Peter Enrich

Lights. Camera. Stop the film subsidies action.

By Peter Enrich
February 19, 2011

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THIS MONTH’S Academy Awards ceremony celebrates America’s love affair with Hollywood’s world of glamour and make-believe. This year, as citizens of Massachusetts, we are no idle spectators at this celebration. After all, our taxes are paying one-quarter of the costs of several of the movies being honored. Perhaps we should be asking why we weren’t invited to the ceremony.

Perhaps we should also be asking whether this taxpayer subsidy of the film industry, which is costing the state some $100 million annually, is a sensible or appropriate use of tax dollars. In a year when the governor is proposing deep cuts to such vital programs as local aid for cities and towns and public higher education and elimination of one-quarter of the state’s mental health hospital beds, are film subsidies a prudent use of our limited resources?

The hope is that film credits will bring not only glamour, but also good jobs to Massachusetts. But a recent analysis by the Department of Revenue reveals that is not the case. More than two-thirds of the subsidies go to underwrite payments to out-of-state individuals and businesses, largely to the nonresident stars and directors who are paid in the millions of dollars.

The jobs that are produced for local residents are far less glamorous — carpenters, cosmeticians, caterers, and the like — jobs that are typically short term and that, on an annualized basis, pay an average wage of $51,116. And they are few in number. In the most recent year of data (2009), subsidized projects provided only 473 full-time-equivalent jobs for Massachusetts residents. That means we spent more than $170,000 of our tax dollars for each $50,000 job.

And, when the Department of Revenue’s study totes up a whole range of “downstream’’ consequences of the tax credits (additional jobs generated by spending by the people employed on the film projects, the negative impact of the lost tax revenues on government-provided jobs and services, etc.), the actual taxpayer cost for each net new job attributable to the film tax credit last year balloons from $170,000 to nearly $325,000.

The hope that film subsidies will build a permanent, self-sustaining movie industry in Massachusetts is no more substantial. Each movie project only lasts a few months. And, with more than 40 states vying to offer ever-more-generous subsidies, future films will only be made here as long as we keep overpaying for the privilege. Production facilities that were built in states that adopted film subsidies a decade ago are now in bankruptcy.

The evidence is clear, and we face a choice: Will we continue to throw $100 million each year at the illusion of turning Boston into Hollywood East? Or will we focus instead on building a solid future on the realistic foundations of economic growth, like schools, roads and bridges, and public safety?

Peter Enrich, a professor at Northeastern University School of Law, was general counsel to the state’s Executive Office for Administration and Finance during the Dukakis and Weld administrations.