Do Film Incentives Have A New Future in Michigan?

Wednesday, August 23, 2023 2:42 PM | Anonymous


Lights, camera – Michigan is hoping to be back in action in the film industry with a new bipartisan plan to create the Michigan Multimedia Jobs Act.

The legislation would create a tax credit to promote Michigan-produced films, television, digital streaming productions and commercials. The House bills, HB 4907 and HB 4908 , are sponsored by Rep. John Roth (R-Interlochen) and Rep. Jason Hoskins (D-Southfield), respectively. The corresponding bills in the Senate, SB 438 and SB 439 , are sponsored by Sen. Dayna Polehanki (D-Livonia).

"This is a business, an industry, that was born in the United States. Dominates still in the United States, for 100 years," Polehanki said. "This is a very serious, lucrative industry, and we're not part of it in any meaningful way."

As introduced, the legislation would create a transferable tax credit for media projects filmed in Michigan. The credit would start at 25 percent of the total amount spent and rise to 30 percent based on the inclusion of "filmed in Michigan," "Pure Michigan," "Michigan Film and Digital Media Office," and "MIFIA" logos somewhere in the project.

The legislation also would create a tax credit worth 30 percent of spending for hiring Michigan residents and 20 percent for hiring nonresidents to work on a project.

The legislation is a "complete 180" from Michigan's previous incentive program, Polehanki said, which gave filmmakers rebate for up to 42 percent of production costs.

The state's previous incentive program existed between 2008-15, but it was gutted as ineffective. In 2008, the state issued about $38 million in incentives to filmmakers. The amount peaked in 2010 at $155 million, but a Senate Fiscal Agency paper published the same year found that the $100 million spent by the state on film incentives generated slightly less than $60 million in economic impact.

"This legislation is not a rebate," Polehanki said. "We're not financing or bailing out movie studios. It's a transferable credit. … It benefits them because it's transferable so you can sell that tax credit to any Michigan company that does own taxes. It could be an automaker, brewery, small business. The only way any Hollywood production is walking out of Michigan with money is to sell a tax credit to someone who needs it."

The program also is structured in such a way so that one company can't dominate the space, Polehanki said.

Roth said he was part of the previous film credit program, and the problem was that those incentives allowed too much money to leave the state during production.

"The problem with those credits was that yeah, they brought money into the state, but they also took money out of the state," he said. "What we're trying to do with these new credits is produce the films, the documentaries, the commercials, whatever it is, in Michigan. The problem with the old credits is that we just didn't get a foothold on the production side of it."

The new credits will aim to emphasize the production side of filmmaking.

"All the states around us and southern states, like Georgia, are really heavy into it, and Michigan has nothing. I think we've got to incentivize it a little to get it going," Roth said. "Once we get it going, maybe we can have a small industry here."

More than 40 states offer some sort of film credit program. Roth said the point isn't necessarily to draw in the existing industry, but to give Michigan students who are interested in the industry a place to start at home.

"Why are we teaching this at Grand Valley and Michigan State if we have no jobs to offer afterwards?" he said. "My youngest daughter will be a senior at Grand Valley this fall, and she's in film production. I know that she's already looking at what state she can go to, to have her career. … We're taking younger folks out of Michigan into other states when I think we could promote film production again."

Before, Michigan was promoting itself as a beautiful filming location. Although that remains true, it's not the emphasis of the new proposal, Roth said.

"Now, we have to actually produce jobs in the state with the film business," he said. "I'm not trying to bring Hollywood into Michigan. We're never going to get Hollywood into Michigan. We're going to produce our own stuff."

Roth said he wanted to see the Big Three automakers film more of their commercials within the state. Right now, he said Michigan wasn't competitive enough for that to happen.

"They go to other states to film their commercials," he said. "They've got the mountains in the background, the ocean, when we have some beautiful territory in Michigan where they could be filming these commercials around, so we need to start bringing some of that home."

Roth said Pure Michigan is the only entity that has promoted filming in Michigan, but the program is receiving less funding in the budget this year, and so he thought it would be a good idea to incentivize film production in Michigan in other ways.

He said there's already been some pushback about not wanting Hollywood in Michigan and the failure of the previous tax credits to attract the film industry.

"There's opposition already forming … saying we don't need film credits in Michigan, and we don't want Hollywood here. I guess I would agree somewhat with that. We want our own Michigan production," he said.

The Mackinac Center for Public Policy is opposing the bills, calling it a "race to the bottom," in an article published in Michigan Capitol Confidential, a news source produced by the Mackinac Center for Public Policy.

Roth said he had talked to them about the differences between this legislation and the previous Michigan film tax credits.

"They're still not necessarily onboard, but I think they're starting to get a little more perspective on what it is," he said. "We have to compete."

Economists are often skeptical of film industry incentives because the industry can be hit or miss.

"Economists never like (film incentives). They never do well in the economic impact studies," said Ellen Harpel, founder of Smart Incentives, last week during the National Conference of State Legislatures summit. "But boy, are they popular."

Roth agreed that the industry isn't necessarily an easy economic win.

"It is hit and miss, to some point, but filming our own commercials in the state, that shouldn't be hit or miss, that should be every year," he said. "I've heard them say that the jobs are often transient and short-term, well, that's because we have nothing to offer. … We've got to have opportunity."

The new film credits will aim to keep money in Michigan, Roth said.

"We need to promote the jobs that go into this and can stay in Michigan," Roth said. "Our young people are leaving our state. … We want our youth to stay at home. We've got to give them the opportunity."

The legislation isn't likely to come up when the Legislature returns in September, but Roth said he was hopeful it could come up before the end of the year or in early 2024.

"We've got a little bit of tweaking and work to do yet. I don't think we're there, but I think we're close," he said.

Polehanki said she was hopeful that the Senate would take the bills up in the fall.

"We're beautiful here, but a lot of places are beautiful," she said. "They're not going to come without an incentive. It's just not how it is. It's not how this business works. Unfortunately, they're going to make money and save money where they can."

– By Elena Durnbaugh

Michigan Film Industry Association (MiFIA)
117 E Kalamazoo St

Lansing, MI 48933

(517) 580 - 7710

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