Opinions differ on whether state incentives bring filmmakers to the state, and whether they wind up being worth the cost.
Filming of Steven Spielberg's Lincoln, a biopic of the 16th President is underway in Richmond and Petersburg, Va, due in part to the more than $3.5 million in incentives floated by Governor Bob McDonnell. Part one of the series looks at the positive effects brought about by film production in the state, and part two offered a dissenting view, arguing that incentives provide little bang for the buck.
Three films are shooting in Virginia this month, including the Steven Spielberg movie about Lincoln. Two have requested and received a promise of subsidies from the state. There is a powerful lobby working to secure these favorable federal and state laws -- at least 44 legislatures offer cash and tax breaks to producers willing to shoot movies in their states.
Incentives in the Commonwealth
Virginia, for example, offers grants and tax credits to help cover production costs. Steven Spielberg's production company will collect $3.5 million from Virginia taxpayers to make his film about Lincoln in the Commonwealth -- and he’s not alone.
"Another film shooting right now in Williamsburg is called To Have and to Hold," says Rita McClenny, head of Virginia's Film Office. "It’s a period piece set in 1619 and it was written by a Virginian. And there’s Argo, which is a Ben Affleck film that’ll be shooting next week at Dulles and CIA/Langley. And we’re working on a remake of Dirty Dancing."
By her reckoning, Spielberg will give the state a big economic boost, spending about $34 million, but there's no way of knowing how accurate that number is.
In the Commonwealth, producers are reimbursed for 15 to 20 percent of their production costs, but when we asked Rita McClenny if we could see reports showing what film companies actually spent, she told us that information was confidential.
Questioning the logic
"One thing we know from a study done in Massachusetts is that about 40 percent of a filmmaker’s budget goes to people who earn more than a million dollars -- movie stars who usually take their their money home," says Bob Tannenwald, a Brandeis economist. "About 60 percent of the remaining employees are from out of state, and they're generally paid far better than the local folks."
Tannenwald says states rarely take into account what is lost when they use tax dollars to pay for Hollywood productions. "To finance the film subsidies, the state has to rob Peter to pay Paul," he says. "It has to take cops off the street, teachers out of the classroom and shutter firehouses to get the cash to pay the subsidy."
Then there’s the question of whether states really have to offer subsidies in the first place. Kathleen Kennedy, who’s producing Lincoln, says she and Spielberg considered shooting in Georgia or Massachusetts -- two other states that offered incentives and historic settings -- but neither came close to what Richmond had to offer. And she wasn't talking about incentives: "I think it was extremely important to both Steven and I that there was an authenticity. This is an extremely important city when it comes to telling the story of Lincoln."
The bottom line, for several policy analysts, is that incentives for film production don’t bring real, lasting prosperity to a state. They say that the money could be better spent on improving education and other services that attract companies with long-term jobs to offer. Some states have recently pulled the plug or scaled back on their film incentives, but with California and New York fighting to keep industries they’ve built over nearly a century – offering over $900 million to keep productions, the Commonwealth faces stiff competition when the story doesn’t demand Virginia.