News Story

Film Subsidy Bucks Buy Video Games: Does Hollywood Glitz Still Shine?

Although celebrities like Clint Eastwood and Michael Moore have grabbed the headlines for Michigan’s controversial film tax subsidy, taxpayers are likely unfamiliar with the program's newest recipients.

Surprisingly, video game company executives are getting in on the 42 percent tax incentive program.

Michigan taxpayers have given two companies a combined $1.3 million in tax subsidies to make three video games. In August, the Michigan Film Office awarded Scientifically Proven Entertainment $411,650 to make “Ghost Game.” The state also gave BH Golfing Games $912,000 in 2010 so it could create two video games.

Attention paid by local media when Hollywood stars come to their town is evident in news reports. For example, a freelance reporter from AnnArbor.com asked George Clooney this month at a film festival what he thought about filming in Ann Arbor. Clooney’s response: He liked the town.

This actually became a story on AnnArbor.com.

“The media is just as star struck as everyone else is when George Clooney comes to town,” said Kathy Hoekstra, an investigative journalist with the Mackinac Center for Public Policy who has interviewed celebrities. “George Clooney is not going to bite the hand that feeds him. He is an actor who is an expert in public relations. It would be ridiculous to think that George Clooney would have anything other than a fawning reply about Ann Arbor when speaking to that reporter.”

The Federal Reserve Bank of Minneapolis, which releases an annual report on film subsidies, described in one of its publications the lure of film incentives for taxpayers: “Call it a movie trailer for economic development: A film production company comes to town with its director and stars, spends a lot of money on lodging and food, hires locals as crew and  extras. Residents run into their favorite stars at the local coffee shop, and the location is seen by millions of viewers on the big screen — a great boost for tourism.”

But who will fawn over a CEO of a start-up computer game company in Farmington Hills?

“Video game development and production have always been a sector we want to attract and grow in the state,” said Michelle Begnoche, spokesman for the Michigan Film Office, in an email.

But the video game industry offers none of the high-profile media exposure of a major motion picture.

“It’s pretty clear that the film incentive does not create jobs,” said Michael LaFaive, director of the Mackinac Center for Public Policy’s Morey Fiscal Policy Initiative. “Whether or not we are spending too much on ‘coolness’ is a debate we covered as well. What is clear is these video games are just another business. The market will create jobs. They just may not be in categories that the politicians want to brag about."

Other experts question the value of targeted tax incentives and subsidies.

Peter Calcagno, an associate professor of economics at the College of Charleston and the director of the Initiative for Public Choice & Market Process, wrote in an email that he’s “yet to find any convincing economic evidence to suggest that these types of policies are generating any real economic growth.”

In the book “Unleashing Capitalism: A Prescription for Economic Prosperity in South Carolina,” Calcagno listed nine different studies on tax incentives done from 1989 to 2007 that found little or no evidence the tax incentives worked.

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.

News Story

House Votes to Ban Automatic Dues Deductions For School Unions

Eight Republicans vote to continue using school resources for government union funding

Every year, about 150,000 public school employees have their union dues paid through payroll deduction by their district. In 2010, that amounted to $65.5 million that went to the Michigan Education Association. Such a collection method is a stipulation that public school districts allow to be included in union contracts, but it is one the Michigan House of Representatives wants to end.

The state House recently passed 2011 House Bill 4929, which would ban using public school resources to deduct union dues.

The bill passed 55 to 53, with all of the "no" votes coming from Democrats, as well as eight Republicans: Reps. Ben Glardon, R-Owosso, Kenneth Horn, R-Frankenmuth, Earl Poleski, R-Jackson, Holly Hughes, R-Montague, Sharon Tyle, R-Niles, Deb Shaughnessy, R-Charlotte,  Kenneth Kurtz, R-Coldwater, and Paul Muxlow, R-Brown City.

If the bill becomes law, teachers would still owe and be legally required to pay the union dues unless other state laws were changed to make teacher union membership voluntary. If that were to occur, the union itself would have to collect the fees that go into its pocket, much as if it were the cable company collecting a monthly bill.

In Grand Rapids recently, about 100 teachers stopped paying union dues to the Grand Rapids Education Association once automatic payroll deductions were removed temporarily after the contract between the union and the district expired. A few were sued by the MEA.

Patrick Wright, director of the Mackinac Center Legal Foundation, said the issue could become a public relations problem for the MEA.

“Do you sue your own members?” Wright asked. “Do you try to get your own members fired?”

Mackinac Center President Joseph G. Lehman said that any business with $65 million in billings would have to hire a dedicated staff to do nothing but collect payments.

“How are they going to collect if they have to collect it themselves? Teacher by teacher?” Lehman said in an email. “But the MEA is not a regular business. They are taking money from people who have no choice (other than unemployment) but to pay. How much harder is it to collect from people who: 1) Don’t have to pay (under teacher Right To Work or lack of a union security clause) and 2) Don’t want to pay (an unknown number of teachers who simply don’t want to pay the union for whatever reason.)”

Lehman said it could translate into significant additional costs to the MEA and the possibility of the loss of millions of dollars from those teachers who just won’t pay.

Amber McCann, spokeswoman for State Senate Majority Speaker Randy Richardville, R-Monroe, didn’t respond to messages or emails asking if Richardville would support stopping automatic payroll deduction for public school unions.

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.