A new study from the Tax Foundation in Washington, D.C. questions the effectiveness of incentives provided to encourage motion picture filming and/or production around the country, including in Oklahoma.
Forty-four states, the District of Columbia and Puerto Rico offer significant movie production incentives, but program limits may be forthcoming, the foundation reported.
David Blatt of Oklahoma Policy Institute (OPI) commented on the film tax credit issue in an interview with CapitolBeatOK.
“In general the report points to the fact that a lot of tax credit programs are simply not well evaluated, he said. “Many of them are not reaching their professed goals in an efficient manner.”
Blatt said that while he is unsure whether all the Tax Foundation analysis’ problems are duplicated in Oklahoma, he hopes legislators will carefully examine the effectiveness of such programs here.
OPI is a policy research group focused on “long-term consequences of policy decisions.” The group has offices in Tulsa and downtown Oklahoma City.
The report, issued this month in Washington, D.C., is ““Movie Production Incentives: Blockbuster Support for Lackluster Policy.” Listed as Tax Foundation Special Report, No. 173, it is available online at http://www.taxfoundation.org/publications/show/25706.html.
William Luther, report author and Tax Foundation adjunct scholar, said in a press release, “Motion picture incentives are often touted as ‘job-creating’ programs, but they create mostly temporary positions with limited upward mobility.
“The only thing these incentives create is the need for ongoing credits and subsidies. As other states sweeten their incentives, productions move on.”
Only five states offered such incentives in 2002. Today, of the 44 involved in some way, the foundation says “28 states and Puerto Rico offer tax credits for film production - credits that are refundable in 15 of those states.
Eighteen states offer production companies direct cash rebates, while Texas, Tennessee and the District of Columbia offer grants to filmmakers, he said.
“Certainly very serious concerns have been raised about the wisdom and effectiveness of the programs in Iowa and Kansas, Oklahoma Policy Institute’s Blatt told CapitolBeatOK.
“I have a pretty strong suspicion some of the same problems have existed here as in those other states.”
A Tax Foundation summary said, “In addition to tax credits, cash rebates and grants, film production companies receive other preferential tax treatment: 30 state offer sales tax exemptions, and six states offer fee-free locations for the use of police officers to stop traffic.
“Some states are suspending their MPI [movie production incentive] programs due to budget pressures and revelations of mismanagement. Kansas has suspended its film tax credit program, and an Iowa panel appointed by Gov. Chet Culver after findings of program abuse [recently] recommended eliminating the state’s film tax credit.”
Blatt reflected, “The question that does not get asked often enough is whether or not these programs are cost efficient and if they have a real economic benefit or not, Blatt reflected. “Often with incentive and credit programs you wind up having only companies who don’t really need the benefits being the only ones who can get these deals at taxpayer expense.”
Blatt concluded, “I hope the report will have the effect of forcing legislators and others in government to look very carefully at what actually works and to be very disciplined before using scarce resources in such a manner.
“Obviously in the terribly difficult circumstances we face, everything the government does is under close scrutiny. I think that kind of scrutiny should be given to the state’s film incentives program. “Strong advocates for MPIs and other incentives have included governors in Florida, Michigan, New Mexico, Oregon, Ohio and Texas, while rare critics have included Mitch Daniels of Indiana, and, most recently, the governors of Iowa and Rhode Island.
A non-partisan, nonprofit organization, the Tax Foundation has monitored and reported on fiscal policy at all levels of American government since 1937.
NOTE: Pat McGuigan is editor of online news service CapitolBeatOK (www.capitolbeatok.com), and senior editor at The City Sentinel.
