Ernst & Young Report Shows Positive ROI For Film Tax Credit
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Just as the Snyder administration is thinking of sharply cutting it, a report showing a positive return on investment from Michigan’s film tax credit has been released from the accounting firm Ernst & Young.
Specifically, the report found that the state’s investment of $84.7 million in credits generated more than half a billion dollars in economic activity and created nearly 4,000 high-paying jobs.
The report was commissioned by the Convention and Visitors Bureaus of metro Detroit, Ann Arbor, Grand Rapids and Traverse City.
CVB officials emphasized that there’s already been a positive ROI from Michigan’s film production tax credit, despite the fact that the program has been in place for less than three full years.
“When we hired Ernst & Young’s Washington, D.C., office to look into the real financial picture behind Michigan’s film production credit, we weren’t sure what the report would show,” said Larry Alexander, president and CEO of the Detroit Metro Convention and Visitors Bureau. “When the final report was presented to us last week, we were delighted to learn that this fast growing new industry had already created 3,860 full time equivalent jobs for Michigan residents in 2010, at an average salary of $53,700 per year, and generated an estimated impact on statewide sales of $503 million in 2010 alone — or $5.94 per dollar of net credit cost.”
The report looked at the net cost of the film, TV and digital gaming production credit by subtracting the estimated new taxes, fees and reduction in unemployment insurance benefits experienced by the state of Michigan from the earned credits in 2009 and 2010, producing a figure of $52.5 million in 2009 and $84.7 million in 2010.
“Diversifying Michigan’s economy by investing $84.7 million — and generating over a half a billion dollars of economic activity and nearly 4,000 high paying jobs — sounds like a pretty good deal to us,” according to Alexander.
More at www.visitdetroit.com.
Meanwhile, Troy-based NextWave Media Solutions said its CEO, Nancy Skinner, has a new interview on the topic with newspaper columnist, radio host and best-selling author Mitch Albom.
NextWave is a business incubator with an attached TV and radio studio.
“We look like fools now in Michigan,” Albom says in the interview. “He (Snyder) pulled the tablecloth from underneath a lot of investors” who were relying on Michigan to keep the credit in place until 2015.
When asked what effect this might have on other businesses who now can’t trust Michigan to honor its commitments, Mitch said, “I wouldn’t come here after that if I were a business.”
The entire interview can be seen on YouTube at www.youtube.com/watch?v=0YiX4ayMzoc.
NextWave said Snyder’s proposal to cut back the credit has already caused several movie projects to head for other states.