Riches-to-Rags Story Developing For Movie Operations in Michigan

House budget proposes eliminating state's $50M film subsidy program

By Tom Gantert | May 1, 2013

If the state’s film subsidy were a movie itself, it likely would be a riches-to-rags story.

Just five years after the Michigan House of Representatives and Senate passed a bill by a combined 145-1 vote that gave huge subsidies to the movie industry, Republican state representatives are proposing to eliminate the film credit completely.

Nancy Cassis was a Republican state senator from Novi in 2008 and the only legislator to vote against the film subsidy.

"I think the mounting body of evidence that the economic return of using film credits is minuscule and actually a questionable subsidy to the movie industry led to the realization that such 'taxpayer giveaways' needed re-evaluation," Cassis said. "In Michigan's case, there is a pressing priority to improve our transportation infrastructure. Thus, the accountable effort to leverage tax dollars more responsibly."

Cassis said the publicity from a failed studio project in Allen Park as well as state public employee pensions having to bail out another studio in Pontiac by making its bond payments have led people to rethink the film tax giveaway.

"… the 'handwriting on the wall' became too overwhelming to ignore," she said.

The state gives approved production companies up to 35 percent incentive on qualified expenditures. The state awarded $93 million in tax credits in 2012, some for projects in production as far back as 2008.

Ari Adler, spokesman for House Republicans, said legislators are looking at all areas to find money for roads within already existing revenues.

"For now, one of those areas is the film incentives," Adler said. "I'm sure this issue will continue to be a focal point of budget negotiations as the process moves forward toward completion on June 1. Certainly, there is some work to be done by those who believe the film incentives should be increased to prove the overall value."

House Democrats asked that the budget for the state film office remain at $50 million.

"We consider the film incentives to be proven job creators in this state," said Katie Carey, spokeswoman for House Democrats. "Additionally, why are we getting rid of a program that has created jobs when Michigan still has an unemployment rate higher than the national average?"

State Rep. Tom McMillin, R-Rochester Hills, said a sign that the film credits were a bad deal is that both the Michigan Education Association and some tea party members oppose them.

"It is becoming more clear that these Hollywood film subsidies mainly send our Michigan taxpayer dollars out of the state to subsidize the salaries of millionaire actors and directors," Rep. McMillin said. "Those tax dollars come from the pockets of our citizens and businesses. If those dollars stay in their pockets, more people are employed in Michigan."

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.

Politics Alive and Well in Public Schools

Brandon board won't sell vacant building to charter group

By Michael Van Beek | April 30, 2013

School boards are sometimes held as shining examples of democracy at its finest — where constituents’ and children’s best interests are truly represented.

This is in contrast to the simplistic narrative of what happens in Lansing and Washington, D.C., where rich lobbyists and power-hungry politicians rule the day. A recent story from a mid-sized Michigan school district, however, demonstrates that even at the local level, political self-interest can and does drive decision-making.

The Oakland Press reported that the board of the Brandon School District decided to demolish a vacant school to prevent a local group of residents from buying the facility and opening a new public charter school there. The school board fears that although the district would profit from selling the building, it ultimately would lose money because state aid once destined for its coffers would wind up going to this new charter school instead.

Of course, for this to happen, parents in the district would have to choose to enroll their children in the charter school over schools run by the Brandon school board. With this in mind, it becomes clear that the school board is attempting to protect its own self-interest (i.e., revenue stream), but doing so at the expense of preventing Brandon children from accessing different public school opportunities.

To be fair, a Brandon school district official says that the local charter school group is only offering one-sixth of the value of the facility. And demolishing the building instead of offering it up to a competitor is not necessarily "wrong" either: The school board is protecting the bottom line of a school district that serves thousands of students and parents.

But this action raises several questions from the perspective of taxpayers in Brandon and those statewide. For example, should the Brandon school board use taxpayer resources to intentionally deprive children the opportunity to attend a different public school? Why should taxpayers pay to protect the school district’s virtual monopoly of publicly funded school services?

This example from Brandon illustrates that school boards face and act on a set of incentives to protect and expand their power — similar to those so clearly displayed in Lansing and Washington, D.C.

Not all school boards behave the same way Brandon is here, but nevertheless, realpolitik is a powerful force even in our local public schools.