The Michigan Legislature is primed to expand the state’s film incentive program, which has only been authorized to spend $25 million this year instead of the more than $100 million it had been spending. The idea of rewriting the law was to allow the film office flexibility to use these funds to get the best bang for the buck. While these programs are ultimately a harmful waste of taxpayer money, the current legislation strips the ability of the state to be flexible. Without this, legislators will be tempted to spend beyond their limits in pursuing their Hollywood dreams.
The Senate-passed version of the bill gives film productions shooting in Michigan a check for up to 32 percent of their Michigan expenses. But the state doesn’t let the Michigan Film Office decide how much each company may receive during negotiations — it is set by statute. Discretion can only be applied in judging whether or not to award the subsidy instead of how much to award.
Because of this, the state is likely to run out of its spending authority, depending on how many films are awarded assistance. The state’s subsidy rates are still higher than many states, and other states are also reigning in their programs.
The caps on economic development programs are easily changed. In 2009, for example, the state’s flagship economic development program approached its limits for the number of deals it could award. The Legislature simply increased the limits.
It’s just too easy to demagogue this issue to expand the program. Film subsidy supporters will parade around the productions that applied but could not get incentives and sob about all the people who could be employed (while ignoring jobs lost due to the taxes that must be paid to support the subsidy). While this doesn’t guarantee that legislation will be added, it’s an argument that tempts Lansing policymakers.
The state should eliminate this game by legislating that incentives can be awarded only up to the state’s maximum rates. While policymakers' best move would be to eliminate this expensive and unfair program, if they choose to keep it around they should at least ensure that they create a program that allows the state to economize.
Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.
Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.