basic costs,” Hohman said. “A lot of people have been focused on the cost of this program. And it is substantially more than advertised the past two years.”
Michigan Film Office Spokeswoman Michelle Begnoche said there could have been a discrepancy involving under reporting in 2008 and 2009.
“The folks who wrote the reports in past years are no longer with the Film Office, so we can’t speak to the reporting methods used in previous years,” she wrote in an e-mail. “However, we can say that the 2010 report was comprehensive, transparent and met all the statutory requirements.”
Janet Lockwood, former director of the Michigan Film Office, wrote in an e-mail: “If you all are concerned that there’s a $72 million liability lurking out there somewhere, I sincerely do not believe that is true.”
The tax credit is at risk as Michigan Governor Rick Snyder proposes to limit it to $25 million a year. Some proponents of the tax credit, such as Detroit Free Press columnist Mitch Albom, are trying to keep it alive. Michigan’s film tax credit incentive allows a refundable tax credit of up to 42-percent to movie companies for projects in the state.
The 2008 film office report states that the reported tax credits that year were $47.9 million as of Feb. 9, 2009. Hohman said one possibility is that the film credits that were pending at the time the report was released were never included in later reports.
State Representative Tom McMillin, R-Rochester Hills, sifted through the bills film companies turned into the state in 2010. He said he thought the state was not being up front about the true costs of the program under Granholm.
“It doesn’t surprise me they were trying to hide the costs to the taxpayers,” McMillin said. “The old way of doing things was to try to hide and obfuscate. The more light we shine on it, the worse it gets.”
Hohman blogged about his findings here: www.michcapcon.com/14700
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.