The fate of Michigan's substantial film production incentives could ride on the outcome of tomorrow's midterm elections, and with Republican gubernatorial candidate Rick Snyder leading Democrat Virg Bernero by double digits in the polls, things don't look good for the program’s supporters.

Since being enacted by the Michigan legislature in April 2008, the program has offered a 40-percent tax rebate on in-state expenses to eligible production entities and an extra two percent for those filming in commercialized areas like Ann Arbor. The rate is lower – 30 percent – for productions using crews and talent from outside the state.

More than 100 films have been produced in Michigan since the incentives were passed, according to the Michigan Film Office. And after spending only $2 million on film production in 2007, film producers have now spent almost $350 million, and that number is expected to reach a possible $650 million by the end of this year.

Speaking recently to Detroit radio station WJR-AM 760, Snyder criticized the incentives.

"I think it's something that needs to be adjusted,” he said. “It is creating jobs, but at what cost to other alternatives?"

On the same program, Bernero voiced his continued support of the incentives.

Several state legislators share Snyder’s concerns as to whether or not Michigan is receiving a significant return on its investments.

“The Michigan film credits are an open-ended promise that could cost us $50 million next year or $250 million next year. There’s no limit,” said state Sen. Mickey Switalski (D–Roseville) in an interview with the Daily. “The first thing we need to do is decide how much we can invest in film credits, and put a cap on it. The second thing we need to do is establish a permanent industry, by gearing the credits toward facilities that produce television shows, commercials and video games,” he said, instead of awarding taxpayer-supported benefits to people who will likely return to their home states.

Switalski’s sentiment is shared by his senate colleague Nancy Cassis (R–Novi), whose September op-ed in the Detroit Free Press criticized what she called financial inefficiency in the program, citing a Senate Fiscal Agency report to support her stance.

“According to the data, the film credits are less effective than previously thought, bringing the state only 11 cents back for each dollar given away in credits,” Cassis said. “In 2008, according to the report, 47.4 percent of the expenditures that qualified for the Media Production Credit did not affect the Michigan economy — primarily because they were made to individuals and firms outside of Michigan."

Donald Grimes, senior research associate at the Institute for Research on Labor, Employment and the Economy at the University, agrees that the incentives don't present a long-term benefit for the state.

"It costs more money than it’s worth in terms of the state budget — they give off more incentives than what they get back in tax revenue," Grimes told the Daily.

"When they give the film subsidy, what they’re basically hoping is that on one level that they can somehow create an industry that doesn’t depend on that subsidy, or secondly that we get some good publicity for the state. And so those are the two arguments for it," he added. "But it is a direct subsidy, it doesn’t pay for itself, and any argument that would say it pays for itself is sort of crazy."

The Senate Fiscal Agency report also describes how the additional revenue brought to the private sector through film crews coming to Michigan presents financial drawbacks for the state.

"While the private sector receives a positive net benefit, the State faces a negative net benefit in that the ‘feedback’ in additional tax revenue from all of those hotels, rental cars, lumber yards, florists, etc. does not exceed the cost of the tax credits," the report states. "The loss to the State exceeds the gain to the private sector.