This past week, Michigan’s House of Representatives voted to kill the tax incentives for the film industry. Some lawmakers acted as if they’d just slain an evil dragon.
Not so fast, Gandalf.
I was in on the creation of these things. Back in 2008, at the request of then-Gov. Jennifer Granholm, a group was formed to see whether Michigan could be competitive in attracting the movie, TV and digital gaming business. Other states were having success with their incentive programs, seeing new jobs and investment while building a young, creative class.
At the time, Michigan needed all of that.
What we created was the most aggressive program in the country. The result was an avalanche of film and TV activity not seen before or since. The state, according to the Michigan Film Office, went from $2 million in annual production to nearly $225 million — in two years! Crews formed. Films took over small towns. Carpenters and drivers found work. Hotels filled. Kids studying movie or TV production stayed here after graduation — even moved here from other states. Want-to-be actors and directors flocked in, never showing in the statistics but spending and paying taxes just the same.
Critics complained that this was costing money. It was. Too much, they said. That’s debatable — like saying you’re wasting too much water on a little tree.
Depends on whether it becomes a big one.
A drop in the budget bucket
We never got to see. After three years of the film incentives (and nearly $650 million spent in the state), Rick Snyder was elected governor. And despite promising to keep the program, he slashed it horribly. People tried to save this or that, but what emerged was a weak-tea patchwork of funding and new rules — ones that benefited a studio in Pontiac but cut the heart out of the initiative.
That was four years ago. Since then, far fewer films have come here and far fewer jobs. Other states picked up the baton, and the largely nomadic movie and TV business went elsewhere — as did many of our young people interested in these fields. Michigan offered a capped $50 million in incentives, at rates that were middle of the pack. We went from running to walking.
Soon, we will be standing still. The new Legislature attacked these incentives as if they wore horns. A committee hurriedly recommended their erasure. The House agreed this past week, by a 58-51 vote, largely along party lines.
If only government always worked this fast.
Look. You may like the incentives or hate them, but let’s tell the truth. Fifty million isn’t making or breaking this state. It’s one-tenth of 1% of our annual budget. And if $50 million was given out, it meant at least $150 million was being spent.
Michigan has given out far, far more to industries that already were here — especially the auto industry. In 2010 alone, two years after the film program started, Granholm announced $2.9 billion in tax credits to the Detroit Three automakers to upgrade plants, in exchange for them not laying people off.
So when I hear lawmakers crow about getting rid of “Hollywood fat cats” who suck Michigan’s tax money, I wonder why the vitriol isn’t equally spread.
The golden rule of business
The fact is, Michigan has nearly $10 billion in outstanding tax credits. Ten billion! To all kinds of businesses. The film industry is a tiny player, thus an easy target. But it hardly invented the practice.
I hear lawmakers chide, “If the movie business leaves without the tax break, then it doesn’t want to be here.”
Come on. Any business will pursue favorable conditions. Should we stop giving tax breaks to downtown Detroit investors, saying, “If you won’t build without them, you don’t want to be here.” Should we stop trying to populate empty areas with favorable housing deals or attract top students with scholarships, saying, “If you won’t come without that, you don’t want to be here.”
That’s why they’re called incentives. What matters is what they produce. Critics say the film and TV industry didn’t produce enough. But how would they know? They clubbed it to its knees after four years. The idea was to build infrastructure, develop a large base of crews, retain our young creative graduates and grow the digital gaming businesses, which dwarf the movie industry — and then scale back funding. It always was going to cost the most up front. But impatience and politics killed the program.
The state Senate still could salvage it. But without restructuring or more funding, it will never do what was intended. It went from an innovation to a typical liberal vs. conservative grenade. You can hear it in the angry comments every story engenders.
Save it. I’m done arguing. I’ll just say what I said when we proposed it as a way out of our single-industry economic doldrums. You hate it? Fine.
What’s your great idea?