The film and television production business is booming in many areas of the country as some 40 states offer the industry tax incentives on everything from catering expenses to studio construction.
New Mexico is currently one of the hottest states for the industry. In 2007, filmmakers spent $476 million there, filming The Transformers, No Country for Old Men, and 3:10 to Yuma. That’s up from less than $2 million the industry spent there in 2001.
New Mexico is now home to Albuquerque Studios, a major film production complex. A 25 percent tax rebate on all production expenditures, diverse landscape, 0 percent loans of up to $15 million per project, and a growing talent pool have made the state an attractive alternative to Southern California.
Similarly, Pittsburgh saw a flurry of film production activity from the late 1970s to the early 1990s. The city’s rolling hills, three rivers, modern-looking downtown, and blue-collar roots provided diverse locations. The Deer Hunter, All the Right Moves, Silence of the Lambs, and Hoffa are among the dozens of movies shot in and around Pittsburgh in that period. Studios often hired local extras and crew members, creating a cottage industry.
Russ Streiner, chairman of the Pittsburgh Film Office, said, “Business was booming. There was enough work for set designers, caterers, costume designers, and others to earn a living making movies in Pittsburgh.”
However, Streiner says Hollywood was lured to Canada in the mid-1990s by generous tax benefits and a weak Canadian dollar. When the cameras stopped rolling in Pittsburgh, the city’s local film crews were forced to move elsewhere to find work.
Seeing other states were having luck in providing tax incentives, Streiner convinced the Pennsylvania governor and legislature in 2004 to pass a bill giving film companies a 25 percent tax credit for all spending in the state.
Since then, Streiner says, there has been a dramatic turnaround. Local crews have returned and cannot keep up with all the productions. Earlier this year, four movies were being filmed in Pittsburgh simultaneously, including the recently released Kevin Smith comedy, Zach and Miri.
Not everyone has been thrilled with the glitz and glamour of Hollywood and tax incentives. Taxpayers in Louisiana were shocked to learn they were subsidizing Brad Pitt’s latest movie to the tune of $27 million, which the producers will receive when they cash in or sell off tax credits.
The state’s 25 percent tax credit made Louisiana the third-most popular state in which to make movies, behind only California and New York. To attract even more filming—and in hopes of establishing a long-term industry—the state offers a 40 percent tax credit on construction costs of film-related facilities.
That generous credit has left some lawmakers concerned taxpayers will be subsidizing Hollywood far more lavishly than was ever intended. Some estimates put all the planned film-related building at $1.4 billion. Louisiana Economic Development Secretary Stephen Moret told a legislative panel it was in the hundreds of millions of dollars.
State Sen. Robert Adley (R-Benton) said it was time to “tighten up” the law so studios could not stretch building facilities for years while continuing to get tax breaks.
Michigan’s Huge Giveaways
Michigan jumped on the Hollywood tax break bandwagon with a whopping 40 percent tax rebate while lawmakers were raising taxes on local businesses to make up for huge state budget deficits. It is estimated the incentives will amount to more than $200 million even as lawmakers in both parties consider placing caps on the state’s annual spending to make up for revenue shortfalls.
Although 40 states now offer some sort of tax incentive for the film industry, not everyone is mesmerized by the idea of luring movie stars and car chases to their states.
Noah Berger, executive director of the Massachusetts Budget and Law Center, recently released a study showing the state’s 25 percent tax credit is eight times higher than its standard investment tax. He said whatever benefits Hollywood brings are only short-term.
“There’s no evidence yet that this is a particularly effective or efficient way to create jobs,” Berger said.
Nick Baker ([email protected]) writes from Washington, DC.