As Michigan Gov. Rick Snyder and leading Republican legislators hammer out a budget for the coming fiscal year, they’ve made the surprising decision to reinvest in the state’s film industry, partially backtracking on last year’s cuts to incentives.
In a target spending agreement announced Wednesday, an additional $25 million of one-time funding was put aside in the fiscal year 2013 budget for film industry subsidies, doubling the current allotment. According to MLive, the one-time funding is not expected to be renewed in coming years.
It’s a surprising move for Snyder, who last year pushed extensive cuts to Michigan’s film incentive program.
Started in 2008 under Gov. Jennifer Granholm in a move to attract studios and production crews, the state offered rebates of up to 42 percent of expenditures for movies made in Michigan. But last year, Snyder implemented a cap of just $25 million on the program for fiscal year 2012, small potatoes to large productions.
Critics of the original incentive program argued Michigan was giving out more money than it was getting back in taxes, while proponents cited the “trickle-down” effect resulting in a boost to the service industry and more jobs, saying the program needed more time to have a lasting effect.
The new $50 million film incentive cap may seem like a steep increase, but is still less than half of the $115 million in rebates given out by the state in 2010.
Budget Director John Nixon told the Detroit Free Press this year’s budget mixed spending and cuts in an effort to avoid “roller-coaster budgeting,” where money would be poured into programs in one year, followed by cuts in the next.
But the state is ramping up spending this year, after what Nixon called last year’s “right-sizing.”
Legislators learned last week they unexpectedly had more cash to spread around afternew projections estimated an additional $300 million in revenue for this fiscal year. The added funds in the state’s coffers came from gathering more taxes than planned and drops in Department of Human Services spending, as the state cut recipients from welfare programs.
Wednesday’s spending target agreement also calls for additional funding for the school retirement system and K-12 education, a slight personal income tax reduction, and cash for home heating assistance, local revenue sharing and roads.
The budget is expected to be complete by June 1.