Michigan's film credits have failed to create jobs, explains Sen. Cassis

“This analysis once again raises serious questions about the effectiveness of the state’s film credits to create jobs. The finding adds to the body of evidence that the refundable film credits are not an economic generator,” said Cassis, R-Novi. “As a job creator, film subsidies have failed in Michigan and in other states as well. Despite giving away $117 million of taxpayer money in film credits, Michigan’s movie industry has lost a higher percentage of jobs than the state as a whole. With the budget problems we face, we cannot afford this generous subsidy.”

The Mackinac Center report studied Bureau of Labor Statistics data and found that between the month that the film credits were signed (April 2008) and September 2009 (the most recent month available) the number of people employed in Michigan’s “motion picture and sound recording industries” fell from 5,867 to 5,290 – a 9.8 percent decline.

“These refundable credits are being subsidized by taxpayers and small businesses who continue to struggle to pay the bills and feed their families,” said Cassis, chair of the Senate Finance Committee. “The nonpartisan Senate Fiscal Agency says the state only gets 17 cents back for every dollar it gives away in film credits and that the average wage in Michigan’s movie industry has dropped by almost 6 percent since the credits were enacted. That is not sustainable or effective.”

The author and analyst of the Mackinac Center report, James Hohman, noted that the estimated $155 million cost of the film credits in Fiscal Year 2011 is equal to 7 percent of what the Michigan Business Tax extracts from other state businesses.

“While the state is trying to balance a $1.4 billion budget deficit, we must use our limited tax dollars wisely and effectively,” Cassis said. “It is unfair and immoral to cut funding to key priorities, like our schools, while handing out subsidies to millionaire Hollywood producers. I recently introduced legislation to remove the refundability of the state’s tax credits. We would still give producers a credit to eliminate their total tax liability, but would end the practice of cutting them a check.”

Senate Bill 1246, sponsored by Cassis, would reduce the business tax burden for thousands of job providers and stabilize the state budget by eliminating the refundability with certain business tax credits going forward. The bill has been referred to the Senate Finance Committee for consideration.