by Sarah Curry
Director of Fiscal Policy Studies
Picking winners and losers using incentives is never a good idea for governments, especially film incentives. Unfortunately, film incentives are still on the table for the NC budget, but maybe NC lawmakers should take the lead from Michigan. Last week, Michigan Rick Snyder signed the law ending Michigan’s film incentives program. The Tax Foundation, a non-profit government watchdog group reported on this smart move by Michigan.
On Friday, Gov. Rick Snyder (R-MI) signed HB 4122 into law, officially ending Michigan’s film Incentives program effective October 1, 2016. The program, known as the Michigan Film and Digital Media Incentive, partially reimburses (up to 25 percent) eligible production companies for certain expenditures incurred while producing digital media and film projects within the state. According the Michigan Film Office, total spending in Michigan must exceed $100,000.
The new law includes $25 million in funding for fiscal year 2016. However, $19 million of that is earmarked for debt obligations against the state pension fund, incurred when the fund was used to secure bonds (now in default) for the construction of a film studio in Pontiac which has since gone under, a cautionary tale if there ever was one. None of the $25 million in funding can go to the issuance of new credits, and any funds remaining at the end of the program will be absorbed back into Michigan’s general fund.
Michigan becomes the second state to end its film program this year, following Alaska’s termination of its program due to budget deficits. Arkansas has also suspended funding for its program in the upcoming year.
A growing number of states are scaling back or even ending their film incentive programs as their ineffectiveness grows more apparent. With the adoption of HB 4122, Michigan now joins their ranks, and it won’t be the last.