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Budget For Film Incentives Shrinks To $5.9M In Agreement

June 2, 2015

An agreement reached on next year’s film incentive funding would essentially bring spending for the program to $5.9 million.

That’s in stark contrast to what the Michigan Film Office (MFO) started this fiscal year off with — $50 million. The negative supplemental earlier this year brought that number down to $38 million.

Gov. Rick Snyder had proposed restoring the film incentives back up to $50 million in his Fiscal Year 2016 budget recommendation, but in the conference report for the general government budget — SB 0122– signed Tuesday the film incentives gets a one-time appropriation for $25 million. 

But $19.1 million of that is slated to compensate the state for guaranteeing debt on a Pontiac film studio. The bond payments made by that studio — Michigan Motion Picture Studio — have been backed by the state’s retirement system if the studio fails to make those payments.

No one with Michigan Motion Picture Studio was available to speak today, the person answering the phones at the facility said. 

Terry STANTON, spokesperson for Treasury, said $1.05 million in interest has been paid out by the state retirement systems as a result of this deal, which he noted was done under former Gov. Jennifer GRANHOLM’s administration. 

Stanton said $18 million is the outstanding principal, so $19.05 million would resolve all obligations of the state’s retirement systems. 

Elsewhere in the budget conference, the General Fund appropriation of $237,100 for running the MFO was slashed completely. The rationale was that state law allows for capture of 4 percent of film incentive appropriations for administrative costs. 

If that’s the case, it would presumably leave the MFO with even less than the $5.9 million to dole out to film projects next year. 

Jenell LEONARD, director of the MFO, said it’s not clear yet how much of that 4 percent will be needed for administrative costs. Four percent of $5.9 million equates to $236,000, just a shade under the administrative funding set for the chopping block. 

When asked if $5.9 million is enough to run a film incentive program, Leonard said, “We work within the parameters of the legislation and the appropriation that they give us, and we will work within those parameters and also modify ourselves to further support and grow the film and creative industries moving forward.” 

Leonard also was asked if having a smaller incentive pot to draw from scares away projects. She said it depends on the project, as the state is still pretty competitive in terms of its incentive rate. 

“For the larger productions, they’re looking for a larger incentive to come, but there’s also . . . a lot of independent films, a lot of small Michigan-based films also that would still need benefits from the smaller incentive amount,” she said. 

Leonard said the state’s film and creative industry shouldn’t be defined by the state’s incentive program, but the positive impact the industry can bring the state. 

The film incentive budget agreement comes after the House voted to completely gut the program earlier this year.  Snyder has previously said that’s not the “appropriate answer.” 

Yet, opponents have sought to end the program or shift its funds to roads, something that House Speaker Kevin Cotter’s (R-Mt. Pleasant) road funding plan adopted.

Last week, the Mackinac Center and Michigan Chamber of Commerce — two outspoken film incentive opponents — released a poll showing public preference for shifting money from movies to roads. 

According to the poll, 66 percent of respondents said they would support putting the state’s film incentive funds toward fixing the roads, while another 25 percent said they were opposed to that idea. 

The poll was commissioned by the Center and the Chamber and done by Mitchell Research & Communications. It consisted of 600 likely voters in the 2016 general election — with 402 landline respondents and 198 cell phone respondents — and a margin of error of 4 percent. 

The budget agreement on film incentives comes less than a week after MFO unveiled its strategic plan. 

In announcing the plan, the MFO said it “aims to chart a long-term course largely unaffected by budgetary changes, while building partnerships with private-sector entrepreneurs and strengthening alliances with the state’s educational community.” 

Leonard touted several initiatives the MFO plans to partake in that aren’t necessarily tied to funding, like working with schools training Michigan’s upcoming creative classes, and pursuing public-private partnerships to grow the state’s digital media sector.

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