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December 04, 2012 10:22 AM The Film Subsidy Fool’s Gold Rush

By Ed Kilgore

Gotta say, I’m beginning to think Louise Story’s series in the New York Times on state and local government corporate subsidies represents some of the very best journalism of the year. But maybe that’s because today she takes on an abuse about which I am frankly a bit deranged: the recent trend, which Democrats have supported as avidly as Republicans, towards state and local government paying the film industry to make movies in a particular location.

Story focuses on the saga of the famously beseiged city of Pontiac, Michigan, where that state’s insanely libertine film subsidy program became a big part of a failed major studio project which, ironically, had as its first production the upcoming Disney “Wizard of Oz” movie.

But Michigan is only the most profligate of the states that have rushed into film subsidies, mostly during the last few years, offering everything from transferable tax credits (a big part of Georgia’s high-profile subsidy program, which involves credits that can be sold for cash if they exceed a company’s actual state tax liability) to flat out rebates of studio expenses. Corruption associated with state film programs has already led to criminal prosecutions in two states, Louisiana and Iowa. And with the arguable exception of New Mexico’s program, which has focused on building up a sustainable local film industry, nearly all these subsidies have primarily benefitted non-residents who hit and run, leaving a perception of glamor and a lot of unmet expectations.

Because state film programs and the projects they supposedly attract get massive public attention, they have become a well-scrutinized form of corporate subsidy where it’s simply impossible to ignore how the companies involved are playing states against each other with zero interest in any ongoing commitment. But as with most corporate subsidies, there’s a mutual exploitation at work between companies pocketing entirely unnecessary taxpayer concessions and pols getting to play an unmerited role as “job creators.” Add in the special perk to governors, legislators and state bureaucrats of getting to rub shoulders with (not to mention play toady to) Hollywood celebrities, and you’ve got a marriage made in hell.

By now, there’s been enough bad publicity about this kind of subsidy that the fool’s gold rush may have subsided, though in several states film programs have simply faced cutbacks as part of general austerity measures (as in Michigan, though Republican Gov. Rick Snyder is on record as disliking corporate subsidies generally).

It would be helpful, however, if state and local policymakers would internalize a systemic resistance to the subsidy game. For that to happen, though, local and regional media need to stop treating “economic development investment decisions” as a cost-free bonanza, and stop covering ground-breakings, ribbon-cuttings, and for that matter, casting calls for movie extras and eventually red carpets, as heavenly news from nowhere.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Grincheuse on December 04, 2012 10:33 AM:

    Could we throw city and state built stadiums into the same pile. I can see no reason to build those monstrosities at taxpayers expense.

  • Chris Rhetts on December 04, 2012 10:43 AM:

  • zandru on December 04, 2012 11:48 AM:

    Well, we all go crazy about the possibility that we - or our house, or city, or state - could appear in The Movies. This has been going on since Hollywood, and probably since Thom Edison set up his camera to capture a model T trying to make its way up La Bajada hill.

    And, speaking of New Mexico: You're right, a lot of work has gone into establishing a local industry, including computer animation houses. This has spun off an annual Albuquerque Comicon event. The "Breaking Bad" and "In Plain Sight" tv series have resulted in a lot of additional tourism, which we need, since the Republican governor has all but shut down the Tourism Dept and sees no need to promote the state anymore. (And the economy shows it.) She even tried to shut down the film industry in her first year, because the initiative had been started by (the hated) Democratic Gov. Bill Richardson.

    However, the state has not been collecting the information that would allow the legislators to tell if we're profiting, breaking even, or losing out from all the subsidies. We may all be having fun - but at what cost?

  • TCinLA on December 04, 2012 1:51 PM:

    And with the arguable exception of New Mexico’s program, which has focused on building up a sustainable local film industry

    Allow me to explain how this happened. The New Mexico film program was established 20 years ago by a friend of mine, an actual for-real Hollywood Movie Producer who moved to New Mexico. Paul knew what the ins and outs of the business are and knew the bullshitters by name, so he crafted a set of requirements that really did work for both the state and the industry. The other part of what makes the NM program work is that New Mexico is a residence destination for many in the business, once they get successful enough that they don't have to live in Los Angeles to work. I doubt many people from Los Angeles would voluntarily move full-time to that burg in Georgia where they make "Walking Dead" or to Pontiac Michigan or any of those other places. Sorry, the reason those places are hard up is because they're not residence destinations for the ones left residencing in them.

    And even with everything New Mexico did, hard times forced a cut in the program to the point it's close to non-existant now.

    What should have been kept back in Reagan's 1986 tax reform was the system of national credits for investing in movies. With that, movies most of the people who read this blog probably like had a chance to get made since they weren't obvious commercial successes. When that got killed, American independent film went down within 5 years to the shadow it is now. Without that, what you get today is the warmed-over comic book CGI lallapaloozas that Hollywood's intergalactic bean-counting corporate masters can understand as the widgets they are.

  • TCinLA on December 04, 2012 2:04 PM:

    And with the arguable exception of New Mexico’s program, which has focused on building up a sustainable local film industry

    Allow me to explain how this happened. The New Mexico film program was established 20 years ago by a friend of mine, an actual for-real Hollywood Movie Producer who moved to New Mexico. Paul knew what the ins and outs of the business are and knew the bullshitters by name, so he crafted a set of requirements that really did work for both the state and the industry. The other part of what makes the NM program work is that New Mexico is a residence destination for many in the business, once they get successful enough that they don't have to live in Los Angeles to work. I doubt many people from Los Angeles would voluntarily move full-time to that burg in Georgia where they make "Walking Dead" or to Pontiac Michigan or any of those other places. Sorry, the reason those places are hard up is because they're not residence destinations for the ones left residencing in them.

    And even with everything New Mexico did, hard times forced a cut in the program to the point it's close to non-existant now.

    What should have been kept back in Reagan's 1986 tax reform was the system of national credits for investing in movies. With that, movies most of the people who read this blog probably like had a chance to get made since they weren't obvious commercial successes. When that got killed, American independent film went down within 5 years to the shadow it is now. Without that, what you get today is the warmed-over comic book CGI lallapaloozas that Hollywood's intergalactic bean-counting corporate masters can understand as the widgets they are.

    HEY GLASTRIS: HOW LONG DOES IT TAKE TO HIRE SOME IT INTERN TO GID OF GODDAMNED CAPTCHA?????????? I RECALL YOU PROMISED THIS BACK IN AUGUST!

  • bigtuna on December 04, 2012 6:49 PM:

    You hit it - these are some of the best, most quantitative, investigative stories regarding public spending, tax breaks, etc. in a long long time.