Commentary
What Michigan can do with $500 million rather than giving it to Hollywood
There is no reason to resurrect film subsidies
Michigan cannot afford to blow another half-billion subsidizing filmmakers. There are too many pressing problems, including roads. | Shutterstock
Picture this: You pitch investors on a company that will create many jobs and offer a great return on investment. The investors bite. They give you seven years and $500 million to work the plan.
Time passes. They ask you how many jobs you created, permanent jobs without an end date attached. Zero, you answer, and scrap the plan.
Eight years later, you pitch the same concept again, with a few small tweaks. Investors would either be offended at the ask or laugh you out of the room.
Taxpayers should have a similar reaction as the Michigan Legislature considers bringing back film incentives. Michigan offered the incentives between 2008 and 2015, spending $500 million of taxpayer money. Boosters said giving money to Hollywood producers would create jobs.
But when the subsidies dried up, the jobs left. Michigan spent $500 million and was left with nothing but memories. Taxpayers didn’t even receive a discount on tickets to the movies made with their money.
It is unclear how much supporters plan to dole out this time. But current subsidies being given to large corporations indicate the price tag would once again be in the hundreds of millions.
Forty-three states currently offer film subsidies, hoping to become the next Hollywood. How would a subsidy scheme make Michigan stand out at this late date?
The National Conference of State Legislatures concluded in May 2022 that the costs of film credits far exceed their benefits.
The $500 million might give you the chance to see a movie star at a local restaurant. But what else could it buy?
Roads. While the orange barrels are plentiful this year on some roads, many are still crumbling and in dire need of attention. How many miles of roadway would $500 million fix?
It can cost up to $3.2 million per lane mile to reconstruct a road. This is up from $1.4 million in 2010, according to The Detroit News. If the state used the money to reconstruct its worst roads, it would fix 156.25 miles.
There are 498 homeless veterans in Michigan, according to the U.S. Department of Housing and Urban Development. Of the veterans in Michigan, 7.2% live in poverty. Many veterans risked their lives and endured physical and psychological wounds. Surely they deserve a higher priority than Hollywood.
Inflation is a bigger problem than it has been in decades, with many families suffering soaring costs for food and energy. State officials can help them by making good on 2007’s broken promise to put taxpayers’ money back in their own pockets.
Lawmakers during the Granholm administration hiked the income tax rate from 3.9% to 4.35%. The state needed the money, they said, and the increase was only temporary. This was just a year before officials adopted a $500 million film subsidy. To this day, the promise to restore the rate to 3.95% by 2015 goes unfulfilled.
The income tax was lowered to 4.05% this year because of a trigger put in place by an eight-year-old law. The reduction came about despite stubborn resistence from Gov. Gretchen Whitmer. If the state decided to lower the rate to 3.95%, that would remove $505 million from the state budget.
This is almost the same amount lost through the original failed film subsidy. It is also the same amount Whitmer argues the state cannot afford to give to taxpayers, all while lawmakers consider showering Hollywood with more money.
Jamie A. Hope is assistant managing editor of Michigan Capitol Confidential. Email her at hope@mackinac.org.
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What Michigan can do with $500 million rather than giving it to Hollywood
There is no reason to resurrect film subsidies
Picture this: You pitch investors on a company that will create many jobs and offer a great return on investment. The investors bite. They give you seven years and $500 million to work the plan.
Time passes. They ask you how many jobs you created, permanent jobs without an end date attached. Zero, you answer, and scrap the plan.
Eight years later, you pitch the same concept again, with a few small tweaks. Investors would either be offended at the ask or laugh you out of the room.
Taxpayers should have a similar reaction as the Michigan Legislature considers bringing back film incentives. Michigan offered the incentives between 2008 and 2015, spending $500 million of taxpayer money. Boosters said giving money to Hollywood producers would create jobs.
But when the subsidies dried up, the jobs left. Michigan spent $500 million and was left with nothing but memories. Taxpayers didn’t even receive a discount on tickets to the movies made with their money.
It is unclear how much supporters plan to dole out this time. But current subsidies being given to large corporations indicate the price tag would once again be in the hundreds of millions.
Forty-three states currently offer film subsidies, hoping to become the next Hollywood. How would a subsidy scheme make Michigan stand out at this late date?
The National Conference of State Legislatures concluded in May 2022 that the costs of film credits far exceed their benefits.
The $500 million might give you the chance to see a movie star at a local restaurant. But what else could it buy?
Roads. While the orange barrels are plentiful this year on some roads, many are still crumbling and in dire need of attention. How many miles of roadway would $500 million fix?
It can cost up to $3.2 million per lane mile to reconstruct a road. This is up from $1.4 million in 2010, according to The Detroit News. If the state used the money to reconstruct its worst roads, it would fix 156.25 miles.
There are 498 homeless veterans in Michigan, according to the U.S. Department of Housing and Urban Development. Of the veterans in Michigan, 7.2% live in poverty. Many veterans risked their lives and endured physical and psychological wounds. Surely they deserve a higher priority than Hollywood.
Inflation is a bigger problem than it has been in decades, with many families suffering soaring costs for food and energy. State officials can help them by making good on 2007’s broken promise to put taxpayers’ money back in their own pockets.
Lawmakers during the Granholm administration hiked the income tax rate from 3.9% to 4.35%. The state needed the money, they said, and the increase was only temporary. This was just a year before officials adopted a $500 million film subsidy. To this day, the promise to restore the rate to 3.95% by 2015 goes unfulfilled.
The income tax was lowered to 4.05% this year because of a trigger put in place by an eight-year-old law. The reduction came about despite stubborn resistence from Gov. Gretchen Whitmer. If the state decided to lower the rate to 3.95%, that would remove $505 million from the state budget.
This is almost the same amount lost through the original failed film subsidy. It is also the same amount Whitmer argues the state cannot afford to give to taxpayers, all while lawmakers consider showering Hollywood with more money.
Jamie A. Hope is assistant managing editor of Michigan Capitol Confidential. Email her at hope@mackinac.org.
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.