LANSING, MI -- Lawmakers this week passed a budget that would effectively slash Michigan's film incentives to $6 million in fiscal year 2016, but Michigan Film Office Director Jenell Leonard says the industry can "absolutely" survive at that funding level.
"The film industry shouldn't be defined by just the incentives program. The film office has been here since 1979," Leonard said.
From 1979 until 2008, the film office didn't have any incentives to give out. In 2008 the film office started giving out tax credits, and under the Gov. Rick Snyder administration moved to direct grants. For the past few budget cycles, the film office has been allocated $50 million a year to use on film incentives.
But in working on the budget for fiscal year 2016, lawmakers made a change. They allocated $25 million to the film program but earmarked $19 million of it to pay off a state retirement fund obligation on a Pontiac movie studio. That leaves $6 million for incentives.
Related: Winners and losers in 2016 Michigan budget
The State of Michigan Retirement Systems under the Gov. Jennifer Granholm administration guaranteed a bond for the Pontiac-based Raleigh Studios. The studio has defaulted on some of its payments, leaving the State of Michigan Retirement Systems on the hook.
The retirement system has made interest payments totaling $1.05 million because of the guarantee, according to Michigan Department of Treasury spokesperson Terry Stanton.
Leonard said the lower funding amount for incentives would shift the Film Office's focus to smaller productions coming from Michigan's indigenous film industry.
"The Hollywood producers are looking for a larger incentive than $6 million, most of the time," Leonard said.
But the Michigan Film Office already works regularly with Michigan film companies. In 2014, the office approved 27 projects. Of those, 90 percent were small, independent type films, more than half from Michigan-based companies.
The legislature has cooled on the credits in recent months. The House voted in March to completely eliminate the credits. This move doesn't go that far.
It will need approval from Gov. Rick Snyder, who told reporters last week that he's had somewhat of a challenge with the film credit for years.
"There's varying degrees of return on investment, such as the Business Development Program is showing strong returns, they're much better than tax credits by far. Pure Michigan has been a success story. The film credits haven't brought the same level of return as those two other programs," Snyder said.
Proponents of the film industry have argued that the industry needs time to establish itself in the state, and the film credits are helping. In fact, some people are petitioning Snyder to keep the funding level at $50 million.
Emily Lawler is a Capitol/Business reporter for MLive. You can reach her at elawler@mlive.com, subscribe to her on Facebook or follow her on Twitter: @emilyjanelawler.