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December 1, 2010 in Business, City
Report: Keep incentive for movie, TV shoots
Producer Larry Estes, left, talks with line producer Marc Dahlstrom on Wednesday outside the Roberts mansion in Browne’s Addition where an independent film is being shot with the help of local film company North by Northwest. The film, from the book ” Camilla” by Madeleine L’Engle, is set in 1940s New York City, and the venerable mansion interiors will stand in for an apartment in New York. Estes said that state money that reimburses a percentage of a film’s cost in order to lure productions to Washington is a key factor in where films are made.
(Full-size photo)
A report that recommends Washington renew a four-year-old program that supports movie, television and commercial production was forwarded to lawmakers today by the Joint Legislative Audit & Review Committee.
The Motion Picture Competitiveness Program, with an annual price tag of $3.5 million, has helped pay for dozens of movies, television episodes and commercials, keeping almost 800 people employed in the process, the report says.
Many work in Spokane. Today, North by Northwest Productions had 70 technicians working on a film adaptation of the book “Camilla,” company President Rich Cowan said.
“We wouldn’t have the work if it wasn’t for the incentives,” said Cowan, adding that every project his company has been involved with since 2006 has been a beneficiary.
But with Washington facing a $385 million budget deficit for the fiscal year ending June 30, supporters were concerned that a program they consider vital to the industry, and an economic plus for the state, might be swept away.
If lawmakers do not renew the program before July, it will expire.
“Obviously, we’re in challenging times,” said committee member Rep. Glenn Anderson, R-Fall City.
But Anderson suggested that, given California’s budget woes, Washington should “lay down flypaper” to capture more Hollywood business.
“We need to be economic opportunists,” he said.
The program allows companies that place money with the Department of Revenue to get a dollar-for-dollar credit against their business and occupation tax obligations.
The department forwards the contributions to Washington Filmworks, a nonprofit agency that distributes the money to production companies like North by Northwest.
In 2009, 14 movies and commercials received $4.6 million in funds, and another $5.1 million was committed for projects in 2010, Filmworks Executive Director Amy Lillard said.
Only 18 states had some kind of film or television production incentives in 2006, when the Washington law was instituted. Now, 44 states offer assistance of some kind, although some have suspended or scaled back their incentives because of budget pressures or disappointing results.
Idaho has not funded its cash rebate program.
But the report to JLARC found that, through 2009, companies that had received $8.4 million in incentives spent $36 million, indirectly generating another $36 million in economic activity. They paid $837,000 in sales taxes.
The incentives have also kept Washington competitive despite intensified competition among the states for movie and television production, said Stacia Hollar, who prepared the JLARC report.
Although the review said the incentives should be continued, it also recommended reporting by production companies be improved so lawmakers could better evaluate the program’s value.
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eagleproducer on December 01 at 4:59 p.m.
A film “adoption?”
Nice.
I’m pretty sure it’s adaptation if you are writing about the conversion of a literary source into cinema, stage, etc.
hawken on December 01 at 5:10 p.m.
“The program allows companies that place money with the Department of Revenue to get a dollar-for-dollar credit against their business and occupation tax obligations.”
Sounds like a good move to me. Give such business incentives.
If they don’t bring their business here, we don’t get any tax revenue.
If they do bring their business here, we get some tax revenue plus the jobs and injection of other monies into our economy. I like it.
de3 on December 01 at 5:23 p.m.
It’s still a subsidy. Even though its their tax money, its return as a subsidy means the money spent on the subsidy must then come from some where else - meaning other taxpayers - or $3.5 million in cuts to some other program.
Apparently, no movies would be shot here without the subsidies? Bizarre.
That’s the implication of this: “But the report to JLARC found that, through 2009, companies that had received $8.4 million in incentives spent $36 million…. They paid $837,000 in sales taxes.”
All of this would have gone to zero without this subsidy?
Seems weird that free markets can no longer function unless subsidized. Something’s broken.
hawken on December 01 at 5:37 p.m.
de3… It’s not a subsidy. If they take their business elsewhere we get zero tax revenue and none of the benefits of that business coming to Washington state.
If they bring it here, we get some tax revenue, that which is over and above the amount the filmmaker deposits with the Department of Revenue…. Plus, we get the economic benefit… all of which I noted above.
You say….
“…its return as a subsidy means the money spent on the subsidy must then come from some where else - meaning other taxpayers - or $3.5 million in cuts to some other program.”
What money spent?
It’s simply a tax break dollar for dollar, according to the amount the filmmaker has deposited with the Dept of Revenue.
Did I miss something here?
misjustice on December 01 at 5:49 p.m.
Yeah, sure. Keep this subsidy, while under the same budget somehow defend denying Medicaid, child care subsidies, and food stamps to poor folks.
nitro71 on December 01 at 6:21 p.m.
It’s unbelievable what the state cuts then we find out they are subsizing the entertainment industry. This is absurd and a perfect example of what should be cut.
SugarShane on December 01 at 7:42 p.m.
Really? They bring alot of money and business with them and employ local actors and extras who in turn spend the money they make here, its a win win in my book as Ive gotten many jobs on the side doing this work. They rent equipment and hire caterers and much more. Plus, how cool is it to see a movie and recognize the locations?
hawken on December 01 at 8:18 p.m.
This series of posts, clearly demonstrates the selfish thinking of the far left….
They would deny economic benefit to our state simply because they cannot see the logic of providing tax incentives to business, to bring their business to us, whom otherwise would take it to some other state…
Sugar Shane: no doubt! It is a win win.
Next time you who are unemployed, want to blame someone, for not having a job, call the liberal left. This is a perfect example of our problems.
They really don’t care that you are unemployed. They care about big government control and more power for their elitist, liberal left, worldview.
de3 on December 01 at 9:13 p.m.
I looked up some details to better explain what this program is and is not.
WA State set up a separate non-profit organization called WashingtonFilmWorks. Any business with B&O tax liability can donate to this fund. You can see a list of donors here:
http://www.washingtonfilmworks.org/index.php/Investors/Contributors/
From the WashingtonFilmWorks web site:
“Washington-based businesses with a B&O tax liability can make cash contributions to WF and will then receive a tax credit in return.”
Just 4 of them are in the film business. Many of them are involved in the tourism industry. It is presumed that movies made in Washington will attract more tourists from out of state. Any company that donates $1 to this fund get to deduct $1 reduced from their taxes.
Let’s say a group of companies donate $3.5 million to this fund. These companies, collectively, reduce their own tax payments to the State government by $3.5 million. That is then $3.5 million less than the State would have otherwise received.
The fund dispenses grants to various film making companies as an incentive to make their film in Washington.
In the report “Review of Motion Picture Program Competitiveness Program Preliminary Report” (Oct 20, 2010) (search for that title) produced by and for the WA State Legislature, they find insufficient data to know whether these films would have been made with or without the funding, or to know the specific $ impact. They went ahead and estimated the values instead.
The program began in 2006. In 2009, the industry employed the same # of people as 2006. From 2002 to 2006, employment grew from 911 to 1628, and then from 1628 to 1899 in 2008. The rate of change was virtually the same from 2002 to 2008 - there is no indication that the subsidy made a difference.
On “Report page 3” (or Slide 4) - says the program is funded by taxpayers
Slide 23 - “Only Washington and Oregon solicit contributions from taxpayers to finance the incentives”.
A comment above says, “It’s simply a tax break dollar for dollar, according to the amount the filmmaker has deposited with the Dept of Revenue.”
Filmmakers get the break whether or not they deposited money into the fund. The fund comes from any WA business that donates.
Ultimately, the costs are born by the taxpayer. Let’s say the state has $10 million in taxes due. A group of companies donated $3.5 m and then get a break and do not have to pay $3.5 m to the State. The State receives $10M - $3.5 M or $6.5M. The state then shifts the tax burden from those companies to other taxpayers to still get its $10M. Some one else has to make up the shortfall; the state does not cut its budget by $3.5M.
Hypothetically, the film makers make movies that generate other taxes to more than make up for this. But there isn’t any evidence to support that:
- they may have made the films anyway
- employment in 2009 was identical to 2006 and the program began in 2006
- the rate of change in employment form 2002 to 2008 was nearly constant, in spite of the 2006 incentive program.
- the state might have gotten a better return on the $3.5M by investing in something else.
In spite of actual data, the report estimates large gains from the program and recommends continuing the program.
pseeger on December 01 at 9:21 p.m.
Hawken, I am embarrassed to admit it, but I agree with you on this issue. Can’t you just put away the knee-jerk right-wing stuff once in a while, though, and think like a grownup? Liberal left, blah, blah, blah…tiresome.
misjustice on December 01 at 9:28 p.m.
de3; thanks a lot for doing the homework in order to better explain how the program actually works. I appreciate your efforts.
; )
hawken on December 01 at 10:18 p.m.
pseeger
You’re ok…. I found myself agreeing with misjudgment and Gus on a different string. A bit embarrassing for me as well.
If it’s tiresome that I keep pounding the left, it’s only because the fallacies of the left are consistently redundant. Yet redundance still doesn’t get through. Which I understand.
As for this argument, on the one hand you agree with me…. yet in the same breath reprove me as a child in my analysis.
Seems like you’re contradicting yourself.
Past my bedtime.
hawken on December 01 at 10:21 p.m.
Looks like d3 might get it after all… Self discovery is always better than direct instruction.
mdriftmeyer on December 01 at 11:24 p.m.
Exposure to Hollywood in Spokane is always a plus.
drywitt99 on December 01 at 11:28 p.m.
hawken:
As a charter member of the far left, let me assure you we do NOT speak with one voice on all issues.
Attracting film production to Washington is a win-win proposition for ALL parties…,a green industry if there ever was one.
And I, for one, am pleased that we agree on this.
Although, I am a bit surprised that you are apparently so willing to accept the economic benefits provided by godless, leftist Hollywood??
oneanddone on December 02 at 3:35 a.m.
There are a lot of assumptions made here with admitted minimal reporting. How about an actual study that itemizes, with actual numbers, whether or not this program at least pays for itself. The only REAL number is $800k produced from $8M. Everything else is a SWAG.