Monday, February 10, 2014

Taxpayers Funding Movies Instead of Schools

Virginia's budget continues to struggle as our economy continues to recover from the Great Recession.

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.

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