|Iowa Film Incentives Are Likely, But Are They Worth It?|
Written by Jeff Ignatius
River Cities’ Reader
Wednesday, 14 March 2007
Film incentives in
But it remains an open question how much of a boost House File 411 - which would create three types of incentives for film production in Iowa - would provide to the state's motion-picture industry, and whether the state would benefit financially from the incentives.
Nationally, there's been little study about whether tax revenues generated by increased film production offset the costs of incentives. And with an increasingly competitive incentive climate, such programs are only going to become more expensive for states.
The rationale for film incentives is simple: If a state doesn't offer incentives to filmmakers, they'll film in states or countries that will make it financially worth their while to do so.
But the evidence to support incentives is primarily anecdotal. Tom Wheeler, the manager of the Iowa Film Office, said last week that four productions are currently considering the state for shooting this summer, possibly contingent on the passage of incentives.
Wheeler said the
• "25-percent transferable income-tax credit based on in-state expenditures at or above $100,000 (cumulative) to Iowa-based companies or
• "25-percent transferable income-tax credit based on direct investment into a certified project"; and
• "100-percent income exclusion for Iowa-based companies or
The credits would be awarded post-production - after the money has been spent.
Wheeler said he expects the film-incentive bill to become law this spring. The legislation's main obstacle, he said, would be higher-priority legislative items pushing more-minor bills off the agenda.
Wheeler also said that his goal with the incentives would be to nab two or three feature films a year with budgets of $4 million to $6 million each.
Representative Tyler Olson, who shepherded the bill through the Economic Development Committee, called the legislation "an important part of an economic-development package."
Olson said he didn't have a target for how much film production the incentive would bring to
The fedgazette - a regional business publication run by the Federal Reserve Bank of
Wheeler said the incentives are a "no loss, all gain" proposition. "I don't think it's likely to cost the state anything," he said.
The fiscal-note worksheet prepared by Wheeler for the legislature estimates first- and second-year costs to the state of $20,000 a year and revenue to the state of the same amount. And
Wheeler claimed that the General Assembly is "not going to legislate giving money away."
Yet the fedgazette said that such calculations are incomplete. A 2005 report on
"But such assertions fail to consider the full costs and benefits of these incentives, and as such fall well short of offering anything close to the real return on this public investment," the fedgazette wrote. "For example, there's no telling how many
That's true in
Furthermore, the center said, while film incentives often achieve their primary objective, they don't generate much business outside of film production: "The little evidence available suggests that film tax credits do attract film production and create jobs in states that have little or no film industry. However, they also cost states considerable foregone tax revenue. The film production stimulates little additional economic activity in other industries. Consequently, film tax credits do not ‘pay for themselves' by indirectly generating additional corporate income, sales, and property-tax revenues."
The report recommended that "as more evidence becomes available, policy analysts and policymakers should evaluate the cost-effectiveness of film tax credits relative to alternative policies designed to promote job creation and economic growth. They should also take into account the economic effects of measures needed to offset the revenue losses incurred by film tax credits in order to maintain balanced budgets."
Yet state officials are quick to point to the success of film incentives, and the case - while circumstantial - is strong.
Wheeler admitted that the kind of growth experienced by
It also seems unlikely that
So how can
But Wheeler also suggested that
"We don't necessarily need to be better than surrounding states if these work for us." Olson said.
Olson's sentiment was echoed by Ross, but he said that
That, of course, didn't stop the state from making its incentive program more generous last year.
Wheeler said that it's critical for
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