On rare occasions, Utah is able to catch proverbial lightning in a bottle with a movie produced here. The “High School Musical” series of films actually led some tourists to come to Salt Lake City so they could visit East High School, where the Disney Channel films were shot.
That was highly unusual, especially considering the films’ fictional location was New Mexico, not Utah.
Utah has been home to major filmmaking since the earliest days of Westerns, but seldom have these movies generated that kind of cult-like response. We doubt many film patrons take note of a movie’s fine print to see where it was filmed, much less plan vacations around that information.
And yet the state gives away millions to bring production companies to the state. Utah lawmakers currently are advancing a request to add $5 million to about $8.3 million already available as incentives for this purpose. The new money would incentivize companies to do post-production work in the state.
Utah’s film subsidies are saner than those in most states. Here, the incentives are given as rebates and credits only after film companies demonstrate they spent a certain amount of money in the state. That keeps the subsidies from becoming massive giveaways without requiring anything in return, but it still represents a cost to taxpayers.
The state ought to study the effects of these subsidies, as well as the nature of the jobs they create, to determine whether they are worth the tax money involved. As the fiscal note to SB185 says, the extra money would reduce the amount available for education by about $5 million per year.
A number of states and organizations already have studied this issue and determined that film subsidies are, to quote Variety, “a giant waste of money.” Utah is hardly the only state to offer incentives. Many other states do more, virtually throwing money at production companies that bring in temporary jobs and take most of their profits with them when they leave.
A 2016 study by professor Michael Thom of the USC Price School of Public Policy found subsidies had little measurable effect on how much motion picture business ended up in each state. This makes sense, considering most productions have a particular type of landscape and setting in mind before they begin production.
This makes some incentives absurd on their face. Steven Malanga, senior editor of the Manhattan Institute's City Journal, noted that “The Wolf of Wall Street” received a $30 million incentive to film in New York even though it would have been ridiculous to film a story about Wall Street anywhere else.6 comments on this story
A few years ago, the Tax Foundation in Washington conducted a study that concluded, “Based on fanciful estimates of economic activity and tax revenue, states are investing in movie production projects with small returns and taking unnecessary risks with taxpayer dollars. In return, they attract mostly temporary jobs that are often transplanted from other states.”
Utah officials say film companies spent $64 million last year in the state and employed 2,400 people. That should be kept in perspective. According to the Federal Reserve Bank of St. Louis, Utah’s gross domestic product in 2016 was $156.3 billion.
Utah lawmakers have a responsibility to manage the taxpayer funds wisely. Incentivizing one industry over another is a serious matter.
Lawmakers should study film subsidies to measure whether continuing them is a wise use of state resources.