Tax credit supporters of Michigan's film incentive prepare for battle

By recruiting powerful lobbyists and gathering compelling economic data, advocates of the film tax credit are prepping for to battle the potential demise of Michigan's film industry incentive.

Supporters plan to convince Legislative and administrative officials, who are hinting at dropping a number of tax credits in an effort to improve the state's business tax structure, to maintain some of the film incentives.

Crain's Michigan Business News asked Lt. Gov. Brian Calley why the administration did not conduct a cost-benefit analysis of such tax credits before moving toward their potential cut. "The approach has been to first fix the environment for everybody before addressing special circumstances," responded Calley.

On the other side of the debate, tax credit advocates argue that they can create a powerful case.

Michigan Film First, a coalition of Michigan's film industry leaders, has hired Truscott Rossman LLC, a communications firm in Lansing to help in the fight to save film tax credits.

"We will have people contacting lawmakers, saying they were out of work, now have found a job, have training, and what that means is that they have a future," said the president of the firm John Truscott.

Truscott added that the team of advocates plan to utilize a recent study by Ernst & Young which discovered in 2010, for every $1 of film tax credit cost, $5.94 of sales by Michigan businesses were generated. Also of value from the study is that state film productions employed 5,606 Michigan residents in 2010, paying out $66.9 million in wages and salaries to these individuals. The study was commissioned by convention and visitors bureaus for Detroit, Grand Rapids, Ann Arbor and Traverse City.

"It's an extremely compelling case, and it represents the most recent numbers," Truscott said. "This is an industry that's been growing steadily ... and it has a lot of potential to help a lot of communities."

In addition to local communities, many key industries in the state benefit from more Michigan-based movie production. Some of which include companies in auto transport are benefiting from the increased need of vehicle logistics services. Also growing are small business near the areas of film production.

Tom McMillin, a state representative R-Rochester Hills, is a critic of the film tax credit. He claimed that the study fails to consider that money given as refundable tax credits "could otherwise have been used by all other Michigan businesses if we hadn't cut the checks."

McMillin added that "paying 42 percent of any industry will result in losing money for taxpayers."

The film tax incentive includes up to a 42 percent refundable tax credit of a production company's expenditures within the state. According to the Michigan Film Office, the state paid $95 million in film tax credits as of the end of 2010, in addition to $209.4 million approved but not yet disbursed for 2011.

The incentives Michigan put into place are responsible for attracting some $648 million in movie-making investments.

Screenwriter and coordinator of the screenwriting program in the University of Michigan Department of Screen Arts and Cultures, Jim Burnstein, and vice chairman of the state film office advisory council, both said the film tax credit helps Gov. Snyder's objective to "reverse the brain drain, revitalize Detroit, and help small businesses create more jobs."

Burnstein said, in the past, his MBA degree students left Michigan upon graduating, however the "migration stopped in its tracks" as students saw a burgeoning film industry in the state of which they wanted to be a part.

Burnstein, a top proponent of the film industry tax incentive, said parts of the tax credit can be reduced, but a proposed $25 million grant program to replace the film credits is "the death of that law."