Red and blue states expand tax incentives in bid for film and TV business

Red and blue states expand tax incentives in bid for film and TV business
·5 min read

States, even those not traditionally associated with Hollywood, have been pushing incentives to lure in film and TV production business as the pandemic wanes.

States such as Montana, Kentucky, Oklahoma, Oregon, and even California have recently made overtures to draw production into their states as the industry starts to heat back up again after COVID-19 disrupted the 2020 plans of many studios.

Vans Stevenson, the senior vice president of state government affairs at the Motion Picture Association, told the Washington Examiner states that are increasing financial incentives for TV and film productions to come to town have two goals in mind: to create jobs and to grow an attractive economic development program.

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In 2008 the National Governors Association published a 30-page issue brief that found that incentives for production companies are a viable economic tool for states.

“Film and media arts can play a key role in state economic development,” the report concluded. “As economic impact studies continue to demonstrate the ability of the film industry to create high-paying jobs, stimulate tourism, engage the community, and boost out-of-state spending, many states have recognized the value of investing in this growing industry.”

Stevenson said that there has been an “explosion in production” over the past few years because of streaming-service growth. Right now, with television, streaming, cable, and movies combined, there about 600 productions in the works across the United States right now, he said.

He added that the high volume of production has rekindled interest in economic incentives by some states, particularly in those that haven’t traditionally had competitive programs.

In Oklahoma, for example, lawmakers tripled the cash rebates to productions and also offered incentives for filming in rural communities. Last week, California lawmakers passed a bill increasing film and TV tax incentives by an additional $330 million, and in Oregon a recent bill raised the cap on a state credit program from $14 million to $20 million.

Montana is another state that is working to attract business from the film and TV production industry.

Montana Film Commissioner Allison Whitmer told the Washington Examiner that in 2019, the Montana Economic Development Industry Advancement Act went into effect, which offers a 20% transferable income tax credit on production expenditures in the state, with additional amounts that can increase the credit up to 35% of the production company’s base investment, in addition to other bonus incentives.

Big Sky Country offers some other attractive features for companies, including a lodging tax rebate after 30 days and no state sales tax. In May, the governor also boosted the film tax-credit cap by an extra $2 million from the current $10 million cap, which will go into effect in January.

Whitmer said during an interview that her state is taking a long-term approach toward tax credits and incentives and is hoping to continue to grow the film industry’s presence. She pointed out that right now, the hit TV series Yellowstone is filming in the state, which is anticipated to bring tens of millions of dollars’ worth of economic value.

A criticism of incentive programs is that TV and film productions don’t create permanent jobs but rather transitory ones. Stevenson said that logic doesn’t hold up because once a TV series or other recurring production sets up base in a state, the projects will offer consistent employment. He highlighted Georgia’s success as an example.

Dubbed “Y’allywood” by some, Georgia has become a major production hub and has handed out hundreds of millions of dollars in generous tax incentives over the years. Earlier this year, a few activists and actors called for filming boycotts in the state over its controversial voting law, and the year prior, there were calls for the same over a restrictive abortion bill. Despite that, business in the Peach State is still booming.

In fact, despite the boycotts and COVID-19 pandemic, the film and TV industry injected some $4 billion of direct spending into Georgia this past fiscal year, a record amount, according to the Georgia Department of Economic Development.

Whitmer said that the Montana Film Office had anticipated seeing a decrease in production activity in the state during the COVID-19 pandemic but actually saw an increase in production as companies looked to places that were more accommodating for filming last year.

“That was an interesting side note. Suddenly we were quite busy,” she said.

Whitmer said that the growth of streaming services has increased the pace of production everywhere, and Montana is starting to see more streaming projects flowing into the state. She said the industry has also become “more accepting” of content produced outside of the major production centers such as California.

“They wouldn’t be continuing to improve or stabilize the programs if they weren’t providing benefits to the state, their constituents, and the businesses that are there creating jobs and investment,” Stevenson said.

Not everyone is a fan of state incentives for film production, though. Joel Griffith, a research fellow at the conservative Heritage Foundation, told the Washington Examiner that when states provide the incentives, taxpayer funds that could either be put toward the budget or lowering taxes are stripped away.

“Politicians love getting the credit for these jobs, but they know that most people aren’t going to recognize the cost,” he said, later pointing out that both Republican and Democratic lawmakers have a hand in offering production incentives.

He said that some studies have shown that the economic return on providing these benefits is less than anticipated. A 2018 survey of studies found that movie production incentives have an average return on investment of 27 cents per dollar of tax credit issued.

Griffith said what the states should be focused on is lowering the overall tax rate for all businesses, which he said would generate more robust economic growth. “Don’t get lost in these giveaways to specific industries,” he said.

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But despite detractors of government production incentives, the TV and film industry and many states see the future for production across the country as promising.

“I think there is a very bright future for production-incentive programs and probably growing in states that right now may not have them at the moment because of the benefit of jobs and investments,” Stevenson said.

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Tags: News, Hollywood, Film, Business, Tax Credits, TV, Movies

Original Author: Zachary Halaschak

Original Location: Red and blue states expand tax incentives in bid for film and TV business

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