HB 12-1286: Film Production Activities in Colorado

House Bill 12-1286

Testimony to the Senate Business, Labor and Technology Committee

George Awuor, Policy Analyst

April 30, 2012

Thank you for the opportunity to address this committee. My name is George Awuor and I am a policy analyst with the Bell Policy Center. The Bell is a non-partisan, non-profit research and policy organization founded on progressive values and dedicated to expanding opportunity for all Coloradans.

I am here to oppose HB 1286, which proposes to appropriate $3 million in fiscal year 2012-2013 for film incentives.

Research shows that film incentives are not an effective way to create jobs and encourage economic growth. The fact is these incentives are costly to states and mostly benefit movie companies.  Studies in Massachusetts, Louisiana, New Mexico and South Carolina find that film incentives do not generate enough returns to cover their costs. In South Carolina, for example, a 2008 study found that the return was 19 cents for every dollar spent.[1]

Many production companies' decisions are made based on suitability of the location and less about the incentives. In addition to location, movie companies consider availability of a skilled workforce, including craftsmen and women and those with media-related skills, and infrastructure.[2]

What this legislation will do is put Colorado in a bidding war with 43 other states, including New Mexico, Louisiana and California, all of which offer larger incentives than we do. We should take note of states such as Arizona, Idaho and Kansas, which have decided to suspend or completely eliminate film production tax credits.[3] Many governors and legislators are ending their programs, preferring to use the money for other priorities.

The benefits of film incentives are exaggerated and rarely supported by data. Besides, jobs that may be created here in Colorado are likely to be temporary. Subsidies are offered to companies that don't really need them. At a time when states are reconsidering these incentives and even scaling back, we should not be proposing to expand our efforts.

We urge you not to pass this bill because we believe that incentives are ineffective. In fact, the mostly conservative Tax Foundation think tank and the mostly progressive Center on Budget and Policy Priorities both agree that movie production incentives are costly and that they fail to encourage economic growth or raise tax revenue as promised.[4] [5]

We at the Bell believe that economic development funds should be targeted at programs that have been proven to be much more effective in spurring economic development, such as improving infrastructure, education and worker training. Film subsidies don't pay for themselves and cannot justify the cost to the state. Besides, Colorado cannot afford to appropriate millions dollars to movie companies at a time when other critical services are facing major cuts.

Thank you for this opportunity to testify on HB 12-1286.

[1] Hefner, Frank, Impact Analysis for Film Production in South Carolina, South Carolina Coordinating Council for Economic Development, April 29, 2008.

[2] Christopherson, S. and Rightor, N., The Creative Economy as "Big Business": Evaluating State Strategies to Lure Filmmakers, Journal of Planning Education and Research: Vol. 29, 3: pp. 336-352, 2010.

[3] Henchman , J.,  More States Abandon Film Tax Incentives as Programs' Ineffectiveness Becomes More  Apparent, Tax Foundation, Fiscal Fact No. 272, 2011.

[4] Will Luther, Movie Production Incentives & Film Tax Credits: Blockbuster Support for Lackluster Policy, Tax Foundation Special Report, No. 173, Jan. 14, 2010.

[5] Tannenwald, R., State Film Subsidies: Not Much Bang for Too Many Bucks, Center on Budget and Policy Priorities, 2010.