Film incentives will help Michigan flourish
Jim Burnstein
In April 2008 under the leadership of Gov. Granholm and now Congressman-Elect Bill Huizenga, among others, we saw our best in the nation incentive package for film, television and video game production become a reality. Certainly we can all agree that once this law took effect, “They” did indeed come.
In 2007, before this legislation was passed, we had three films shot in Michigan with a total of $2 million in production spent here. But in the last nine months of 2008 alone, we had 38 projects spend $125 million. In 2009, there were 43 projects that spent $223.6 million in Michigan. This year we will surpass $300 million in production.
The question, of course is: Is it worth it? The Senate Fiscal Agency report would suggest that so far it is not. The figure in the report that captured attention was that the estimated additional tax revenue to the state in 2009 was roughly 10 cents on every dollar spent on film subsidies.
This interpretation was news to Advisory Council members, as we took more of a Ronald Reagan approach that the purpose of this legislation was to make the people, not the government, rich.
We don’t have to be economists to recognize the incentive’s ripple effect because the people of Michigan have lived it in reverse. We have seen what happens to suppliers and small businesses when auto production shuts down and people are laid off.
So, we get it when, thanks to increased movie productions, Chow Catering builds a commissary in Madison Heights, purchases a second 30-foot truck and rents a long-vacant property. We see the ripple when the company pumps $400,000 back into the economy, purchasing propane, supplies and groceries from local businesses and hiring up to 25 workers who in turn have money to spend.
And so it goes for all those restaurants, hotels, rental car agencies, accountants, security guard companies, party rental businesses, dry cleaners, florists, gas stations, hardware stores, vintage clothing shops, trash haulers, even portable-potty providers who are not just surviving but thriving thanks to our incentives.
Yet perhaps the most beneficial impact of the incentives has been on the future of our young people. For years have I watched my students at the University of Michigan leave for Los Angeles or New York as soon as they possibly could upon graduation. Virtually none of them was inspired by my example that you could live and work here, including my own son.
But over the past two and a half years, I have seen students from around the state get real world production experience, training and a healthy pay check here in Michigan from almost the day they graduate.
Who of these young people will be the next Bob Shaye, founder of New Line Cinema, who gave the world movies like Lord of the Rings, or Bill Mechanic, former chief of Fox Studios Worldwide, whose credits include Titanic and Braveheart, or Jerry Bruckheimer, who brought us Pirates of the Caribbean and CSI, or Bobby Kotick, the CEO of Activision/Blizzard, who gave us Guitar Hero or even Larry Page, the co-founder of Google? We educated all of these individuals in Michigan and lost them. How many jobs did they create, and how many tax dollars went with them? We simply cannot afford to export our creative class any longer.
In December 2008, the lowest point in our history since the Great Depression, after witnessing the spectacle of our auto giants getting hammered before Congress, along came Clint Eastwood’s Gran Torino. When the last credit rolled and it said, “Made in Michigan,” the audiences all applauded. This was an emotional tipping point, an occasion where people felt proud and free to cheer again for the place they loved. Please tell me how you put a price tag on hope?
Jim Burnstein is vice chairman of the Michigan Film Office Advisory Council and head of the screenwriting program at University of Michigan.
Comments
Do not taunt Happy Fun Ball
Fri, Nov 19, 2010 : 8:12 a.m.
No long term investments is one of the major flaws of this program. Take the money and run - is the attitude of the producers. And why not? Other states offer cash too. Michigan should offer the biggest tax credits and then take a piece of the box office to get big dollars into the state. As it is - this is a give away. $1.00 goes out, for every dime that comes in. And in 2009 - we actually had fewer film jobs then before the incentive began. Is that good government?
Eric
Thu, Nov 18, 2010 : 11:34 a.m.
I really enjoyed the article and all of the comments above. I have learned more about the film incentive in the past couple days than I knew before. I went to school for film and always thought I would be leaving the state for LA or NYC. I decided that my love for film and Michigan could be one since all of this movie making "magic" is taking place here. I really want to stay here but the more I talk to people the more I hear about most of these films bringing MOST of their own people with them. There is the exception but it's mostly smaller budget/indie films that are hiring the locals for low/no pay. I really do want to stay here and work on films and I hope it works out but I, like many I have talked to, have had a hard time even getting out feet in door...
David Briegel
Tue, Nov 16, 2010 : 10:33 p.m.
GE and Exxon/Mobil paid no tax last year and you are worried about a few movies. Forest and trees??
shepard145
Mon, Nov 15, 2010 : 8:07 p.m.
As someone who has been involved with the LA film industry coming to Michigan well before the incentives passed, I greatly enjoyed reading Jim's opinion and could not agree more. While it's true that Jenny made a mess of almost everything she touched, this program is a winner that voters support. I'm sure that once Governor Snyder learns of the commitment Michigan has already made to this industry (including the vast sums of hard to raise cash that have been already been invested), he will not dump it into the compost heap with the rest of Granholm's crack-pot programs.
AlphaAlpha
Mon, Nov 15, 2010 : 6:51 p.m.
"That's a wrap" -Rick S.
CynicA2
Mon, Nov 15, 2010 : 6:29 p.m.
Yeahhh... this is really just a taxpayer-funded subsidy. Michigan taxpayers pick-up 42% of the tab in the hope that all this film-making activity generates more than $0.42 on the dollar in ancillary economic activity - that they'll spend more while they're here than we give them in tax dollars. As soon as this subsidy goes away, so will the film-makers. I give it about another year before the governerd finds a way to get rid of it.
JSA
Mon, Nov 15, 2010 : 11:23 a.m.
Incentives, garbage! The Michigan taxpayer is paying companies to make films here. 42% of their production costs. That is just plain stupid. Kill this turkey ASAP and serve it for Thanksgiving.
Dynamite123
Mon, Nov 15, 2010 : 8:36 a.m.
@say it plain As a youth working in the film industry I can clearly say that if the industry stays I will be here in this state for good and not it NY or LA. While still in college in 2007 I started my own production company here in the state and with the incentives my company has grown more than I could have ever imagined. We are going on our 5th Michigan made feature (On every feature around 95% is entirely Michigan crew) and have hired many of our talented, graduating friends. In some cases we have even brought back people who left this state. SO no, I have no interest in NY or LA even though I am well trained in this industry. On top of that, there are plenty of college educated people I know, who do not directly work in the industry who have benefited from the industry. From an internet startup company, to a t-shirt company, to law school friends and even college graduates who work in the banking industry. There is no other industry that involves such a diverse group of people.
Dynamite123
Mon, Nov 15, 2010 : 8:30 a.m.
@alphaalpha You are absolutely right that the state should do more to offer incentives to various industries, but I would like you to find another industry that has such a diverse group of hiring of crew and vendors. Sure, we can give incentives to battery companies, but would they hire all of these people and vendors?: Electricians Painters Construction Workers Medics Security Guards Clothing Designers Trucking Companies Porta-Potty Companies Travel Agent Truck Drivers Animal Trainers Policemen Firemen Athletic Trainers Weapons Trainers and Experts Welders Historians Caterers Graphic Artists Public Relation Firms Lawyers Hotels Car Rental Tent Rental Hotels Real Estate Agents Classic Car Owners Musicians Actors
scole
Sun, Nov 14, 2010 : 8:06 p.m.
I can't think of an industry more deserving of a break/incentive than the hard-working dairy farmers that I grew up with in the upper peninsula years ago. We could make lots of arguments about how they scrape out a living from frozen earth and feed our kids. Or how about the mechanic struggling to pay his mortgage? These people are struggling to survive during good times, not to mention the current situation. They just don't grab headlines like a few movie stars. It's great that the film industry is employing at least some Michigan workers, but what about the people who were here all along? What if the mechanic could hire one more tech, and the farmer could hire one more hand? They wouldn't earn a $75k salary, but a few thousand of them would help the economy a lot more than a couple of hundred hired for a year by a film. I like the fact that the film industry is doing well here, but agree that this incentive needs to be given in some form to everyone here, not just the attention grabbing filmmakers.
Mick52
Sun, Nov 14, 2010 : 7:46 p.m.
I have heard about this program and find it confusing. Most stories note the state is giving tax credits to these companies. From what I can tell, that means that a movie company that makes a file here pays less taxes on spending up to 42% less. Critics say the state cannot afford it. My question is, isn't any tax revenue, better than none, which is what Michigan will get if the movie business moves elsewhere? Or is the state subsidizing the movies? Most of the studies say it is costing too much. Bottom line: Is the state paying these companies to be here or just accepting less taxes on business? I find it very confusing and difficult to figure out how this works. If it is costing the state, then it should be ended. Is it profitable or not? I do not buy the argument that eventually the film industry will become so strong here that the credits can be reduced. Can anyone clarify how this is working in layman's terms?
CynicA2
Sun, Nov 14, 2010 : 5:03 p.m.
I seem to recall that our new Governerd is in favor of axing this incentive... could make for some interesting political fireworks, but I'm guessing he will get his way. States have been playing this game for years with the film industry, and the industry follows the incentives around the country like a band of gypsies - showing-up as they appear, and vanishing when the punch bowl vanishes, as it ultimately seems to do. Maybe, in the long run, the costs fail to justify the benefits, so both the states and the film companies view it as a temporary thing that will, ultimately, go away.
Craig Lounsbury
Sun, Nov 14, 2010 : 3:20 p.m.
"The question, of course is: Is it worth it? The Senate Fiscal Agency report would suggest that so far it is not. The figure in the report that captured attention was that the estimated additional tax revenue to the state in 2009 was roughly 10 cents on every dollar spent on film subsidies. This interpretation was news to Advisory Council members, as we took more of a Ronald Reagan approach that the purpose of this legislation was to make the people, not the government, rich." The Government gets its money from the people. So its our dollar that gets spent in subsidies and our dime that gets returned. In other words its our collective 90 cent loss. Its disturbing to me that those are the only hard figures he supplies. All the "touchy feely" good stuff is anecdotal and lacks hard numbers. I have heard Mitch Albom on WJR talk about this on numerous occasions as an ardent supporter. He continually says if we roll back the subsidy/incentive/kickback they will be gone. They came because we offered the best incentive. If thats true it seems to me that means as soon as another state decides to beat our deal they will be gone. That doesn't sound like a reliable long term plan to me.
Macabre Sunset
Sun, Nov 14, 2010 : 12:56 p.m.
That's all nice, but an expensive and temporary solution to a bigger problem. We need Michigan jobs. We need a tax system that's fair and consistent, so companies can afford to choose Michigan. Instead, we have a lottery-like system where film is this year's winner, and will be gone the minute the expensive incentive payments are gone.
say it plain
Sun, Nov 14, 2010 : 12:55 p.m.
Thank you @deb, for giving that very enlightening account of how the incentives *really* play out. It seems to me that @AlphaAlpha's point is quite reasonable--if the idea of incentives is a good one, why not create business incentives that bring lasting and useful changes to the economic infrastructure? Certainly there are young people who would like to stay in MI who are not interested in the movie industry? Does anybody really believe that people who want to have entertainment industry careers don't aspire to living in NYC or LA?! I enjoy spotting Richard Gere on Liberty as much as the next annarborite, but c'mon, @deb's points seem irrefutably sound. It seems like getting young people excited about working in movies via film-industry training and intern work on MI-made films might ultimately cause more kids to *leave* the state rather than stay--unless incentives come with requirements about how much MI-crew must be hired. Otherwise, it seems like an expensive economic band-aid, designed to deliver a little 'oh, cool' rise in service-industry income and perhaps a bump in income for the few locally-owned businesses that serve the temporary infusion of demand a film crew provides. Why not just give us all some tax rebate money then, and regular ol' MI-residents can buy some extra martinis on main street?!
Plubius
Sun, Nov 14, 2010 : 12:40 p.m.
Of course Jim sees this as a success - money is probably flowing into his pocket. For the rest of us, this is the biggest boondoggle yet - simply money down the drain to benefit a chosen few. The state would be far better off if this program were axed.
deb
Sun, Nov 14, 2010 : 11:54 a.m.
and they dont give opportunities for residents. For example, the movie "Flipped" flew in a standby painter. A standby painter sits around in a hotel and gets paid regardless of if the production needs them. The production decided that no one in michigan could do this job. Now the argument is that heads of departments on a production are usually from out of town because they have experience, and must be able to hire who they want on their crews.
deb
Sun, Nov 14, 2010 : 11:48 a.m.
I worked on a total of five movies over the past two years. The problem with the industry is that all of the production companies bring in their crew from out of town. They either believe michigan crew cant do the job, or they dont care. I am glad chow catering is doing well, I worked with them, but on the other side of things you have other companines (like craft services) that come from across the country and get hired. There are people here that can do these jobs, but the producers dont hire them. Plain and simple. Even if they did hire the problem is these are all union jobs, so if you are not alredy a member of IATSE, you cant get a job. Also we have seen production companies take advantage of peoples good will here. For example, for the shooting of the movie Stone, the producers hired one PA and made the rest interns, effectively cutting out the low level positions available on movies and half of the potential workforce. In the movies I have worked on, the usual ratio is about 20 michigan residents out of a 100 person crew. When speaking of the economic benefit the only one that really applies is rental cars and hotels. However, these companies are many times nationwide, so they do not put money back into the local economy (during an ann arbor shoot, we rented from hertz and had people stay at holiday inn and some other hotel on eisenhower that was a chain (blanking on the name.)) As much as people like to say it was made in Michigan, or point to the screen and say, "I know that place" it is not worth the incentive. It does not provide enough jobs in the state and those that it does are hampered by being unionized by the industry. Jim writes that the incentive will keep the best and brightest in the industry here. unfortunatley for theose people to do most jobs on a production that the incentive is likely to encourage they will first have to get into the union, which is not easy, nor do the people in the union like to add to their ranks. No the incentive is terrible, and after working on productions I have seen it abused far too much (ex. the buying of personal laptops then running them through production expenses)
AlphaAlpha
Sun, Nov 14, 2010 : 9:31 a.m.
Perhaps. If it only took two years to create the one positive thing on our map, perhaps we should seriously expand the incentives, for many industries. Just curious: entertainment industry = the knowledge economy? How?
MyOpinion
Sun, Nov 14, 2010 : 9:10 a.m.
@alphaalpha I think incentives should be targeted and this one is targeted to the knowledge economy and to youth. And, it is working. Make Michigan cities attractive to creative folks under age 35 so that our state will not be bleeding youth like it has been in the past decade. I don't think the incentives need to last forever or that we have to have the best rate in the nation, but it is penny wise/pound foolish to get rid of the one positive thing putting Michigan on the map.
AlphaAlpha
Sun, Nov 14, 2010 : 8:56 a.m.
Mr. Burnstein - If your reasoning is sound for the entertainment industry, should it not apply to all industries?