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Bill to end film incentives poised to advance next week

March 3, 2015

A proposal to end state financial incentives meant to lure film and TV production companies to Michigan will get its first vote of support next week, according to the plans of the House Tax Policy chair.

Although at least five bills have been filed since 2009 to end the film incentive program, which could hand out up to $50 million this year, none of those five have ever made it out of committee.

That could change next week as Tax Policy Chair Jeff FARRINGTON (R-Utica) plans to hold a committee vote on HB 4122, which would sunset the incentive program.

Today, Farrington’s committee took about 90 minutes of testimony on the bill, sponsored by Rep. Dan LAUWERS (R-Brockway).

The incentive program has been in place since 2008. In committee today, representatives of the film industry and workers who’ve benefitted from the program argued that it should stay in place because it’s a positive for the state’s economy.

Meanwhile, the Michigan Chamber of Commerce, the Mackinac Center for Public Policy and a handful of Republican lawmakers laid out the arguments against the program, saying it’s not worth the $50 million annual investment.

Every seat in the meeting room was full with about 100 people in attendance. Outside, others watched on TV from a spill-over room.

Many of those in attendance were members of Teamsters union who’ve worked as drivers or location scouts for film productions in the state.

Pat DOUGHERTY, of Teamsters Local 337, said the film industry has directly benefited members of his union. Before the industry began putting people back to work, many of the drivers were unemployed.

“At the time they were losing their houses. They weren’t paying taxes. There was a huge strain on their families,” Dougherty said. “I’m happy to say that at this point in time, they’re buying second houses, they’re paying taxes. Their kids are going to our schools.”

Dougherty said while the jobs may be part-time, workers can make six figures just being on the job for six or seven months of the year.

Melissa PATACK, of Los Angeles, represented the Motion Picture Association at the meeting, saying that the production of a Transformers movie in Michigan employed about 1,200 people from the state. The production of Batman V. Superman employed about 758 Michigan residents, she said.

Patack painted the incentives as a fact of life in the competitive world of trying to lure movies to a state.

“As long as these are a factor, it would be irresponsible for the company not to include that in their decision-making process,” Patack said of the incentives. “That’s just the reality of the world that we live in.”

On the other side of the matter, Rep. Lee CHATFIELD (R-Levering), said the state has invested about $500 million in the film production business over the life of the incentive program. Meanwhile, he said, according to the Bureau Of Labor Statistics, from 2001 to 2013, the number of full-time film industry jobs in the state has increased by only 24 jobs.

“I think the jig is up on tax credits,” Chatfield said. “They’re not effective.”

Opponents of the incentive program argued that the money could better be used for roads or a variety of other programs.

Tricia KINLEY, senior director of tax and regulatory reform for the Michigan Chamber, noted that supporters of the programs have argued that Michigan needs to keep its incentives to compete with other states.

“This is an arms race Michigan will never win,” Kinley said. “The state will never keep up with the demands of Hollywood executives. This is by and large a transient industry with no loyalty to our state and our residents.”

Lauwers said “fiscal responsibility” was his motivation to introduce the bill.

As the state faces billions of dollars in business tax credits that will be taken advantage of in the next years, Lauwers said it’s “common sense” that the state shouldn’t extend its obligations.

After the meeting, Farrington said he believes he has the votes to advance the bill next week.

Asked about the arguments made during the meeting, Farrington responded, “It’s the same stuff I’ve been hearing for four years.”

Farrington said House Republicans’ support for the bill is “strong.” According to multiple sources, Democrats are divided on how they’d vote on the bill.

The committee’s minority vice chair, Rep. Jim TOWNSEND (D-Royal Oak), said this morning that he’ll oppose the bill.

“We are rifle shooting one really tiny part of the business incentive program,” Townsend said. “You’d never budget that way. We should be looking at all of these incentives and decide how they perform in relation to each other. That’s how you budget. That’s how you make public policy.”

In committee today, Joel FREEMAN, vice president of government affairs at the Michigan Economic Development Corporation (MEDC), said MEDC does not have a position on the bill.

However, Freeman specified that MEDC supports the Governor’s budget proposal for next year, which includes $50 million for the film incentive program.

During the meeting, Townsend said it “doesn’t make any sense” how the administration could be neutral on a bill to get rid of the program while supporting the $50 million in the budget proposal.

“Not neutral, no position,” Freeman said of the administration’s stance. “But yes, I understand it’s one of the nuances.” 

Townsend replied, “Boy, that’s a nuance.” 

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