Thanks to contentious state budget issues, Michigan’s most rapidly emerging industry could take a potentially fatal hit.

In 2008, the state legislature passed a series of tax credits and rebates aimed at encouraging the development of the film industry and video game production. The 42 percent retainable tax credit is the most generous in the nation.

The program has been successful so far.

In 2007, the Michigan Film Office in the Office of the Governor in Lansing consisted of one administrator and a secretary. They approved three films that year, which were produced for $2 million. In 2008, the office oversaw 35 projects, totaling over $120 million.

Despite the revenue generated by the emerging industry, a number of legislators think that the credits are excessive given the state’s current fiscal crisis.

State Senator Nancy Cassis, a Republican from western Oakland County, has been one of the leaders in the attempt to curb the film and video game incentives.

Cassis introduced a bill earlier this year to cap the credits at $50 million, less than half of the credits granted in 2008. Cassis said nobody is giving serious consideration to eliminating the film credit program altogether, but the amount of credits needs evaluation.

“It would be wonderful if (the film industry) could emerge as a major player, but some people are wondering why we are giving all this money to Hollywood producers when we are cutting funding for K-12 education,” Cassis said.

Support for lowering the tax credit is not confined strictly to Republicans. Democratic Gov. Jennifer Granholm, an ardent supporter of the tax credits, said she would support dropping the credits from 42 percent to 37 percent.

However, opposition to a reduction in film and video game credit initiatives is strong within the entertainment industry.

Michael Mannasseri, senior vice president of Big Screen Entertainment, held a rally last Monday at the Crofoot Ballroom in Pontiac to keep the Michigan Film Incentives program as it is.

The event was attended by hundreds of area residents and it also featured passionate pleas from notable figures including best-selling author Mitch Albom and Democratic state senator Gilda Jacobs.

The rally began with a video featuring a number of film workers testifying to the benefits of the incentives, many claiming they would be unemployed and/or homeless without the film and video game industry in Michigan.

Mannasseri, who moved a large portion of Big Screen Productions to Michigan from Los Angeles in order to take advantage of the tax credits, said that the evidence of the success of the tax incentives so far should be obvious to lawmakers.

“I don’t think it takes a genius to realize this is working,” Manasseri said. “All you have to do is look at all the people who have jobs because of this. Just look at the people who are going to be able to pursue a career they love without having to leave the state. Michigan needs this.”

Matt Tailford was an actor in Los Angeles who moved to Manistee, just south of Traverse City, to establish 10 West Studios.

Tailford said the fact that a film company could succeed in a rural area shows just how much the incentives benefit the entire state, not just the major motion picture studios in metro Detroit.

“What Manistee offered is different than what Detroit offered, and we didn’t want to compete with Detroit. We wanted to supplement Detroit,” Tailford said. “If the film incentives are even cut back, we’re all gone.”

Alvin Wallace created filmemerge.com, a motion picture data storage directory, last year after retiring from his job as an insurance coordinator for the auto industry. Wallace, an aspiring screenwriter, said the emergence of the film industry in his home state provides not only light to his own dream but also provides hope for the whole state as well.

“There is a domino effect,” Wallace said. “Once you have any film industry in your state, you’re going to see more businesses, you’re going to see more people with jobs.”