If budget is passed by legislature, a cap would be placed on tax credits program
By Robert Goldrich
LANSING, Mich. --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.
Maggie Smith, Star of Stage, Film and “Downton Abbey,” Dies At 89
Maggie Smith, the masterful, scene-stealing actor who won an Oscar for "The Prime of Miss Jean Brodie" in 1969 and gained new fans in the 21st century as the dowager Countess of Grantham in "Downton Abbey" and Professor Minerva McGonagall in the Harry Potter films, died Friday. She was 89. Smith's sons, Chris Larkin and Toby Stephens, said in a statement that Smith died early Friday in a London hospital. "She leaves two sons and five loving grandchildren who are devastated by the loss of their extraordinary mother and grandmother," they said in a statement issued through publicist Clair Dobbs. Smith was frequently rated the preeminent British female performer of a generation that included Vanessa Redgrave and Judi Dench, with a clutch of Academy Award nominations and a shelf full of acting trophies. She remained in demand even in her later years, despite her lament that "when you get into the granny era, you're lucky to get anything." Smith drily summarized her later roles as "a gallery of grotesques," including Professor McGonagall. Asked why she took the role, she quipped: "Harry Potter is my pension." Richard Eyre, who directed Smith in a television production of "Suddenly Last Summer," said she was "intellectually the smartest actress I've ever worked with. You have to get up very, very early in the morning to outwit Maggie Smith." "Jean Brodie," in which she played a dangerously charismatic Edinburgh schoolteacher, brought her the Academy Award for best actress, and the British Academy Film Award (BAFTA) as well in 1969. Smith added a supporting actress Oscar for "California Suite" in 1978, Golden Globes for "California Suite" and "Room with a View," and BAFTAs for lead actress in "A Private Function" in 1984, "A Room with a View" in... Read More