Colorado’s Joint Budget Committee nixed Gov. Jared Polis' request for more funding to provide taxpayer-funded incentives to film production companies.
The Colorado Office of Film, Television and Media currently offers performance-based tax rebates capped annually at $750,000 for film production companies.
Polis’s budget proposal requested $1.25 million in additional funding for the Office of Film, Television and Media’s tax rebate incentives, which would have raised the office’s total to $2 million for 2019-2020.
Past incentives allowed films like “Furious 7” and “The Hateful 8” to be filmed in Colorado. Producers for "BlacKkKlansman," which was nominated for an Academy Award for best picture, inquired about filming in Colorado, but the film office didn’t have enough incentives to offer, TheDenverChannel.com reported.
The Joint Budget Committee voted 6 to 0 on Monday to keep the office’s funding at $750,000. The film office, which is part of the Office of Economic Development and International Trade and the governor’s office, draws its money from the general fund.
According to the film office’s website, it in-part “facilitates content creation in the state to generate economic growth in all of its communities.” The office claims $151 million in economic impact has been created since 2012 thanks to the state’s incentive program.
To be eligible, out-of-state film production companies must have at least $1 million in local expenditures and Colorado residents must make up at least 50 percent of the workforces on productions.
Donald Zuckerman, the film office’s commissioner, has said in past interviews the program is “basically a job-creation program,” and more money is needed to lure in blockbuster films.
The office’s annual cap on incentives has been slashed over the years, from $3 million in 2016 down to what it is now. In 2012, the legislature upped the 10 percent percent performance rebate to 20 percent, which it’s still at today.
Several studies have found tax incentives for film production don’t pay off for taxpayers, and several states have slashed or cancelled their film incentive programs.
Joseph Bishop-Henchman, executive vice president of the Tax Foundation in Washington, D.C., said that while tax incentives do create some jobs in states, they’re most often temporary.
“The credits have certainly brought film and TV jobs to Georgia, Louisiana, New York, and a few other states, as those states are willing to use hundreds of millions of dollars of taxpayer money to subsidize Hollywood,” he said in an email. “Film offices in those states trumpet huge job creation numbers, although many of these jobs only lasted for the few weeks of filming.”
Bishop-Henchman added that studies have found the incentives don’t pay for themselves in other states.
“Every independent study that has evaluated the return on investment has found film tax credits do not pay for themselves. Because studios can trade or sell their credits to other taxpayers, a dollar in film tax credits is a dollar diverted from something else in the state budget,” he said. “Arizona estimated they get 28 cents back for every dollar they spend. Connecticut found just 7 cents for each dollar. Two studies in Louisiana found it was between 13 and 18 cents on the dollar. Massachusetts found it got 16 cents back for each dollar. New Mexico found 14 cents (and sharply reduced its program as a result). Pennsylvania found 24 cents, which is still a 76 cent loss for each $1 in credits.
“Michigan calculated how much it spent in tax credits to create one full-time equivalent film industry job, and discovered it cost $112,800 per new job. Realizing there were more cost-effective ways to create jobs, in 2011 they gutted the film program and instead cut business taxes generally, ending a 10-year economic freefall,” Bishop-Henchman added.
A 2016 study by Michael Thom, an assistant professor at the USC Price School of Public Policy, found that economic benefits for states offering film incentives were “nil or nearly nil.”
“The incentives are a bad investment. States pour millions of tax dollars into a program that offers little return,” Thom said in a news release around the time the study was released. “We looked at job growth, wage growth, states’ share of the motion picture industry, and the industry’s output in each state. On average, the only benefits were short-term wage gains, mostly to people who already work in the industry. Job growth was almost non-existent. Market share and industry output didn’t budge.”
While New Mexico might offer $50 million a year in incentives, it only generated 14 cents to each dollar spent, according to the study’s press release.
Thom also said government oversight of film incentives can be poor, too.
A 2017 audit of the film office found it doled out $1.9 million to production companies that weren’t eligible to receive the tax incentives.
Office of Economic Development and International Trade spokeswoman Jill McGranahan said in an email it will appeal the budget committee’s decision.