When I drove to Detroit for the first time, I thought I was driving through an empty movie set. The city was like a ghost town with dilapidated buildings, broken windows and not a soul in sight. It was kind of like one of those old cowboy movies where everybody is inside waiting for the town sheriff and the bad guy to walk out of opposite buildings, anxious to see who can pull their gun faster.
But the truth about the scene I was driving through wasn’t anything close to that. Detroit is an aging city, withering away as the automobile industry is failing, and not enough money and resources remain to save the city. Since the early 1900s, the auto industry has been the primary employer and money-making machine of Michigan. For a long time, the economy of the state and even the economy of the country were largely banked on the industry’s success. A hundred years later, it’s a different story. Auto companies are going bankrupt and now new industries that can diversify Michigan’s economy are necessary.
In an effort to promote such diversity, state legislators in Lansing approved the Michigan Film Production Incentive last year. It allows a whopping 42-percent tax refund on production costs for motion pictures shot in Michigan. It also offers tax rebates of up to 25 percent on the costs to build production-related facilities in the state and includes a 50-percent, non-refundable tax credit for on-the-job training expenses.
In light of recent budget woes, state lawmakers are now debating whether or not to limit these benefits and cut incentives. The state government projected that film-related rebates could potentially drain $150 million from next year’s state tax collections. But it’s important for lawmakers to remember that having a portion of the $60 billion U.S. film industry in Michigan is crucial for balancing out the declining auto empire.
Keeping filmmakers in Michigan can only be favorable, as film productions spent over $65 million this past year, according to Michigan State University’s Center for Economic Analysis. This is not including the hotels booked, restaurants visited and other services used by the casts and crews. According to the Detroit News, an Oakland County inn reported recently booking 10,000 room-nights to movie crews alone (Lawmakers debate limits to Michigan film incentives, 06/04/2009). Such daily living expenses directly flow to the local economy and it’s crucial that they keep coming.
MSU’s Center of Economic Analysis also projected that by 2012, film spending could rise to $188 million, creating 2,922 jobs and having a $336 million economic impact. Although this sum is less than the once billion dollar auto industry’s influence, Michigan needs every job it can get.
Michigan shouldn’t be cutting incentives right now because the good being done by the film industry is worth the initial drain in taxes. It is actually a test of patience for lawmakers. The aim should be to establish a large enough movie infrastructure in Michigan for the state to have a more prominent presence in the U.S. film industry before tax incentives can slowly be reduced.
For now, Michigan needs to keep the terms of the Michigan Film Production Incentive as they are and maximally utilize the money coming from the film industry. And hopefully in the near future, I’ll be driving through Detroit again — through a quiet, decrepit street — and actually be in the middle of an empty movie set.
Vivian Wang is an alum.