Senate panel votes to end Michigan film aid in 2017

Gary Heinlein
The Detroit News

A Michigan Senate committee narrowly voted Tuesday to end film incentives in the 2017 budget year along with funding for the Michigan Film Office.

The Senate Government Operations Committee voted 3-2 on the proposal, which now goes to the Senate floor for a vote. The move has no effect on the $25 million in film incentives that the House and Senate last week approved for the 2016 fiscal year that begins Oct. 1.

The Michigan Film Office is part of the Michigan Economic Development Corporation, a private-public agency, but its operations are paid out of the state's General Fund.

The development agency still could finance the Michigan Film Office on its own, said Senate Majority Leader Arlan Meekhof, R-West Olive, who heads the Government Operations Committee.

But Joel Freeman, vice president of government affairs for the Economic Development Corporation, said he's not sure the agency can afford to absorb the cost, especially when facing $135 million in cuts proposed by House lawmakers.

Meekhof said he changed his mind about keeping the film incentives because the state's top priority is finding more money to fix roads and bridges. Criticism was directed at the film incentives, in particular, by opponents of the May 5 roads-related Proposal 1.

The ballot proposition would have used a sales tax hike to boost education and local government funding while triggering fuel tax and vehicle registration fee increases to raise an added $1.3 billion a year for roads. Its resounding rejection by Michigan voters seemed to alter Senate leaders' attitude toward Michigan's movie recruitment efforts.

"I was very supportive of (the film incentive program), and I think it's a great program but we don't do it well," Meekhof said. "I still think Michigan has unique backdrops and unique locations that film companies will want to use, but the incentives just won't be there because we have other priorities."

The proposed phase-out would make Michigan the only state without a film office.

"Other states do this better than us," Meekhof said. "And if we're going to do this somewhere in the future, I think we just go away from it for now while we've got other priorities."

Meekhof, Senate Majority Floor Leader Mike Kowall, R-White Lake, and Sen. Geoff Hansen, R-Hart, voted to end the film incentives. Senate Democratic Leader Jim Ananich of Flint and Sen. Morris Hood, D-Detroit, voted against the legislation.

The legislation "just sends a message that the state is closed to the film industry," said Calvin Hazelbaker, business agent for the Detroit local of a union representing stage hands, moving picture technicians and artists.

"It's a good opportunity for young people to have a job that pays good wages and has benefits, to have a career rather than just a job," Hazelbaker said, adding he was blind-sided by the turnabout by formerly supportive Senate leaders.

"It's such a small program (yet) such a lightning rod," he said. "Last time we were up here to testify, we kept hearing 'free money, free money.' It's not free money. We earned that money as well as the next guy. We pay our taxes. We don't say 'free money' to Ford Motor Co., who makes billions in profits in a quarter and we still give them tax credits and we still turn a blind eye when they send jobs to Mexico."

Freeman said the Economic Development Corporation wanted to support the phase-out of incentives but hadn't anticipated the Senate plan also would call for an end to the state budget line item covering operation of a film office. He said the annual cost is $400,000 a year but Meekhof said it's $650,000.

The film office and Economic Development Corporation recently presented lawmakers with a broad proposal for continuing to run the State Film Office without the incentives program.

"Our goal all along has been to attract film projects and foster growth for Michigan's creative industries," said Jenell Leonard, commissioner of Michigan Film Office, in a statement.

"We're in transition, life without incentives. Part of the transition has been to reach out to the Michigan film industry and translate feedback into a strategic plan," Leonard said. "We've done that. The plan promotes the film industry in key public-private partnerships. There has been a film office in Michigan since 1979, and every state has one for a reason."

Absorbing the cost to keep the film office running through the MEDC, Freeman said, is problematic because the House roads plan also calls for taking away $135 million of its annual state funding and using that for road repairs.

The Senate hasn't approved that proposal and is developing its own roads funding plan.

"We've got tight times, especially when other plans are being contemplated in the Legislature right now," Freeman said. "So it's a tough call. You've got to start prioritizing if you're going to take a cut like is being proposed."

In the proposed 2016 state budget, $19.05 million of the $25 million for film incentives would be used to reimburse the State of Michigan Retirement Systems for borrowing used to develop a Pontiac film studio.

The studio is unable to make payments on the debt. Some industry officials speculated the state's uneven commitment to film incentives kept Michigan movie-making from becoming steady enough to support it and other in-state studios.

With the studio debt payments taken away from incentives, there will be less than $6 million to attract movie and television productions if Gov. Rick Snyder, who has favored a measured phase-out of the incentives, signs the budget bill into law.

Tuesday's Senate committee vote revises a House-passed bill that aimed to end the film incentive program Oct. 1 but didn't address the status of the film office. The House bill passed March 11 on a 58-51 vote.

This month, the House also passed a dozen-bill road repair funding proposal calling for an end to the film incentive program. It anticipates that would free up $25 million to $50 million annually for roads.

Snyder has said in the past that it's too soon to end the movie aid, which he credits with boosting badly needed skilled trades jobs in the state. Meekhof said Snyder hasn't completely agreed with the bill passed by the Government Operations Committee.