Film Office: Industry can survive subsidy cut to $6M

Karen Bouffard
The Detroit News

Lansing — The state's film industry will remain strong despite the Legislature's proposal to reduce movie and television production subsidies effectively to $6 million next year, the head of the Michigan Film Office said Wednesday.

A House-Senate conference committee agreed Tuesday to reduce the 2016 film incentives to $25 million, but $19.05 million of the appropriation would be used to retire a bond debt and reimburse the State of Michigan Retirement Systems for making payments on a Pontiac movie studio. It leaves less than $6 million to attract movie television productions.

In 2013 and 2014, the annual cash aid for films and TV productions was $50 million. The amount got trimmed this year to $38 million when initial revenue reports came in lower than expected.

"The Legislature is doing their due diligence," said Jenell Leonard, commissioner of the Michigan Film Office. "... (But) the film industry in Michigan is so much more than the incentive program."

The proposed cut resulted in muted protest Wednesday from film industry supporters, who have criticized past reductions in state funding. The remaining less than $6 million in film incentives is likely not enough to attract superhero and big-budget movies like the "Batman v. Superman" flick that filmed in Michigan last summer and the two "Transformer" movies that were partially shot in Detroit.

"Reducing the amount of the incentives we can offer producers means we lose much of our competitive edge with the rest of the nation," said Deb Havens, chair of the West Michigan Film Video Alliance, calling the proposal "regrettable."

"On the other hand, if we can set aside the perpetual policy debates over payouts to major studios, perhaps we can finally concentrate on our indigenous talented content creators who want to live and work here," Havens added.

Leonard said funding for the state's film program has always been politically volatile, which is why her office recently released a plan to make the industry sustainable. It is a move that Havens lauded.

The Michigan Film Office plan includes 40 recommendations. The list includes strategies to develop talent, improve digital media, form public/private partnerships and develop alliances with educational institutions such as community colleges.

The full House and Senate must sign off on the committee's proposal before sending it for the possible signature of Gov. Rick Snyder. But proposed incentive reduction was welcomed by a film incentive critic.

"It's good that legislators are getting closer to ending a program that has taken roughly $500 million from taxpayers to hand over to film producers," said James Hohman of Mackinac Center for Public Policy in Midland. "This money can be better spent elsewhere in the budget or returned to residents.

Many Republican lawmakers have vowed to divert funding from lower-priority programs to help bolster funding for Michigan's road and bridge repairs. The state still faces a $1.2 billion shortfall in road aid to get road and bridge back in good condition.

The State Retirement Systems made $1.05 million in interest payments when a Pontiac studio operated by Raleigh Film Studio of Hollywood — now called Michigan Motion Pictures Studio failed to make the payments, according to the Michigan Treasury Department. The Granholm administration negotiated the bond guarantee by public pension funds, but the Snyder administration got the law changed to ban the practice.

There is an $18 million outstanding debt on the studio's construction bonds, so the $19.05 million appropriation would reimburse the retirement systems while retiring the debt obligation. Michigan Motion Pictures Studio did not return a call for comment by deadline Wednesday.

Film subsidies were originally uncapped under Jennifer Granholm, resulting in annual spending of more than $100 million on film productions.

Snyder capped the spending and initially set the annual incentives at $25 million. The backers of the Michigan Motion Pictures Studio said the large reduction helped doom its prospects for attracting work.

In other budget moves Wednesday, a House-Senate committee approved a $19.6 billion Community Health budget proposal that would prohibit public health departments from providing information on abortion while continuing funding for a graduate medical program and rural medicine.

A conference committee on the $12 billion budget for K-12 public schools, the last major piece of the state's 2016 spending plan, is scheduled for Tuesday.