At 10:30 a.m. on Monday, June 29, House Bill 4122, which would kill the state’s film subsidy program, was presented to the office of Gov. Rick Snyder.

That officially started the clock ticking on the ultimate fate of the measure. Snyder could veto the bill, sign it into law, or take no action on it at all. If he chooses the latter, the bill becomes law 14 days after the date it was presented.

It's hard to argue that film subsidies have been anything but a loser for the state. Five years after the program was launched in 2008, after more than $450 million from Michigan taxpayers was appropriated to the coffers of film studios, there were fewer film jobs in the state than when it started. This poor record is mirrored by the experience of other states with similar programs.

“After wasting [hundreds of millions of dollars] chasing Hollywood producers, the legislature finally came to its senses and voted to end this program,” said James Hohman, the assistant director of fiscal policy with the Mackinac Center for Public Policy.

State lawmakers sent this bill to the governor, but the voices of Michigan voters might have played just as crucial a role. Few issues have seen as many twists and turns as film subsidies over the past seven months. The law authorizing them was scheduled to sunset at the end of 2014, but large bipartisan majorities in both the House and Senate voted for a reprieve last December.

Just weeks later, on Jan. 29 of this year, Rep. Dan Lauwers, R-Brockway, introduced House Bill 4122, taking another run at axing the Hollywood handouts. The House passed the bill on a 58-51 vote on March 11. Prospects for passage then dimmed when both Snyder and Senate Majority Leader Arlan Meekhof, R-West Olive, argued that ending the program so soon after extending it would set a bad precedent.

As these events were unfolding, Michigan voters were assessing Proposal 1, which asked them to approve a $2 billion tax hike for road repairs plus other spending increases. Another factor was introduced on Feb. 18, when the Department of Treasury dropped a budget bombshell: It disclosed that corporate tax credits previously handed out through the Michigan Economic Development Corporation, the state’s corporate welfare arm, had racked up an unfunded taxpayer liability totaling $9.38 billion, including more than $500 million due this year.

On May 5, Michigan voters rejected Proposal 1 by an 80-20 margin. Polling results released by the Mackinac Center for Public Policy and the Michigan Chamber of Commerce two weeks later showed 66 percent of voters favored diverting film subsidy money to road repairs.

Crunchtime for film subsidies came on June 18, when the Senate passed the bill to end the program on a 24-13 vote, after adding language from Meekhof allowing the state film office to fulfill current incentive contracts. Some see in this a chance that the program could be extended once again, but most assessments consider that improbable. The House quickly concurred with the Senate's tweak in a 63-46 vote, with all Republicans and one Democrat voting “yes.”

At various points it appeared the threat of a veto could become a bargaining chip in the ongoing road funding negotiations between the House, Senate and governor. Based on the current pace and likely direction of the process, this no longer seems likely.

Two separate plans to increase Michigan road funding are now on the table, one passed by the House and one by the Senate. In contrast to Proposal 1, which rejected 80-20 by Michigan voters in May, neither plan relies solely on a large tax hike.

The House plan, passed in May, would provide around $1 billion for roads, only a little of which is from tax hikes. Like the Senate plan, it redirects a portion of state income-tax revenue to roads, and offsets this by cutting corporate welfare, scrapping a state earned income tax credit, and making other changes.

In contrast, the plan passed by the Senate this week raises an estimated $1.4 billion for roads annually, half from increasing gas and diesel taxes to 34 cents per gallon by Jan. 1, 2017, and half from reallocating $700 million in annual income tax revenue to roads. The Senate also includes a provision that could lead to future income tax cuts, loosely tied to increases in state revenue.

“Now that the legislators have two plans to work with, let’s hope they find a compromise somewhere in the middle,” said James Hohman, the assistant director of fiscal policy with the Mackinac Center for Public Policy. “We really wouldn’t want to see them proposing another $2 billion tax hike.”

Under the Senate plan, the gas tax would go up from 19 cents a gallon to 24 cents on Oct. 1, and jump to 29 cents on Jan. 1, 2016; then a year later, on Jan. 1, 2017, it would increase to 34 cents a gallon. The diesel tax would increase in seven-cent jumps on the same schedule, going from the current 15-cents per gallon to 34-cents per gallon by Jan. 1, 2017.

This would make Michigan's levy on gasoline purchases the second highest in the country, and the third highest on diesel. The Senate Fiscal Agency estimates these increases would bring in $475 million next year, $733 million in 2017 and $822.1 million in 2018. After the phase-in period these taxes would then ratchet upward (only) with inflation.

The potential tax-cut aspect of the Senate plan would require the state income tax, which is currently 4.25 percent, to be decreased by a set amount if revenues flowing into the General Fund increase faster than inflation. Any tax cuts would be dependent on future legislatures not diverting revenue away from the General Fund (for instance, to the Budget Stabilization Fund), thereby avoiding the trigger and not cutting rates.

The other major part of the House plan allocates $350 million from the state General Fund next year and $700 million in following years. These amounts are less than official projections of state tax revenue growth in the next two years, so absent an economic downturn before then, they would not require cuts to other programs, but rather decreases in the rate of increase.

The Senate plan does not include the House provision that eliminates a 6-percent state boost to the federal earned income tax credit provided by Michigan taxpayers. Increasing this subsidy to low-income wage earners to 20 percent of the federal credit was one of the provisions of the failed Proposal 1. The Senate Fiscal Agency estimates that cutting the current state EITC supplement would make an additional $118 million available for roads next year.

Gilda Jacobs, CEO of the Michigan League for Public Policy, said neither the House or Senate plan is a good deal for low-income households.

"This is like Sophie's Choice," Jacobs said, referring to the novel in which a mother has to decide which of her two children would die. "Neither of these plans are good."

"I would like us to increase the pot of revenue in the state so we don’t hurt those who are vulnerable in the state," she said. "We need a sustainable revenue base for our roads going forward."

Both House and Senate plans impose an annual registration surtax on electric and hybrid cars — $100 on all-electric (battery) cars and $30 on gas/electric hybrids.

Both packages also include some changes to road contracting and other procedures, and consists of House bills 4609 to 4616, plus Senate Bill 414 with the Senate's income tax earmarks.

The Legislature is scheduled to return to Lansing on July 15. Speculation around the Capitol is that the two plans will be debated and discussed behind closed doors by legislative leaders and Gov. Rick Snyder's people during the interval.