‘Oz’ film costs Michigan taxpayers $40 million

Robby Soave | Reporter

Thanks to Michigan’s film subsidies, the production of Disney’s “Oz the Great and Powerful” forced the state to pay nearly $40 million to Hollywooders critics consider the Wicked Witch of the West.

Back in 2010, Michigan’s film incentive program was the most generous in the nation, offering studios a 42 percent refund of all in-state production costs. It was enough for Disney to click its heels three times and say, ‘There’s no place like Michigan.’ Thus production of its “Wizard of Oz” prequel film, which premiered last week, took place in the Great Lakes State.

With a $100 million in-state budget, the estimated cost to taxpayers is about $40 million, according to the Mackinac Center for Public Policy.

“It just comes right out of taxpayers’ pockets,” said James Hohman, assistant director of fiscal policy at Mackinac, in an interview with The Daily Caller News Foundation.

The costs continue to roll in. The film’s production company, Emerald City Film Inc., had trouble making its bond payments — forcing the state to provide even more financial assistance.

“I don’t like that [the money] went out of the state and continued to enrich millionaires and billionaires with government subsidies,” said state Rep. Tom McMillin in a statement.

The goal of the incentive program is to persuade film studios to relocate to Michigan and create a long-term source of economic growth for the state. But in practice, Michigan’s quest to become the Hollywood of the Midwest is as troubled as a Kansas farm during tornado season.

“Despite having subsidized this industry more than anyone else had been, we don’t have a single viable film studio,” said Hohman. “Even if we did, it wouldn’t be worth the hundreds of millions of incentive dollars we’ve offered this industry.”

Film studios tend to hop from state to state, chasing the latest and greatest subsidy. They seldom establish long-term operations anywhere but California.

“MPIs [motion picture incentives] create mostly temporary positions with limited options for upward mobility,” concluded William Luther, an adjunct scholar at the Tax Foundation, in a 2010 report.

After taking office in 2010, Michigan Gov. Rick Snyder capped the subsidy at $25 million to prevent studios from cashing in on what Luther called a “preposterously generous” incentive. Snyder and the legislature later agreed to raise the cap to $50 million for fiscal year 2013.

The incentive isn’t worth continuing in any amount, said Hohman.

“It’s not producing a viable film industry, and even if it did, it still would never be worth the expense,” said Hohman.

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