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Such estimates were critical not only for state budgeting purposes, but for evaluating the effects of the program. The SFA also predicted that based on the number of applications approved for the Film Incentive, the state would grant an estimated $148.8 million in tax credits to movie companies in 2008, compared to $98.8 million in expected tax revenue. In May 2008, a Michigan Senate Fiscal Agency memorandum cited the state's Consensus Revenue Estimating Conference in warning that, "he film tax credits will cost the State far more in business tax credits than it is expected to gain in income and sales tax revenue." The memo also stated, "According to the projections, if a film production company spent $10.0 million in Michigan, the State will gain less than $700,000 in income and sales tax revenue but will pay out about $4.0 million to the production company in the form of MBT credits." The Muskegon Chronicle reported, "In 2008, the Michigan Film Office received 221 scripts for consideration, leading to 136 applications and 71 approvals for the incentive program in the nine months after the legislation passed." īecause the Film Incentive's tax credits are refundable, the program's cost is substantial. The signing quickly drew media and public attention, as did the number of scripts and film incentive application submissions reported by the Michigan Film Office. In a press release, she announced, "We're going to grow this industry and in the process, grow our economy and create jobs." The legislation passed with only one state legislator voting against it, and it was signed into law by Gov. Granholm on April 7, 2008. The bills also transferred the MFO to the Michigan Strategic Fund from the Department of History, Arts and Libraries. There are further tax credits for infrastructure spending and workforce training. The credits were refundable, meaning that the state issues the company a check for the difference if the company's Michigan-related spending exceeds its tax liability. The most significant portion of the legislation amended the Michigan business tax law to allow film production companies to earn tax credits of up to 42 percent of the companies' spending in Michigan. Under that state financial incentive, three movies were filmed in Michigan in 2007.Ĭlaiming a need to increase the tax incentives in order to better compete with other states and create jobs, legislators passed a package of 15 bills in 2008. The smaller the film company's in-state spending, the smaller the rebate the company received from the state. The incentives granted a graduated tax rebate of up to 20 percent of a film or commercial production company's spending if the company spent between $200,000 and $10 million in Michigan. Michigan's first film industry tax incentives were enacted in a legislative lame duck session of 2006. The Michigan Film Office reports that 127 films (or portions of films) were produced in the state between 19 - about two films per year. He Michigan Film Office was formed in 1979 to "assist and attract incoming production companies in the entertainment industry, including film, TV and music." Historically, Michigan has seen some degree of movie production, though nowhere near the magnitude of long-time production meccas California and New York.