Rick Snyder, a Republican who was elected governor of the Great Lakes State on a platform to curb spending, wants to gut Michigan's film tax credit program, one of the most generous in the country. In his $45-billion budget plan, unveiled Thursday, Snyder proposed reducing or eliminating various state tax credits, including those awarded for filming.
If approved by the state's legislature, the move would be a blow to Hollywood, which has flocked to Michigan in recent years to take advantage of the generous tax break. Snyder has proposed setting aside a meager $25 million for film incentives from a jobs fund. In 2010, Michigan approved more than $100 million in film tax credits.
Since offering a film tax credit of up to 42% in 2008, the state has attracted more than 100 movie and TV productions, including "Transformers 3" and the new ABC cop drama "Detroit 1-8-7."
Spending on film productions in the state has mushroomed to $224 million in 2009 from $2 million in 2007, according to the Michigan Film Office.
"The Michigan Film Office remains open for business and will continue our work to grow Michigan's film industry,'' Michelle Begnoche, a spokeswoman for Michigan Film Office, said in a statement. "Under the governor's proposed budget, $25 million would be allocated for film incentives beginning in 2012. We will work within this framework to make our film incentives more Michigan friendly for homegrown businesses and entrepreneurs while continuing to attract key projects to the state."
Scrapping the current film tax credit, however, will make it hard for Michigan to stay competitive, said Jeff Begun, a partner in the Incentives Office, which advises companies on film tax credits. "Michigan is going to be relegated to a minor role in the film industry," he said.
Although wildly popular with filmmakers, Michigan's film program has come under fire as of late. A report by the Michigan Senate's Fiscal Agency last year concluded that nearly half of the expenditures that qualified for the state's media production credits did not affect the Michigan economy.
While most states have retained their film tax credit programs, and in some cases actually increased them, film subsidies are drawing more scrutiny as states grapple with massive budget deficits.
New Mexico's newly elected Gov. Susana Martinez recently proposed reducing the state's film tax credit to 15% from 25% as part of a plan to balance the state's budget.
Ohio Film Office Director Jeremy Henthorn was asked to resign last month as new Republican Gov. John Kasich took office. Iowa's new Gov. Terry Branstad plans to dismantle the state's incentives in the wake of a scandal there. Nick Paleologos, head of the Massachusetts Film Office, also recently resigned in a cost-cutting move.
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