DETROIT (WWJ/AP) – Michigan’s starring role as a darling of the movie industry may be about to end up on the cutting room floor. If Gov. Snyder’s budget passes, Michigan will lose its coveted role as backdrop to the film industry.
Gov. Rick Snyder’s first budget proposal calls for the elimination of the film tax incentive program – one of the most generous in the nation – and orders a $25 million cap on film credits starting later this year. Current commitments would be honored.
State lawmakers still need to approve the changes, but if they go through as proposed, it would “definitely devastate the state’s industry,” said Ken Droz, a former Michigan Film Office spokesman who now works as an industry consultant.
“A $25 million cap could cover only one or two movies with minimal job creation and no permanence of infrastructure,” Droz said. “It won’t reduce it to cottage industry status, but more like half a tool shed.
“And you will also see a massive trail of out-migration from the state.”
Snyder says Michigan no longer can afford the credits, noting the state faces a $1.4 billion deficit in the upcoming budget year. He also says the incentives aren’t needed because he’s dramatically lowering corporate taxes on all businesses, which still makes Michigan a good place to do business.
“Our goal here is not to create undo havoc, but to recognize there is an industry here,” the Republican governor said Thursday after releasing his budget proposal. “But it needs to move out of the incentive model at some point.”
Michigan’s current program was begun by Democratic Gov. Jennifer Granholm as a way to lure jobs – any jobs – to the hard-hit state. It refunds 40 to 42 percent of a company’s qualified expenditures and also covers commercials, TV shows, documentaries, video games and other film work.
Big Hollywood names, from George Clooney and Clint Eastwood to Bruce Willis and Drew Barrymore, have plied their craft during this golden age of Michigan-based movie-making.
In all, more than 130 projects have used the Great Lakes State as a backdrop and spent $648 million in the process since the incentives took effect in April 2008, according to figures provided by the film office, which administers the incentives.
Last year alone, the film office received 119 applications and approved 69 productions. Of those, 48 productions wrapped, and more than $300 million was spent in the state.
Jerry Zandstra, who produced and acts in the “The Genesis Code,” said his production company would have taken the feature film’s production’s elsewhere, but Michigan’s credits were too good to pass up.
“The film incentive made `The Genesis Code’ possible in Michigan,” Zandstra said. “Without the incentive, we would not have been here. We would have been in another state.”
“There are 40-some other states that have tax incentives. Michigan isn’t the only one, so Michigan competes to draw film business here with these 40 other states,” Zandstra said. “The states that have no incentive program, guess what: They don’t do a lot of business.”
Michigan isn’t alone, however, in considering an about-face in luring film productions.
In Missouri, Democratic Gov. Jay Nixon has recommended dropping funding for that state’s film office, and a government commission wants to dump the existing film production tax credit of $4.5 million, which represents the total amount the state would pay out per year. Both say the incentives don’t bring enough positive returns to Missouri, leaving little to show for its investment.
Detractors of film incentives in Missouri, Michigan and beyond argue such programs often succeed in bringing business and attention, but the majority of jobs created don’t last beyond the time it takes to make the movie.
Pixofactor Entertainment’s Sean Hurwitz argues that’s not always the case.
The CEO of the digital content developer is renting 6,500 square feet of formerly vacant space in Royal Oak, hired 25 employees and just landed a contract to produce a golf-themed Wii game, mobile app, website and DVD.
Hurwitz, whose company earned a 40-percent tax credit from the state for the project, plans to hire another 75 workers by the end of the year and 100 more in 2012.
But if the governor’s budget changes become a reality, next year’s hiring plan probably won’t materialize, Hurwitz said.
Rodney Ouellette, co-founder of Harrison Township-based S&R Event Rental, also has concerns about the proposed change, saying he’s “whipping off a letter” to his state representative to urge a “no” vote on the governor’s budget.
“They’ve changed the whole game plan, and we’re going to get nothing but low-budget independent movies that don’t spend the money. It’s very disappointing,” said Ouellette, whose Macomb County business supplies executive bathrooms, tents, air conditioning and heaters to sets, including for the ABC series “Detroit 1-8-7” and the science-fiction films “Real Steel” and “Transformers.”
S&R Event Rental has earned $1.7 million in revenue since the incentives started and has hired five full-time employees with benefits and an additional 15 part-time workers.
“With it gone, I doubt I’ll be able to carry that,” Ouellette said. “So, is this now going to push me to Atlanta? I have to look at my options.”
(Copyright 2011 by The Associated Press. All Rights Reserved.)