Michigan’s making movies 2 years after adopting incentive program, but questions remain

2 years after tax law, Michigan’s making movies

LANSING, Mich. — Michigan’s bid to become a star in the movie business is drawing mixed reviews.

Two years into one of the most generous tax incentive programs in the nation, the state has lured some big-name productions, from “Gran Torino” with Clint Eastwood to portions of “Up in the Air” with George Clooney.

Since the measure became law on April 7, 2008, 89 movie or TV productions have been completed. Hotels, caterers and others getting some spin-off business can’t wait for the industry to expand.

But some lawmakers are questioning whether Michigan is getting its money’s worth.

The tax credit program is projected to cost the state nearly $69 million for projects completed in 2009, not counting incentives given for permanent infrastructure projects, according to the Michigan Film Office. The potential annual bill is higher — more than $100 million — but some projects weren’t finished and won’t get the tax credits.

A few lawmakers would prefer to use part of the tax incentive cash to help fill in a state budget shortfall of at least $1.5 billion headed into the fiscal year starting Oct. 1. Other detractors say the jobs created are just temporary.

Janet Lockwood, director of the Michigan Film Office, disagrees with the program’s critics. She says Michigan’s film industry is already contributing to the state’s economy and will become an even bigger player.

“You have to remember, we’re still building a whole new industry in the state of Michigan,” Lockwood said. “It’s going to take some time to evolve. We all know that. But I believe this program is working.”

Michigan allows companies to file for tax credits worth up to 42 percent of a film’s production costs. Sixty-two of the 126 companies that applied in 2009 were approved for the credits, the state’s film office said. Industry expenditures were estimated at nearly $224 million last year, up from $125 million in 2008.

The Michigan Film Office says companies reported nearly 3,900 temporary jobs attributable to 2009 productions. That would be the equivalent of nearly 1,600 full-time jobs on an annual basis.

The transient nature of the business draws some criticism. East Lansing economist Patrick Anderson has said all Michigan has to show for the film tax credits are “one or two buildings and a whole lot of ‘Clint Eastwood slept here’ signs.”

Rep. Pete Lund, a Republican from Macomb County’s Shelby Township, says the program subsidizes Hollywood — and that it’s tough to take when lawmakers are forced to make harsh budget cuts.

“I don’t see how come we’re cutting education and we’re laying off police officers all so that we can subsidize an industry that basically is headquartered outside the state of Michigan,” Lund said. “I don’t think there’s any industry we’d be getting our money’s worth out of when we’re subsidizing it at the rate of 40 percent. That 40 percent has to come from somewhere.”

He says that means businesses are paying higher taxes or benefits to communities are being cut.

Backers say that as the industry matures, the state will add more full-time, permanent jobs.

Production facilities are started in Walker near Grand Rapids, Manistee in the northwest Lower Peninsula and Allen Park in suburban Detroit. More are planned.

The ripple effects are also apparent. Hotels in the Ann Arbor-Ypsilanti area, which has seen a lot of filming activity, reported roughly 20,000 hotel room nights attributable to the film industry last year. Party rental companies, caterers, gas stations and high-tech equipment firms have benefited from shoots across the state.

“It gave my guys some overtime that they were happy to get,” said Frank Rymill, co-owner of DeSantis Trucking in Warren — a company that did site cleanups for the sets of “Red Dawn” and a few other projects. “It’s the trickle-down effect. They’re going to run to the store, they’re going to need this, they’re going to need that. … It’s been all welcome work. I’m hoping to see more.”