Independent Evaluations Conducted for State Governments
These studies were conducted for and by state governments for the purpose of evaluating the impacts of film subsidies. For the most part they attempt to account for direct and indirect benefits as spending circulates through the economy.
These studies show that although the film incentives are effective in attracting studio spending and contribute something to the overall economy they do not pay for themselves - each are a net loss for their respective state. The net economic activity generates less new tax revenue than they cost. Loss estimates range from a low of 68% of investment to a high of 87%.
In 2009 the Massachusetts DOR estimated that the cost to taxpayers to support a full time equivalent job* (FTE) for just one year was more than $88,000 for each job that went to a Massachusetts resident. As Jennifer Weiner, Policy Analyst with the Federal Reserve Bank of Boston notes in her paper on the CT incentives, theses are temporary jobs which exist only so long as subsidies are in place to attract them. (Navigate to "Papers on Film Incentives", "Fed Analysis of CT Film.pdf".)
Some studies include opportunity costs, others do not. Most states are required to maintain balanced budgets. "Investing" in film subsidies means that funding for other state priorities (e.g. higher ed, human services, etc.) must be reduced. Opportunity costs account for the loss in economic activity that would have occurred had these priorities been funded instead. Evaluations that do not account for opportunity costs overstate the "benefits" of film subsidies.
See also the The Creative Economy as “Big Business”: Evaluating State Strategies to Lure Filmmakers
* sufficient temporary work hours to be equivalent to a full time job
Summary of Independent Evaluations
State | Subsidy | Commissioned by | Conducted by | ROI** | Notes |
|---|---|---|---|---|---|
25% | Legislature | DOR | 0.18 | ||
25% | Legislature | DIR | 0.15 | based on more hard data than 2008 | |
30% | Comm. on Culture | Dept. of Econ Dev. | 0.20 | ||
25% | Governor | DOR | 0.28 to 0.32 | Assumes all jobs go to RI residents. Does not include opportunity costs. | |
25% | Legislature | NM State Univ | 0.14 | ||
25% | Legislature | Legis. Fiscal Ofc | 0.16 to 0.18 | ||
25%*** | LA Economic Development | Economic Research Assoc | 0.127 |
** Return On Investment. In other words, states recover only this fraction of each dollor money spent on subsidies.
*** Recently increased to 30% with additional subsidies for specific neighborhoods and employing Louisiana residents
