The GOP Politicians Who Voted Against Ending Film Subsidies

CORRECTION: Six Republicans voted against House Bill 4122. State Rep. Jason Sheppard, R-Temperance, also voted against the bill but was not included in the story.

Last Wednesday, on a 58-51 vote, the Michigan House passed House Bill 4122, which would eliminate the state’s film subsidy program. The action would, among other things, free up the $50 million Gov. Rick Snyder proposed spending on the program for next year.

Five Republicans joined with 46 Democrats to vote against the measure, which will now go to the Senate where the chances of passage are unknown. The five GOP lawmakers who voted “no” were Rep. Mike Callton of Nashville, whose district has a 61.8 percent Republican base; Rep. Kathy Crawford of Novi, whose district has a 57.8 percent Republican base; Rep. Ben Glardon of Owosso, whose district has a 51.4 percent Republican base; Rep Peter Lucido of Washington Township, whose district has a 61.4 percent Republican base; and Rep. Mike McCready of Birmingham, whose district has a 55.5 percent Republican base.

Rep. Paul Muxlow, R-Brown City, did not vote.

Michigan’s film subsidies date back to 2008, when they were authorized on the premise that paying producers to shoot here would inspire a home-grown film movie industry to take root. But after handing producers nearly $500 million in taxpayer-funded subsidies from 2008 through 2013, Michigan’s return on investment has been a net drop in the number of full-time film jobs here, from 1,663 to 1,561. The program's failure to generate a state film production industry is consistent with what economic analysts on both the right and the left have found typical of film subsidies generally.

Snyder's overhaul of the state's business tax in 2011 also dismantled the means by which the original program’s “incentives” were delivered, which was “refundable” tax credits. The Legislature reconstituted the program to simply send subsidy checks to producers, with the aggregate amount determined in the annual appropriations process. At the same time, the Legislature added a Jan. 1, 2015 sunset on the program.

But the December 2014 lame duck session became the home of the subsidy program that would not die: Legislation to tweak the program and extend it through 2018 was passed overwhelmingly and signed into law by Snyder.

Earlier this year, however, the budgetary impact of long-term “refundable” tax credit deals selectively granted to certain corporations and developers when Jennifer Granholm was governor made news.

Businesses began either cashing in the credits or using them against taxes due. At a legislative hearing in February, the MEDC testified that taxpayers would ultimately be on the hook and annual state budgets would be negatively impacted to the tune of $9.38 billion over the next decade because of the tax credits.

With the $9.38 billion in tax credits in the headlines, there was reason to believe the legislature might quickly reverse what it had done in December and kill the film credits. House Bill 4122 began moving through the process, but in the week prior to Wednesday’s vote in the House, Senate Majority Leader Arlan Meekhof, R-West Olive, and Snyder poured cold water on the idea of ending the subsidies.

Meekhof maintains that switching the film subsidy program off after it had just been turned back on again would send businesses a message that the State of Michigan isn’t an entity that can be relied upon. Snyder has also said he doesn’t support ending the film subsidies immediately.

Now as House Bill 4122 heads to the Senate speculation swirls regarding what Meekhof will do with the bill. He could hold it up and use it as a bargaining chip for other issues as the year plays out, try to have it killed right away, have it amended, or any of a number of other possibilities.

Michigan Capitol Confidential contacted all five Republicans who voted “no” on the bill to kill the subsidies to give them an opportunity to comment. Crawford, Lucido and McCready responded.

Crawford said she voted against House Bill 4122 because film credits have spurred additional business activity in her district.

“Basically I voted my region,” Crawford said. “These film credits have really had more positive impact in Oakland and Macomb counties than in other parts of the state. I also think it really wouldn’t have been fair for Michigan to offer these subsidies and then turn around and say they aren’t there anymore. But I can tell you I think the vote may really mean next to nothing because it doesn’t look like the Senate will take the bill up, and if it did, it doesn’t look like the governor would sign it.”

According to Lucido, film subsidies might provide “something new and exciting that could potentially be a new bud on the tree.”

“The governor himself has said that we ought to ease out of this slowly,” Lucido said. “I don’t think we’re really having a comeback. We’ve lost 50 percent of the auto industry we used to have and we really haven’t found anything to replace it – the film industry might provide some of that.”

“I also don’t think you tell people one day that you’ve set a sunset in seven years then turn around the next day and say they’re going to end this right away,” Lucido said. “And what do we do with businesses like the movie place in Pontiac, do we just pull out on them; and something else no one ever talks about is the bondholders who have made investments. I think these film incentives have millions of dollars of impact that isn’t accounted for, including spin-offs and residuals.”

McCready said he checked ahead of time and discovered the vote probably wouldn’t have much impact and then basically voted his district.

“I went around and checked with the Senate and the governor’s people and it didn’t look like this bill would make any difference in the end,” McCready said. “As far as the $50 million that was put in the (Fiscal Year 2016) budget for this, that can still be changed through negotiations. Regarding the bigger picture, I do agree with the idea that this is something we ease out of, not just end right after we’ve basically offered the subsidies. I don’t think that’s a very good way to do business.”

“In my area the film initiatives have sparked a good deal of business activity,” McCready continued. “I know that the Pontiac Marriot is constantly booked up as a result of the activity at the place where they make movies in Pontiac. It is probably not $50 million worth of business activity but it has been having a positive impact in some places.”