question of the day: Do film and TV production subsidies provided by local governments make sense?

You think movie tickets are expensive? Could be some of your tax dollars are going to Hollywood, too. From AlterNet:

The budget for The Avengers was a hefty $220 million, but a portion of it was defrayed by $22 million in subsidies that Marvel received from the state of New Mexico. Much of the film was shot at various locations around Albuquerque, New Mexico, and the state has decided to provide a 25 percent rebate for any film or television production done within its borders.

That New Mexico managed to find $22 million to subsidize a major motion picture should raise some eyebrows, considering that, in the last few years, it has cut funding for services for the elderly and the disabled, preschool, higher education, and its state workforce. “We could have spent that $22 million on all kinds of things, like education for our children. We could have spent it on roads,” said New Mexico state Rep. Dennis Kintigh (R).

But subsidies bring in jobs, right?

The common rationale used to justify such a cost is that the subsidies attract jobs and other economic activity to a state that otherwise will go somewhere else, benefiting someone else. However, as the Center for Budget and Policy Priorities found, the subsidies only tend to create short-term jobs. Furthermore, those jobs are filled by already well-off film professionals who come from a state other than the one that’s footing the bill…

The few analyses done of state film and television subsidies have found that their rate of return in terms of economic activity borders on pathetic. For instance, Rhode Island found that it receives just 28 cents in direct economic investment for every dollar it spends on subsidies. A 2005 study by Louisiana’s chief economist found that the economic activity generated by film subsidies only offsets 16-18 percent of their cost.

Other times, the subsidies will go toward projects that would have happened in a particular state anyway, providing a convenient windfall rather than an enticement for production to move.

That “convenient windfall” aspect seems to describe the situation The Hollywood Reporter noted yesterday:

Basic cable TV series were the biggest winners in the lottery held by the California Film Commission to determine which shows and movies would receive the $100 million in annual tax credits doled out to keep movie and TV production in California.

The number of applications was up 63 percent from the prior year to 322, which was a record for the program since its inception in 2009. “Once again, the number of applications we received far exceeded our expectations,” said California Film Commission Executive Director Amy Lemisch. “It’s clear that despite fierce competition from other states and nations, the industry is eager to remain at home in California.”

Yup, that’s right: there are so many applicants for production subsidies that the state has to hold a lottery. If the industry is this “eager to remain at home in California,” why bother with the subsidies at all? Does anyone seriously think that film and TV production is going to flee Los Angeles?

What do you think? Do film and TV production subsidies provided by local governments make sense?

Hat tip to Neima for the AlterNet link.

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