The Oakland Post

Michigan’s film tax incentive creates more debt, not jobs

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George Clooney is spotted walking the streets of Ann Arbor. Hugh “The Wolverine” Jackman shops at a local market in Franklin. Gerard Butler hangs out at South Bar in Birmingham. Award winning actors and actresses have been gracing Michigan with their presence and talent.

But why Michigan? The climate is far from rewarding or reliable for shooting a movie, and never before had the state been known for its abundance in actors. Why are movies with multi-billion dollar budgets deciding to film in the big mitten?

The answer — tax incentives. In 2008, Gov. Jennifer Granholm signed into law a film incentive program to attract jobs to Michigan.

According to Michigan.gov, the laws provide a 40 percent refundable or transferable tax credit for producing films in Michigan, with an added two percent rebate for movies that film in core communities.

So far, it seems everyone is a winner. Now my weekends can be spent following these Hollywood stars, the unemployment rate should soon drop and movie executives can film for cheap rates.

All this would be great if it weren’t creating an even larger dent in our state’s deficit.

Let’s talk economics. In our state’s constitution, along with the majority of other states in the union, every fiscal year our deficit must be balanced, as to avoid creating a debt. Simply put, the state cannot spend more money than is brought in through taxes and other revenues. This explains why much of the funding for public schools and other programs have been cut — not because they are unnecessary or unworthy of funding, but because Michigan does not have the money.

So, with money even being deducted from school funds, the state cannot afford the rebates offered to the movie companies.  While many people felt the economic stimulation through increased spending and employment, the industry still has not created a sufficient amount of jobs to pay the state back. The income it produced within the state does not match the amount that was offered in incentives.

The Michigan tax incentives to the movie industry have allowed movies to film for extraordinary low rates, only to bring people from other states to do the job. Crain’s Detroit Business addresses an economic report by the nonpartisan Senate Fiscal Agency that says, “… About $37.5 million in credits during the 2008-09 fiscal year reflected nearly $98 million in private spending. But nearly half of the spending left Michigan and didn’t contribute to economic activity in the state.”

In regular terms, this translates to say that the movie industry is bringing employees from out of state to do jobs that Michigan residents are perfectly capable of doing. While some are receiving employment through the new industry, it is at the expense of the state.

The report continues to say that the credits have created a few jobs and publicity for Michigan, but at a very high cost.
This employment is only temporary because as soon as the incentives dwindle, the movie industry will relocate to a state that offers a better deal, and the people are, once again, unemployed.

Upon entering office, Snyder signed into law a $25 million dollar cap on incentives to prevent the deficit from rising.

According to the Detroit Free Press, the industry has already shrunk, and actors and production companies have already begun to leave.

So, while it may be fun to have celebrities in our back yard, the state should not be left to fund their productions. We should consider the costs over the benefits. While on the surface Michigan may appear to benefit from the enticement of Hollywood, in reality, it’s is truly running us dry.

George Clooney, Hugh Jackman, we’ll miss you.