Arkansas BudgetEconomy

Film Subsidies under Scrutiny Nationwide

A couple years ago, I wrote a paper for AAI that examined the folly of film subsidies in Arkansas. In it, I wrote:

In states around the nation, film subsidy programs have failed to “pay for themselves” in terms of increased tax revenue. Their track record for job creation and economic growth is weak. They divert money away from necessary government functions, such as prisons and highways. In short, these subsidies by and large enrich Hollywood producers at the expense of state taxpayers.

As that paragraph indicates, many states use taxpayer dollars to subsidize filmmakers. Some states have eliminated their subsidy program based on the clear evidence that they do little to help the economy.

Unfortunately, Arkansas legislators have yet to kill the state’s wasteful giveaway to film companies. But during legislative sessions and in political campaigns in other states, there is movement to curtail or even end these unneeded incentive programs. Legislators in Arkansas should take note.

In Colorado, Governor John Hickenlooper signed a bill that tightens up the state’s rules on what film companies can qualify for the state’s subsidies. This bill was in response to an audit that indicated there were serious abuses with the program.

Then members of the Colorado House of Representatives went one step further and voted to eliminate film subsidies from the budget. One member, noting that the money could be used to beef up school security, asked, “Do we want handouts from my taxpayers and your taxpayers to wealthy Hollywood elites, or do we want to protect our kids?”
That may have been a little bit of hyperbole, but it does point to the undeniable fact that every taxpayer dollar given to film production is a taxpayer dollar that cannot be spent on another government priority – or a dollar that cannot be returned to the taxpayers.

In New York, one candidate for governor has questioned the wisdom of that state’s incentives.

Cynthia Nixon, an actor who appeared in Sex and the City, said, “I don’t think there’s any real truth that that enormous expenditure of money is making a significant enough difference in production to justify it.” Given her background, this is a somewhat surprising view for her to hold, but it is part of her larger criticism of corporate welfare. Incumbent Governor Andrew Cuomo, on the other hand, wants to expand New York’s film subsidies.

In Florida, legislators killed a bill that would have re-established a film incentive program in that state. The previous subsidies ended in 2016.

In 2015, I wrote, “As experience in other states has shown, these programs return very little to the state treasury and they generally cost tens or hundreds of thousands of dollars for each job created.” This continues to be true. Nationally, lawmakers are realizing this and ending (or advocating to end) these programs. Of course, this isn’t the case in every state. New Jersey legislators are considering reviving their film subsidies now that a Democratic governor has replaced Republican Chris Christie, who suspended that state’s program. I imagine that there is plenty of disagreement among this blog’s readers about Arkansas’s best public policy options — but surely we don’t want to follow the lead of New Jersey!

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