'Batman vs. Superman' Swings Super Subsidy Deals from Multiple States

The mainstream media’s infatuation with the state-subsidized “Batman vs. Superman: Dawn of Justice” movie production reached new heights this week following reports from an anonymous blogger who posted photos of filming in East Lansing and Detroit.

What hasn’t been in the media’s viewfinder is that the production may be collecting subsidies not just from Michigan but also from other states. Batman vs. Superman will be filmed in several states, and at least one of them says the film is eligible for its own film subsidies.

In addition to the $35 million the film’s producers have been approved to collect from Michigan taxpayers, Batman vs. Superman may also get subsidies from Illinois and New Mexico.

Illinois Film Office Managing Director Betsy Steinberg confirmed in an email that the movie was filming in her state. She explained that state’s subsidy process: Once the project is a wrap, a third party accountant submits a report on how much the production company spent in Illinois. Steinberg said after the report is audited the producers get approved for their subsidy.

Illinois offers up a tax credit worth up to 30-percent of a film production’s in-state expenses, subject to various caps. The credit can be sold to other businesses that owe state taxes, which means a producer can walk away from the state with cash, not just a tax break.

Rather than tax credits, Michigan offers film producers straightforward cash subsidies. Batman vs. Superman was approved for up to $35 million from the state, based on spending an estimated $131 million here. The subsidy can cover up to 32 percent of the producer’s expenses here, which makes it one of the most generous in the country.

This week a New Mexico TV news helicopter shot footage it claimed was from a set being built in that state for Batman vs. Superman. Dozens of news sites, including Internet Movie Database, list New Mexico as one of the locations for the movie. Still, New Mexico Film Office Public Information Officer Angela Heisel wouldn’t give any information about her office’s involvement with the film.

“Because the NM Film Office has not officially released this announcement, we cannot confirm or deny that this is filming in New Mexico,” Heisel said in an email.

New Mexico offers a 30-percent “refundable” tax credit for films, which means a producer with no state tax liability gets a check instead of a reduced tax bill.

Batman vs. Superman also filmed scenes in California, but won’t collect any subsidies from that state. Amy Lemisch, executive director of the California Film Commission, said movies with budgets of $75 million or more aren’t eligible because the state only set aside $100 million to subsidize films. (Michigan legislators approved $50 million for the subsidies in the current fiscal year.)

It’s not unusual for movies to shop around for “incentive” deals from multiple states. The third “Transformers” movie received subsidies from three different states for production done in 2010, including $6.1 million from Michigan taxpayers.

Since the Legislature approved film subsidies in a bipartisan 2008 vote, Michigan has spent $500 million on the program. Yet today the state has fewer film industry jobs than it did before the subsidies.

Some states are now challenging Hollywood’s claims that the subsidies are good for their economies. The North Carolina legislature recently changed their film incentive program from a 25-percent refundable credit with no cap (through 2014) to straightforward cash subsidies with an aggregate cap of $10 million for all 2015 productions. 

In 2014, North Carolina’s Fiscal Research division ripped apart a report commissioned by local film commissions and the Motion Picture Association of America, which claimed the state profited from its subsidy program. The non-partisan agency’s review concluded that the subsidies were a “net fiscal loss.”

In 2009, the Michigan Economic Development Corporation, the state agency in charge of administering this state’s selective tax break and subsidy programs, commissioned a similar study from Michigan State University, which also praised the film incentives. According to a policy brief written at the time by Michael LaFaive of the Mackinac Center for Public Policy, the MSU effort was subject to many of the same shortcomings as the one from North Carolina’s subsidy boosters.

In 2010, Michigan’s nonpartisan Senate Fiscal Agency, this state’s version of the North Carolina’s Fiscal Research division, also performed a review of the film subsidy program. It concluded:

"The nature of the credit and the resulting activity is such that under current (and any realistic) tax rate the State will never be able to make the credit 'pay for itself' from a State revenue standpoint, even when the credit generates additional private activity that would not have otherwise occurred."