Explaining WHY the film credit is not a good deal..

On the way out from the hearing in Traverse City Monday, a couple who has a daughter filming in Bulgaria commented on my remarks (I pretty much insisted the deal reeked of hypocrisy) before the panel. The gentleman insisted the film deal was “found money” and that we were getting NOTHING before by comparison.

True.. we were getting nothing… but..

Those proponents who feel that the deal worked out was a bargain, and that we are getting FREE Money should consider the fact they have lost the value this state brings without the additional money that was essentially “left at the table.” They forget the natural beauty, the variety of urban, nature and waterscapes which are highly sought after already. Michigan has SO MUCH to offer ANY industry without any overblown incentives.

That’s 42% CASH Folks.  Yeah, I know that Rebates aren’t usually turned in for redemption, but these are such big deals they HIRE someone or a TEAM to make sure the cereal box tab is cut out properly. Maybe they would have come for less? And finally WHO made this deal anyhow?   PT Barnum is widely credited as describing such folks in my opinion, and it ain’t just as “ladies and gentlemen.”  A 42% CREDIT, not a tax abatement, which is typically used for manufacturing and other industry incentives.

But WHY? Why 42%.. why not 20%? or 10%? I mean no disrespect for other states who might be offering 25% or thereabouts, but 42%???!!!

In the hearing, we were issued a policy brief. Probably the same thing legislators received before voting on the 16 bills which make up this giveaway of Michigan resources and taxpayer funds. there is a particular line I present here:

“According to a January 2006 Virginia Commonwealth University study, a film production company usually leaves 25-35 percent of it’s budget behind in the community where it films. For example, a film production with a $10 million budget has an overall impact of about $3 million on the local economy.

The VCU study also said that if Virginia enacted an incentive package competitive with their neighbors, the return on investment would be tremendous. The study said that if Virginia distributed $10 million in incentives, the state would see an economic impact of $143 million. – for every dollar spent the return is $14.30”

Whoa… Empty the coffers! We gonna be rich folks!! Maybe if we blow the WHOLE WAD (Michigan’s budget is $42.5 BILLION) we can solve Michigan’s, the federal government’s, and the world’s hunger problems all at once! …what? Are you saying “that doesn’t make any sense” to ME? ..ok I played ya. Just wanted to see if you were paying attention. Now that we know you are.. READ the above statements AGAIN.

Notice what is missing? (and I am not the person who left it out.) c’mon, look a little harder… I have a reasonable level of patience. it’s RIGHT THERE!.. or not.

The statements in the brief do not explain the manner of the distribution of the incentives indicated in the study. They DIDN’T SAY whether it was tax Credits, training incentives, worker assistance accommodations, or even FREE DONUTS! (personally, I can attest to donuts being a major decision maker for me) There is NOTHING that explains HOW 10 million in incentives APPLIES to the situation.

BUT using the logic invented for the MICHIGAN Film credit program lets try a little math: First statement references $3 million impact on a $10 million budget (30% ) so… for a $143 million dollar impact, then movie productions expense would have to be $476,000,000.00 (I prefer to use the zeros.. makes it look bigger) Assuming that the $10 million in incentives applied to GENERATE that $143 million impact was in the MICHIGAN model of credits, then we need to hire new negotiators. These used car salesmen saw us coming… a mile away, and we bought a lemon.

LOOK.. the math says 2%.. 2% of film budget is what VCU was talking about! where did the other 40% come from? Oh my god, we are about to have some serious buyers remorse.. I hope we at least get royalties.. at least an autographed DVD…

Of course having Teamster Boss Bill Black at the hearing made it a little more clear perhaps? the 40% extra may be for the 80 Plus contracts he says are already out for review for his TEAMSTER employees.. (remember in the last post I mentioned $20/hour coffee getters..)

Michigan, I will again remind you of the value you have in resources, people and industry. The film industry can be a vibrant and exciting addition to our economy, yet we shouldn’t shell out all of our gold for merely tinsel in return.

8 comments for “Explaining WHY the film credit is not a good deal..

  1. Logan5
    July 30, 2008 at 3:13 pm

    So the real time fact of the matter is that Michigan is currently on the hook for 200 million dollars in rebate incentives, right?

    The law states in order to qualify for the rebate a production company must have spent the money here, and turn in the receipts proving they spent the money here in Michigan, before the treasury will even cut a check to ANYone.

    200 million dollars in rebates is 42% of how much in total that must have been spent here in Michigan to to get a check cut?

    Hmmmm? Need some help? It’s a lot of zeros I agree.

    It blows around the state right now. I agree with you on that.

    But I’d like to see smart people like yourself start offering solutions along with the problems they pose. Or are you perhaps one of those closet democrats wearing a republican power tie too? Who knows?

    More importantly, who cares.

    Michiganders are far tougher than this blog would lead the rest of the world to believe.

    Let’s start proving it, shall we?

    Peace.

  2. jgillman
    July 30, 2008 at 7:28 pm

    I guess I don’t understand what you are saying? Power tie?

    As for solutions, I would suggest revisiting the deal they made. It was done in poor faith with poor information at hand. At the SAME TIME, businesses in this state are being saddled with a regressive business tax they couldn’t avoid by ANY means other than NOT being here. I suggest ELIMINATING those taxes ENTIRELY.

    As for the math, because $500 million might be spent, does NOT mean the coffers of the state will benefit to the extent it can afford cutting the $200 million pay out. (if that is in fact where it is.) If that is the way it works, I guess another solution is EVERYONE gets a 42% rebate to stay in the state.

    As for proving ANYTHING, what are you talking about? Prove what? About being tough? say what? where does it indicate Michiganders are not tough? On this site?

    And I care. That is all that really matters for the purposes of this blog. I care about the constant ripping away of our freedoms. Our financial resources are the one way in which the government can restrain our true liberty. And EVERY time I see another tax increase alongside a special interest payback, it bothers me a little more.

    And.. Since we are ALL special interests, I just want my cut of the pie. That involves me keeping what is mine, you yours, and so on.. no need to “reward” outside of the DIRECT benefit form those interests.

    Appreciate the words.

  3. July 31, 2008 at 12:19 pm

    Shouldn’t someone be on their way to the Sleepshop?

  4. Kevin Rex Heine
    July 31, 2008 at 9:55 pm

    Here’s a thought, Logan5 . . . the Michigan Fair Tax Initiative. Just in case you want to give a read, check the post at . But that’s just my thought.

Comments are closed.

Loading Facebook Comments ...