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Posted on Thu, Nov 18, 2010 : 5:51 a.m.

It's too early to pull the plug on Michigan's film incentives

By Rick Haglund

Officials of Michigan’s budding film industry must feel a bit like the neighborhood hoodlums looking down the barrel of Clint Eastwood’s shotgun in “Gran Torino.”

(A 2008 movie that, by the way, was filmed in Michigan and grossed $260 million at the box office.)

They know that Michigan’s lucrative film industry tax credits are in trouble and could be blown away by skeptical lawmakers acting in concert with Governor-elect Rick Snyder.

Snyder has said the credits, which refund as much as 42 percent in direct production costs, aren’t sustainable and should be restructured.

But there’s been a plot twist in the film incentives story that has moved supporters back a bit from the edges of their seats.

Snyder has cast Democratic Speaker of the House Andy Dillon as state treasurer, a selection film industry leaders say could signal that the new governor might not write the incentives out of his economic script.

Dillon, a backer of the incentives, will oversee a department legally charged with approving tax credit applications.

“It’s no secret Andy Dillon supported the incentives, and it’s no secret that, whoever the treasurer is, the treasury has to work very closely with the film office for the incentives to work,” said Jim Burnstein, vice chairman of Michigan Film Office Advisory Council.

Burnstein, who heads the screenwriting program at the University of Michigan, said he hopes Snyder and the Legislature won’t end the tax credits before the industry’s storyline is fully developed.

The tax credits, enacted in 2008 should continue and be evaluated after five years by an independent entity, Burnstein said.

That’s what Louisiana did after conservative Republican Gov. Bobby Jindal took office in 2007. A study there found that $429 million had been spent in the state on production that year, creating an economic impact of $763 million.

As a result, the state boosted its tax credit from 25 percent to 30 percent.

Burnstein said it will take Michigan five years to develop experienced film crews and build out studios and other infrastructure.

“If we’re in this thing for five years, we’re going to be fine,” he said. “We’ll have a sustainable industry like Louisiana and New Mexico,” he said.

But he and others worry that Michigan’s incentives, if not eliminated altogether, might at least be capped.

A bill recently introduced by outgoing Sen. Nancy Cassis, R-Novi, would do just that. Her bill would cap the credit at $80 million next year and $40 million in 2012, and phase out the credits by the end of 2012.

Film industry officials say capping the credits likely would kill the business in Michigan because filmmakers fear their applications might not get approved before the cap was reached.

"If this incentive is prematurely capped or downsized, people will leave," said Emery King, chairman of the Michigan Film Office Advisory Council. "The industry will be gone so fast it will make our heads spin."

King, a former Detroit television news reporter, made the comment last week at the Elmore Leonard Literary Arts and Film Festival in Birmingham.

Burnstein told me one of the most important things the film credits have accomplished is giving film graduates the opportunity to work in Michigan, in at least a small way reversing the state’s brain drain.

“What I really didn’t see coming is some of these kids are moving into Detroit,” he said. “I have been at U of M 16 years, and I have never seen that pattern.”

And, as Burnstein noted, keeping young talent in Michigan and revitalizing cities are two of Snyder’s top priorities.

“Is there a better way to revitalize Detroit than having a young creative class come in? There is none,” he said.

E-mail Rick Haglund at haglund.rick@gmail.com.

Comments

G.W. Williams

Sun, Nov 21, 2010 : 11:20 p.m.

I think the film incentives have done good things for our state, but why are we incentivizing only certain industries and not others? We should incentivize all industries by lowering the Michigan Business Tax and eliminating the personal property tax, not by having government bureaucrats picking winners and losers. We can and must do better. Learn how we can @ http://www.michiganturnaroundplan.com.

Tex Treeder

Fri, Nov 19, 2010 : 11:18 p.m.

Keep these incentives in place. Yes, money will be saved in the short term by killing the incentives. But shouldn't a self-described entrepreneur (i.e. Rick Snyder) understand that not all investments pay off immediately? The car industry can no longer support this state. Michigan needs to diversify and with a little help, the film industry can be a financial plus for the state.

Do not taunt Happy Fun Ball

Fri, Nov 19, 2010 : 7:28 a.m.

This is a fine opinion piece as it skips the data the state has so far on this incentives program. The data says... "The new report also found that for every one dollar paid out to filmmakers the state only collects an estimated $.10 in tax revenue." I will gladly give the program more time to be successful - but as for grading this incentive program up to now = D-!. Failures include: Loss of state money overall - and MI is broke right now. No real job growth, in 2009 there were actually fewer movie jobs then before the incentive began! No long term projects - and your column speaks to that issue. A complicated approval process - very political. Friends get incentives - others do not.. Overall - there is too much money and no goals to continue as is. When the MEDC gives out cash' - you need to show jobs and growth - this State Program is failing by that measure. Perhaps, the State could get a piece of the profits; First set a minimum production budget of perhaps $1,000,000 'skin in the game', then offer more incentives but take 1% of profits of anything over a certain production cost level - so if the film goes big MI gets a piece. Something needs to be done to advance long term investing in this program.

Michael Stephen Bryant

Thu, Nov 18, 2010 : 3:19 p.m.

It mentions in this article that it takes time to train production crews.I'd like to point out that the Lifton Institute trained two graduating classes.I myself have access to a complete production crew.The problems are (1)Nobody had the foresight to build an indoor soundstage,so filmwork in Michigan will be seasonal again this year.(2) There is a lack of Michigan people investing in our own film industry.Sitting around waiting for a California company to come in and provide filmwork,is not going to work.Michigan needs to have Michigan investors for Michigan made films.California is not going to save Michigan's film industry.Investors in Michigan need to be aware that Michigan is already prepared with Michigan Production Crews to make Michigan films.There are talented people in Michigan,trained Production Crew workers and actors,all looking for filmwork.