State Sens. Mike Kowall (R-Commerce, Highland, Milford, Walled Lake, Wixom, Wolverine Lake, White Lake, Orchard Lake, West Bloomfield) and Virgil Smith (D-Detroit) are on opposite ends of the political spectrum in just about every policy debate in Lansing, but they have come together on a new piece of legislation that would restore the Michigan film credit program that was eliminated in a host of bills that, among other things, strip most retirees of the tax exemption on their pension income.
When the state’s film industry incentive program was enacted, it was included in the Michigan Business Tax, which is on the chopping block under the omnibus legislative package lawmakers agreed to largely on party lines earlier this month. That left some concerned that no film incentive would continue in the state.
The legislation would allow for up to a 42 percent tax credit on each “separate direct production expenditure” in one of 136 core communities, up to 40 percent in a community other than a core community, and up to 30 percent for each separate qualified personal expenditure — much like what currently exists for those looking to shoot their next big production in the Wolverine State.
According to Kowall, what Senate Bill (SB) 383 would do differently is provide “control mechanisms” where few now exist. The state treasurer has to concur with the amount of the tax credit doled out by the Michigan Film Office, and under the legislation, the credits could be flexible — say, only a 20 percent credit on production expenses rather than the firm 40 or 42 percent figure.
“It takes the existing credits,” Kowall said of the current limitations on tax credits for film productions. “Right now, there’s no control mechanisms in it at all. (The bill is) going to give the MEDC (Michigan Economic Development Corporation) the abilities to go in and negotiate (the amount of the credits).”
So far in 2011, the Michigan Film Office has doled out $13 million in total tax incentives on $31.27 million in approved expenditures by nine projects, with the expected hiring of 886 Michigan workers — the equivalent of 196 full-time jobs, the office reports.
Michelle Begnoche, the Michigan Film Office’s communications advisor, said that while the incentive program itself hasn’t been eliminated, it will not be a tax credit anymore.
“It will be some other form of appropriation,” she said.
In order to be eligible for the current film tax incentives, at least $50,000 must be spent in Michigan.
Under current law, according to Kowall, the 42 percent credit would apply no matter how much of a Michigan connection — or local economic impact — a film production has.
“Say you filmed just a little bit of the film here, they woul1d get the full 42 percent (tax credit),” Kowall said, adding that tying the amount of the tax credit to how much of a film production actually occurs in Michigan will “encourage more production here.”
Kowall also said his wife, state Rep. Eileen Kowall (R-Highland, White Lake), wants to get the ball rolling on having the Pure Michigan logo on “anything that’s produced here in Michigan, say a film.”
Gov. Rick Snyder has called for capping the film incentive at $25 million, and Begnoche said the Michigan Film Office has “kind of been working in that $25 million budget area since then.”
Snyder and Republican legislative leadership announced on Thursday, May 19, that a $25 million deal had been reached for the film program as part of the state’s Fiscal Year 2011-12 budget.
The Oakland County core communities include Pontiac, Royal Oak, Hazel Park, Ferndale, Oak Park and Southfield. The Michigan Film Office reports that, since the tax credits took effort three years ago, a total of $374 million in incentives have been doled out on about $952 million in total qualified expenditures by 214 productions in the state.
Most recently, the Michigan Film Office announced that the made-for-television production of “Have a Little Faith,” based on Mitch Albom’s best-selling book, has been awarded $2.35 million in incentives on its qualified Michigan expenditures; the movie is expected to hire 226 Michigan workers.
Locally, HBO’s series “Hung” — which has shot in Walled Lake and West Bloomfield — was awarded $1.06 million last month in incentives on $2.65 million in expected Michigan expenditures.
SB 383 has been referred to the Senate Economic Development Committee, which Kowall — who has been holding public hearings recently on the film incentive — chairs.
“This is really just a measure to get us through the end of the year until the new form takes effect,” Begnoche said. “Once the new tax structure takes effect, whatever the new form of the film incentive is in will go into effect, as well.”
A message left in Smith’s Lansing office was not returned prior to press time.