Film industry incentive reform

A lakes area lawmaker has co-sponsored a bill that would maintain a state film industry incentive program, albeit at a scaled-back level. The proposal is grounded in a fair measure of reason, making it well worthy of adoption.

Gov. Rick Snyder and GOP legislative leadership announced last week that a deal had been reached on a $25-million annual film incentive program as part of the state’s Fiscal Year 2011-12 budget. The state’s film tax credit program had been written into the statute that provided for the Michigan Business Tax (MBT), which lawmakers recently axed via an omnibus legislative package outlining much of the state’s next fiscal year budget.

That prompted state Sens. Mike Kowall (R-Commerce, Highland, Milford, Walled Lake, Wixom, Wolverine Lake, White Lake, Orchard Lake, West Bloomfield) and Virgil Smith (D-Detroit) to introduce a bill to preserve a film industry incentive program.

Senate Bill (SB) 383 provides for up to a 42 percent tax credit on each “separate direct production expenditure” in one of 136 core communities, up to a 40 percent credit for an expenditure in a community other than a core community, and up to a 30 percent credit for each separate qualified personal expenditure.

At least $50,000 must be spent in Michigan to be eligible for the current tax incentives. According to Kowall, a 42 percent tax credit applies, regardless of a project’s economic impact.

Under the bill, the state treasurer has to concur with the amount of the tax credit doled out by the Michigan Film Office, and credits would be flexible — a production may receive only a 20 percent credit rather than the full 42 percent credit, for example.

That’s one of the best aspects of SB 383. It empowers the Michigan Economic Development Corporation (MEDC) to negotiate tax credit levels based on each project. Under the current program, a production that lasts only a couple days could receive a 42 percent credit, just like projects lasting a few weeks. It makes sense for the state to provide incentives based on a project’s economic impact — including the employment of state residents and expenditures on goods and services. Those productions that make a greater, longer-term commitment to the state deserve a greater tax credit than a project that lasts a day or two.

Another advantage to this approach is that it encourages longer-term projects. The more that’s spent on a production here, the greater the financial incentive for the project. That should lead to more jobs for Michigan residents and more dollars pumped into the state’s economy.