Over the summer, we reported that 37 states are offering film taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. incentives in 2011, a drop from 40 states in 2010 and the first such drop since the trend began over a decade ago. The aggregate dollars paid out by states has also dropped, from $1.396 billion to $1.299 billion. I made the prediction that 2010 will remain the peak year, which was noted approvingly by, among others, The Economist magazine.
While film incentive programs were once universally applauded as great economic development tools and tourism boosters, their merits are now being rigorously debated. At a minimum, film incentive programs should be required to report how many dollars in incentives were provided per each Full-Time Equivalent (FTE) job created by qualified productions. Programs should be reviewed periodically for their effectiveness by legislative oversight or a third party.
Back in the spring, motion picture industry lobbyists and their supporters successfully pushed the New Jersey legislature to quintuple the size of that state’s film subsidy program, but were met with a veto from Governor Chris Christie (R). The bill has been reintroduced but in the meantime the New Jersey Economic Development Authority awarded $420,000 in tax credits to the popular (infamous?) television show Jersey Shore. Christie vetoed the award:
My serious concerns with the Film Tax Credit Transfer Program (the “Program”) are well documented. And, as you know, the EDA’s February 2011 review noted the Program’s questionable returns to taxpayers and recommended its termination. In this difficult fiscal climate, the taxpayers of New Jersey should not be forced to subsidize projects such as Jersey Shore. We must ensure that our limited taxpayer dollars are spent on programs and projects that best benefit the State of New Jersey. I have no interest in policing the content of such projects; however, as Chief Executive I am duty-bound to ensure that taxpayers are not footing a $420,000 bill for a project which does nothing more than perpetuate misconceptions about the State and its citizens.[…]
The tax credit to Jersey Shore illustrates the potential for wasteful spending inherent in the implementation of the Program. Such potential was the prime reason for my veto of legislation earlier this year which would have grossly expanded the Program’s funding.[…]
More on film tax credits:
- Motion Picture Association Attacks Tax Foundation Critique of Film Tax Subsidies, June 2011
- More States Abandon Film Tax Incentives as Programs’ Ineffectiveness Becomes More Apparent, June 2011
- Film Production Incentives: a Game California Shouldn’t Play (Testimony Before California Legislature), March 2011
- Palin Responds to Film Tax Credit News, March 2011
- Movie Production Incentives & Film Tax Credits: Blockbuster Support for Lackluster Policy, January 2010
Update: Stateline reports in an excellent piece.
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