Michigan's Film Incentive Program Has Been A $450 Million Bust

Michigan's Film Incentive Program Has Been A $450 Million Bust
March 24, 2014

Michigan has spent $444.7 million on the film subsidy program since 2008.

In 2011, Michigan changed its open-ended film incentive program to a capped $25 million annual subsidy. Since then, it’s been increased to $50 million. While the executive budget this year calls for another $25 million for this program, it should be eliminated entirely.

All told, the state has devoted $444.7 million to film productions from both the tax credits and appropriations, according to the state treasury and budget offices.

Despite spending hundreds of millions of dollars, the program is not designed to establish a permanent film industry. Approved film productions spend money in the state and leave. The state sends them a check based on what they spent. The hope is that if you keep priming the pump enough, someone will stay of their own goodwill.

Temporary Industry Boost

That is unlikely to occur because other states — and even the agglomeration of film producers in California — also are offering their own incentives. Producers threaten to leave states that think about pulling back on incentives.

This is borne out by the economic reports on the film industry in Michigan. While the industry is not large enough to get monthly reports from the Quarterly Census of Employment and Wages, the survey lists 1,768 people employed by "motion picture and video production firms," in 2012. That is 0.05 percent of the total employment covered by the survey.

Total employment also is down from 2011 when 2,129 people were employed in this industry, though at no point from 2001 to 2012 were fewer than 1,300 or more than 2,200 people employed in this industry.

Supporters contend that film producers tend to use employee leasing agencies to hire workers. But that's the point — despite this substantial investment of taxpayer resources, there is no permanent film industry in Michigan. The state has so far approved $444.7 million in incentives with little to show for it.

James M. Hohman (hohman@mackinac.org) is assistant director of fiscal policy at the Mackinac Center for Public Policy. Used with permission of mackinac.org.