Curtains: The aftermath of vote to end Michigan's film tax incentives

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By Kurt Anthony Krug
Legal News

It was a sad day for many when the state Senate voted in late May to end Michigan’s film tax incentives 24-13 on October 1, 2016 and subsequently phase out funding to the Michigan Film Office by the end of 2018.

“Motion pictures, documentaries, television series, miniseries, interactive television, music videos, interactive games, video games, Internet programming, sound recordings, digital animation, and interactive websites all have to find a new place to be developed. Now that Michigan has axed the film incentives, all these productions, jobs, and young professionals will move out of (Michigan) and to Hollywood or Vancouver, Canada. What an incredible disappointment for our state,” said
Lindsay Warren, president/CEO of Lindsay Warren Consulting, a public relations firm in Royal Oak.

Warren was one of many fans who actively campaigned to save “Detroit 1-8-7,” the first TV series to be filmed and set in Detroit.

Initially, when the Michigan House of Representatives voted in March to pass a bill – HB 4122 – to end the incentives, the plan of the original incarnation of the bill was to end them on October 1 of this year and not October 1, 2016. However, a $25 million appropriation for the incentives and $400,000 for the MFO was included in the $54.5 billion budget for 2015-16 approved by the state Legislature and later signed by Gov. Rick Snyder on June 17. Of the $25 million to be allocated for the incentives, $19 million of that will go towards paying off the state’s investment from pension funds in a struggling Pontiac film studio.

This $54.5 billion budget, which is effective October 1, represents a $1.6 billion increase over the current 2014-15 spending plan. It includes modest spending increases on education and road repair, the latter being a very hot button topic in Michigan.

Rep. Dan Lauwers, R-Brockway Township, sponsored HB 4122.

“Repairing our infrastructure supports all Michigan families and businesses, not just one industry. Until we get the MEGA tax credits under budgetary control and establish a long-term solution to our roads, I believe this money is better spent on pavement rather than movie producers,” Lauwers said in a statement.

It has been a slippery slope for the incentives ever since they were signed into law under 2008’s Michigan Film Production Credit by then-Gov. Jennifer Granholm as part of her economic stimulus plan for Michigan, which was one of the hardest hit states in the economic recession. Originally, the incentives were to provide a 40 percent refundable movie tax credit for production costs spent in Michigan – 42 percent for movies filmed in any of Michigan’s 103 core communities – and considered some of the most generous incentives around.

In fact, many notable movies were filmed in Michigan thanks to these incentives, including 2009’s “Gran Torino,” starring Clint Eastwood; 2011’s “Scream 4,” starring Neve Campbell; 2011’s “Ides of March,” starring George Clooney; 2011’s “Real Steel,” starring Hugh Jackman; 2012’s “Red Dawn” remake, starring Chris Hemsworth and Adrianne Palicki; 2012’s “The Five-Year Engagement,” starring Jason Segel and Emily Blunt; 2013’s “Oz: The Great and Powerful,” starring James Franco; the third and fourth installments in the “Transformers” franchise; and next year’s eagerly-awaited “Batman v. Superman: Dawn of Justice,” starring Ben Affleck and Henry Cavill. In addition to “1-8-7,” 2013’s short-lived police drama “Low Winter Sun” also took place and was filmed in Detroit as did the comedy “Hung,” which ran from 2009-11. The sci-fi drama “12 Monkeys” was filmed in Detroit as well.

When Snyder took office in 2011, he was publicly opposed to the incentives and capped them off at $25 million later that year. This created plenty of uncertainty within Michigan’s budding film industry and impacted “1-8-7,” which was cancelled after one season and doing marginally in the ratings in the first place. This cap also forced filmmakers of “Marvel’s The Avengers” not to film 2012’s top-grossing movie in Michigan. Instead, the majority of it was filmed in Ohio.

“It’s a sad day that the incentives have ended. A lot of people are going to be affected by this. When they were first slashed (in 2011), I had to give up my dream of working in the film industry in Michigan; now it seems that everyone else will too,” said Eric Knop, of Dearborn, who was as a production assistant on “1-8-7” and currently works at a battery factory in Romulus to support his family.

Senate Majority Leader Arlan Meekhof, R-West Olive, voted to end the incentives, even though he advocated them. It was not an easy decision for him.

“I have been a proponent of the film incentive program; however, part of our responsibility as legislators is to prioritize spending based on what we hear from our constituents and there are simply priorities that rank higher than the film incentives. I am not happy to see the state move away from this fledgling industry, but we will preserve the film office and its functions to assist current projects,” said Meekhof.

Robert Fox, an English and media teacher at Ann Arbor Huron High School, is another one torn over the decision to end the incentives.

“Though I understand the short-term economic reasons behind ending the program, the filmmaker in me is deeply saddened by this reality,” said Fox.

Sen. Steve Bieda, D-Warren, didn’t want the incentives to end and voted against it. 

“I’ve seen a lot of economic activity in my district from people working in the film industry and in related industries: carpenters, caterers, electricians, hotels, restaurants, even hardware stores,” he said.

According to Bieda, the incentives have changed so much that they became unstable for a fledging industry looking to stabilize itself in Michigan, which sends a bad message to everyone.

“This has been the program that’s died from 1,000 cuts,” said Bieda. “We say one thing one day, and we’re doing something different the next day. It’s very schizophrenic.”

Rochester native Tim Flattery, an alumnus of the College of Creative Studies in Detroit, stated that although he can understand the Senate’s stance on the issue, the incentives weren’t given enough time to grow and prosper.

“I have a broken heart about it because I think Michigan missed a huge opportunity because of a lack of patience. I’m bummed out,” said Flattery, a conceptual artist on many films including 1989’s “Back to the Future II,” 2014’s “Captain America: The Winter Soldier,” and this summer’s “Tomorrowland.” “Atlanta is booming now because of how it embraced the film industry. Everyone’s benefiting from it across the board. They had the right mindset and patience, and it’s paying off right now.
Michigan was so close, and ending it is really sad. I hope there’s a way of turning that around someday.”

David Costabile, one of the stars of the above-mentioned “Low Winter Sun,” echoed Flattery’s sentiments because the incentives make more sense from an economic standpoint, especially since people in the film industry want to be working in Michigan. When he learned of the decision to end the incentives, Costabile uttered a sarcastic “Terrific.”

“It’s almost an immediate thing. When jobs go away, those production companies fall out. They are ruthless in that way,” said Costabile. “Invariably, the way things are working now is that there is a lull… a boom and a bust cycle in every state. You’ll see crew members who’ll leave the state and transfer to, say, Louisiana. And once when that one goes away and the politics catch up, they go to Georgia or North Carolina. My hope (for Michigan) is that it’ll come back and (the lawmakers) will see the folly of their ways.”

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