Michigan taxpayers will give one company about $912,000 for it to make two video games under the state’s 42 percent film tax incentive program. The Michigan Film Office has approved tax incentives to BH Golfing Games Productions so it can make the Ben Hogan games, according to the film office’s 2010 annual report.

The money goes to BH Golfing Game Productions LLC, which is one of a series of limited liability companies created for the project. The project has ties to Alliance Acquisitions, a venture capital company in California. There are also Michigan investors involved, according to Marc Seyburn, the attorney who applied for the film tax incentive.

The Royal Oak company PixoFactor Entertainment was awarded the contract to produce the video games.  PixoFactor Entertainment didn’t return an e-mail seeking information. Reportedly, the company has been hiring and currently has 30 employees.

BH Golfing Games Productions will spend just over $1 million for the interactive website game and receive a $427,856 tax incentive. The company will spend $1.2 million for the Nintendo Wii game and receive a $484,333 tax incentive.

Seyburn said it was very hard to get people in the Midwest to invest in a digital entertainment project. He said these projects wouldn’t go forward without the financial help from the state.

“They (private Michigan investors) would not even touch a production,” Seyburn said. “Tell me where the market is. I don’t know anybody would do it. Without the incentive, I don’t know how you would do it.”

Seyburn said with the state incentives, other investors can be attracted.

“There is a big fear of the unknown. The people in Michigan, there mentality is, ‘It is just too foreign,’ ” Seyburn said.

Michael LaFaive, director of the Mackinac Center for Public Policy’s Morey Fiscal Policy Initiative, said the video game incentives were a good example of why the state should not be playing “this corporate welfare game.”

“It is not the state’s job to judge whether or not we have the right mentality to engage in entrepreneurial work,” LaFaive wrote in an e-mail. “Suggesting that is the case is like saying Michigan’s entrepreneurial and capital markets are broken. Investment dollars will go and stay where they are welcome. Redirecting subsidies to game makers doesn’t create new wealth, it just shifts it around. From whom was this money taken? Was it the next Bill Gates? The next Henry Ford? … The evidence is very clear: governments make terrible investors.”

BH Golfing Game Productions is a wholly owned subsidiary of BH Golf, which is a company set up by investors from California and Michigan. BH Golfing Game Productions set up another LLC company called BH Golf of Michigan.

Michigan taxpayers have doled out $18.1 million in special tax credits to Michigan International Speedway over the past three years. The possibility of further credits for MIS is a mixed bag. The State has committed to automatically giving the speedway some more dollars next year, while an even bigger annual hand-out and other future funding will be left up the Legislature.

The MIS tax credits are officially referred to as NASCAR credits. They are listed in the annual Michigan Department of Treasury Executive Budget Report in two parts.

One credit (the larger of the two) is the NASCAR Safety Credit. It is for improvements to, and maintenance of, traffic and pedestrian safety at MIS. This is to defray the cost of addressing congested traffic conditions fans have typically experienced, particularly when exiting MIS, which  supposedly made them reluctant to come back for future events.

The other credit is called the NASCAR Speedway Credit, which was a credit to help MIS make renovations and create an incentive for the track's parent company — International Speedway Corporation of Florida — to invest additional dollars in MIS. This credit was to be awarded each year, 2008 through 2012.

Even though Gov. Rick Snyder theoretically got rid of automatic credits that were built into the annual budget, the MIS credits survived this year. The smaller credit — the $1.2 million NASCAR Speedway credit — still exists because the state decided it shouldn't renege on previously-made promises. It will automatically be in the budget for one more year.

The larger credit — the $6.2 million NASCAR Safety Credit — was pushed through the Legislature in a late floor substitute version of legislation that dealt with multiple budget issues. It's even possible that lawmakers who voted for the bill didn't realize the NASCAR funding was in the measure, but they'll be on the hook to explain their vote anyway.

To qualify for the initial tax credit (the smaller one) MIS had to invest $30 million over five years. It claims it actually invested $43 million to build a new scoreboard, an infield suite and media center and a number of other projects. According to MIS, it used all Michigan contractors and vendors and created 1,100 jobs. However, MIS did not say how many of those jobs were only temporary or how small of a payroll was involved.

This smaller tax credit was initiated in 2007, when then Gov. Jennifer Granholm, then-Senate Majority Leader Mike Bishop and then-House Speaker Andy Dillon agreed to the idea. 

MIS is located in the Senate district represented by current Senate Majority Leader Randy Richardville, R-Monroe.

In 2010, the NASCAR Speedway Credit was extended through 2016. This credit was supposed to be based on a $32 million investment at the track made over a five-year period. However, it now appears that this extension is not  going to “automatically” be in effect. Whether or not the state keeps giving this credit to MIS will be an issue subject to the legislative appropriations process on a year to year basis.

“I think the Governor is working to get all of these types of things into the regular appropriations process where they can be reviewed by the Legislature,” said Rep. Pete Lund, R-Shelby Twp., a member of the House Commerce Committee. “I think that's where these issues belong.”

Rep. Tom McMillin, R-Rochester Hills, said he doesn't agree with the idea of giving the credits to an auto speedway.

“What's next, a skateboard tournament?” McMillin quipped. “Once you start doing this sort of thing how do you justify not doing it for every sports event?”

McMillin added that he believes the MIS credits and others like them are on their last legs.

“My sense is that the Governor wants these kind of issues to be addressed directly by the lawmakers who are accountable to the voters,” McMillin said. “It might be written someplace that we can give them the credits, but that doesn't mean we're going to keep on approving them.”

The NASCAR Safety Tax Credit, which has been larger than the automatic credit in each of the past three years, isn't part of the commitment the state has agreed to honor. It seems likely that someone will probably try to get this credit inserted back into the budget again next year. At that point, the question will be whether lawmakers are going to be willing to support it again.

McMillin said he finds the traffic safety tax credit particularly indefensible.

“I don't agree with that at all,” McMillin said. “I was once the Mayor of Auburn Hills. We had to deal with traffic from the Palace of Auburn Hills. Along with the advantages of having a facility like that comes the responsibilities. We never dreamed of trying to make the state pay for our traffic and safety responsibilities.”

Back in 2007 the tax credits were predicated on the idea that they would give MIS a competitive advantage over its sister tracks in other states. Those sister tracks and MIS are all owned by International Speedway Corporation. In other words, the thinking was that the credits would help the local guys convince their bosses back at corporate headquarters to send more money to the Michigan  track.

The other International Speedway Corporation tracks are located in states like Florida, Virginia, Alabama and Arizona. These tracks haven't been receiving the kinds of tax credits MIS has gotten in Michigan. In fact, one of the initial arguments for the credits was that, because Michigan would be the only state dishing out the credits, MIS would be a “slam-dunk” to get more funding from its parent company headquarters.

Meanwhile, as the State of Michigan was handing MIS the credits, Washington, D.C. was contributing taxpayer money to speedways as well. In fact, a $40 million tax break the federal government gave to NASCAR has been labeled among the most outrageous taxpayer dollar giveaways of the past year. This “giveaway” took place in the  December budget deal between President Barack Obama and Congress.

Back in the Great Lakes State, the tax credits aren't the only way Michigan Government has been generous concerning MIS. As reported previously by Capitol Confidential, the Michigan Economic Development Corporation is sponsoring the Pure Michigan 400 Sprint at MIS this Sunday and paying $972,500 for the privilege.