The Film Subsidy Fool’s Gold Rush

Gotta say, I’m beginning to think Louise Story’s series in the New York Times on state and local government corporate subsidies represents some of the very best journalism of the year. But maybe that’s because today she takes on an abuse about which I am frankly a bit deranged: the recent trend, which Democrats have supported as avidly as Republicans, towards state and local government paying the film industry to make movies in a particular location.

Story focuses on the saga of the famously beseiged city of Pontiac, Michigan, where that state’s insanely libertine film subsidy program became a big part of a failed major studio project which, ironically, had as its first production the upcoming Disney “Wizard of Oz” movie.

But Michigan is only the most profligate of the states that have rushed into film subsidies, mostly during the last few years, offering everything from transferable tax credits (a big part of Georgia’s high-profile subsidy program, which involves credits that can be sold for cash if they exceed a company’s actual state tax liability) to flat out rebates of studio expenses. Corruption associated with state film programs has already led to criminal prosecutions in two states, Louisiana and Iowa. And with the arguable exception of New Mexico’s program, which has focused on building up a sustainable local film industry, nearly all these subsidies have primarily benefitted non-residents who hit and run, leaving a perception of glamor and a lot of unmet expectations.

Because state film programs and the projects they supposedly attract get massive public attention, they have become a well-scrutinized form of corporate subsidy where it’s simply impossible to ignore how the companies involved are playing states against each other with zero interest in any ongoing commitment. But as with most corporate subsidies, there’s a mutual exploitation at work between companies pocketing entirely unnecessary taxpayer concessions and pols getting to play an unmerited role as “job creators.” Add in the special perk to governors, legislators and state bureaucrats of getting to rub shoulders with (not to mention play toady to) Hollywood celebrities, and you’ve got a marriage made in hell.

By now, there’s been enough bad publicity about this kind of subsidy that the fool’s gold rush may have subsided, though in several states film programs have simply faced cutbacks as part of general austerity measures (as in Michigan, though Republican Gov. Rick Snyder is on record as disliking corporate subsidies generally).

It would be helpful, however, if state and local policymakers would internalize a systemic resistance to the subsidy game. For that to happen, though, local and regional media need to stop treating “economic development investment decisions” as a cost-free bonanza, and stop covering ground-breakings, ribbon-cuttings, and for that matter, casting calls for movie extras and eventually red carpets, as heavenly news from nowhere.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.