Story first appeared in AnnArbor.com.
Tax incentives, like the one Ann Arbor gave to Pfizer in 2001, often don’t result in the economic benefits local governments think they will, reports Michigan Capitol Confidential, a publication of the Mackinac Center for Public Policy, a free market think tank.
The article notes Pfizer got the $84 million tax abatement after suggesting it might leave town if it didn’t. Six years later, Pfizer announced it was leaving anyway.
As the Ann Arbor area struggled with the job losses at Pfizer as well as others wrought by the faltering economy, jobless rates rose from 5.5 percent in 2007 to 10.3 percent in 2009, the article notes. But the jobless rate now stands at 5.9 percent.
Community leaders say a coordinated response helped soften the blow of Pfizer’s leaving. The economic development organization Ann Arbor SPARK and its then-CEO played an integral role in organizing that response, local leaders said.
Eventually, the University of Michigan bought the site and has said it plans to have 1,700 workers employed there by the end of the year.
For more local and Michigan related news, visit the Michigan Business News Blog.
Showing posts with label tax incentive. Show all posts
Showing posts with label tax incentive. Show all posts
12 April 2012
19 September 2010
Study: Film Aid Costs State
The Detroit News
Michigan paid nearly twice as much money in film incentives as the industry brought into the state the past two years, according to report released Friday by the Senate Fiscal Agency.
The incentives cost taxpayers more than $190,000 per direct full-time job created last year, the report found.
"The nature of the credit and the resulting activity is such that under current (and any realistic) tax rate the state will never be able to make the credit 'pay for itself' from a state revenue standpoint, even when the credit generates additional private activity that would not have otherwise occurred," according to the report.
The study, a compilation of data presented at Senate and House hearings over the past two years, says Michigan spent $137.5 million to generate $80.6 million in private sector activity.
The report didn't shake Gov. Jennifer Granholm's faith in the program.
"We stand by the film incentive program and its ability to create good-paying jobs," spokeswoman Liz Boyd said.
"We're working every day to diversify our economy," she said. "This is a brand-new sector which continues to grow. And we are pleased with what we've seen so far."
The program subsidizes the direct cost of the production of movies and television shows by up to 42 percent.
Since the Legislature passed the incentives, movie and TV filming has been a growing industry in Michigan. It has led to the creation of studios, spawned college programs to teach movie jobs and brought a number of big-name stars to the state. It's also given the national media a positive story to write about a state wracked by job loss and outmigration.
The report analyzed the impact of the film industry incentives on the state budget and does not take into account additional money the movie and TV productions have contributed to local governments and businesses, such as restaurants and hotels.
"I've said all along that any industry that the state decides to pay 42 percent of their costs is going to come to Michigan," said Gary Olson, executive director of the Senate Fiscal Agency. "It doesn't mean there aren't other benefits. Is it worth it? That's up to the people who are elected."
The agency is a nonpartisan government office that analyzes legislation for the Senate.
The film credit was created in 2008 to attract film productions to Michigan. Since then, 105 film projects have been shot in the state.
According to the report of Detroit movie accounting services, in 2009 there were 355 direct full-time jobs created by the tax credit at a cost to taxpayers of $193,000 each. Adding indirect jobs, 1,542 have been created at a cost of $44,000 each.
The number of jobs created was much higher, but because they are temporary, the numbers shrink when converted to equivalent full-time, 12-month jobs.
The film industry does provide a net financial benefit to the private sector, according to the report, but that benefit is less than the net cost of the program to the state.
Michelle Begnoche, communications advisor to the Michigan Film Office, said the industry is still taking root in the state.
"We always knew it would take some time before seeing the benefits seen in other film-friendly states," she said.
State Sen. Nancy Cassis, R-Novi, a longtime critic of the program, said she plans to hold hearings on the report.
"There are better economic alternatives than this film incentive giveaway," Cassis said. "These films are like cotton candy -- they're sweet when they're in your community, but there's no longterm nutrition.
"I think there is a chance to do something before the end of the session. And if not, we will be laying the groundwork for the new administration to review the film policies and get them in line with our revenue."
Republican gubernatorial candidate Rick Snyder is not surprised by the report's findings, spokesman Bill Nowling said.
"This is just a tax incentive that is just not financially feasible over the long term," Nowling said.
Democratic gubernatorial candidate Virg Bernero's campaign could not be reached for comment.
11 May 2010
Film Commissioner Bringing Hollywood's Movie Magic to Michigan
The Detroit Free Press
She has been described as the hardest-working woman in show business. For Janet Lockwood, being Michigan's film commissioner means 12-hour days scrutinizing dozens of tax-credit applications from production companies, dealing with difficult producers and answering a constant deluge of e-mails from everyone from Hollywood studio executives to mothers hoping to turn their children into movie stars.
The veteran director of Michigan's Film Office usually doesn't leave her Lansing office until 8 p.m. or 9 p.m. each day and is so busy that she rarely has time to go to lunch. To get some exercise, she forces herself to walk around her office.
"I have no life," says the former stage actor. "I haven't had a life since April 8, 2008."
That's the date when Michigan passed the most-generous film tax incentives in the country, instantly catapulting the state from an extra in the movie production business into a starring role. For Lockwood, the transformation was like going from 20 m.p.h. to 200.
But this Michigander says she wouldn't have it any other way. The state's 42% movie tax credits have created more than 3,000 temporary jobs, helping people save their homes and cars. "It's really meant a lot," Lockwood says. "The movie industry for the most part makes people smile and Lord knows Michigan could use more smiles."
Lockwood's seven-person office works closely with Michigan's Treasury Department to ensure that tax credits only go to legitimate production companies. Last year, scandals in Iowa led to the suspension of that state's film incentives, a warning to other states new to the incentive game. "We don't want to approve crap," Lockwood says.
When Lockwood took over the Michigan Film Office in 1992, states competed for Hollywood production dollars based solely on their locations and services. Nowadays, it's all about money. "As long as everyone else has incentives, Michigan has to have incentives," says Lockwood, the state's fourth film commissioner.
Under former Gov. William Milliken, Michigan established a film office in 1979, the year "Somewhere in Time" filmed at the Grand Hotel on Mackinac Island. The first movie Lockwood worked on was 1992's "Hoffa," starring Jack Nicholson.
With her deep voice, wry sense of humor and theater experience, Lockwood enjoys public speaking. That's something she regularly gets to do, whether it be running meetings of the Michigan Film Office Advisory Council or talking to a room full of independent filmmakers at an industry trade show in California.
Her job does have some perks. She got to spend two days in a van with Billy Crystal, scouting for locations. She counts Jeff Daniels as a friend. George Clooney once brought her a cappuccino. And the producers of the 1998 movie "Out of Sight," which was partly shot in Detroit, even thanked her by name in the film's credits.
"I'm still enamored by the business of Hollywood," Lockwood admits. "I love the movies. It's just magic."
The veteran director of Michigan's Film Office usually doesn't leave her Lansing office until 8 p.m. or 9 p.m. each day and is so busy that she rarely has time to go to lunch. To get some exercise, she forces herself to walk around her office.
"I have no life," says the former stage actor. "I haven't had a life since April 8, 2008."
That's the date when Michigan passed the most-generous film tax incentives in the country, instantly catapulting the state from an extra in the movie production business into a starring role. For Lockwood, the transformation was like going from 20 m.p.h. to 200.
But this Michigander says she wouldn't have it any other way. The state's 42% movie tax credits have created more than 3,000 temporary jobs, helping people save their homes and cars. "It's really meant a lot," Lockwood says. "The movie industry for the most part makes people smile and Lord knows Michigan could use more smiles."
Lockwood's seven-person office works closely with Michigan's Treasury Department to ensure that tax credits only go to legitimate production companies. Last year, scandals in Iowa led to the suspension of that state's film incentives, a warning to other states new to the incentive game. "We don't want to approve crap," Lockwood says.
When Lockwood took over the Michigan Film Office in 1992, states competed for Hollywood production dollars based solely on their locations and services. Nowadays, it's all about money. "As long as everyone else has incentives, Michigan has to have incentives," says Lockwood, the state's fourth film commissioner.
Under former Gov. William Milliken, Michigan established a film office in 1979, the year "Somewhere in Time" filmed at the Grand Hotel on Mackinac Island. The first movie Lockwood worked on was 1992's "Hoffa," starring Jack Nicholson.
With her deep voice, wry sense of humor and theater experience, Lockwood enjoys public speaking. That's something she regularly gets to do, whether it be running meetings of the Michigan Film Office Advisory Council or talking to a room full of independent filmmakers at an industry trade show in California.
Her job does have some perks. She got to spend two days in a van with Billy Crystal, scouting for locations. She counts Jeff Daniels as a friend. George Clooney once brought her a cappuccino. And the producers of the 1998 movie "Out of Sight," which was partly shot in Detroit, even thanked her by name in the film's credits.
"I'm still enamored by the business of Hollywood," Lockwood admits. "I love the movies. It's just magic."
Lawmakers Seek Further Review of Michigan Tax Credits
Bloomberg / Business Week
Michigan lawmakers said Wednesday they want the state auditor general's office to dig deeper into the state's tax incentives program for businesses, a task made tougher by continuing budget cuts.
Republican state Sen. Nancy Cassis of Novi said she will formally request a closer review of Michigan Economic Growth Authority tax credits for 2008 and 2009.
The request comes after a recent auditor general's report found some companies given millions of dollars in tax credits to create jobs or invest in the state didn't always live up to their agreements on how much they would pay workers.
The audit released last month also said the Michigan Strategic Fund, which oversees tax credits awarded by the MEGA board, didn't follow proper procedures in checking whether companies were doing what was necessary to win the credits.
The Michigan Economic Development Corp., which deals with the tax incentives, largely agrees with the report and has said it found the auditor's recommendations valuable. Some of the audit's recommendations already have been implemented.
The audit covered some activity from 2005 into 2009. Cassis, chairwoman of the Senate Finance Committee, wants a more thorough review focused on 2008 and 2009 because the state's MEGA tax credit program has expanded significantly the past two years.
The performance audit released last month was the first of its kind by state auditors regarding MEGA since the program was established in the mid-1990s. That surprised lawmakers, who acknowledged they have helped create an audit backlog by requesting more reports themselves from an agency that's already spread thin.
"We have met the enemy, and it is us," said Sen. John Pappageorge, R-Troy.
Lawmakers have cut the auditor general's budget as Michigan continues to wrestle with state budget problems. The auditor general's office says its budget has dipped from about $13.1 million in 2001 to about $11.6 million this year. The office had 178 employees in 2000, but that's down to 137 this year.
The agency's budget could be cut again in the fiscal year starting Oct. 1.
Sen. Gilda Jacobs, D-Huntington Woods, said it was "pretty awful" that MEGA had been audited just once over a 14-year span -- but that was partially lawmakers' fault.
"The Legislature is to blame for part of this," she told auditors. "We're not giving you the tools."
Republican state Sen. Nancy Cassis of Novi said she will formally request a closer review of Michigan Economic Growth Authority tax credits for 2008 and 2009.
The request comes after a recent auditor general's report found some companies given millions of dollars in tax credits to create jobs or invest in the state didn't always live up to their agreements on how much they would pay workers.
The audit released last month also said the Michigan Strategic Fund, which oversees tax credits awarded by the MEGA board, didn't follow proper procedures in checking whether companies were doing what was necessary to win the credits.
The Michigan Economic Development Corp., which deals with the tax incentives, largely agrees with the report and has said it found the auditor's recommendations valuable. Some of the audit's recommendations already have been implemented.
The audit covered some activity from 2005 into 2009. Cassis, chairwoman of the Senate Finance Committee, wants a more thorough review focused on 2008 and 2009 because the state's MEGA tax credit program has expanded significantly the past two years.
The performance audit released last month was the first of its kind by state auditors regarding MEGA since the program was established in the mid-1990s. That surprised lawmakers, who acknowledged they have helped create an audit backlog by requesting more reports themselves from an agency that's already spread thin.
"We have met the enemy, and it is us," said Sen. John Pappageorge, R-Troy.
Lawmakers have cut the auditor general's budget as Michigan continues to wrestle with state budget problems. The auditor general's office says its budget has dipped from about $13.1 million in 2001 to about $11.6 million this year. The office had 178 employees in 2000, but that's down to 137 this year.
The agency's budget could be cut again in the fiscal year starting Oct. 1.
Sen. Gilda Jacobs, D-Huntington Woods, said it was "pretty awful" that MEGA had been audited just once over a 14-year span -- but that was partially lawmakers' fault.
"The Legislature is to blame for part of this," she told auditors. "We're not giving you the tools."
04 February 2010
Unity Studios Graduates First Class
The Detroit News
Unity Studios graduated its first class of students trained for the growing Michigan film industry Tuesday night -- and announced it's producing a feature film that should give many of them jobs.
The feature film will be called "A Christmas Dream."
The Civil War- themed family presentation will be produced in partnership with The Henry Ford, which stages a large, historically accurate Civil War re-enactment every Memorial Day weekend.
The film will be shot in Michigan, including at The Henry Ford's history-themed Greenfield Village in Dearborn, said Patricia Mooradian, president of The Henry Ford.
"After Unity Studios moved in down the street, we began to get to know them as neighbors. This was our first opportunity to work with them and it makes a lot of sense," Mooradian said.
"The backdrop of the film takes place during the Civil War era so it was a completely synergistic opportunity for both parties."
Mooradian added that the project also ties in with The Henry Ford's educational mission, since the film will employ graduates from the Lifton Institute for Media Skills, a training facility for film industry workers connected to Unity Studios.
The first class of 106 graduated Tuesday night, and the institute expects many of them will find work on this project and other films in Michigan.
"Some of our students have already been on film sets and gotten jobs," said Eric Cedo, director of marketing for Unity Studios. "Now we're putting together our first feature film, and the main purpose is to put our graduates to work."
The institute trains students for careers in areas such as production, art, camera, lighting, grip, sound and film editing.
New graduate Ed Williams, 33, drove to Allen Park from Port Huron to attend classes in sound mixing.
"I went online looking for a career change and this just kind of fit me," said Williams, who had made his living as a musician.
Mitch Griffin, 20, of West Bloomfield Township, trained to become a picture editor, but said he "got a taste of directing here with a full film crew, so I wouldn't mind going that route."
Unity and Institute President Jimmy Lifton said of the first class: "It feels like birthing all these kids."
The graduates laughed when he announced production of "A Christmas Dream" -- "just in case you know someone who's qualified" to join the crew.
The studio wouldn't discuss financial details of the film and said budget and casting details would be announced later. The film already is in pre-production and will begin production sometime next month.
Unity Studios last summer became the first of three such film production projects in Michigan to begin construction. The complex is still under construction.
Nearly 50 films wrapped production in Michigan last year, according to the Michigan Film Office. The state has become an attractive site for movie-makers due to its 40 percent to 42 percent tax credit on money spent here.
The feature film will be called "A Christmas Dream."
The Civil War- themed family presentation will be produced in partnership with The Henry Ford, which stages a large, historically accurate Civil War re-enactment every Memorial Day weekend.
The film will be shot in Michigan, including at The Henry Ford's history-themed Greenfield Village in Dearborn, said Patricia Mooradian, president of The Henry Ford.
"After Unity Studios moved in down the street, we began to get to know them as neighbors. This was our first opportunity to work with them and it makes a lot of sense," Mooradian said.
"The backdrop of the film takes place during the Civil War era so it was a completely synergistic opportunity for both parties."
Mooradian added that the project also ties in with The Henry Ford's educational mission, since the film will employ graduates from the Lifton Institute for Media Skills, a training facility for film industry workers connected to Unity Studios.
The first class of 106 graduated Tuesday night, and the institute expects many of them will find work on this project and other films in Michigan.
"Some of our students have already been on film sets and gotten jobs," said Eric Cedo, director of marketing for Unity Studios. "Now we're putting together our first feature film, and the main purpose is to put our graduates to work."
The institute trains students for careers in areas such as production, art, camera, lighting, grip, sound and film editing.
New graduate Ed Williams, 33, drove to Allen Park from Port Huron to attend classes in sound mixing.
"I went online looking for a career change and this just kind of fit me," said Williams, who had made his living as a musician.
Mitch Griffin, 20, of West Bloomfield Township, trained to become a picture editor, but said he "got a taste of directing here with a full film crew, so I wouldn't mind going that route."
Unity and Institute President Jimmy Lifton said of the first class: "It feels like birthing all these kids."
The graduates laughed when he announced production of "A Christmas Dream" -- "just in case you know someone who's qualified" to join the crew.
The studio wouldn't discuss financial details of the film and said budget and casting details would be announced later. The film already is in pre-production and will begin production sometime next month.
Unity Studios last summer became the first of three such film production projects in Michigan to begin construction. The complex is still under construction.
Nearly 50 films wrapped production in Michigan last year, according to the Michigan Film Office. The state has become an attractive site for movie-makers due to its 40 percent to 42 percent tax credit on money spent here.
03 January 2010
How To Keep Business In Michigan
The Detroit Blog
TIME / CNN
While Michigan is in the throes of its upside-down economy, it has been scrambling to find creative solutions. Gov. Jennifer Granholm has been (smartly) promoting green jobs. Meanwhile, we offer generous tax breaks to the film industry, which arguably provides some economic help and boosts local morale.
Meanwhile, community leaders have come up with their own smart solutions, including one that, as someone who works in advertising, I see as having a lot of value. A team led by Campbell-Ludwig CEO-designate, Bill Ludwig, has been pushing to extend those film industry incentives to commercial production. This sense since auto companies put over a billion dollars a year into the filming and editing of car ads, and the lion's share of that money winds up in the pockets of production companies in New York and California. Given the right incentives, a greater portion of that work could stay here in Michigan. I don't know the current status of this particular legislation, but it would add jobs to our economy and deserves serious support in Lansing.
Still, despite these best efforts, things keep slipping downhill. Next month, as everyone in the industry knows, Detroit's BBDO office will close. An estimated 485 employees will lose their jobs. This is an incredibly sad thing. Over many decades, BBDO has done good, great, and even world-famous work for the Chrysler's brands, most notably the ads they did for Jeep, but in the end they were too reliant on one big car client, and when that client looked elsewhere, they were out of luck.
So clearly, just as with the rest of Michigan's economy, one thing that would help local advertising agencies here is greater diversification. Yes, to a large degree, it's up to the agencies themselves. Doner Advertising has thrived for years without a domestic auto account. Campbell Ewald has done an admirable job of attracting a range of clients outside the industry, including award-winning work for the U.S. Postal Service and the Navy. My own agency, Team Detroit, has also recently added Scott's Miracle Grow, Ohio Art and Warrior Sports to its roster.
But in extreme times like these, extra efforts are perhaps necessary and there is additional leverage that a smart, proactive state government could provide if it decided to act. It occurs to me that a notion similar to Ludwig's could bring additional help to the region. Despite its myriad of woes, Michigan is still home to many large, thriving, successful businesses, including Kellogg's, Whirlpool, Domino's, and Herman Miller. These are multi-million dollar brands whose collective advertising budgets add up to billions of dollars. But Kellogg's advertising agency is based in Illinois, Domino's is based in Colorado.
If Granholm and the state government could find a way to entice these companies - through tax incentives and other means - to hire advertising agencies located within their own home state, it would immediately put millions of dollars annually back into the state's economy. Now, perhaps these companies are perfectly happy with their current advertising, though it would be hard for them to argue that these ad agencies are serving them in a demonstrably better way than what they could get right here at home (I, for one, cannot remember seeing one single great Kellogg's ad nor one memorable Domino's ad in the past three years. Can you?) But obviously this isn't about coercion; the companies would still be perfectly free to choose. This is all about the carrot, not the stick. Perhaps they will say that Michigan agencies can't sell as well as agencies elsewhere, though, given the chance, I'm sure we could convince them otherwise (we are in the art of persuasion after all.)
All the state would do is develop and promote incentives to encourage these large, global companies to begin a conversation with some of these agencies. Even if just one of these giants moves their marketing here, the incomes generated will end up supporting local economies (the restaurants, the dry cleaners, etc), while the additional tax base would support education and local infrastructure.
So the companies would win, and not only because they would get equal - and probably superior - service from local agencies, but also because their standard of living would be positively impacted as well. Their own schools would be stronger, their own roads would have fewer potholes, their neighbors would be happier, and life would be better. Who knows, maybe their homes would even be worth more.
There would be at least one added benefit. After firing BBDO, Chrysler has split the account, hiring new agencies in Texas and Minneapolis. Meanwhile, GM is considering agencies for Cadillac that are based in New York. By creating the right sort of incentives, Michigan could even encourage the auto manufacturers to keep their marketing dollars—and jobs—here in Michigan too. That wouldn't be a bad thing, would it? After all, we do still love our car companies.
Meanwhile, community leaders have come up with their own smart solutions, including one that, as someone who works in advertising, I see as having a lot of value. A team led by Campbell-Ludwig CEO-designate, Bill Ludwig, has been pushing to extend those film industry incentives to commercial production. This sense since auto companies put over a billion dollars a year into the filming and editing of car ads, and the lion's share of that money winds up in the pockets of production companies in New York and California. Given the right incentives, a greater portion of that work could stay here in Michigan. I don't know the current status of this particular legislation, but it would add jobs to our economy and deserves serious support in Lansing.
Still, despite these best efforts, things keep slipping downhill. Next month, as everyone in the industry knows, Detroit's BBDO office will close. An estimated 485 employees will lose their jobs. This is an incredibly sad thing. Over many decades, BBDO has done good, great, and even world-famous work for the Chrysler's brands, most notably the ads they did for Jeep, but in the end they were too reliant on one big car client, and when that client looked elsewhere, they were out of luck.
So clearly, just as with the rest of Michigan's economy, one thing that would help local advertising agencies here is greater diversification. Yes, to a large degree, it's up to the agencies themselves. Doner Advertising has thrived for years without a domestic auto account. Campbell Ewald has done an admirable job of attracting a range of clients outside the industry, including award-winning work for the U.S. Postal Service and the Navy. My own agency, Team Detroit, has also recently added Scott's Miracle Grow, Ohio Art and Warrior Sports to its roster.
But in extreme times like these, extra efforts are perhaps necessary and there is additional leverage that a smart, proactive state government could provide if it decided to act. It occurs to me that a notion similar to Ludwig's could bring additional help to the region. Despite its myriad of woes, Michigan is still home to many large, thriving, successful businesses, including Kellogg's, Whirlpool, Domino's, and Herman Miller. These are multi-million dollar brands whose collective advertising budgets add up to billions of dollars. But Kellogg's advertising agency is based in Illinois, Domino's is based in Colorado.
If Granholm and the state government could find a way to entice these companies - through tax incentives and other means - to hire advertising agencies located within their own home state, it would immediately put millions of dollars annually back into the state's economy. Now, perhaps these companies are perfectly happy with their current advertising, though it would be hard for them to argue that these ad agencies are serving them in a demonstrably better way than what they could get right here at home (I, for one, cannot remember seeing one single great Kellogg's ad nor one memorable Domino's ad in the past three years. Can you?) But obviously this isn't about coercion; the companies would still be perfectly free to choose. This is all about the carrot, not the stick. Perhaps they will say that Michigan agencies can't sell as well as agencies elsewhere, though, given the chance, I'm sure we could convince them otherwise (we are in the art of persuasion after all.)
All the state would do is develop and promote incentives to encourage these large, global companies to begin a conversation with some of these agencies. Even if just one of these giants moves their marketing here, the incomes generated will end up supporting local economies (the restaurants, the dry cleaners, etc), while the additional tax base would support education and local infrastructure.
So the companies would win, and not only because they would get equal - and probably superior - service from local agencies, but also because their standard of living would be positively impacted as well. Their own schools would be stronger, their own roads would have fewer potholes, their neighbors would be happier, and life would be better. Who knows, maybe their homes would even be worth more.
There would be at least one added benefit. After firing BBDO, Chrysler has split the account, hiring new agencies in Texas and Minneapolis. Meanwhile, GM is considering agencies for Cadillac that are based in New York. By creating the right sort of incentives, Michigan could even encourage the auto manufacturers to keep their marketing dollars—and jobs—here in Michigan too. That wouldn't be a bad thing, would it? After all, we do still love our car companies.
02 June 2009
Michigan Among Several States Wooing Hollywood
Story from Associated Press
BALTIMORE (AP) — Many states that are cutting spending on schools, roads and other basics have been lavishing hundreds of millions of dollars in incentives on Hollywood studios to lure TV and movie productions — this, despite scant evidence that taxpayers come out ahead on such deals.
An Associated Press survey found that states competing for projects handed out $1.8 billion in tax breaks and other advantages to the entertainment industry from 2006 through 2008.
Several states have even sweetened their incentives recently or are considering doing so, for fear that if they don't land the next major motion picture, someone else will.
"The industry has been able to play off North Carolina against South Carolina against Louisiana against Georgia. Louisiana raises its incentives, and it puts pressure on South Carolina, North Carolina and other states to do likewise," said Bob Orr, a former North Carolina Supreme Court justice who heads an anti-incentives group called the North Carolina Institute for Constitutional Law.
Some states argue that the tax breaks pay for themselves in revenue. Many others contend that even if tax revenue takes a hit, the film industry boosts their economies with an infusion of cash and jobs.
Production companies spend money on sets, props, caterers, and salaries for actors, extras and crew members. Movie crews eat at restaurants and stay in hotels while in town.
Movie shoots can also give a place a little Hollywood glamour, which can, in turn, boost tourism — something that has happened in Durham, N.C., where the 1988 Kevin Costner comedy "Bull Durham" was shot, and in Savannah, Ga., the setting of the 1997 film "Midnight in the Garden of Good and Evil."
"I relate this to creating jobs similar to the way you would turn on a light," said Republican state Rep. Stephen L. Precourt of Florida, who is pressing to increase the state's incentives. "Within days, people could be working here under this incentive program."
New Mexico and New York commissioned studies by the accounting firm Ernst & Young that found the tax credits pay for themselves by producing more revenue than they sacrifice. The studies' authors estimated that state and local governments in New Mexico brought in $1.50 in revenue for every dollar spent on tax credits, while state and local governments in New York state and New York city generated $1.90.
But many economists and policy analysts who have studied the issue independently contend that tax breaks for the TV and movie industry are rarely break-even deals for states, in part because the jobs created are often short-lived. Even the revenue departments in some states would agree.
Connecticut's revenue department, for example, found in 2007 that every dollar in tax credits generated only 20 cents in new tax revenue. Connecticut gave away an estimated $70 million in tax revenue that year.
"The credit does not 'pay for itself,'" Jennifer Weiner, a policy analyst for the New England Public Policy Center at the Federal Reserve Bank of Boston, wrote in a January report about Connecticut's incentives. "Increases in economic activity spurred by the film credit generate some additional tax revenue for the state from a variety of sources. This additional revenue is likely to offset some, but not all, of the initial cost of the credit."
The AP surveyed the 41 states, plus the District of Columbia, that offer rebates, grants or tax credits to cover production costs for movies, TV shows and commercials, and found they committed $1 billion last year alone. New York was the leader in 2008, giving away or pledging $275 million in tax credits to productions that shot in the state that year.
New York said the money bolstered the state's economy with $2.2 billion in direct spending. The state had no immediate estimate of how much tax revenue that translated into.
Louisiana, one of the biggest incentive states, pledged an estimated $358 million in tax credits to filmmakers between 2006 and 2008, including $27 million for last year's Oscar-winning "The Curious Case of Benjamin Button." Now state lawmakers are considering more than $150 million in cuts to higher education.
Filmmakers have grown accustomed to shopping around for the best deal.
California, which is grappling with a projected $24 billion budget deficit, launched an incentive program this year to keep its homegrown business from migrating. Movie-star Gov. Arnold Schwarzenegger even pledged to make a cameo in the Warner Bros. blockbuster "Terminator Salvation," now No. 2 at the box office, if producers shot it in California. The movie was made in New Mexico.
Little illustrates the competition between states better than Miley Cyrus' new movie project, "The Last Song." In April, North Carolina's governor scheduled — then canceled the same day — a news conference to announce the movie would be filmed in Wilmington. The reason for the cancellation: the Walt Disney Co. was considering Georgia, which offers incentives of up to 30 percent versus North Carolina's 15 percent.
Shooting is to begin in Georgia this month.
Determined not to miss out next time, legislators have introduce a bill in North Carolina — a state facing a $3 billion budget gap this year — to increase incentives to 25 percent of production costs.
Some states have started rethinking their show business giveaways. Wisconsin Gov. Jim Doyle wants to eliminate the incentives he signed into law a year ago. A legislative committee has instead proposed capping the annual payout — but only for two years — to help solve Wisconsin's budget shortfall.
Michigan, which offers one of the most generous tax credits in the nation, equal to 42 percent of production costs, gave away $48 million in incentives last year and is expected to pay out $198 million in the 2010 fiscal year, which starts in the fall. And that's in a state that faces an estimated budget shortfall of $700 million for 2010.
State Sen. Tom George said he supports Michigan's incentive program because of the production activity it has drawn to his job-starved state. But he has no illusions about whether Michigan brings in more tax revenue than it gives away.
"We don't get back what we pay out," said George, a Republican who wants to cap the annual payout, either on a per-film or per-year basis. "We don't even get back half of what we pay out. I don't even know if we get back a quarter of what we pay out."
BALTIMORE (AP) — Many states that are cutting spending on schools, roads and other basics have been lavishing hundreds of millions of dollars in incentives on Hollywood studios to lure TV and movie productions — this, despite scant evidence that taxpayers come out ahead on such deals.An Associated Press survey found that states competing for projects handed out $1.8 billion in tax breaks and other advantages to the entertainment industry from 2006 through 2008.
Several states have even sweetened their incentives recently or are considering doing so, for fear that if they don't land the next major motion picture, someone else will.
"The industry has been able to play off North Carolina against South Carolina against Louisiana against Georgia. Louisiana raises its incentives, and it puts pressure on South Carolina, North Carolina and other states to do likewise," said Bob Orr, a former North Carolina Supreme Court justice who heads an anti-incentives group called the North Carolina Institute for Constitutional Law.
Some states argue that the tax breaks pay for themselves in revenue. Many others contend that even if tax revenue takes a hit, the film industry boosts their economies with an infusion of cash and jobs.
Production companies spend money on sets, props, caterers, and salaries for actors, extras and crew members. Movie crews eat at restaurants and stay in hotels while in town.
Movie shoots can also give a place a little Hollywood glamour, which can, in turn, boost tourism — something that has happened in Durham, N.C., where the 1988 Kevin Costner comedy "Bull Durham" was shot, and in Savannah, Ga., the setting of the 1997 film "Midnight in the Garden of Good and Evil."
"I relate this to creating jobs similar to the way you would turn on a light," said Republican state Rep. Stephen L. Precourt of Florida, who is pressing to increase the state's incentives. "Within days, people could be working here under this incentive program."
New Mexico and New York commissioned studies by the accounting firm Ernst & Young that found the tax credits pay for themselves by producing more revenue than they sacrifice. The studies' authors estimated that state and local governments in New Mexico brought in $1.50 in revenue for every dollar spent on tax credits, while state and local governments in New York state and New York city generated $1.90.
But many economists and policy analysts who have studied the issue independently contend that tax breaks for the TV and movie industry are rarely break-even deals for states, in part because the jobs created are often short-lived. Even the revenue departments in some states would agree.
Connecticut's revenue department, for example, found in 2007 that every dollar in tax credits generated only 20 cents in new tax revenue. Connecticut gave away an estimated $70 million in tax revenue that year.
"The credit does not 'pay for itself,'" Jennifer Weiner, a policy analyst for the New England Public Policy Center at the Federal Reserve Bank of Boston, wrote in a January report about Connecticut's incentives. "Increases in economic activity spurred by the film credit generate some additional tax revenue for the state from a variety of sources. This additional revenue is likely to offset some, but not all, of the initial cost of the credit."
The AP surveyed the 41 states, plus the District of Columbia, that offer rebates, grants or tax credits to cover production costs for movies, TV shows and commercials, and found they committed $1 billion last year alone. New York was the leader in 2008, giving away or pledging $275 million in tax credits to productions that shot in the state that year.
New York said the money bolstered the state's economy with $2.2 billion in direct spending. The state had no immediate estimate of how much tax revenue that translated into.
Louisiana, one of the biggest incentive states, pledged an estimated $358 million in tax credits to filmmakers between 2006 and 2008, including $27 million for last year's Oscar-winning "The Curious Case of Benjamin Button." Now state lawmakers are considering more than $150 million in cuts to higher education.
Filmmakers have grown accustomed to shopping around for the best deal.
California, which is grappling with a projected $24 billion budget deficit, launched an incentive program this year to keep its homegrown business from migrating. Movie-star Gov. Arnold Schwarzenegger even pledged to make a cameo in the Warner Bros. blockbuster "Terminator Salvation," now No. 2 at the box office, if producers shot it in California. The movie was made in New Mexico.
Little illustrates the competition between states better than Miley Cyrus' new movie project, "The Last Song." In April, North Carolina's governor scheduled — then canceled the same day — a news conference to announce the movie would be filmed in Wilmington. The reason for the cancellation: the Walt Disney Co. was considering Georgia, which offers incentives of up to 30 percent versus North Carolina's 15 percent.
Shooting is to begin in Georgia this month.
Determined not to miss out next time, legislators have introduce a bill in North Carolina — a state facing a $3 billion budget gap this year — to increase incentives to 25 percent of production costs.
Some states have started rethinking their show business giveaways. Wisconsin Gov. Jim Doyle wants to eliminate the incentives he signed into law a year ago. A legislative committee has instead proposed capping the annual payout — but only for two years — to help solve Wisconsin's budget shortfall.
Michigan, which offers one of the most generous tax credits in the nation, equal to 42 percent of production costs, gave away $48 million in incentives last year and is expected to pay out $198 million in the 2010 fiscal year, which starts in the fall. And that's in a state that faces an estimated budget shortfall of $700 million for 2010.
State Sen. Tom George said he supports Michigan's incentive program because of the production activity it has drawn to his job-starved state. But he has no illusions about whether Michigan brings in more tax revenue than it gives away.
"We don't get back what we pay out," said George, a Republican who wants to cap the annual payout, either on a per-film or per-year basis. "We don't even get back half of what we pay out. I don't even know if we get back a quarter of what we pay out."
10 April 2009
Recovery Act Lifts Ceiling On Surety Bonds, Other Small Business Aid
Story from the Detroit Free Press
With tax incentives and steps to encourage lending, the American Recovery and Reinvestment Act recognizes that small businesses are part of the solution to getting our economy moving again. The bill's primary goals for the U.S. Small Business Administration are jump-starting job creation, re-starting lending and promoting small business investment.
The Act provides SBA with $730 million. This includes $375 million to temporarily eliminate loan fees and raise guarantee limits on some loans; extra funding for SBA-backed Microlenders; and $255 million to help viable small businesses with immediate economic hardship meet existing loan payments.
With tax incentives and steps to encourage lending, the American Recovery and Reinvestment Act recognizes that small businesses are part of the solution to getting our economy moving again. The bill's primary goals for the U.S. Small Business Administration are jump-starting job creation, re-starting lending and promoting small business investment.
The Act provides SBA with $730 million. This includes $375 million to temporarily eliminate loan fees and raise guarantee limits on some loans; extra funding for SBA-backed Microlenders; and $255 million to help viable small businesses with immediate economic hardship meet existing loan payments.Small businesses that need surety bonds to compete for contracts also can qualify for SBA-backed surety bonds of up to $5 million, more than double the previous $2 million maximum.
Another element, which is already in place, is SBA's Microloan program. These non-profit, community-based lenders make loans of up to $35,000 to small businesses and start-ups. The act funds $50 million in new loans by Microlenders, plus $24 million to help pay for technical assistance and training from the lenders.
In addition, the Treasury Department will commit up to $15 billion in TARP funds to help unfreeze the small business lending market.
There are a lot of moving parts, but our aim is to put these programs in place as quickly as we can so they have the broadest effect possible.07 April 2009
Governor Increases Tax Incentives For Manufacture of Advanced Batteries
Story from Connect Mid Michigan
• allows the Michigan Economic Growth Authority (MEGA) to approve up to $300 million of the total $555 million in incentives for the construction of battery-cell manufacturing facilities.
In February, the Michigan Economic Growth Authority approved the first incentives from the original legislation for Ford and General Motors for pack engineering, integration and assembly, vehicle engineering, and advanced-battery technologies. Those incentives, which included tax credits to help produce the battery for GM’s Chevy Volt.
“This is an exciting time in Michigan as we are on the cusp of a new industry taking root,” MEDC President and CEO Greg Main said. “I want to thank Governor Granholm, our state legislators and our federal lawmakers for giving us the tools we need to grow this industry in Michigan and create thousands of new jobs.”
U.S. Senator Carl Levin and Congressmen Sander Levin applauded Michigan’s efforts to promote advanced battery development in the state.
“The $2 billion grant program passed by the Congress reflects our active efforts to create a vigorous partnership between the federal government, state government, and private industry to position our nation, its companies, and its workers in a leading role to develop the automotive technologies of the future,” said Congressman Sander Levin. “The legislation being signed today by the governor demonstrates that Michigan, the center of the domestic auto industry, is determined to be the fullest partner in this urgent national priority. Today, we are showing that we can dynamically link the need for a strong industrial base with action on vital environmental goals.”
“The state of Michigan has developed an innovative and generous set of refundable tax credits available for companies that will establish battery cell and battery pack manufacturing in Michigan,” said Senator Carl Levin. “These advanced-battery credits provide critical incentives that will attract companies to establish new manufacturing facilities in Michigan and should provide these companies a significant boost in competing for federal dollars provided by the American Recovery and Reinvestment Act. Michigan is the heart of automotive engineering and manufacturing. The incentives developed by the state of Michigan combined with the federal funding for battery manufacturing facilities are an essential part of continued Michigan preeminence in this field and will help to ensure that Michigan companies manufacture the green vehicle of the future and their critical components.”
The bills signed today are House Bill 4515, sponsored by State Representative Dian Slavens (D-Canton), and Senate Bill 319, sponsored by State Senator John Pappageorge (R-Troy).
LANSING -- The following is a message from Governor Jennifer M. Granholm:
Governor Jennifer M. Granholm today signed legislation that increases tax incentives for companies that develop and manufacture advanced batteries. Today’s action puts Michigan in prime position to capture up to $2 billion in federal advanced-battery development grants.
“We are committed to making Michigan the advanced-battery capital of the world and the home of the next generation of green vehicles powered by them,” Granholm said. “This expansion of incentives will keep our momentum going and demonstrate that Michigan is uniquely qualified for a significant portion of the $2 billion in federal recovery money designated to build America’s advanced-battery infrastructure. We are aggressively going after that funding as part of our strategy to diversify Michigan’s economy and attract more high-tech jobs.”
The new law adds an additional $220 million in refundable tax credits for companies involved in the development and application of advanced-battery research, engineering, and manufacturing. The legislation expands the $335 million in tax credits that Governor Granholm signed in January, which were the first in the nation, bringing total incentives available to $555 million. The legislation signed today:
The new law adds an additional $220 million in refundable tax credits for companies involved in the development and application of advanced-battery research, engineering, and manufacturing. The legislation expands the $335 million in tax credits that Governor Granholm signed in January, which were the first in the nation, bringing total incentives available to $555 million. The legislation signed today:
• adds an additional $220 million in tax credits to the $335 million approved in January;
• increases from $70 million to $90 million the maximum amount of tax credits for companies engaged in vehicle engineering to support battery integration, prototyping and launch expenses;
• allows the Michigan Economic Growth Authority (MEGA) to approve up to $300 million of the total $555 million in incentives for the construction of battery-cell manufacturing facilities.
In February, the Michigan Economic Growth Authority approved the first incentives from the original legislation for Ford and General Motors for pack engineering, integration and assembly, vehicle engineering, and advanced-battery technologies. Those incentives, which included tax credits to help produce the battery for GM’s Chevy Volt.
“This is an exciting time in Michigan as we are on the cusp of a new industry taking root,” MEDC President and CEO Greg Main said. “I want to thank Governor Granholm, our state legislators and our federal lawmakers for giving us the tools we need to grow this industry in Michigan and create thousands of new jobs.”
U.S. Senator Carl Levin and Congressmen Sander Levin applauded Michigan’s efforts to promote advanced battery development in the state.
“The $2 billion grant program passed by the Congress reflects our active efforts to create a vigorous partnership between the federal government, state government, and private industry to position our nation, its companies, and its workers in a leading role to develop the automotive technologies of the future,” said Congressman Sander Levin. “The legislation being signed today by the governor demonstrates that Michigan, the center of the domestic auto industry, is determined to be the fullest partner in this urgent national priority. Today, we are showing that we can dynamically link the need for a strong industrial base with action on vital environmental goals.”
“The state of Michigan has developed an innovative and generous set of refundable tax credits available for companies that will establish battery cell and battery pack manufacturing in Michigan,” said Senator Carl Levin. “These advanced-battery credits provide critical incentives that will attract companies to establish new manufacturing facilities in Michigan and should provide these companies a significant boost in competing for federal dollars provided by the American Recovery and Reinvestment Act. Michigan is the heart of automotive engineering and manufacturing. The incentives developed by the state of Michigan combined with the federal funding for battery manufacturing facilities are an essential part of continued Michigan preeminence in this field and will help to ensure that Michigan companies manufacture the green vehicle of the future and their critical components.”
The bills signed today are House Bill 4515, sponsored by State Representative Dian Slavens (D-Canton), and Senate Bill 319, sponsored by State Senator John Pappageorge (R-Troy).
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