The General Assembly is back in session, and that means a dialog among members about taxes, spending, and the budget. Talking points have been tossed around, with some carrying more weight than others; but on one issue, state lawmakers have fallen strangely silent—film incentives.
Hollywood subsidies, which in Tennessee come in the form of grants given directly to production companies, are one of the most perplexing policies currently being instituted in Nashville.
The goals outlined by the state grant are no doubt well intentioned considering the goals of the program are to create new jobs and a home-grown film industry within the state. Theoretically, the grant would pay for itself through tourism, job creation, and tax collection multipliers. Sadly, that isn’t the case as these programs consistently produce poor results.
Thirteen states have performed economic studies into similar programs, including Alaska, Michigan, New York, Louisiana, North Carolina, California, Florida, and Connecticut. In only one of those studies did the film incentive program come close to paying for itself, and the measures for employment were so exaggerated in that study that 1 in 14 Floridians were reported to work in the film industry. As the flaws in film incentive programs become more apparent, many states are choosing to abandon the practice. In 2015, 34 states had film programs, down from a peak of 44.
In 2013, Tennessee’s Comptroller performed an audit on the state’s Film Commission and found that the volunteer state’s program has fared no better, and in some aspects arguably worse, than many of its peers.
The audit found that “The Department of Economic and Community Development and the Department of Revenue have disregarded their statutory responsibility and exercised poor management and administrative oversight” of the film program. A failure to disclose a personal connection to a law firm collecting taxpayer funds from the film program was also discovered during the course of the audit.
Additionally, the audit found little or no evidence that the incentives provided by Tennessee’s Film Commission led to actual job or industry creation in the state. In fact, the Audit found that the return on investment for every state dollar spent was a mere $0.14 cents. The cost to the state for each full-time equivalent job created was estimated at over $118,000 dollars.
Unfortunately for the taxpayer, Tennessee’s response to this audit was to increase the amount of funding for the Film Commission in 2014, and again in 2015. The state spent more than $15 million dollars during the last fiscal year alone on this wasteful program.
There is no clear benefit to the state of Tennessee from this program—the only clear beneficiary is Hollywood. There are plenty of dividing issues and tough policy questions posed to legislators this year, but the continuance of Film Incentive programs should not be one of them. Tennessee should consider stepping away from the Hollywood limelight, and stepping towards some fiscal responsibility.