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With Film Incentive Capped, Michigan's Movie Jobs Face An Uncertain Future

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MICHIGAN FILM INCENTIVE
Michigan Gov. Rick Snyder speaking in Southfield, Michigan, in October. Snyder has capped the state's film incentive at $25 million, which some say is causing jobs to dry up. | AP

Sean Doerr knows Detroit. He's been poking around the city since he was 14, exploring its forgotten buildings and learning the names of architects long gone. Now 21 and a senior at the College for Creative Studies, he's seen Detroit's parks, its factories, its greasy spoons and everything in between.

In the last couple years, Doerr has picked up some part-time work as a location scout for movie producers. The work suited someone with Doerr's knowledge of the city, and the timing was right, because in 2008, Michigan's film industry began to boom.

"You could definitely tell the city was more vibrant, because there were film crews everywhere," Doerr said in an interview. "It really seemed to inspire a lot of people."

The film crews were in town thanks to Michigan's original film incentive program, launched in 2008 under former Democratic Gov. Jennifer Granholm. It was the most generous such program in the country -- the state was providing a rebate of up to 42 percent of a production's expenditures. Soon, television and movie studios were flocking to Michigan.

No one expected filmmaking to replace the hollowed-out auto industry or bring the state up to full employment, but at the outset, at least, the movie business seemed to gesture toward two of Michigan's biggest labor-market concerns: how to keep the young creative class from leaving the state and how to keep members of the large industrial workforce employed.

But the momentum didn't last long. In October of this year, the new state budget capped the film incentive at $25 million a year -- a sharp drop-off from 2010, when there was no cap and the state approved $115 million in rebates.

With less money to go around, studios are now taking their big-budget pictures elsewhere.

"It just instantly deflated," said David London, president of Parliament Studios, a Michigan video production company founded in 2009. "A lot of people who had kind of pinned their hopes on this industry were just left out to dry."

'AN INCREDIBLE TRICKLE-DOWN BOOM'

Blame for the reduction of the film incentive is usually laid at the feet of Republican Gov. Rick Snyder, who succeeded Granholm in January.

Snyder could not be reached for comment for this article. But he has said that he views the tax credits as a form of "picking winners and losers" among industries, which he has called an inappropriate role for government to play. Soon after taking office, Snyder began arguing that the percentage-based film incentive was leading the state to give back more in rebates than it was taking in.

A study released in 2010 by the state Senate Fiscal Agency seemed to bear this out, concluding that Michigan was getting back only 17.5 cents in taxes for every dollar it spent on studio incentives.

But advocates for the incentive program, including people employed in Michigan's entertainment infrastructure, say the SFA's narrow focus on tax dollars missed the true business benefits accruing elsewhere.

For one, service industries, including hotels, restaurants and car rental facilities, were getting more customers thanks to the influx of filmmakers. In 2008 and 2009, one study found, film crews booked almost 50,000 hotel rooms in metro Detroit and introduced a combined $10 million in revenue and food and beverage spending.

Meanwhile, jobs were popping up for Michigan residents, supporters say. Sets needed to be built, lights rigged, makeup applied. There was work for painters, carpenters, electricians, stylists, location scouts and actors -- or anyone interested in becoming one of the above.

"The film industry in Michigan was causing an incredible trickle-down boom," said Mort Meisner, president and director of Michigan's Center for Film Studies.

The precise effect of movie-studio cash on the state's private sector is difficult to quantify, but one widely cited study, from the accounting firm Ernst & Young, found that every dollar spent on film incentives generated nearly six dollars in economic activity for Michigan businesses.

The same study found that in 2009 and 2010, film projects had created a total of 6,491 full-time equivalent jobs in Michigan.

This was far from enough to fix the state's unemployment problem -- in those same years, the jobless rate in Michigan hovered between 13 and 14 percent, well above the national average.

Opponents of the film incentive, including the Michigan-based Mackinac Center for Public Policy, a conservative think tank, contend that job growth created by movie production was too modest to justify what the state was giving away in tax dollars.

But advocates for the film incentives say the job growth seen since 2008 was merely a promising beginning, and could have increased if given the chance.

Meisner's organization, the Center for Film Studies, houses one of the numerous training programs that emerged for Michigan residents looking to get involved in the movie industry.

According to Meisner, the center has trained and placed hundreds of people in movie-related jobs. Its past students include "laid-off carpenters, electricians and autoworkers," he said, as well as recent high school graduates "who didn't have the aptitude, desire or financial means to go to college."

And while the film incentive spurred commercial activity and brought some momentum to Michigan's torpid labor market, there were also other, less tangible benefits.

"It gave the entire region something to hope for, something to look up to," said Parliament Studios' London.

Michigan isn't often cited as one of America's cultural centers, and some of the best-known depictions of the state in film take place against a backdrop of economic calamity ("Roger & Me") or urban burnout ("8 Mile"). The film incentive was bringing stars to Michigan on a regular basis -- stars like Clint Eastwood, George Clooney and Courtney Cox, all of whom have filmed movies in the state since 2008 -- and with them a sense of energy and artistic cachet.

"Finally we had something cool, something high-profile, something with culture," said Dayna Polehanki, owner of Detroit Casting Company. "Finally, something we could be proud of."

'WHATEVER HAPPENS, HAPPENS'

In February of this year, shortly after Gov. Snyder signaled that he was planning to curb the film incentive in the annual state budget, movie houses started walking away.

Marvel Studios, for example, backed out of plans to film some scenes for its tentpole feature "The Avengers" in Michigan, ultimately taking that project to Ohio instead, which offers a film tax credit of up to 35 percent. Marvel also passed on Michigan for its "Iron Man 3" shoot. The company is planning to take that project to North Carolina next year, and the project will reportedly employ more than 1,500 locals as extras or crew members.

Other movies that dropped plans to film in Michigan following Snyder's announcement include "Freelancers," starring rapper 50 Cent; "Starbright," starring James Earl Jones and Kathy Bates; and an untitled project from "The Bourne Identity" director Doug Liman that had proposed to hire 2,200 people. "Freelancers" and "Starbright" reportedly took their productions elsewhere because it was unclear whether they'd be awarded the amount in incentives they asked for.

"Everybody who was about to cast, who was about to make films, just kind of bolted," said Jenny Feterovich, a managing partner at Parliament Studios.

Meanwhile, the Michigan Film Office, which handles studio requests for film incentive funds, is making do with its new, limited budget.

The Film Office now faces hard choices about which projects to sign off on, but it has had some time to prepare for these restrictions. Though the $25 million cap was only enacted for the fiscal year beginning October 1, the MFO kept itself to $25 million in fiscal 2011 as well, and approved 21 projects during that time. Among the projects it did not approve was the Doug Liman film, which had alone requested almost $23 million in incentives.

"I think there's this perception that somehow the film industry in Michigan has died," Michelle Begnoche, communications adviser at the Michigan Film Office, said. "If you look at what we've done with the resources we've had, we still had a fairly good year."

At the moment, the Michigan Film Office is holding off on considering studio applications for incentives for next year. It will begin looking at those requests if and when the state legislature passes a bill currently being heard in the Michigan House of Representatives.

The bill, which could go to Gov. Snyder for a signature by the end of the year, proposes criteria for how the Film Office can allocate its $25 million. It would require that productions spend at least $100,000 in Michigan, and stipulates that projects that employ Michigan personnel would be eligible for greater funding than projects that don't. These conditions, say the bill's supporters, will help Michigan turn film activity to its economic advantage.

But the bill does not raise the $25 million spending cap, and people attached to Michigan's film industry have expressed little optimism that business will rise again to its previous levels.

"Whatever happens, happens," said Polehanki, the casting company owner, adding that she expects to lose "tens of thousands" of dollars this year as a result of the incentive cap.

"I love having this career," she said, "but I have resigned myself to the fact that it might completely go away."

CORRECTION: A previous version of the post mistakenly spelled Ms. Polehanki's name as "Polehanski." The Huffington Post regrets the error.

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