Stop Bay State subsidies for Hollywood moguls

It’s time to pull our heads out of the popcorn buckets. With 310,000 jobless residents, Massachusetts can’t afford to waste any more public resources on subsidies for Hollywood moguls.

The state covers a quarter of the expenses for movies made in Massachusetts through a film tax credit. Last year the credit cost taxpayers $125 million. Governor Patrick put a cap on film industry subsidies in his latest budget. This was a step in the right direction, but in 2011 we’ll still give $50 million to the first producers who land at Logan.

Wouldn’t it be great if your business could get the state to pick up a quarter of your costs? With that same deal, you might expand, build a new facility, or hire more workers. The film industry does the opposite. They put up a set one day, haul it away the next. About 85 percent of their payroll — which accounts for more than two-thirds of film spending — goes to actors and freelancers flown in from out of state. Because the film covers expenses, they spend a miniscule fraction of their pay while they’re here.

There’s no way to know how many jobs for Massachusetts residents the film tax credit actually creates. The state doesn’t even ask about what it’s getting for our money because the industry has lobbied successfully against reasonable reporting requirements.

Without this data, researchers rely on government records from unemployment insurance filings, a crude measure that shows a few thousand jobs in the state’s film industry in some months, and in others only a few hundred. This variability offers an indication that the credit has created very few full-time jobs for locals.

But just assume the film tax credit has bought 1,000 new jobs, which is as reasonable an estimate as any. It cost Massachusetts taxpayers about $125 million to purchase those jobs in 2009. Some would say that’s a $125,000 per job. But that accounting treats film just like other industries. It’s not.

To keep movie crews in Massachusetts, the state must essentially give the subsidy year after year. Supporting those 1,000 workers for 10 years — a reasonable time horizon for evaluating a deal with a typical business — comes out to more like $1.25 million per job. Federal economic development standards call for a maximum public subsidy of $50,000 per job.

Advocates suggest there’s an incalculable benefit from having movie viewers see the Commonwealth in all its glory. This is doubtful. Most audiences can’t tell the difference between a movie shot here and one filmed on the moon. If there is a real benefit, why can’t we measure increased tourism? Extremely scarce public dollars should never go to risky investments we can’t quantify.

Advocates insist that Massachusetts can build a strong industry cluster, and then filmmakers would stay without bribes. But for this to happen, other states would have to stop paying off the filmmakers. If this is our strategy, why did the Legislature authorize the credit until 2023?

Advocates point to “multipliers” that show the industry has nearly a $1 billion economic impact. But these models exaggerate the impact by relying on old tables that reflect a more localized industry — filmmaking only at WGBH and Harvard. The fact remains that no independent peer reviewed research justifies major pubic investments in film tax credits.

Unfortunately, all the oohing and ahhing at photo spreads of stars taking in the town has drowned out serious conversations about real strategies to put people back to work.

Here’s one idea we might hear: Reinvigorate the state’s emaciated economic development agency so they actually have the staff to return the calls of employers interested in Massachusetts. With some capacity, they could cut more deals like the one the governor recently did with Liberty Mutual, which will bring us 600 permanent jobs, and two new construction projects.

Here’s another one: Invest in programs to retool our workers. Right now, the state spends three times more on film incentives than on workforce development.

Meet the Author

Ben Forman

Research Director, MassINC

About Ben Forman

Benjamin Forman is MassINC’s research director. He coordinates the development of the organization’s research agenda and oversees production of research reports. Ben has authored a number of MassINC publications and he speaks frequently to organizations and media across Massachusetts.

About Ben Forman

Benjamin Forman is MassINC’s research director. He coordinates the development of the organization’s research agenda and oversees production of research reports. Ben has authored a number of MassINC publications and he speaks frequently to organizations and media across Massachusetts.

It’s time to stop chasing down photo ops, and get to work on real economic development programs. Right now about the only thing Massachusetts can afford less than this senseless film tax credit is another jobless recovery.

Ben Forman is the research director of MassINC.