Several years ago under Democratic Governor of Michigan, Jennifer Granholm, the state Congress passed a very tidy set of tax cuts for filmmakers setting up shop in Michigan. The result has been large numbers of films being made here, spin-off companies starting up and a new movie industry being born in the Midwest. It’s safe to say that, at least in southeast Michigan, nearly everyone knows someone who has been in a movie or a television show, at least as an “extra”, that was filmed here.
When our new Republican Governor, Rick Snyder, the self-named “Nerd Governor” released his budget last week, those tax incentives, along with tax incentives for brownfield development and for companies making batteries for the electric vehicle industry, were eliminated.
I’m trying hard to not hate Rick Snyder until he does something I truly detest. So far, he has been as moderate a Republican as you might hope for. He has publicly stated he will work with the unions, saying, “I believe we should go through the collective bargaining process in terms of our discussion as we ask for concessions”.
But with this budget, he’s moving into very dangerous territory. Not only that, he’s being dragged to the right by a very conservative, GOP-led House and Senate.
Here’s the thing about the movie industry in Michigan: it is bringing in LOTS of money to the state. A study released this week shows that every dollar spent to lure moviemakers to Michigan returns SIX DOLLARS of spending in our state. That’s a very fine return on our tax money-funded investment in a state that is reeling from unemployment.
We also have a LOT of “brownfields”; former industrial sites not suitable for use for residential or most commercial developments but perfect candidates for rehabilitation into manufacturing locations. The tax incentives … well … incentivize companies to do just that rather than despoiling other places.
And the tax incentives for battery manufacturing for electric cars? Michigan may literally be poised to be the battery capital of America if initiatives put in place under Governor Granholm, seeds she planted, flower into prosperous research and manufacturing hubs to supply domestic vehicle manufacturers. Or we can cede that to other states or even other countries.
What Snyder is counting on is that a lower overall tax rate will create an environment where ALL businesses will take a close look at Michigan and decide to set up shop here. In that environment, he believes, true market forces will pick the winners and the losers, rather than the government which, he contends, in some ways correctly, has done a poor job of this in the past.
He may be right. He may be very, very wrong.
But I do know this: some industries need a kick-start to really get going. And we’re not competing on a playing field that easily forgives unilaterally disarming by taking away tax incentives. Industries like the movie industry and nascent manufacturing technologies need nurturing. The Granholm administration admittedly picked them as “winners” to cultivate. I believe they did so smartly.
Snyder has ended that (though existing agreements will be honored.) He’s banking on something else.
I hope he’s not wrong.
I’m just sayin’…