Michigan cities could offer local film credits under legislation introduced by Mark Ouimet
Michigan municipalities would be allowed to create local "film tax credit zones" to encourage film production within their borders under legislation unveiled today.
State Rep. Mark Ouimet, a Republican from Washtenaw County's Scio Township, said his bill would allow cities, townships, villages or counties to authorize creation of the zones with a vote of local residents. Governing boards could put forward ballot initiatives.
"Although some may argue that the sequel is never better than the original, this is the fairest, most democratic way to continue the film tax credits," Ouimet said in a statement. "The state can no longer afford these tax credits on such a massive scale, but if cities like Ann Arbor or Grand Rapids want to support film production, they should be empowered to do so."
Mark Ouimet
But the new Republican-backed state budget for the fiscal year starting Oct. 1 caps the pool of money for the state's film incentives at $25 million. That's about one-fifth the amount distributed in 2010, when the film tax credits were theoretically unlimited.
Currently, film companies are eligible for a film tax credit from the state if they spend at least $50,000 anywhere in Michigan. Companies can receive a 40 percent refundable tax credit on Michigan expenditures, or a 42 percent credit if they film in one of 135 state-designated Core Communities, which includes Ann Arbor.
Ouimet said his bill allows communities to set any percent credit they desire. Instead of a state tax credit, individual municipalities would pay a grant to production companies in the amount of the post-production certificate issued by the Michigan Film Office. It would be up to the local government to decide how to pay for the credit.
"Small communities that have unique downtowns or special landmarks, such as Dexter, Saline, Manchester or Chelsea, also could create a movie zone within their borders to take advantage of potential film production revenue," Ouimet said. "Any community could create an individual movie zone if there is public support for the idea."
Without a way of generating new revenue, Ann Arbor CFO Tom Crawford said, it'll be hard for cash-strapped communities to come up with the funding for local film programs.
Crawford, interim city administrator, said Ann Arbor currently reaps the benefits of the state's film tax incentives and likely will continue to do so even at the reduced funding levels. Still, any new proposal like the one offered by Ouimet that provides communities an opportunity to create jobs, he said, is something cities like Ann Arbor would want to look at closely.
"Obviously, we're like most communities and squeezing more dollars out is tough. If it's city dollars this is looking for, cities will need to evaluate whether they're getting returns," Crawford said, adding it might make more sense in cities where film companies are building studios.
A recent study by Ernst & Young showed that every $1 spent by the state on film incentives generates $6 in economic activity. But for purposes of the state's budget, Gov. Rick Snyder and other Republican lawmakers in Lansing decided the return in tax dollars isn't there.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's e-mail newsletters.
Comments
Jonas B Williams
Sun, Jun 26, 2011 : 3:27 a.m.
Film is the "new kid on the block". There's money for training people how to use all sorts of tools for business. Community colleges in many situations train people to do what -- to work for big business right (aside from 4-year transfers)? How to use Excel, how to be a nurse, and so on. And this is subsidized. There are ties between employers and community colleges -- truth of the matter is, those ties are much, much, much stronger than the ties between film schools and Hollywood (or what most people think of as Hollywood). Not that ties between employers and community colleges are bad, it's just that it does involve money. Why shouldn't hospitals train their own nurses? Why should we subsidize our community colleges to do it? Etc, etc... Big 3, train your own engineers, etc... In the same way, creating a climate where film subsidies are modus operandi may seem weird -- that's the new kid on the block thing -- but the subsidies change the community in ways that can't just be justified with money or whatever. It may very well be the case that there isn't enough money. Basically, the tax credits most often go to start paying off investors. It's a cash flow thing. It's "built in" to the Hollywood model. If you want the industry here, you have to feed it. If you have hospitals in the area, you want to subsidize your community colleges to teach people how to be nurses and subsidize your 4-year public colleges to churn out doctors. Remember, the production companies probably never see the tax credits. Almost invariably, hey go to pay off investors almost immediately. If you want the industry here, you have to compete. It's critical cash flow without which medium+ budget movies can't get made. It's a choice of which industries we want here is what it is. "Money" will be spent by taxpayers either way.
deb
Thu, Jun 9, 2011 : 3:59 p.m.
This is a terrible idea. I worked in the Michigan film industry for a couple years. A large amount of the workforce is flown in from other states, especially when it is a studio film. (Additionally, when tickets were booked through anywhere in Michigan, i.e. a travel agency in Mi., they qualified for the tax credit. The tax credit pays for airline flights for workers from other states to come here and take advantage of Michigan taxpayer monies.) Movies are shot out of the backs of semis and can be shot anywhere. The movie industry will always go to where it can find the best tax break. A tax break for almost any other industry, that is transient or can be done over the internet, would create immediate jobs here. For instance, law firms in NYC, Chicago and other large markets have been shifting some of their workforces to Pennsylvania and other states because of cheaper costs of living in those areas. The firms do this so they can pay employees a cheaper wage. If Michigan were to give legal employers a 42% tax break, there would be a lot more law firms looking to employ lawyers in our state. If we really want to stop our talented people from leaving the state, why not create tax credits for legal employers, engineer employers, software developers, etc.? Why give a tax break to an industry where a job requires very little to no education when the same funds could be used to attract real top level "talent."
Joshua Manila
Thu, Jun 9, 2011 : 2:37 p.m.
This is exactly what people have asked for tax incentives and tax breaks in order to create jobs. Representative Ouimet have given city and county governments exactly what they have asked for now it is their turn to take action. If the film industry is that important to Washtenaw County put the credit and let the voters decide.
Macabre Sunset
Thu, Jun 9, 2011 : 4:10 a.m.
Ann Arbor will take advantage of this - trading police officers for actors portraying police officers in pretend-land is definitely in line with the goals of the city charter. Actors are far more aesthetic.
Stephen Landes
Thu, Jun 9, 2011 : 1:17 a.m.
From the article, "Obviously, we're like most communities and squeezing more dollars out is tough. If it's city dollars this is looking for, cities will need to evaluate whether they're getting returns," Crawford said, adding it might make more sense in cities where film companies are building studios. The whole problem with the state film credits is that the state never got the return. While supporters talk about all the economic activity created by the film credits the sad truth is that the return to the state in tax revenue has never paid for the tax money spent to create the activity. What we have is taxpayer paid support for a select group of businesses. These businesses simply go where the financial incentives are highest and Michigan has been one of those places. Too bad they don't pay for themselves. If this system did not work for the state I can't imagine it will be any more financially attractive at the city level.
DonBee
Thu, Jun 9, 2011 : 8:36 p.m.
Madler - The state was taking roughly 9 percent of the spending in taxes from small businesses that were housed in the state (business taxes and personal taxes) and it was offering 42 percent of the spend back to the companies. I don't know how you get that the state government got more back than it spent. Overall the economy of the state may have been better off, but beyond the flawed E&Y study (a virtual carbon copy of the New Mexico study), no study has found the state got back what they spent. Any business would flock to the state if the state offered to pay 42 percent of its costs. Paying out 4 dollars for 1 dollar in return is unsustainable.
deb
Thu, Jun 9, 2011 : 5:47 p.m.
No madler, production centers basically mean nothing. They are buildings like airport hangers. Additonallly all the equiptment already has housing in the area, or is flown in. . . .
deb
Thu, Jun 9, 2011 : 5:46 p.m.
How does aa.com pick featured comments??? This post has one vote, yet is featured on the front page. Makes no sense, other then it sides with the pro-film contingent, and aa.com is definitely in that area.
Madler
Thu, Jun 9, 2011 : 1:34 p.m.
Not true. Not when we have been a production center. You are spewing misinformation sir.
Peter Jameson
Thu, Jun 9, 2011 : 12:57 a.m.
Great! We dont need to give those big FAT CATS in hollywood any more breaks.
Macabre Sunset
Fri, Jun 10, 2011 : 6:45 a.m.
She doesn't understand economics, though. The film industry is a transient business. It can and will go to any place that will pay enough money. As many states have found after being bilked out of millions for funding football and baseball stadiums, temporary jobs are expensive. Incentives should create permanent jobs, and should only be used to temporarily prop up a business that's investing in our state. This doesn't even pass the sniff test. Most of these benefits are going out-of-state, and we're paying six figures for every job created here - jobs that will go away if we don't continue to pay six figures every year. I wouldn't vote for Ouimet anyway, but this is particularly clueless behavior.
deb
Thu, Jun 9, 2011 : 5:48 p.m.
How does aa.com pick featured comments??? This post has one vote, yet is featured on the front page. Makes no sense, other then it sides with the pro-film contingent, and aa.com is definitely in that area.
Madler
Thu, Jun 9, 2011 : 1:26 p.m.
'You don't understand the film business sir. Its local workers who get the benefits. Not Hollywood fat cats. And Ann Arbor has benefited too.
Craig Lounsbury
Wed, Jun 8, 2011 : 11:12 p.m.
The only reason Hollywood showed up here was because we were offering " some of the most generous incentives in the nation". The truth is you can strike the words "some of" from that quote. There is no possible way a local Government can throw the money needed to get Hollywood to pay attention. This link offers some sobering reality to film subsidies.... <a href="http://www.cbpp.org/cms/index.cfm?fa=view&id=3326" rel='nofollow'>http://www.cbpp.org/cms/index.cfm?fa=view&id=3326</a> Of particular local interest it mentions Ernst and Young... "One strategy that proponents have used to convince policymakers and the public that film subsidies are a boon to state economies is to commission consultants to prepare state-specific studies. The conclusions of these studies— at least those that are published— always validate the proponents' position. Ernst & Young's (E&Y's) study of New Mexico's film tax subsidies is a prominent example."....... It goes on to describe the flaws in the Ernst and Young study.
Michigan Man
Wed, Jun 8, 2011 : 10:29 p.m.
Excellent idea put forth by Ouimet. Ann Arborites should be proud and honored that Ouimet is serving them in Lansing!
Dr. Rockso
Wed, Jun 8, 2011 : 10:19 p.m.
This guy is a real tool who has supported every one of THE RICKS moves to rob the elderly, education, and the working poor. Check out his voting record <a href="http://www.votesmart.org/voting_category.php?can_id=89557" rel='nofollow'>http://www.votesmart.org/voting_category.php?can_id=89557</a> Don't be fooled by this headline grabbing proposal into thinking that Ouimet gives a damn about Michigan Cities or the County of Washtenaw. Its going nowhere. Stanton and the rest of the children at Ann Arbor Dot Com are just puppets dangling on the strings of politicians like Ouimet and Snyder.
Joshua Manila
Thu, Jun 9, 2011 : 2:42 p.m.
Dr. Rockso while I agree with you that Stanton is puppet you claim that Mark is lock step with Snyder is poor argument. I am guessing you are Democrat put tell people you make decisions based on policy so you claim to be an "independent" Also willing to be that you voted for Granholm(twice) and that it did bother you when the Dems followed her blindly down the road to Michigan's destruction. I await your response which insults Republicans and climes we dont care about kids, teachers or old people.
Michigan Man
Thu, Jun 9, 2011 : 2:46 a.m.
All Ann Arborites should be honored to have Ouimet and Synder representing them in Lansing. These are two (2) men who know Ann Arbor inside out, understand what it takes to keep Ann Arbor prosperous and on top of that they are accessible and listen to all sides of an issue. Ann Arborites are WINNING with Ouimet and Synder!
Peter Jameson
Thu, Jun 9, 2011 : 12:55 a.m.
no, hes more into robbing the government of its control over our wallets.
Edward R Murrow's Ghost
Wed, Jun 8, 2011 : 10:14 p.m.
"Without a way of generating new revenue, Ann Arbor CFO Tom Crawford said, it'll be hard for cash-strapped communities to come up with the funding for local film programs." And there's the rub. Revenue collection and distribution has been centralized at the state level. So, let's layoff police and firefighters so we can free up funds and give a cash cow to Hollywood filmmakers. Yeah, that makes sense. GREAT idea, Mark!! Good Night and Good Luck
mojo
Wed, Jun 8, 2011 : 10:10 p.m.
The city should ask for a percentage of ownership in the deal as well to pay for some of the costs - perhaps a piece of the profit dollars after the costs of the film are covered. Perhaps s an amount not to exceed X dollars.
A2comments
Thu, Jun 9, 2011 : 10:42 a.m.
Hollywood has very creative accounting, how would a city audit the financials?