Blowing the Lid off Film Subsidy Duplicity

Grand Rapids Press reporter Chris Knape has done excellent reporting on a potential $10 million taxpayer subsidy for the investors in the "Hangar42" film studio project that Gov. Jennifer Granholm has boasted of, and in a June 6 editorial the paper captured the essence of what concerns people about it. As reported by the Mackinac Center, the 25 percent "capital investment" subsidy is based on a $40 million purchase price for the property claimed by the deal's promoter, yet the same building was listed for sale at just $9.8 million in February.

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Here's how the GRP editorial characterized all this:

"That makes the sudden price spike immediately suspicious, especially since the bump would enable the buyer to cover the original asking price completely with state money. It leaves the impression of a questionable collusion between buyer and seller, an impression that could be better addressed with more information from the sealed tax credit application."

Meanwhile, many in the press and elsewhere continue to call the cash subsidies "tax credits." This in spite of analysis by the Senate Fiscal Agency suggesting that most of the deals involve the state writing checks to film producers for millions of dollars. The iron wall of government secrecy that surrounds the entire film subsidy adventure prevents residents (or even lawmakers) from knowing exactly how much is being forked over.

That is no reason to reward the state Film Office for its secretiveness by mischaracterizing the subsidies as "mere" tax breaks. An editorial in the Livingston Daily went to the heart of this duplicity:

"The mere fact that the film (tax credit) program is misnamed is a red flag that suggests that deception is valued more than accuracy."

Surprisingly in this era of Tea Party resentment against taxpayer handouts to crony-capitalist fat-cats, lawmakers continue to defend the program, even new ones who weren't among the 108 House members and 37 Senators who voted for the subsidies.