Wisconsin, I’m Ready for My Closeup Now

Friday, January 14, 2011 at 3:17 PM by

A growing body of evidence suggests that film subsidies are not a cost-effective means for states to promoting economic growth. The Center on Policy and Budget Priorities (CBPP) issued a report last month that declared tax credits for film production to be as ineffective as they are widespread. More than 40 states offer such credits, according to CBPP, despite the fact that these subsidies result in few high-quality jobs for residents, reward companies for production they might have done anyway, and don’t pay for themselves.

Add to that a new report by the Massachusetts Department of Revenue, which underscores some of the same points made by CBPP. The report finds that the state’s $82 million tax incentive brought in $10.7 million in additional state tax revenue and created 222 jobs for locals in 2009 – at a cost of $325,000 per job. Two-thirds of the production spending considered attributable to the tax incentives was paid to non-residents or out of state businesses.

Incoming New Mexico Governor Susana Martinez may be reading some of these same reports, because she has proposed slashing her state’s $67 million tax credit for film production by 40 percent, according to CBPP. New Mexico was one of the first states to wholeheartedly embrace tax incentives for film production.

Wisconsin’s experiment with film subsidies was short lived. Refundable tax credits were originally implemented in 2008 as a sum sufficient appropriation with no limits. Then in the 2009-11 budget, tax credits for film production in Wisconsin were all but eliminated, with a cap of $500,000 in total credits available.

The cut came in the wake of an analysis by the Wisconsin Department of Commerce that calculated that the state spent more than $60 in incentives for each hour of employment created, and warned that the program structure was biased towards out of state workers. The study pointed out that a film production company could get nearly three times more in incentives than a manufacturing company with a project of comparable size.

Film subsidies in Wisconsin may yet rise again, as Governor Walker and the new Legislature have indicated they are open to the idea of resurrecting the program. Governor Walker believes that film subsidies were not given “a fair chance to take hold,” according to an Isthmus article by Jay Rath. “Reasonable and sustainable incentives that give an emphasis in putting Wisconsin people to work and growing this industry for the state should receive serious consideration,” Walker said.

Tamarine Cornelius

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