Film subsidies are not likely to pay off - Powell Tribune

Wyoming lawmakers in the next legislative session will consider a proposal to provide subsidies to the film industry. This would reinstate a program that the Wyoming Legislature passed in 2007 and sunsetted in 2018 after allocating $1 million for projects around the state.

WyoFile reported that the Joint Committee on Travel, Recreation, Wildlife and Cultural Resources voted to advance a proposal that would allow filmmakers to apply for up to $3 million in rebates for production expenses through the Wyoming Department of Tourism.

The intention of these subsidies is to create jobs and promote Wyoming tourism by having the state featured in films. Many states offer subsidies to the film industry, and they compete with each other to offer the most generous packages they can in order to lure production crews.

During the committee hearing, industry officials boasted of the thousands of dollars that flow into a community as a result of these projects, and the jobs that would be created. They also warned that a failure to offer good subsidies could result in the loss of films featuring the Cowboy State. Two examples they offered were the 2005 film “Brokeback Mountain” and the ongoing ABC TV series “Big Sky,” which is based on the work of Wyoming author C.J. Box; both productions were enticed away to other areas over financial considerations.

The industry may promise big returns and great promotional benefits to getting our state on the Big Screen, but more and more, states are becoming skeptical about the payback they are getting for their film subsidy packages.

In 2010, the left-leaning Center on Budget and Policy Priorities conducted a study that found little benefit to the programs. The companies that produce movies and shows often have established relationships within a state and will choose a location based on those relationships, regardless of subsidies, the study concluded.

The jobs these programs promise to create mostly go to non-residents. The skill sets applicable to production are often found in the labor pools of states like New York and California, which have robust film and television production industries.

“Jobs for in-state residents tend to be spotty, part-time, and relatively low-paying work — hairdressing, security, carpentry, sanitation, moving, storage and catering — that is unlikely to build the foundations of strong economic development in the long term,” the study explained.

The conservative Tax Foundation did a study in 2012 and found that, “aside from studies paid for by economic development authorities and the Motion Picture Association of America, an industry trade association, almost every other study has found film tax credits generate less than 30 cents for every $1 of spending.”

A 2016 study by Michael Thom of the University of Southern California Price School of Public Policy found only a minimal economic benefit for refundable tax credits in terms of employment, and only a temporary impact for wages.

When Virginia evaluated its film incentives program in 2017, it found that the state’s film tax credit and grant “had mixed success in achieving their goals. While the incentives have influenced most productions that received incentives to film in the state, film industry growth in Virginia has been very small overall even after increased spending through its incentives.”

Another analysis of New Mexico’s highly generous film incentive packages found that, between 2014 and 2016, for every tax dollar invested in its film subsidy program, state and local governments received about 43 cents in tax revenues; a New Mexico State University study found the state’s program earned a mere 15 cents for every dollar in subsidies. New Mexico’s program was also found to support very few jobs for the cost.

Many other analyses have been done for other state programs and find similar results.

The problem with trying to generate economic benefits on film and television productions is you’re dealing with a highly mobile industry. It’s the nature of their “on location” business to pick up and move easily and quickly. Even if they are enticed by a state’s subsidy package, it’s extremely easy for another state to lure them away with better packages. So states are put in the position of having to give more and more to keep the industry happy. It’s a race to the bottom at taxpayers’ expense, for only fleeting jobs.

With mineral extraction revenues in decline and the state’s budget strained, the Wyoming Legislature is going to get a lot of proposals for how to diversify the economy. We hope our representatives scrutinize them closely.

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