by Tom Shields
June 16, 2009

“Greed, for lack of a better word, is good. Greed is right. Greed works.”
—Gordon Gekko (Michael Douglas)
Wall Street

I don’t think anyone was surprised when $160,000 came up missing from an armored truck that dropped its load on I-75 recently. One observer called it the “freeway lottery.”

No real shock to learn Detroit City Councilwoman Joanne Watson never questioned a $68 property tax bill on her $150,000 home for the last nine years. She joked she didn’t know anyone who, in the same position, would argue to pay more.

And, after taking home $48 million of Michigan taxpayer dollars last year, it wasn’t hard to imagine why Hollywood is encouraging the legislature to keep the money flowing.

It just goes to prove the theory that if you give away free money, someone will happily take it.

As the legislature tries to figure out how it balances a budget that’s more than $1 billion short this year, a number of studies are being released that support or question the financial sense of continuing the “nightmare on Capitol Avenue” program. People a lot smarter than I have looked at the numbers. The conclusion: it all adds up to a bad deal for Michigan taxpayers at a time when we can least afford it.

The state Film Office reports $125 million was spent last year to produce movies in Michigan. But a study commissioned by the MEDC (in support of the program!) says that only about half of that — about $65.4 million — was spent in Michigan, while the other half was paid to out-of-state actors, producers, writers and workers.

The MEDC-commissioned study says the film subsidy helped create 2,763 Michigan jobs, but also points out that each job only lasted an average of 23 days — the equivalent of 254 full-time jobs.

So, at a cost of $48 million for 254 full-time jobs, Michigan taxpayers are subsidizing each job to the tune of $188,000. Even if we are to believe the “multiplier effect,” we’re still spending more than $43,000 for every job created.

That’s just the beginning.

“It’s alive.”
—Dr. Frankenstein
Young Frankenstein

If you don’t think we’ve created a monster here, check out these stats:

• Estimates for this year’s film subsidy are $80 million–$100 million.
• It could be worse. The Film Office approved projects totaling $492 million during 2008 (worth up to $200 million in tax subsidies). Be grateful that only $125 million was spent last year.
• The Senate Fiscal agency pegs the cost of the subsidy at more than $150 million in 2010.
• Three companies say they are going to build production facilities in Michigan, at the cost of over $300 million. Those companies may qualify for the 25-percent infrastructure rebate.
• The production companies are planning to offer subsidized job training at a cost of $3,000–$7,000 per person — or about the same price as a year’s college tuition. Training qualifies for a 50-percent film commission subsidy, and the gov’s office says they have additional job training money available.

For context, Senator Nancy Cassis says, “The Senate Fiscal Agency estimates that it will take 20,000 small businesses or 148,000 taxpayers with an income of $45,000 per year to pay for the subsidy in 2010.” Next year it will cost the state about one-quarter of the MBT surcharge. At the same time, we can’t find a way to give a tax break for Michigan’s existing and struggling businesses.

This is an experiment that has gotten out of control. While Michigan forges ahead, states like Louisiana (which spent $117 million last year) are scheduled to roll back their subsidies to less than half of Michigan’s.

As Michigan closes prisons, cuts education and is forced to use Medicaid money to balance the budget, the Hollywood producers continue to send scripts for more money.

Michigan seems to be star-struck by all this. No question it’s interesting to have actor sightings in our communities, and it’s great to have stars like Jeff Daniels and Mitch Album testify in committee on how great Michigan’s program is. Mitch is a great writer. Jeff is a talented actor. At some point fiscal reality has to set in.

As the voice in the Field of Dreams said, “If you build it, they will come.” So, if we keep paying for actors, writers, producers, studios and the job training, Hollywood will continue to come. Just like those mooching relatives that come for the weekend and stay a lot longer — at least until all the food is gone.

Tom Shields is founder and president of Marketing Resource Group (MRG), a Lansing-based political marketing and public relations firm.