An MPAA-commissioned study released by Ernest & Young today concludes that state film incentive programs are good for local economies – and not just if you work in the business. “The economic benefits to residents extend beyond the production activities themselves and include increased activity by suppliers to the film industry and increased consumer spending from higher incomes,” says Robert Cline, E&Y’s National Director of State and Local Tax Policy Economics and co-author of the Evaluating the Effectiveness of State Film Tax Credit Programs study. Thirty-seven states currently have film credit programs. The programs, with Louisiana, Illinois, Florida and Georgia among the most utilized by studios in recent years, draw from an estimated $1.2 billion in tax dollars annually nationwide. While providing few hard numbers, the E&Y report notes that some of the long term benefits a state with a film incentive program can enjoy are increased tourism, if the location ‘plays itself’ in productions, infrastructure development and seasoned local crews which can lead to increased tax revenues, spending and investment.
While primarily a methodological exercise, the 30-page study is dismissive of critics who gauge film incentive programs by whether they pay for themselves or not. “From a benefit-cost analysis perspective, this is too limited a budget constraint,” says the report. “Whether the costs of the programs are justified by these economic benefits must be answered by comparing the benefit-cost ratios of film credit programs with those achieved by other economic development programs,” the report concludes.