Tax ReformUncategorized

Will Film Subsidies Work in Arkansas? Because They Ain’t Workin’ Elsewhere.

Gov. Mike Beebe on set
Gov. Mike Beebe declared that, henceforth, state film incentives would only be awarded to ‘talkies.’

Here’s a new (OK, newish, last week, whatever, get over it) article from The Economist on state level film subsidy programs, which questions the subsidies’ value as economic development tools. Here, I’ll summarize it for you, since the average Arkansas Project reader doesn’t subscribe to The Economist and is, at best, semi-literate:

Film subsidies are a “stupid trend” and states should do away with them.

Well, all right then, The Economist! Thank you for not beating around the bush.

In 2009, you’ll recall, Gov. Mike Beebe signed the Digital Product and Motion Picture Industry Development Act, a bill aimed at nurturing the growth of film production in Arkansas through financial subsidies for qualified productions. Two years later, how’s that working out?

Film Subsidies in Arkansas

It may be too soon to say. Curious after reading the Economist article, I asked Christoper Crane, director of the Arkansas Film Commission, who says the usual development cycle for these types of incentive programs is about three years, the time it takes for a typical film project to reach completion. Since the Arkansas program started in 2009 (with that first year being given over largely to fielding inquiries from producers, Crane says), full data isn’t available yet.

To his credit, Crane speaks modestly about the scope and ambition of the Arkansas subsidies. He notes that the Arkansas subsidy (a 15 percent rebate, with an additional 10 percent rebate for employing Arkansas residents) is far below the insanely generous tax credit packages that have caused serious budget troubles in other states (see Michigan, for one example).

“It’s not a huge incentive, but it’s one that sparks interest,” he says.

Moreover, Crane speaks of the program as being geared toward nurturing a sustainable base of Arkansas “content producers,” more than seeking to attract major feature productions (though he certainly hopes larger productions will be part of the mix): “We want to keep those content makers here, instead of exporting them — we want to export the content and not them,” he explains.

The Race to the Bottom

But nationallly, film production subsidies are on the chopping block, as other states and cities have concluded they’re not worth the cost (in New York City, Mayor Mike Bloomberg pulled the plug on the city’s film subsidy program, declaring it a “race to the bottom”).

Studies from policy organizations across the ideological spectrum suggest film incentive programs don’t deliver when it comes to economic development—and likely cost taxpayers more than they return in benefits. Here’s one from the non-partisan Tax Foundation, published in January 2010, along with another from the left-leaning Center on Budget and Policy Priorities, published in December 2010. From the Tax Foundation study:

…the competition among states transfers a large portion of potential gains to the movie industry, not to local businesses or state coffers. It is unlikely that movie production incentives generate wealth in the long run. Most fail even in the short run. Yet they remain popular.

Crane says he plans to conduct an economic impact study to better determine the program’s performance in Arkansas. But it’s hard to believe the subsidies will perform differently in Arkansas than in other states, where the costs have often exceeded the benefits and where the programs have failed to create stable long-term jobs for residents.

Moreover, the justification for the Arkansas film subsidy program is shaky at best. It’s not clear why subsidies should be extended to this particular industry, as opposed to any other. Should the state subsidize insurance salesmen? Computer programmers? Subway sandwich artists? It’s unclear what makes the film industry a special case.

What’s your favorite “made in Arkansas” movie? I choose “Boxcar Bertha” from 1972, directed by Martin Scorsese, because Barbara Hershey’s clothes fall off, like, every 15 minutes in that movie. I remember exactly nothing else about the film.

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4 thoughts on “Will Film Subsidies Work in Arkansas? Because They Ain’t Workin’ Elsewhere.

  • DumbArkie

    Okay, first of all, I don’t like it when you use words like “stupid” because I don’t know if you’re talking about me or not. Second, I don’t exactly understand what you mean by “semi-literate.” What do big trucks have to do with this story? Third, and more to the point, how else are our Arkie politicians supposed to meet and hob-knob with the Hollywood elite?

    What’s my favorite “made in Arkansas” movie? Well I have two.

    First is White Lightning (1973) because when I think of actors who have honed their craft to a fine edge, sharper than an Arkansas Toothpick on an Arkansas whetstone, Burt Reynolds is on the top of my list. I mean Nicholas Cage may be a better actor than Burt, but he never made any movies in Arkansas.

    Second is Sling Blade because Billy Bob Thornton is about as close as I’m gonna get to Angelina Jolie wearing a necklace with a vial filled with my blood.

    Oh, and yes, Subway Artists should be subsidized. I have a half eaten Spicy Italian under my passenger seat that’s been there since last August because it was just too pretty to eat all of it.

  • Donnie Copeland

    David, great to have you back.

  • I read that article in the Economist. Issues rarely arrive on time, so “new” is relative. Favorite made in Arkansas movie: The Legend of Boggy Creek II: the Legend Continues.

    The Mystery Science Theater 3000 version is comedy heaven.

    I am in favor of subsidies if they give the world another Boggy Creek film, If not then eliminate them.

    I would also make an exception if they could be funneled to make a larger budget Phil Chambliss film. I understand that both of these exceptions are totally insane and unreasonable.

  • Ah- ACT 816. All Senators voted for it, but 6 House members voted against- your own Greenberg was among them.


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