The US State of Michigan looks likely to slash its incentives offering for the film and videogames industries as it struggles to battle a $1.4 billion budget deficit.
The office of Governor Rick Snyder has proposed a $25 million cap on credits given to support the creative industries in a bid to attract more business - with $648 million handed out since the incentive launched in April 2008, $300 million of that coming in 2010.
The plans were originally intended to stimulate new jobs in the State, with a refund of 40-42 per cent of a company's qualified expenditure, applicable for film, TV and videogames, reports USA Today.
But with a desperate economic situation looming, that could all change - and if such a cap is introduced it's likely to have a significant impact on the chances of attracting further big investment, warned Pixofactor CEO Sean Hurwitz.
Pixofactor is currently working on a golf title on the Wii, mobile, online and DVD platforms, but potential new projects from a big publisher are unlikely to happen if the budget plans go ahead - scuppering plans to increase his team's size from 25 to 200 by the end of 2012.
"We recently had a visit from one of the top three largest videogame publishers in the world, and they're looking to bring tens of millions of dollars' worth of business to us and to Michigan," he said. "There won't be any of that work without the incentive."
In response, Governor Snyder has claimed that the State can no longer afford the incentives, but that by lowering Corporation Tax, Michigan will remain a positive place for businesses. State lawmakers are yet to approve the budget changes.