Government Secrecy Rules on $10 Million Film Studio Subsidy

The latest news from the excellent Chris Knape series in The Grand Rapids Press is that final approval of a $10 million state subsidy for the Hangar42 film studio project touted by Gov. Jennifer Granholm in her annual State of the State address last January has been delayed due to paperwork problems.

The Mackinac Center broke this story May 20 when it raised questions about the total "investment" made in Hangar42, and exposed the state's lack of transparency about anything related to the subsidy. In his latest report Knape lists a variety of non-responses he was given while attempting to get information about the project:

Mike Shore, spokesman for of the Michigan Film Office, told Knape that he couldn't talk about Hangar42 because, "I don't want to go to jail" for revealing taxpayer information, which he said is confidential.

A spokeswoman for Attorney General Mike Cox told Knape she could not talk about it because the Michigan Film Office is "part of Treasury." However, the Film Office is physically located at Michigan Economic Development Corp. headquarters, MEDC employees speak for the office, Freedom of Information Act requests regarding its operations are received and processed by MEDC staff and Director Janet Lockwood's name and salary appear on an "MEDC Staff Listing" directory.

Liz Boyd, Gov. Granholm's press secretary, told Knape she couldn't talk about the deal because of "confidentiality rules," but apparently these did not prevent Gov. Granholm boasting about the project in her January speech.

Messrs. Buchanan and Peters — the owner and purported buyer of the Hangar42 property — would not allow reporters to tour the building or see the appraisals used to justify a $40 million purchase price (and $10 million state subsidy). They also refused to share a copy of land contract the property was supposedly purchased with.

The Mackinac Center has experienced the same extreme government secrecy in its pursuit of the facts. In March and April two Center analysts called Peters, Buchanan and a state official 11 times. Not one of these calls was returned, not even to say, "No comment." Ken Droz of the Film Office finally did respond, but would not answer even general questions about the methodology used to vet such deals.

The only person who seems to be talking is state Rep. Robert Dean, D-Grand Rapids. Knape reported that Dean tried to intervene on behalf of the project, and has since retracted a promise to the reporter to provide some evidence for his claim that the state has spiked the deal.

The basis for all the claims of secrecy is that the matter involves the "administration of a tax." However, as the Livingston Daily noted in a recent editorial referring to these "tax credits" that are in fact cash subsidies, "The mere fact that the film program is misnamed is a red flag that suggests that deception is valued more than accuracy."

All but three legislators voted "yes" to launch the film subsidy adventure back in 2008, so perhaps it's expecting too much to ask that they now use the Legislature's subpoena power to extract information about how the program is being managed. When one of these deals finally blows up into a scandal, as has already happened elsewhere, they may wish that they had.

Hard-earned taxpayer dollars are being handed over by the state to these film studios, and when legitimate questions and concerns are raised the response from those in charge is, "Trust us. We know what's best for you." Voters and taxpayers shouldn't accept that, and neither should state legislators.

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