Education still has not recovered to pre-2009 funding levels, safety net funding lags, over 2,000 disabled adults are on the waiting list for services, and state-supported college tuitions continue to rise while 8,662 children are still waiting for childcare help so their parents can afford to work.
Prioritizing our spending continues to be a priority which is apparently why the Virginia Legislature felt that in this time of competing priorities it was necessary to send $60 million to Hollywood.
In 2010, Virginia first adopted a $2.5 million per year tax credit with a two-year sunset. At the time, the justification was the "need" to negotiate with Steven Spielberg to ensure that Lincoln would be filmed in Richmond. This was increased to $4 million in 2012 - I wrote about it here:
This year, HB460 was introduced raising the tax credit to a level that has a $10 million annual impact through Fiscal Year 2019 - $60 million total through it's 2019 sunset (click here for Fiscal Impact Statement). This equates to $7.29 per Virginian or almost $30 per four-person family.
Other states have been reconsidering these programs - especially in light of tight budgets and priorities:
- Arizona and Kansas suspended their film production credits in 2010.
- Wisconsin's program was reduced their program to a $500,000/year grant.
- Iowa put their program on hold due to a criminal investigation.
- Program have also been curtailed or eliminated in Connecticut and Missouri.
- Tax credit participants have also been convicted of tax fraud in Massachussetts.
- Michigan's retirement system is now paying the cost of their under-utilized program.
The conservative Tax Foundation found that these film incentives generate about $0.30 of tax revenue for every dollar spent. Here's their report.
A study in Lousiana found that it took $7.29 of tax credits to generate $1.00 in tax revenue.
Compare this with a $350,000 grant that Governor Kaine provided to Chesterfield County help attract Sabra to build a plant employing 260 people. Spending $10 million per year or $60 million on a major road improvement would create more long-term jobs. Ten million per year covers the entire annual tuition and fees for 1,604 students at the University of Virginia.
The House of Delegates passed an expansion 73-23 with bipartisan opposition (16 Democrats, 7 Republicans voting "no"). My floor comments from our debate are on the right.
Hollywood recorded a record $10.8 billion in revenue last year. Studies show that film production does not create long-term, high paying jobs. It largely produces temporary gains in hotels, restaurants, and lumber purchases.
This is the wrong way to spend $60 million of Virginians taxpayer dollars.