If they ever make a movie about Washington’s use of tax dollars to attract movie makers to the state, it should be a vampire movie.
Perhaps it could be the final sequel to the “Twilight” series that’ll probably be made around 2028.
That would be the appropriate genre because this is the tax break that won’t die, no matter how much light is shed on the discredited concept, no matter how much golden data is produced to show these breaks don’t work.
Opponents – mostly those who read studies not paid for by the film industry or state film offices – thought they had succeeded in slaying the beast last year. After a bill to renew the tax break passed the star-struck Senate, it died in the House where budget writers couldn’t fathom subsidizing Hollywood while cutting schools and social programs.
They also couldn’t figure how fellow Democrats could be calling for closures of tax loopholes out of one corner of their mouth while praising this one out the other.
They might have been convinced if there were decent data to show the so-called investment brings in more tax revenue than it costs, that it creates economic development and not just economic activity. But only captive studies, as well as a deeply and admittedly flawed study of the Washington program by the Joint Legislative Audit and Review Committee, assert state film programs work.
A recent UCLA study found that for every dollar California spends to subsidize film production, it gets $1.04 back in spending.
Yet last week, the Washington bill arose from the dead. After a debate fueled more by what backers hoped could be true rather than what is true, Senate Bill 5539 passed 40-8.
At a cost of $3.5 million a year, the bill would once again turn state tax dollars over to a nongovernmental panel made up of officials from the film industry, its unions and the tourism community. It is the only time when nongovernment officials appropriate state dollars. (I’m not fooled by the funding mechanism, in which businesses “donate” money to Washington Filmworks and then take an equal deduction from their state business and occupation taxes. That’s not private money, it’s state tax money.)
This tax break should be a case study in what not to do to stimulate economic development. It began in a few states that thought it would lure some film production from Hollywood and New York. And it likely worked. But when nearly every state has some version of the program, it just gives producers the ability to play one state against the other.
And it creates a so-called race to the bottom where the only way states can distinguish themselves is to be ever-more generous. That, in turn, leads other states to do the same.
Backers of the program claim it gives jobs to film production workers who live in the state, and that is certainly true.
But even the JLARC study showed that the number of in-state jobs in the industry was roughly the same before the credit was created in 2006 as existed during its six-year run.
As Sen. Rodney Tom said during the debate last week, this tax break barely breaks even for the state.
“If you put our tax preferences in rank order, this would be so far down the list, it would never make the cut,” the Medina Democrat said.
As scripted, backers brought up the “Twilight” movies, noting the intangible effect those movies have on tourism, how they created “buzz” about the state. How ridiculous, they argue, that the films are set in Forks but filmed in Oregon and British Columbia.
But the state had a film credit in place when producers chose those other locales. British Columbia won because its film credits are more generous than Washington’s were or will be.
Vancouver, it seems, has already won the race to the bottom and is determined to keep that lowly status no matter what Washington does.
Peter Callaghan: 253-597-8657