There’s quite a difference between what Michigan Governor Rick Snyder and his predecessor regard as constituting economic growth. What is clear, though, is that Michigan, like many states, is facing a daunting budget shortfall, estimated to be some $1.4 billion.
The new Republican governor’s self-described approach is one of “shared sacrifice” as reflected in a 2011-’12 fiscal year budget proposal which would cut spending for public schools, universities and local governments while ending many personal tax breaks. Gov. Snyder told the Associated Press that his state budget is also “getting rid of all the special-interest kind of items. This is approaching it as a total solution.”
One of those “special-interest kind of items” that would be impacted by Snyder’s budget is Michigan’s groundbreaking tax credits program, which covers as much as 42 percent of local expenses for an eligible project. Currently there is no cap on the filming incentives package.
Snyder’s budget–which, if passed by the Republican legislature, would take effect on Oct. 1–places a cap on the amount of filming tax credits for the year at $25 million. In its current and proposed form, the tax credits would continue to apply to theatrical features and TV shows, not to commercials.
The cap would greatly reduce the appeal of the program to prospective filmmakers. But whether the incentives cutback is penny-wise and pound-foolish is subject to great debate.
Snyder’s predecessor, former Gov. Jennifer Granholm, a Democrat, said last year that the filming tax credits initiative has proven to be successful. “Michigan’s film incentive program has made our state one of the top three in the nation for the production of all types of media,” said Granholm during her weekly radio address on April 2, 2010. “An entire new industry is emerging in Michigan, one that’ll help keep our talented young people here.”
In its 2009 annual report, the Michigan Film Office related that filming expenditures in the state increased from $125 million in 2008 to an estimated $223.6 million in ’09. That figure was a mere $2 million in ’07, prior to the incentives program being enacted.
In its latest semi-annual project report released last month, the Michigan Film Office related that in 2010, 119 production companies applied for film and digital media incentives, with 69 projects approved. Forty-eight incentivized projects wrapped in ’10. From July 1-December 31, 2010, 26 approved projects represented a total estimated Michigan investment of some $168.6 million as compared to some $65.7 million in credits requested. Additionally, many of the projects approved in late ’10 do not start production until this year.
However, another report–prepared by economist David Zin for the Senate Fiscal Agency–concluded that the price of the Michigan film incentives program exceeds the economic activity generated.
Indeed Zin’s study does not look at lensing incentives through rose-colored glasses. Part of his report’s conclusion read:
“The analysis of film incentives is a complex process. Many assumptions and interactions must be accounted for and studies will differ in both the manner and degree to which these issues are addressed. Failure to address several of the issues that arise can cause results to differ by factors of more than 10, or even produce results that differ in the direction of their impact. Studies that have produced lower impacts for film incentives have generally addressed more of the issues and/or used more realistic assumptions, but such a claim cannot be made universally about the studies….
“Regardless of what factors are accounted for in the analysis, film incentives have generally exhibited a positive private sector impact in the form of creating employment and generating income. The magnitude of impacts depends upon a wide variety of assumptions. In Michigan, however, the sector is very small relative to the size of the economy, accounting for less than 0.1 percent of gross domestic product by state and about 0.14 percent of wage and salary employment. If the MSU [Michigan State University Center for Economic Analysis] report’s employment projections are correct, the sector will increase in size by approximately 50 percent over the next five years. However, this growth would represent only roughly 2,900 jobs, about 8.1 percent of the jobs lost between May and June 2008. The information sector, of which media production is a subsector, lost 3,100 jobs in 2008–even with the film incentives. If the incentives have the impact forecasted in the MSU study, it will be insufficient to bring the information sector back to its 2007 level. Any probable impact from the film incentives is likely to have a negligible impact on economic activity in Michigan, particularly when the economy is viewed as a whole.
“As is true for most incentives,” continued the Zin report, “the film incentives represent lost revenue and do not generate sufficient private sector activity to offset their costs completely. As with other types of incentives and credits, whether the relationship of costs to benefits is acceptable is a decision for individual policy-makers.”
Still there are tangible benefits that are difficult to attach a specific dollar amount to, such as the impact on tourism with state locations and attractions gaining exposure in film and on TV. Plus there’s the infrastructure being created by increased filming business. For example, Raleigh Studios is slated to soon open a stage facility and production complex in Michigan.
Apple and Google Face UK Investigation Into Mobile Browser Dominance
Apple and Google aren't giving consumers a genuine choice of mobile web browsers, a British watchdog said Friday in a report that recommends they face an investigation under new U.K. digital rules taking effect next year.
The Competition and Markets Authority took aim at Apple, saying the iPhone maker's tactics hold back innovation by stopping rivals from giving users new features like faster webpage loading. Apple does this by restricting progressive web apps, which don't need to be downloaded from an app store and aren't subject to app store commissions, the report said.
"This technology is not able to fully take off on iOS devices," the watchdog said in a provisional report on its investigation into mobile browsers that it opened after an initial study concluded that Apple and Google effectively have a chokehold on "mobile ecosystems."
The CMA's report also found that Apple and Google manipulate the choices given to mobile phone users to make their own browsers "the clearest or easiest option."
And it said that the a revenue-sharing deal between the two U.S. Big Tech companies "significantly reduces their financial incentives" to compete in mobile browsers on Apple's iOS operating system for iPhones.
Both companies said they will "engage constructively" with the CMA.
Apple said it disagreed with the findings and said it was concerned that the recommendations would undermine user privacy and security.
Google said the openness of its Android mobile operating system "has helped to expand choice, reduce prices and democratize access to smartphones and apps" and that it's "committed to open platforms that empower consumers."
It's the latest move by regulators on both sides of the Atlantic to crack down on the... Read More