Michigan's Budding Movie Industry in Jeopardy!

Michigan Senator Nancy Cassis (R-what else) who is the chair of the Senate Finance Committee was the only one to object to the tax breaks for movie industry in the beginning. Now she is trying to put a cap on those tax incentives. Republicans generally favor any tax break for rich people even when the public benefits are at best dubious, yet when a targeted tax break seems to be working, one lone senator could screw it up for the whole state. Read Mitch Albom's column on this at freep.com from Sun. March 29.
email the good senator at senncassis@senate.michigan.gov or call 888-38NANCY.

The tax incentives are one of the best things to happen in Michigan in a long time. How could anyone think that limiting the incentives would be a good idea? She is completely out of touch. I can't image enough people, even Republicans, getting on board with this idea to pass the Senate.

Even though she won't read it.

----- Original Message -----
From: "Ofc. N. Cassis" <SenNCassis@senate.michigan.gov>

Thank you for taking the time to contact me with your opinion on the
Michigan film credit. I think it is appropriate to provide you with
background and rationale on Senate Bills 404 and 405.

A year ago, the legislative package establishing the film credit was signed
into law by Governor Granholm, creating the largest film incentive in the
nation. I supported all of the bills in this 14-bill incentive package,
except for one. The 13 bills I supported would provide a credit for
infrastructure and job training expenditures, create the Michigan Film
Office, authorize the use of public property without charge for film
production, create three loan programs, and allow for a possible income tax
and investment credit and "high-technology activity" Michigan Economic
Growth Authority credits.

I opposed House Bill 5841 (Public Act 77 of 2008), which provides for a
40-42% refundable credit on production expenditures. A refundable credit
allows a production company to eliminate its tax liability and pay no taxes,
while receiving the remainder of the credit as a check from the state’s
general fund. When the bills were passed, the nonpartisan Senate Fiscal
Agency stated that, "The bills will decrease State revenue, mostly to the
General Fund, by an unknown and potentially significant amount."<1>

Over the course of the last year, new information has come to light about
Michigan’s economy and how the film credits are working. Michigan has
experienced the worst unemployment in the nation at 12 percent<2> and a
deepening economic recession. The Michigan state government faces a $1.5
billion budget deficit in the coming fiscal year.<3> Also, during January
and February the state received $200 million less in revenue than it had
expected.<4> And on top of all of this, the uncapped refundable Michigan
film credit continues to expend funds from an ever-shrinking revenue source,
adding to the growing deficit and creating very few sustainable jobs.

A recent report required by law, which Michigan State University compiled
for the Michigan Film Office, shows that 32 film productions occurred in
Michigan during the credit’s first nine months at a cost of $48 million to
the state general fund.<5> The Michigan Department of Treasury and the
nonpartisan Senate and House Fiscal Agencies have estimated that the film
credit could cost the general fund $100 million for the full 2009 fiscal
year and $150 million in fiscal year 2010.<6> The report also states that
the credits created 2,800 jobs. However, these jobs only lasted for an
average of 23 days. According to the Senate Fiscal Agency (SFA), when the
number is annualized the result is 254 jobs.<7>

With the difficult economic times that Michigan faces, the increasing
uncapped cost of the film credit jeopardizes other programs that the state
provides to its citizens. Whether providing a safety net for our most
vulnerable residents, keeping criminals behind bars, or funding schools and
higher education, failure to put a reasonable cap on the film credit could
take money from critical services.

Furthermore, without the cap the state cannot provide broad-based tax relief
for all of Michigan’s businesses. As chair of the Senate Finance Committee,
I have heard from businesses being forced to close their doors due to the
overwhelming burden of the Michigan Business Tax surcharge. Also, small
businesses, which create 80% of Michigan’s jobs,<8> have been forced to lay
off employees or cancel expansion of their businesses.

Therefore, bipartisan bills have been introduced to “right-size” the film
credit, while allowing Michigan to continue offering the most generous and
competitive film incentives in the nation. Importantly, these bills expand
the infrastructure credit from 25 percent to 30 percent, require that 90
percent of the employees on the production reside in Michigan, and apply the
credit to the production of television commercials. Encouraging the
construction of infrastructure in Michigan and expanding the credit to
commercial production will help create more permanent jobs for Michigan
residents. As with all legislation, these bills will be negotiated and may
change as they advance through the legislative process.

Please visit my website (www.senatornancycassis.com) for more information on
this issue and the many other initiatives I have sponsored. I have also
attached below a fact sheet with information on the bills and a list of
articles for your review.

I value your input and thank you for your interest in this issue.

Sincerely,
NANCY CASSIS
State Senator, District 15
Chair, Senate Finance Committee

My reply:
You are forgetting about what Republicans claim is the reason for tax
credits in the first place, and you are missing the residual effects of this
particular tax credit. The people who work on the movies have to live here,
eat here, be entertained here while in production. I have seen dozens of
condos in Downtown Royal Oak being leased for movie people, halls being
leased for production parties, catering, etc. I personally worked for a
contractor that installed blinds in the leased condos. You are looking at a
very small snapshot of the pluses, while providing all of the minuses. I
don't think it is a fair comparison. Give it a chance to work. I believe
your assessment is biased for some reason. Tax breaks for corporations
usually don't work. They didn't work for John Engler. This particular tax
credit seems to be bringing business to Michigan. Don't screw it up.

"It was Gov. Granholm's idea which means I must oppose it."

She stated the cost of the tax incentives but not the benefit. Film production brought in 100 million dollars in revenue last year, compared to the cost Cassis stated ($48 million). Seems to me that simple math would show that the film incentives brought in more than it cost. This doesn't even include the studios that will come in the future and the benefit of having an industry that attracts creative, young people to the area.