Senate votes to end TV, movie subsidies in Michigan
Lansing — Michigan's taxpayer subsidies for film and television production have gone from bang to bust in seven years, as the Legislature on Thursday sent Gov. Rick Snyder legislation ending the program.
The star-studded attraction of two "Transformers" movies, the forthcoming "Batman v Superman" and other blockbusters filmed in Michigan since 2008 weren't convincing enough for lawmakers to change spending priorities.
Legislation awaiting Snyder's likely signature would prohibit the Michigan Film Office and the Michigan Economic Development Corp. from awarding any new grants to companies for film production when the bill is signed into law.
The bill marks a major change in direction. Six months ago, the Legislature approved a seven-year extension of the $50 million annual program, which was scaled back from the more than $200 million taxpayers were shelling out in 2010 to land blockbuster flicks.
"In my estimation, we probably jumped off the end of the dock too soon, too big and we tried to scale it back and make it more workable," said Senate Majority Leader Arlan Meekhof, the West Olive Republican who voted for the original film tax credits in the House in 2008.
"People kept remembering the biggest jump-off point and thought it was … a handout for Hollywood."
The film office has about $32 million in unannounced agreements with filmmakers that will still be honored if the governor signs the bill, Film Office Commissioner Jenell Leonard said Thursday.
"No new agreements can be entered into following the governor's signature," Leonard told The Detroit News.
Snyder's office was noncommittal Thursday about whether the Republican governor would sign the bill, but Leonard said she was preparing to promote the film industry without incentives.
The five-person film office, which has existed since 1979, will remain open to finish ongoing film incentive agreements and continue to promote the development of a creative arts industry, Leonard said.
"It's important that we continue to have a voice in state government for this unique and diverse industry," she said.
Snyder spokeswoman Sara Wurfel said the governor has been focused on keeping the film office open. Lawmakers backed away this week from an earlier plan to shut the office, which is housed at the MEDC.
"The office has had a good history in Michigan even before incentives so he believes it's something that has to be carefully considered, regardless of incentives," Wurfel said in an email Thursday.
'We just need to move on'
The 2016 fiscal year state budget Snyder signed Wednesday appropriates $25 million for the film incentives, but $19.05 million has to be dedicated toward repaying the state's pension system for a failed investment in a Pontiac film studio.
It leaves $5.95 million for the film office to lure television and movie production to Michigan next fiscal year. The legislation directs any unspent film incentives as of Sept. 30, 2016, back to the state's general fund.
John Rakolta Jr., CEO of the Walbridge construction company, was among the investors who lost money in the Pontiac film studio project. He said the film incentives have become a "political football" in recent years in the Legislature.
"(Republican legislators) couched it in as 'Well, we're picking winners and losers' and to a certain degree they're right," Rakolta said in an interview earlier this week. "But they do this every single day in one frame or another. It's just unfortunate. … We just need to move on."
At least five proposed or pre-existing studios in Metro Detroit have shut their doors since the film boom began in 2008. They include Maxsar Digital Studios in Livonia, S3 Entertainment in Ferndale and Wonderstruck Studios in Detroit.
Unity Studios in Allen Park went bust. The Downriver community lost about $16 million on the proposed studio, according to the city's mayor, and a state-appointed emergency manager took over the city's finances for almost two years.
A Securities & Exchange Commission investigation found that documents provided to investors during Allen Park's sale of $31 million in general obligation bonds "contained false and misleading statements about the scope and viability of the movie studio project as well as Allen Park's overall financial condition and its ability to service the bond debt."
Grace & Wild Studios in Farmington has closed, and one of its former owners has created a post-production firm called Ringside Creative in Oak Park, a Ringside employee said Thursday.
Changed spending priorities
The film incentives were created by the Democratic administration of Gov. Jennifer Granholm as a refundable tax credit on 42 percent of qualified in-state production costs. In April 2008, a Republican-controlled Senate and Democratic-controlled House approved the film tax credits by near-unanimous votes.
When the annual costs soared to more than $200 million, Snyder convinced lawmakers to change the program in 2011 to a grant-based subsidy and the Legislature began funding $50 million for the last four fiscal years.
Former Senate Majority Leader Randy Richardville pushed hard to keep film incentives at $50 million annually, even when Snyder would propose $25 million in past budget plans.
In February, Snyder and the Legislature reduced this year's film incentives budget to $38 million as part of mid-year cuts to balance the state budget.
The Senate's swift 24-13 vote Thursday to end the program came six months after the Legislature green-lighted a seven-year extension of the film incentives program through September 2021.
But that was under the leadership of Richardville, an ardent proponent of taxpayer incentives for luring big-name actors and blockbuster movies to be filmed in Michigan. Richardville was forced from office last year because of voter-imposed term limits.
Meekhof had supported film incentives, but said Thursday his spending priorities have changed in the wake of the May 5 ballot box defeat of the Proposal 1 road funding plan.
"Given the election and the failure of Prop 1, the citizens gave us a different set of priorities and we were making sure those things that they think are important we're pursuing first," Meekhof said.
On Thursday, the Republican majority held a quick vote without debate on the merits of the film incentives program. Ten Democrats joined Republican Sens. Tory Rocca of Sterling Heights, Phil Pavlov of St. Clair Township and Jack Brandenburg of Harrison Township in voting against eliminating the film incentives.
Senate Minority Leader Jim Ananich, D-Flint, was absent.
Brandenburg said he's toured film studios in Atlanta and was hopeful Michigan could replicate the tourist-attracting film industries of southern states.
"I really think we're missing out on something," Brandenburg said Thursday. "I don't think we've been consistent with the way we fund it. ... But it looks like it's history."
HED: Online notices bill stalls
The Michigan House failed to gather enough votes to pass a bill that would allow local governments to publish public notices online instead of in newspapers under a phased-in plan.
The House put the legislation up for a vote Thursday but closed voting after it appeared likely that not enough members were in favor. The bill would allow local governments to post public notices on their websites instead of in newspapers after 2025.
Supporters say allowing notices to be posted online would reduce costs for municipalities and give notices a better chance of being accessible to younger residents who might not read newspapers.
Critics say the change would provide only small savings compared to total budgets for local governments. They also say publishing notices in newspapers provides an independent record.
-- Associated Press