Film industry tax incentives generated nearly 3,000 'indirect jobs' in 2010, study finds
The debate over the sustainability of Michigan's film industry tax incentives is heating up with the release of a study concluding that the incentives generated more "indirect jobs" than the film companies generated themselves.
The study, conducted by accounting firm Ernst & Young and paid for by groups that advocate in favor of the film incentives, found that film companies hired the full-time equivalent of 1,039 workers in 2010. During the same period, Michigan businesses that service the film industry — in industries such as food services, hotels and equipment rentals — hired the full-time equivalent of 2,822 workers. In 2010, film companies cashed in on $117.2 million in state tax incentives.
In 2009, film companies received $73 million in incentives and hired the equivalent of 797 full-time workers directly, the study found. During the same period, Michigan businesses that service the film industry hired the full-time equivalent of 1,834 workers as a result of business gained from the film industry.
The study also found that the tax incentives translated into $19.5 million in state and local taxes paid in 2009 and $30.9 million in 2010. Those figures include estimates of the amount of taxes non-film companies paid as a result of additional business they gained from film companies.
The study was paid for by the convention and visitors bureaus in Ann Arbor, Detroit, Grand Rapids and Traverse City. Those groups support the film incentives because they boost the travel industry.
If this study's figures are correct, the state spent about $27,746 for each direct or indirect job created in 2009 as a result of the film incentives. In 2010, that figure was $30,362.
Although the film incentives result in a net loss in tax revenue, advocates argue that the job creation and the film industry's attractiveness to young people made the incentives worthwhile. Opponents say the state can't afford to issue aggressive tax incentives to specific industries.
The Ernst & Young study contradicts a September report by the nonpartisan Senate Fiscal Agency, which found that the state spent $44,561 per job in the 2009-10 fiscal year. The Senate Fiscal Agency reported that economic activity by film companies and other businesses that benefited from the film industry accounted for 1,542.2 full-time jobs in Michigan in the 2009.
The contradicting studies add fodder to the debate over Gov. Rick Snyder's proposal to eliminate the state's unlimited film tax incentive and replace it with a capped pool of $25 million dedicated to the industry.
Companies and film productions that have already received film credits would get to keep them.
Michigan's film incentives program, approved in spring 2008, provides a cash refund of up to 42 percent of the amount a filming company spends in the state. It's considered one of the most aggressive film tax incentives in the country.