Michigan Chamber CEO Blasts Film Subsidies as a 'Boondoggle'

The House Commerce Committee has approved legislation to extend Michigan’s film incentive subsidy program indefinitely. Senate Bill 1103 was advanced Wednesday on a 10-7 vote as four Republican committee members joined six Democrats in support of the measure. The bill now goes to the full House, where a vote is expected soon.

The Republicans who voted yes were: committee chair Rep. Frank Foster, R-Pellston; Rep. Wayne Schmidt, R-Traverse City; Rep. Dale Zorn, R-Ida; and Rep. Gail Haines, R- Waterford. Rep. Foster lost his GOP primary re-election bid in August and Rep. Haines is term limited, so neither will be back next year. Reps. Schmidt and Zorn have both been re-elected to the Senate.

Michigan Chamber of Commerce CEO Rich Studley blasted film subsidies during withering testimony in which he called the program a “boondoggle,” and argued that extending it would indicate a Legislature with upside down priorities. The leader of the influential state business group pointedly observed that the millions of taxpayer dollars spent on film subsidies would be better employed fixing roads.

“If the Michigan film subsidies were a movie it would be on the list of the 10 worst ever seen, right along with 'Ishtar,'" Studley said. “The issue before you today is all about priorities. Supporting this legislation would put highly compensated movie stars and highly compensated directors, who don’t even live in Michigan, ahead of Michigan’s motorists.”

Studley read from a Michigan Economic Development Corp. memo dated Feb. 18, 2014.

“A total of $26,551,106 in film credits were claimed from the Department of Treasury in 2013,” he said. “As of Dec. 31, 2013, a total of $225,539,660 in film tax credits have been paid out by the state with $94,148,139 in potential film credits that remain eligible to be claimed under the tax credit program.”

“What is the return on this?” Studley asked, before turning again to the MEDC memo. “For the calendar year 2013 here are the permanent jobs created: for the movie 'Man v. Wild,' zero permanent jobs; for the movie 'Fish Zoos Zoos Wham Whams,' zero jobs; for the movie 'Chasing Jimmy,' zero jobs; for 'Detention of the Dead,' zero; for 'Actor,' zero; for 'AKA Jimmy Picard,' zero; for 'Beside Still Waters,' zero; for 'Blue Goji Boxing,' zero; for 'Keystone Studio’s 100th Anniversary Collection,' zero; for 'Low Winter Sun,' zero.”

Studley asked the panel to at least amend the bill by retaining the current Sept. 30, 2017, “sunset” for the program. As currently drafted, the legislation eliminates the sunset altogether, allowing film subsidies to continue on a permanent basis. He said that gives plenty of time for the Legislature to decide whether or not to keep the film subsidies going beyond the current Sept. 30, 2017, expiration.

However, Rep. Vicki Barnett, D-Farmington Hills, suggested the sunset is unnecessary because the Legislature can always cut off funding for the subsidies in the annual budget.

A similar argument was advanced by Bridget Sobek, policy adviser for the Senate Majority Office, who testified in favor of SB 1103 on behalf of Senate Majority Leader Randy Richardville, R-Monroe, who introduced the bill.

“This bill does not deal with appropriations for the film credits,” Sobek said.

Left unsaid was that under the appropriations process currently in use, money for programs like film subsidies appear as a single line item among hundreds of others in multi-billion dollar omnibus budget bills. Typically, once approved by House-Senate conference committees these omnibus budget bills are subject to a single up-or-down vote.

Andrew Richner, a former Republican legislator now working as a lobbyist for Clark Hill PLC, testified in support of the bill. Rep. Rick Outman, R-Six Lakes, asked Richner about recouping the taxpayers’ investment in the film subsidies. Then Rep. Henry Yanez, D-Sterling Heights, told Richner that he had received emails from constituents who oppose the film subsidies.

“Aren’t these (actors and directors, etc.) just paying taxes on the money we’ve paid them?” Rep. Yanez asked.

Richner said Senate Bill 1103 would change the film subsidy program so that it would be more likely to pay off for Michigan taxpayers.

“What we want is to fix these so that people like Ben Affleck (actor, director, screenwriter, and producer) would be making (tax) payments back to the state on . . . into the future for things like the (movie) royalties going forward,” Richner said. “So if they had a big hit the state would stand to collect a lot of money for a long time.”

Studley appeared unimpressed.

“We’ve heard a lot these types of promises about this program in the past,” he said.

Rep. Outman ended up voting against the bill; Rep. Yanez voted for it.

Rep. Barnett asked Studley why the Michigan Chamber was taking a stand against the film incentives after not opposing other taxpayer subsidies.

“Why didn’t you (the Chamber) come out against the money we just gave for a hockey arena, or in the past for the Palace of Auburn Hills, Ford Field and Comerica Park?” she asked.

“There is a difference between those and these film credits,” Studley said. “Most of those were public–private projects in which a significant amount of private dollars were invested. But this program (the film subsidies) is a giveaway.”

Studley added that another difference involved timing, pointing again to the need to spend more on road repairs.

“These lawmakers like to say they are conservatives,” Studley said outside the committee meeting. “But if they can’t pull the plug on something like this, I don’t know how they can make that claim.”

Senate Bill 1103 was passed by the Senate 32-4 on Oct. 22. On Wednesday, Carrie Jones, former director of the Michigan Film Office, now with The Studio Center, a stage and production facility in Farmington Hills, asked the panel to consider adding subsidies to produce commercials, which are not included in the current bill.

“Only 10 to 15 percent of commercials made for the Big Three auto companies are currently made in this state,” Jones said.

The committee did not add commercials, but an amendment authored by Rep. Foster was approved that would adjust tax payments by film subsidy recipients. Rep. Stacey Oakes, D-Saginaw, was not present at the hearing. Rep. Ben Glardon, R-Owosso, abstained on the Senate Bill 1103 vote.

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