Tuesday, December 7, 2010

Re: [MISP] Fwd: RE: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

Thanks for taking the time to do this. I don’t know how many Teachers, police officers, and firefighters have been let go in New Mexico though. Maybe in Mass.

 


From: NM Media Discussion List [mailto:MISP-L@unm.edu] On Behalf Of Stacy Sacco
Sent: Tuesday, December 07, 2010 2:44 PM
To: MISP-L@LIST.UNM.EDU
Subject: [MISP] Fwd: RE: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

 

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I thought you might all want to see the response from the folks at CBPP to my email from last week.  I certainly appreciate there having responded to my email and I would imagine would enjoy being part of this continued dialog.    Happy holidays to all.  Stacy

 

 

-----Original Message-----
From: Shannon Spillane <spillane@cbpp.org>
To: SASacco@aol.com
Sent: Tue, Dec 7, 2010 2:04 pm
Subject: RE: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

Sue,

 

Apologies for the delay in responding to your emails from last week.  Thank you for sharing the list serv dialogue with us.   My colleague, Dr. Bob Tannenwald, has written up a short note in response.  We invite you to share these comments with the list serv if you like.  Please find them below.

 

Kind regards,

Shannon

 

Shannon Spillane

Deputy Communications Director for Strategic Initiatives

Center on Budget and Policy Priorities

Phone: 202-408-1080

 

Response from Dr. Robert Tannenwald

Thank you for the discussion of my new report and for sharing with me your robust debate about this issue.  I appreciate the opportunity to respond briefly to a few of the points made in the list serv exchange.

 

First, I do not dispute that, by offering film tax subsidies, states induce producers to shoot movies within their borders. However, these subsidies are so lavish that governments must cut vital public services to pay for them. While residents get some work on movie productions, others lose their jobs as governments cancel contracts with vendors and lay off workers. For example, construction workers lay idle as maintenance, repair, and modernization of infrastructure are postponed. Teachers, police officers, and firefighters get let go. This has a ripple effect through the state economy.  The laid off workers struggle to pay their rent, to support their families, and to make car payments. As their household budgets shrink, they spend less at the grocery store and other local businesses. The resulting economic drag wipes out the economic gains that movie making appears to generate. In short, film tax credits make governments rob Peter to pay Paul.

 

To make matters worse, a large chunk of the benefits from film production goes into the pockets of nonresidents— out-of-state media pros. This is true even in New Mexico, where the state pays colleges and universities to train residents for media jobs and eligibility for its film tax credit is partially limited to residents. (A close reading of the New Mexico Film Office’s study offers evidence on this point).

 

Some other points:

 

Arizona does have a film tax credit, with an appropriation of $70 million, the same order of magnitude as film tax credits paid out by New MexicoArizona is discontinuing its film tax credit, effective December 31.

 

True, other industries get government subsidies. Most of these subsidies are just as wasteful and ineffective as the film tax credit and deserve scrutiny as well.  This report, however, focused on film tax credits in particular.

Movie producers moved back from Canada in large part because the Canadian dollar appreciated rapidly against the American dollar (by 50 percent) in the early part of the decade.

 

Thank you for your consideration of these points.

 

 

 

 

 

From: SASacco@aol.com [mailto:SASacco@aol.com]
Sent: Wednesday, December 01, 2010 6:41 PM
To: Shannon Spillane
Cc: Bob Tannenwald
Subject: Fwd: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

 

Just curious.  Does the CBPP have a process for reviewing and responding to comments regarding your reports, as noted in the following email?  Thank you.

 

Stacy

 


From: acw232@GMAIL.COM
Reply-to: MISP-L@unm.edu
To: MISP-L@LIST.UNM.EDU
Sent: 12/1/2010 4:26:05 P.M. Mountain Standard Time
Subj: Re: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

 

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It looks like that press release was a preview of a fuller article by Robert Tannenwald; Shannon Spillane is the Center's director of communications but not the author.

 

CBPP's mission is to help low and moderate income families, but they definitely are missing the boat in New Mexico.

 

Most of the hard data in Tannenwald's article is from a Massachusetts study (this link: http://www.mass.gov/Ador/docs/dor/News/2009FilmIncentiveReport.pdf ). Tannenwald's full article is here: http://www.cbpp.org/cms/?fa=view&id=3326 .

 

The Massachusetts study strikes me as actually being pretty good; it is one of the few that has reasonable math and clearly recognizes its assumptions. It's not very applicable to any state but Massachusetts, though, and particularly inapplicable to New Mexico  -- since, among other things, New Mexico does have "crew depth," and out-of-state crew wages and non-talent above-the-line wages are not eligible for the NM rebate.

 

The article hurts mostly because of misleading headings and a misleading summary at the top (i.e. "Most Thorough Study Shows Cost Far Exceeds Benefit" without mentioning that the study applies to the Massachusetts program and nobody else). I think CBPP may not be aware how much the generalizations in their article may harm thousands of working families here in NM.

 

 

On Wed, Dec 1, 2010 at 3:18 PM, Stacy Sacco <SASacco@aol.com> wrote:

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Since I like to review the source of the data that these kinds of studies are based on (in particular how accurate the information is, how do the researchers insure it's unbiased, etc.), I did a little research and found the following link to the original paper...

 

 

This document was written by Shannon Spillane, 202-408-1080, spillane@cbpp.org, the Deputy Director of Communications for Strategic Initiatives at the Center on Budget and Policy Priorities (which I assume funded this study?):

 

 

I'm including her in on this email, since I wanted to ask if she could send a copy of the original research and data analysis she completed (to make these claims), and, of course, how she insures the accuracy of the information she collects? 

 

Shannon... do you make that type of information available?  Is it available on your website or can we purchase a copy of the full report?   Stacy 

 

 

In a message dated 12/1/2010 2:34:32 P.M. Mountain Standard Time, skullkrushing@MSN.COM writes:

I "ditto" what you are saying Corey.  Thanks!

All The Best!
Sue Lucas
www.skylimitmusic.com
www.quote-unquote.org (Channel 26)
The Sky's the Limit Show
 
Breaking Bad Season 4 (Sony/AMC)

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Date: Wed, 1 Dec 2010 13:41:03 -0700
From: jolopyjockey@HOTMAIL.COM
Subject: Re: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS
To: MISP-L@LIST.UNM.EDU

Wow...this is just plain wrong.  I wouldn't own a house or have a job if it were not for these subsidies.  The film industry pumps a ton of money into the local economy. It filters down to all sorts of local business, from hotels and restaurants to construction supply companies.   I have lived here for 32 years and I have seen a big change in our local Albuquerque economy since the industry arrived. 

 

It is not the only industry that is publicly subsidized.  How about Sandia Labs, Kirkland AFB, Intel.....sure some is Federal money, but we still pay for it.  If I'm not mistaken Intel gets huge breaks.  

 

If film incentives were not offered, movies would not shoot here....or in Detroit, North Carolina, etc.   For example,  no film production exists in Arizona because they have no incentives. Film production nearly vanished from the United States in the 90s. This was due to Canada's incentive programs.  Thanks to State film incentives, much of that work has come back to the United States. If the incentives were to end in this State, the industry would vanish, and with it nearly 3,000 well paying jobs.   Also the positive trickle down to many local businesses. With it would also exit an entire industry that is keeping younger New Mexicans in the state.  Frankly, if you don't want to work at intel, the labs or as a public servant, there are not allot of  well paying jobs in this state.

 

If we end the film subsidies we should also not allow ranchers on public lands.   No oil on public lands.  Cut all funding to the labs.  Ask intel for the land it was given to be returned to the State, etc......

 

I guess we will see how this shakes out.


Date: Wed, 1 Dec 2010 18:58:54 +0000
From: karenakoch@MAC.COM
Subject: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS
To: MISP-L@LIST.UNM.EDU

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Check out this Center on Budget & Policy Priorities report on Film Business Subsidies.  You can be sure the new administration has.

The 17 page report is attached as a pdf but below is the opening premise ...

Like a Hollywood fantasy, claims that tax subsidies for film and TV productions — which nearly

every state has adopted in recent years — are cost-effective tools of job and income creation are

more fiction than fact. In the harsh light of reality, film subsidies offer little bang for the buck.

· State film subsidies are costly to states and generous to movie producers. Today, 43

states offer them, compared to only a handful in 2002. Over the course of state fiscal year 2010

(FY2010), states committed about $1.5 billion to subsidizing film and TV production (see

Appendix Table 1) — money that they otherwise could have spent on public services like

education, health care, public safety, and infrastructure.

The median state gives producers a subsidy worth 25 cents for every dollar of subsidized

production expense. The most lucrative tax subsidies are Alaska’s and Michigan’s, 44 cents and

42 cents on the dollar, respectively. Moreover, special rules allow film companies to claim a

very large credit even if they lose money— as many do.

· Subsidies reward companies for production that they might have done anyway. Some

makers of movie and TV shows have close, long-standing relationships with particular states.

Had those states not introduced or expanded film subsidies, most such producers would have

continued to work in the state anyway. But there is no practical way for a state to limit

subsidies only to productions that otherwise would not have happened.

· The best jobs go to non-residents. The work force at most sites outside of Los Angeles and

New York City lacks the specialized skills producers need to shoot a film. Consequently,

producers import scarce, highly paid talent from other states. Jobs for in-state residents tend to

be spotty, part-time, and relatively low-paying work — hair dressing, security, carpentry,

sanitation, moving, storage, and catering — that is unlikely to build the foundations of strong

economic development in the long term.

· Subsidies don’t pay for themselves. The revenue generated by economic activity induced by

film subsidies falls far short of the subsidies’ direct costs to the state. To balance its budget, the

state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive

economic impact.

820 First Street NE, Suite 510

Washington, DC 20002

Tel: 202-408-1080

Fax: 202-408-1056

2

· No state can “win” the film subsidy war. Film subsidies are sometimes described as an

“investment” that will pay off by creating a long-lasting industry. This strategy is dubious at

best. Even Louisiana and New Mexico — the two states most often cited as exemplars of

successful industry-building strategies — are finding it hard to hold on to the production that

they have lured. The film industry is inherently risky and therefore dependent on subsidies.

Consequently, the competition from other states is fierce, which suggests that states might

better spend their money in other ways.

· Supporters of subsidies rely on flawed studies. The film industry and some state film

offices have undertaken or commissioned biased studies concluding that film subsidies are

highly cost-effective drivers of economic activity. The most careful, objective studies find just

the opposite.

Given these problems, states would be better served by eliminating, or at least shrinking, film

subsidies and using the freed-up revenue to maintain vital public services and pursue more costeffective

development strategies, such as investment in education, job training, and infrastructure.

Effective public support of economic development may not be glamorous. However, at its best, it

creates lasting benefits for residents from all walks of life.

State governments cannot afford to fritter away scarce public funds on film subsidies, or, for that

matter, any other wasteful tax break. On the contrary, policymakers should broaden the base of

their taxes to create a fairer and more neutral tax system.

Film

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