Thank you to Phil Drake for telling me about Zach Patton’s recent article in this month’s edition of Governing Magazine. The article is an excellent introductory primer on the “state” of state film incentive programs in the US. One thing that is debated about in the academic literature on international film production and runaway production is whether decisions on where to shoot are guided by artistic or economic concerns or a mixture of both.
Several years ago, I began arguing that with massive film incentives in place across the nation and the world, the debate was somewhat passé since data showed that new film incentives and new production were directly correlated. In short, filming decisions were based exclusively on financial considerations for a majority of productions (certainly, there are always exceptions). Patton’s article showed some further proof of this, albeit anecdotal. In discussing the filming of “Whip It”, a film about roller derby set in Austin, Texas, one of the producers explained why production was shifting to Michigan (home to the largest incentive):
“That was enough to lure Whip It, which originally planned to shoot entirely in the Lone Star State. During filming, the movie’s screenwriter told an Austin newspaper that the Michigan deal was just too good to pass up. ‘For a year, it was going to be Texas, and if it hadn’t been for money, it would have been Texas all the way.’”
Patton also does an excellent job of discussing the two-sides of the film incentive debate: are they worth it? In Michigan, for example, Patton shows how some in that state felt the money spent on incentives could be put to better use:
“Even in Michigan, where the incentives have brought in such high-profile success stories, the enticements have come under fire from people who say they’re unnecessarily generous. The fact is that Michigan still faces a massive $1.6 billion budget gap, and it’s been in a fiscal downturn for a solid decade. The state slashed spending on corrections, education and human services. At the same time, it doled out tens of millions of dollars in tax credits–$48 million in 2008, $68 million in 2009 and an estimated $155 million in fiscal 2011. Lawmakers last year debated placing an annual $50 million cap on the incentives that could be paid out. Even Granholm entertained the idea, but remained an avid supporter of the program as it stood. But the film industry and tax-cut advocates rallied, and ultimately no caps were put in place.”
To be fair, what does “worth it” even mean? If an incentive creates jobs in a place like Michigan, it’s fair to say the program is “worth it” even if it costs the state rather than generate revenue. And while I am sympathetic to such an argument, there must still be a line…at a certain point the cost-per-job is not going to be “worth it.” And I think $89,000 per-job is a poor use of public funds to create jobs in Massachusetts, where $89,000 could pay additional teachers, fire fighters and police (In case you missed it, be sure to read my exchange with the Massachusetts film office director HERE.) This brings us to the next problem which I discuss at length in my two law review articles on runaway production (available HERE and HERE): reliable data. Patton mentions this as well:
“Still, film incentives are increasingly coming under fire. Part of the problem is data. It’s hard to get a good handle on the exact impact of an in-state movie production. In most places, the only reports on movie-production revenue and jobs come from the state film office–or the movie industry itself. Objective studies are relatively hard to come by. And even where independent studies of film incentives do exist, the data can easily be interpreted in myriad ways.”
Getting good data isn’t the only problem. “These film credits have another shoe to drop,” says Tannenwald of the Center on Budget and Policy Priorities. He’s referring to the fact that in most states, the incentives paid to movie studios are transferrable. That means a film producer can sell unused credits on a secondary market. As a result, the credits could wind up benefiting people who have nothing to do with movies or entertainment. Worse, Tannenwald says, reselling the credits means they may be redeemed years down the line.
Finally, what I found the most interesting part of Patton’s article was in his last paragraph. Despite the issue of out of control cost and near rampant corruption and abuse in some states like Iowa, it seems the public doesn’t really care. To be fair, many people who reside in states not home to the industry love having productions shoot in their states, and so far that love is outweighing the cost. If hosting production boosts local pride and morale, especially in a hard-hit area like Michigan, who can put a price on this?
Despite those concerns and the uncertain economic benefits of film incentives, they remain extremely popular with the public. And that could prove to be one of the biggest obstacles to critics who want to do away with the tax credits. Even in the midst of Iowa’s high-profile criminal investigation into its film program, a poll of state residents showed 61 percent still thought the credits were a good idea. In-state movie productions generate buzz, and visits from marquee-worthy celebs can engender no small amount of local pride. That can drown out a lot of talk about job creation and secondary credit markets. “It’s hard for people to be rational about this industry,” D’Amico says. “Everybody dreams they’ll someday be in the movies. Everybody wants to see a celebrity walk down the street.”
If these film incentives improve morale, have public support and are ridiculously expensive, it seems to me film offices need to shift away from making the economic benefit pitch, which is disingenuous. As I told the Massachusetts’ film office head, “you can still sell these incentives, but the pitch needs to be totally overhauled.”
To read all of Patton’s article, click HERE.
