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.