"Michigan Gov. to Film Business: 'Drop Dead.'

[Fnemecek]

In my opinion the film industry is just a fair weather friend [[Or is golddigger a better term?). The ONLY reason they are here is because the state is massively subsidizing their projects, and the fact that the ending of those subsidies means the loss of the industry is proof of that.

You say "fair weather friend." I say it's just business. They came for the tax credits. They'll leave if they dry up. It's not personal, it's just business.

I'll temper my argument by saying that I'm not in favor of any tax credits or public funding for any for profit industries, but to subsidize an industry that is completely mobile is a complete waste of our tax dollars.

I'm more pragmatic than you. If it produces a net gain in tax revenue, I'm all in favor of it.

The film incentives do produce a net gain in tax revenue, if one includes the increased tourism spending and secondary spending as a result of it. Therefore, I support it.

MSU did a study on the economic impact of the film industry in Michigan. They concluded that every dollar spent on film production ultimately resulted in five dollars being spent, with each level of spending resulting both income and sales tax revenue for the State of Michigan.

http://media.igorfilms.com/msu.econo...pact.study.pdf

There's also the fact that movies have a proven impact of driving tourism. This is important in a state like Michigan where tourism is our third largest industry.

http://www.sciencedirect.com/science...b&searchtype=a

The film incentive produces a net gain in tax revenue as well as a few thousand jobs. Quite frankly, Michigan needs more jobs and more tax revenue; not less. Therefore, philosophical arguments aside, ending the film incentive is simply a bad idea.

[lilpup]

Correct ... But what is also happening over there and in China all of those workers that are getting paid pennies are starting to stand up and say hey,and loudly, so that boat will only sail for so long ..

Unfortunately it will sail for long enough that the educational and investment feeders for those fields will dry up in the US.

[Parkguy]

The whole idea with the film credits was to incubate a new industry in Michigan. At one time, the Detroit area was the number 3 producer of film and video behind LA and NYC... all because of industrial productions that were never seen by the general public. Those jobs a just a fraction of what they were at one time because of the contraction of the auto business. By offering the incentives we can grow a HOMETOWN industry again. This thing is less than three years old right now... so obviously the projects that have been done so far are for the most part imported one-off productions. But new infrastructure is being built as noted by other posters. Once those are fully operating and generating their own productions, we won't have to wait for George Clooney or others to come to town. We'll be creating our own. Feature film production work is project work, and the employees move from project to project. They know this going in, and the entire industry works like that. The post-production houses are more steady, and the vendors and contractors work on a client services and sales basis, just like many other industries. CGI and animation studios work like a combination of these. Give the credits a chance to do what they are intended to do. The "cost per full-time job" is high right now [[and that is a ridiculous comparison to draw-- it is entirely political gamesmanship), but it is an investment with an up-front cost. The payoff comes later. [[Oops. I forgot. We don't do that as a nation anymore.)

The same thing goes for battery technology credits and green power generation credits. We put those into place to diversify the economy and get away from relying on a single industry. Entertainment, media, green power, and battery technology are all growth industries for the next few decades. Let's keep working to develop those fields, and others, too. And here's another one that will be a growth area over the next era: water and hydro technologies. We should corner that market before Chicago or Cleveland or Toronto does.

[Packman41]

The film incentive produces a net gain in tax revenue as well as a few thousand jobs. Quite frankly, Michigan needs more jobs and more tax revenue; not less.

Well the Michigan State Senate Fiscal Agency does not agree with you. Their report of September 201 can be read here: http://www.senate.michigan.gov/sfa/Publications/Issues/FilmIncentives/FilmIncentives.pdf
The report says, "The nature of the credit and the resulting activity is such that under current [[and any realistic) tax rate the State will never be able to make the credit "pay for itself" from a State revenue standpoint, even when the credit generates additional private activity that would not have otherwise occurred.”
The report goes on to say that in 2008-09 the State paid out $37.5 million in subsidies to generate $21.1 million in private sector activity. In 2009-10 the State will pay out $100 million to generate $59.5 million in private sector activity.
In 2008-09 the Media subsidy created 216.0 direct FTE jobs at a cost of $186,519 per job. For 2009-10 the subsidy will create 355.5 direct FTE jobs at a cost of $193,333 per job.
Just click the link to read it for yourself.

[lilpup]

Yes, I clicked your link and what did I see on page 10 of the report?

"Total Net Impact on State [[Public & Private)" - estimated, dollars in MILLIONS

FY 2008-09 +$81.7
FY 2009-10 +$208.6
FY 2010-11 +$263.2

so I guess pumping over $200 million a year into the state economy is irrelevant to you...

[Johnnny5]

Another thing to consider is that these tax credits are not really "creating" any jobs. For the most part they are simply pulling production jobs away from areas out of state. Honestly, that may be my biggest issue with the credits. It's just one state government outbidding the next seeing who can write the biggest corporate welfare check. The entire system might actually be a bit entertaining if not for the fact that it's taxpayer money.

[lilpup]

And why do you think Comerica bolted from Michigan? And why are we eating New York's shit? And why is Toyota in San Antonio of all places? It goes on and on, both domestically AND with foreign countries.

Are we supposed to just sit here and take it?

[Johnnny5]

And why do you think Comerica bolted from Michigan? And why are we eating New York's shit? And why is Toyota in San Antonio of all places? It goes on and on, both domestically AND with foreign countries.

Are we supposed to just sit here and take it?

You have two competing gas stations on the same corner. One of the owners decides that in order to have a leg up on his competition he will try lowering his prices by 5 cents. The competition sees that he's losing customers so he lowers his by 10 cents. The owner that originally lowered the price figures the only way to compete is to lower his price by 5 cents more. In the end neither gas station owner benefits.

It's well past my bed time =). Goodnight.

[BrushStart]

I am on the fence about this. On the one hand, I think the tax credits may cost more than they generate in terms of spin-off revenue. On the other hand, I look at all the things the state spends money on that return absolutely nothing on a dollar for dollar basis. Think prisons.

Let me make it real. I was at Waa Hoo downtown tonight grabbing some delicious sushi, and the place was packed by a talent agency looking to hire actors. It's hard to deny that the guy who owns the restaurant is benefiting as well as the people who will actually be paid to be on screen. All of those people parked their cars downtown, and many will probably spend money at the bar later. Do the figures really take that kind of economic impact into account?

I think Snyder had a knee-jerk reaction to the film credits. I think the industry was just starting to grow roots here in SE Michigan. What's the harm in keeping them for a few more years then scaling them back to a point where it generates positive revenue for the state? In the meantime, the exposure Michigan and Detroit are getting is probably worth the difference in cost. I feel like we went from giving out this huge incentive and then went to giving absolutely nothing. Seems like a schizophrenic 180 to me.

Does anyone want to do business in a state where the next governor can just pull the rug out from under you?

[Richard]

After reading the link posted by packman41 it seems as though the return on investment rises dramatically when local hires are used,so maybe it can be tweaked, geared on that aspect.

[DetroitDad]

Attachment 8875

I understand the need to make cuts, but think this deserves a triple look, and here is why;

Michigan and her cities have a pretty horrible reputation, and need to turn things around, and advertise it. I think these credits and the film industry are an asset in our long term portfolio. Cuting these film credits may help us now, but could hurt us in the future.

This is a long term asset that must mature in both jobs and the affects of having America's cultural trend setters, artists, and entrepreneurs in our backyard, watching our every move, and seeing the oppurtunities for themselves. Throwing this away could be minimizing risk, or it could be throwing away Apple Computers stock in 1988 in order to save a few bucks. 1988 was a year before Apple released it's first laptop.

[rjk]

They will ,somebody before as a push or incentive to bring the film industry into MI put the bid at 42% so now the next state will say okay we will give you 42.5 % when you are dealing will multi millions that is a chunk of change.

When will they? This April it will be three years since this tax incentive plan started and I don't see any other state approaching our 42%. If imitation is the sincerest form of flattery I don't see any other state following our lead. When you have a great idea people follow it, they don't sit back and do nothing. With our 42% are we just the smartest people in the room and all the other states don't get it?

[JBMcB]

Throwing this away could be minimizing risk, or it could be throwing away Apple Computers stock in 1988 in order to save a few bucks. 1988 was a year before Apple released it's first laptop.

I understand your analogy, but I don't think you want to mention the Macintosh Portable as an example of a stock-boosting success.

Maybe late 2001, post-9/11 and right before the first iPod was launched...

[DetroitDad]

When will they? This April it will be three years since this tax incentive plan started and I don't see any other state approaching our 42%. If imitation is the sincerest form of flattery I don't see any other state following our lead. When you have a great idea people follow it, they don't sit back and do nothing. With our 42% are we just the smartest people in the room and all the other states don't get it?

Sometimes, one man's garbage is another man's treasure.

[DetroitDad]

I understand your analogy, but I don't think you want to mention the Macintosh Portable as an example of a stock-boosting success.

Maybe late 2001, post-9/11 and right before the first iPod was launched...

Let's not let silly facts get in our way.

Multipointed statements slide right by them.

[Fnemecek]

Well the Michigan State Senate Fiscal Agency does not agree with you.

I read that report when it first came out. The difference between the two is that MSU takes into account revenue from secondary spending whereas the SFA does not.

As for the cost per FTE job, the issue there is that they include tax credits spent with vendors [[caterers, hotels, car rental, etc.) but do not include the jobs associated with them.

If one includes all of the jobs, all of the benefits, and all of the costs then the tax credit is a good deal for Michigan taxpayers.

[Richard]

Surrounded by states with tax incentives such as New York’s 30 percent [[35 for productions in New York City), Massachusetts’s 25 percent, and Rhode Island’s 25 percent [[for projects over $300,000), what does Connecticut have to offer? Heller continued, “Our 30 percent credit on projects over $50,000 is extremely competitive. Within a two-hour drive you’ll find mansions, depressed areas, farmlands, cities, and so many locations for a lot of looks.”
Regarding any pressure or competition brought on by neighboring states, Heller said, “New England has become a production center again, and I try not to look at it like a competition. We encourage producers to find the best locations possible for their work. While our tax credit is larger than that in Massachusetts, there’s a 40-42 percent rebate in Michigan, although it caps above the line. We cover above and below, so it’s one of the most competitive in the country.”

http://www.newenglandfilm.com/magazi...es/2009/02/cpc

[Packman41]

Yes, I clicked your link and what did I see on page 10 of the report?

"Total Net Impact on State [[Public & Private)" - estimated, dollars in MILLIONS

FY 2008-09 +$81.7
FY 2009-10 +$208.6
FY 2010-11 +$263.2

so I guess pumping over $200 million a year into the state economy is irrelevant to you...

I think you misunderstood the term IMPACT. It should not be confused with REVENUE. Impact means a COST to the State for this program. Beside looking at Table 1 on page ten you also need to read the explanation on page 9

"Because the full cost of the tax credits is carried by reductions in General Fund/General Purpose [[GF/GP) revenue, while much of the revenue increase expected is directed toward the School Aid Fund, the REDUCTION in GF/GP revenue is even larger, totaling $28.2 million in FY 2008-09, $100.7 million in FY 2009-10, and $125.7 million in FY 2010-11."

So, yes I think this large cost to the taxpayers of the State is relevant.

[Fnemecek]

So, yes I think this large cost to the taxpayers of the State is relevant.

You mean, the "large cost" that is created by ignoring 80% of the tax revenue generated by it?

Yeah, funny thing. If one ignores 80% of the revenue something generates then even the most profitable companies in the world are worthless money pits.

[Fnemecek]

When will they? This April it will be three years since this tax incentive plan started and I don't see any other state approaching our 42%. If imitation is the sincerest form of flattery I don't see any other state following our lead. When you have a great idea people follow it, they don't sit back and do nothing. With our 42% are we just the smartest people in the room and all the other states don't get it?

The biggest reason for why no one has one-upped Michigan on the tax credit game, in my estimation, is the fact that there's been talk of repealing the tax credits since the day they were enacted. None of the other states seem inclined to change their offer since it constantly seems like our program is going away. Instead, they are changing their programs so that they're in a competitive situation regardless of whether or not Michigan stays the course.

For example, under the Michigan program, film studios have spend all of their money and then wait several months to a year before they get their check. Other states are offering a smaller amount of money, but delivering it much faster than Michigan.

New Mexico and several other states, for example, will get filmmakers their rebate within 90 days. Georgia and a couple of others have set up programs so that they can get their money before they even start filming.

[Pam]

http://www.rickswrong.com/

Help us change Governor Snyder’s mind on this important issue for our state. Please sign our petition, tell us your stories or thoughts so we can show him how important this is to our citizens and donate so we can continue our work on this initiative and get ads on the air in the future. Together, let’s change his mind and save this growing and profitable business in Michigan.

[Detroit Stylin]

I hope everybody's ready to be blown away....

[Fnemecek]

I never thought I'd say it, but I miss Jennifer Granholm. I hated her when she was in office, but her successor makes her looks so much better by comparison.

[DetroitPole]

You have two competing gas stations on the same corner. One of the owners decides that in order to have a leg up on his competition he will try lowering his prices by 5 cents. The competition sees that he's losing customers so he lowers his by 10 cents. The owner that originally lowered the price figures the only way to compete is to lower his price by 5 cents more. In the end neither gas station owner benefits.

It's well past my bed time =). Goodnight.

What the governor, and Michigan, has failed to understand is that there is more to a business decision than just tax rates.

Take your scenario: If one gas station is staffed by uneducated assholes and the lot is full of potholes and crime-ridden, while the other is staffed by friendly, knowledgeable attendants, clean, safe and full of amenities, but a little more expensive, where will people go?

And which one will people want to work at?

We have no decent, livable big cities, besides Ann Arbor, which isn't really a big city. Can you guess why that is? One of those useless research universities that the governor wants to cut funding to. A third of the population of Michigan is illiterate. Our share of people with advanced degrees is below the national average. There is no transit to speak of anywhere.
Yeah, some parts of Mihcigan are pretty, and we have some lakes and rivers, but this isn't Mars - other places have that too. We can strategically incentivize companies to come here, or invest heavily in education and communities to improve our situation. Then we can retain the talented, educated people who won't have to look elsewhere to not have to work at Wal-Mart.
Instead Snyder does the opposite.

[LeannaM]

What I don't undrstand is that if this is so great for Michigan why hasn't some other state gone above Michigan's 42% production-cost tax kickback?

Missouri's is 35% and it [[from what I have read) was a great return on the investment.

Unfortunately the governor is threatening both the film credits and the historic preservation tax credits. Both seem pretty worthwhile, but I guess in a recession that doesn't matter. That said, that doesn't mean that every tax incentive program is worthwhile. I guess you have to look at each individually.

If it brings more revenue than it costs then it should be worth it.