Like ardent bachelors on a TV reality show, cities and states looking to create jobs and promote their favorite landscapes on the big and small screens are wooing Hollywood to come to town. But often they are handing out much more than roses.
These courtships involve tax breaks and incentives that cost hundreds of millions of dollars a year, and not always with a clear return on investment for local taxpayers.
For instance, if a production does not generate enough tax liability to use all of a refundable film tax credit, the state pays the producer the whole credit anyway — even if that means writing a seven-figure check to the production company.
Such shortfalls have led spending watchdogs like Robert Tannenwald, a senior fellow at the Center on Budget and Policy Priorities, to dismiss on-location movie and TV incentives as “a wasteful, ineffective and unfair” instrument of economic development.
“While they appear to be a ‘quick fix’ that provides jobs and business to state residents with only a short lag, in reality they benefit mostly nonresidents, especially well-paid nonresident film and TV professionals,” he said.
Nonetheless, more than 35 states and scores of local governments offer tax breaks, waive fees and regulations or even give away cash handouts as a way of luring TV and movie producers to film their shows in town. Just this week, California Gov. Jerry Brown and state lawmakers reached a deal to triple the state’s movie and TV tax credit program to $330 million annually, saying the move will halt a drain of some 16,000 entertainment industry jobs the state has seen over the past decade to other states.
The cost to taxpayers in 2012 alone from all these subsidies: about $1.5 billion, according to a database compiled by The New York Times.
Last month, city council members in Santa Fe, New Mexico, took television incentives to another level when they voted to offer the popular ABC reality dating show “The Bachelor” as much as $100,000 in cash, as well as free luxury lodging for the cast and crew, to entice the show to film an episode in New Mexico’s capital city.
For its decision to hand out its citizens’ hard-earned money in an attempt to create a reality television romance, the Santa Fe City Council wins this week’s Golden Hammer, a weekly Washington Times distinction awarded for dubious uses of taxpayer money.
Santa Fe Mayor Javier Gonzales defended the offer to the television program, telling the Santa Fe New Mexican, “I don’t know that there’s anywhere else that we could ever spend $50,000 to get 14.3 million people to look at Santa Fe for an hour.”
A poll revealed that just 18 percent of respondents supported the city’s decision to spend tax dollars to lure “The Bachelor” to Santa Fe, according to the newspaper.
“The show is dreck, and the demographic watching is not likely to have the funds or the motivation to spend them in Santa Fe,” said Santa Fe resident Jill Meyer. “There are so many other local issues that could be addressed with this money.”
City Councilor Ron Trujillo agreed.
“This is real money,” Mr. Trujillo said during discussions about the handout. “I’m all for economic development, but I think there are better uses of taxpayer money than spending it on a soap opera.”
Santa Fe is far from the only deserving recipient of a Golden Hammer for offering tax dollars to lure millionaire TV producers to film shows in certain states and cities.
Across the country, there are plenty of other examples of local government’s courtship with Hollywood.
Over the past two years, the Tennessee state government has lavished nearly $28 million in incentives on producers of the TV show “Nashville” to film the show in Music City. Nashville city officials offered a separate $500,000 handout to sweeten the deal, courtesy of local taxpayers.
When the popular Netflix series “House of Cards” threatened to move its production out of Maryland, state lawmakers ponied up $11.5 million in tax credits and grants to keep the show in that state.
Michigan gave a $1.5 million film incentive to “Ask Dr. Nandi,” a talk show on the Doctor Television Channel hosted by a gastroenterologist from suburban Detroit.
Even “Sharknado 2” was “filmed with the support of the New York State Governor’s Office for Motion Picture and Television Development.”
Advocates of government production incentives argue that they generate new jobs, tourism and economic development.
Earlier this month, Georgia Gov. Nathan Deal announced that feature films and television productions shot in Georgia generated an economic impact of $5.1 billion during fiscal year 2014.
According to Mr. Deal, the influx of filming in the Peach State has “created jobs and investment opportunities for Georgians. It also has revitalized communities, established new educational programs, tourism product and more.”
Not all states share Georgia’s enthusiasm for film and television incentive schemes. Arizona, Connecticut, Iowa, Kansas, Missouri and Wisconsin have scaled back or eliminated their production incentives.
In 2011 the Massachusetts Department of Revenue found that for every dollar the state spent on production incentives, only 13 cents in revenue was generated.
A 2013 report on the Louisiana Motion Picture Investor Tax Credit by the state auditor revealed the state spent an estimated $196.8 million in production tax credits while generating just $27 million in taxes from the program. The Florida Office of Film & Entertainment admitted to similarly disappointing results.