State Film Subsidies Show Losing Strategy

Chief Economist Greg Albrecht reveals how much money Louisiana film subsidies lost.

Last week I criticized the VES for advocating for more subsidies in California. As I pointed out, Governor Jerry Brown believes films subsidies are a losing strategy. Other states seem to show the same problem.

Louisiana Film Subsidy Program Loses -85%

Last month the state of Louisiana did a revenue study and hearing on film subsidies offered there. Legislators were almost shocked to learn the return on every $1 spent of film subsidies was .15 cents!

The most revealing parts of the hearing are posted here. You can listen to the whole 2 hour hearing here.

Michigan Spent $40 Million on OZ

Oz made lots of money this opening weekend. The state of Michigan gave the film $40 million in subsidies. The facility it was shot at is unable to meet it’s financial obligations and the pension system for state employees and teachers was used as collateral.

New York Gov cuts Funding for Disabled, Increases Film Subsidies

Film producer Gavin Polone who is against film subsidies shot off this tweet:

Screen Shot 2013-03-11 at 9.38.31 PM

New York is looking to close a budget gap by cutting funding for the disabled. At the same time it has tripled funding for film subsidies.

Nevada Competitive Without Film Subsidies

The state of Nevada is one of the few states without film subsidies and yet it’s quite competitive:

Even without the film tax credits, however, Nevada competes well against other states with credits. According to the MPAA, the film and television industry is responsible for 2,975 direct jobs and $135.7 million in wages in Nevada. In New Mexico, a state with a 25 percent credit and where the television program “Vegas” is filmed, film and television are responsible for 3,268 direct jobs but only $131 million in wages.

State governments tend to release more independent studies of their film programs. The vast majority of them show a loss and the ones that do show a gain were paid for by the film commissions themselves.

British Columbia, which is a hot spot for VFX, did a study in 2010 which measured the impact of films subsidies:

An economic impact study commissioned by the province in 2010 was never released because of internal conflicts over methodology

 Perhaps the reason for the conflict was that it showed huge losses for the province?
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26 Responses to State Film Subsidies Show Losing Strategy

  1. The pilot of Vegas was filmed in New Mexico. The series is filmed in Santa Clarita. It is one of the home grown shows, both filmed and posted with VFX done locally by Encore.

  2. MatteLine says:

    [...] Read the full article at VFX Soldier State Film Subsidies Show Losing Strategy. [...]

    • Pi says:

      VFXSoldier and Dank, these are good links.

      After spending a billion dollars …
      “Does this state want to spend a billion dollars in the movie industry … or … education and health care?”
      “The record from other states is clear. If the subsidy goes away, the movie industry goes away.”

  3. Louisiana spent over $150 million on just six movies: http://twitpic.com/cacm7a

    • Pi says:

      Why should states (and countries) spend money on useless things like education and health care, when they can subsidize Hollywood movies, and send that money out of state?!

      • mocha says:

        While I support the efforts of vfx soldier to raise awareness of how destructive these subsidies are, I get the feeling sometimes that people on here have just gotten the idea that in genral subsidies are ok, but since this now affects them, they recognize film subidies are bad but probably couldn’t care less how much distortion they cause in virtually all industries. Subsidies are merely a means for elected officials to pick favorites – this whole notion that we have a free market economy and this the problems we face are because of it are false, it’s quiet the contrary.

        So how can Nevada be competitive without subsidies? I don’t know for certain, but I’d imagine a close proximity to Los Angeles combined with having no state income tax might have something to do with it. As I believe VFX Soldier may have mentioned, there’s virtually no chance California would consider getting rid of the income tax, but imagine the good it would do – hiw much more competitive we could be. Just remember – other states manage without it, why can’t we? Police, fire, roads, school etc are funded primarily with property tax. What’s the CA govs excuse for taking so much of our money – and then complaining that they don’t have enough?

      • VFX Soldier says:

        I think the income tax is a separate issue but let me say this:

        VFX facilities are generally low margin companies so im doubtful the idea that state income taxes are the reason these companies are going to vancouver.

        In fact california could lower taxes to zero and I doubt that it would do little to change the flow of work going to BC. The reason why is because BC offers a subsidy that goes beyond tax liability. It’s giving free money away and no matter how low your taxes are, the gravitational pull of free money for the big 6 studios will still demand that the facilities send the work there.

      • Jen says:

        @Pi – This is why Louisiana will cut Medicaid services to balance its budget before it cuts one penny from the far needier Warner Bros.

      • Jen says:

        @mocha – What’s the CA govs excuse for taking so much of our money – and then complaining that they don’t have enough?

        California still needs to make up for the massive shortfall in corporate property taxes. California’s nonstop corporate welfare ain’t gonna pay for itself.

      • hector says:

        “So how can Nevada be competitive without subsidies?” who told you that some states have to compete in this manner? using taxpayer money! What kind of competition is this?

      • What Happens in Vegas.... says:

        Hey Mocha –

        While the Casino’s subsidize (there’s that scary word) the income tax burden of the residents of the state and pay their income taxes, it doesn’t necessarily make it cheaper to shoot there because it is in an IATSE jurisdiction (as opposed to right to work). Other things need to be factored are such things as access to talent both in front of and behind the camera who reside there working on other forms of entertainment, cost of lodging for distant hires, low airfare costs to LA, International airport with flights from everywhere, on major trucking routes, lower cost of rentals of stages and locations and the sunny weather.

      • tazzman says:

        Mocha, I agree. We have a system of state capitalism, not a free market economy. Shh. Don’t tell the GOP and their empty rhetoric.

      • tazzman says:

        Taxing income is a whole other debate. They shouldn’t even tax income. They should tax use and have it go directly to those services.

  4. wb says:

    I doubt the Quebec prime minister care about this. With Framestore and MPC coming here, proves that we the taxpayer, we have a long way ahead to pay this insane thing.
    Madame Marois is inconsistent in her action – these days she is trying to push the bill14, witch will limit the use of english language in Quebec, and the other hand, she is forcing the taxpayer to sustain the foreign companies in this subsidies war. Witch are English speaking companies.
    Totally crazy….

  5. Irma Hall says:

    Everyone loves it when individuals get together and share ideas. Great site, keep it up!

  6. […] Furthermore, in general these film subsidies have been a big money loser in Louisiana. I pointed out earlier this year that the state loses a whopping -85% on the amount they dole out. […]

  7. […] has a very large subsidy program that leads to one of the largest recorded losses: For every $1 they spend they lose 85 cents! Watch the video in that link to see how dumbfounded the lawmakers are trying to figure out why […]

  8. […] recently did a study that found only 15 cents of economic benefit for every dollar spent by state taxpayers are used to prop up […]

  9. […] answer to that question is a resounding “no”. Louisiana recently conducted a study which, according to Inquisitr, found only 15 cents of economic benefit for every dollar spent by […]

  10. […] recently did a study that found only 15 cents of economic benefit for every dollar spent by state taxpayers are used to prop up […]

  11. watch movie says:

    watch movie

    State Film Subsidies Show Losing Strategy | VFX Soldier

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