Michigan Film Office Fails to Report $72 Million Handed to Hollywood

Published March 15, 2011

The Michigan Film Office appears to have under-reported by 31 percent the amount of money it gave out to Hollywood’s film producers, according to James Hohman, fiscal policy analyst at the Mackinac Center for Public Policy.

According to Hohman, about $72 million in tax credits were not included in the 2008 and 2009 reports put out by the Michigan Film Office. Hohman caught the budgeting mistake when he examined the latest 2010 report put out by the Michigan Film Office and compared it to the 2008 and 2009 reports.
“Bureaucrats can’t really be trusted to measure the effectiveness of their programs, including in this case, the most basic costs,” Hohman said. “A lot of people have been focused on the cost of this program. And it is substantially more than advertised the past two years.”

Michigan Film Office Spokeswoman Michelle Begnoche said there could have been a discrepancy involving under reporting in 2008 and 2009.

‘No Longer with Film Office’
“The folks who wrote the reports in past years are no longer with the Film Office, so we can’t speak to the reporting methods used in previous years,” she wrote in an e-mail. “However, we can say that the 2010 report was comprehensive, transparent and met all the statutory requirements.”

Janet Lockwood, former director of the Michigan Film Office, wrote in an e-mail: “If you all are concerned that there’s a $72 million liability lurking out there somewhere, I sincerely do not believe that is true.”

The apparent under-reporting problem occurred under former Democratic Gov. Jennifer Granholm. The film tax credit is at risk as Michigan’s current governor, Republican Rick Snyder, proposes to limit it to $25 million a year.

42 Percent Credit
Some proponents of the tax credit, such as Detroit Free Press columnist Mitch Albom, are trying to keep it alive. Michigan’s film tax credit incentive allows a refundable tax credit of up to 42 percent to movie companies for projects in the state.

The 2008 film office report states the reported tax credits that year were $47.9 million as of Feb. 9, 2009. Hohman said one possibility is that the film credits that were pending at the time the report was released were never included in later reports.

‘Trying to Hide Costs’
State Representative Tom McMillin (R-Rochester Hills), sifted through the bills film companies turned in to the state in 2010. He said he thought the state was not being up front about the true costs of the program under Granholm.

“It doesn’t surprise me they were trying to hide the costs to the taxpayers,” McMillin said. “The old way of doing things was to try to hide and obfuscate. The more light we shine on it, the worse it gets.”

Tom Gantert ([email protected]) is senior capitol correspondent for Michigan Capitol Confidential, a news Web site of the Mackinac Center for Public Policy. Used with permission.