Guest Editorial: Why We Must Save Washington State's Film Incentive

Comments

1
I'd have an easier time tolerating this horseshit film production tax break if 1) it wasn't part of a race to the bottom with every other state offering film incentives 2) the McCleary decision wasn't hanging over our heads 3) we closed some other, truly godawful, tax break/loophole in the state (something like a leftover coal/gas/oil giveaway) to pay for it.
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@1:

In other words, you're totally opposed to an industry that brings tens, nay hundreds of millions of dollars worth of economic activity INTO the state for an incredibly modest investment of $3,500,000 per year, which equals 0.0075% (as in 75/1000th of a percent) of the total annual state budget of $37,850,000,000.

And here I thought conservatives were supposed to be all for Return On Investment, maximizing value, and generating profit. So much for that myth...
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Horse hockey! By not taxing people and in return the State makes millions? @1 there is no tax money made if no one is here. You just fall off the Turnip Wagon?
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@2 Dude (Dudette?), I count myself a liberal. I've never voted Republican in my life.

Film production credits are special favors for a special interest. Granted, I'm more sympathetic to local film production than a zillion other special interests the WA legislature has served, but still...

Anyway, what's so unreasonable about asking for reducing some really shitty tax break for the usual suspects (coal/gas/oil/agriculture/Boeing/etc) to pay for the slightly less shitty tax break for film credits?
5
This film incentive is what keeps WA state on the table and in the conversation of film incentives around the world. Everybody wants to film here but only a few are allowed to due to the $3.5 Million cap that has been placed on us annually which resulted in turning away 6 projects that would have spent $107 Million in our state. This incentive creates jobs for cast and crew locally and it should be much larger than it is right now.
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@5 the numbers don't add up - if people really wanted to film in WA and the tax credit only amounts to about 3 percent of the total expense budget ( I'm getting that based on the fact that about 117 million of biz was brought in by 3.5 million of tax credits) ..... seems like people would find a way to film here if they really wanted to and trim a few points from other line items in their budget.
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Which numbers? Go to http://keepfilminwa.com/ to see for yourself. We have nothing to hide in our local industry, we just need to be free of the training wheels.
8
State budgets are reactionary in nature.

The very first things that tend to get cut are things whose immediate benefits are not clearly visible. Public Health is a great example. Under Carter, the CDC launched a highly effective TB program that focused on the homeless population. Federal dollars were routed to local health departments for the purpose of retrofitting busses to serve as mobile health clinics. Homeless persons were invited aboard for a free night in a warm safe place with meals and bathing facilities on the bus in exchange for health department employees being able to directly place the TB drugs to treat their disease on the tongues of the homeless and then inspect to make sure they had been swallowed. By 1980, the TB rates in this country plunged tot he lowest in the historical record.

The incoming Reagan administration observed that TB was at an all time low, and therefore viewed the TB program as a waste of money, and cut it. The index case of HIV appeared later that year. HIV infection disables the cells that fight TB in the human body, and vice versa. his causes both diseases to progress far more rapidly and erratically than normal. Riding on the coattails of the emerge HIV epidemic, TB rates skyrocketed to the highest we have seen in the historical record within 18 months of the recorded low incidence rate for that disease.

We also cut PE and recess in the schools the same way. Playtime is deemed as time which could be more productively used for study. However, cutting PE and recess led not only to a rise in obesity, diabetes and other plagues created by low physical activity, it turns out that children's brains don't function as well when they are not allowed unstructured playtime, and they actually retain less information when you cut recess and PE out of their school schedules.

Art is also funded reactively. When we're flush (Think immediately after the tech boom in Seattle), we fund the arts quite heavily (unless your name is Mark Sidran and you just hate the idea of people dancing). What we don't see immediately is that the economic boom was accelerated and sustained longer because of public funding or the arts. It turns ut that all that creativity we were instilling in people translated directly into more novel ideas when it came to coding. It also allowed us to create greenspaces that were more aesthetically pleasing (think Gasworks Park) and therefore drove more recreation, better health outcomes, reduced violence and more vibrant social networks (not the online variety-the real variety, where your friends aren't just FaceBook people youlll never meet in real life).

Reactionary budgeting is the problem, generally speaking. Cutting these programs doesn't help the economy at all- it kills the economy. The fact is, people don't like to live in ugly places. If theres' no public art around, or civil engineers don't take aesthetics into account when planning urban growth, we wind up with people avoiding public spaces rather than engaging in them. Further, less creative ideas in your external environment leads to fewer creative ideas in your internal environment. Where do you think those brilliant programmers who drove Miscrosoft and Amazon to the top got their inspirations from? Do you think Fred Hutchinson Labs will be able to attract top doctors to a place that looks like an urban hellhole?

I moved to Seattle because of the arts. As cliche and hipsters as this is going to sound, it was the liner notes to Nirvana's Insecticide album that brought me here. I read in them that this was a place where gay people were not only welcome, it was an environment where homophobes were not welcome. I would never have read those liner notes if I hadn't liked the music enough to buy a copy.

The 1980's were hard on Seattle. Go watch the film Streetwise sometime. Have a look at the past of this city. Talk to people who can remember when the running joke was "Will the last person to flee Seattle please turn out the lights". That's where we were before the arts scene made this city worth living in. Don't drag us back into that dark era.

Keep the lights on. Fund the arts.
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@5 - WA state isn't "turning away 6 projects that would have spent $107 Million in our state" - those projects are electing to not film here. There's a difference.
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@9:

Incorrect. They applied for incentives funding (that's how we got the numbers, because they had to provide information showing how much they planned to spend in-state), but there wasn't enough available to accomodate every request, so they most likely elected to go to another state that DID have funding. Those states got $107mm in economic activity for a fraction of that in incentives investment, we didn't. Stunning vistas and the Seattle skyline aren't enough to convince film, television, and commercial producers to come to WA - they run businesses, and businesses look for the best deal, which other states are more than willing to negotiate. That's why practically every movie or TV show you see nowadays that's supposedly set in Seattle shoots somewhere else - mostly in Vancouver - because they recognize it as a good investment that generates significant return. and so THEY derive all the economic benefit of portraying US on-screen.
11
All I know is that it seems every other movie I go to nowadays has a Georgia peach logo in the end credits. It's depressing that WA doesn't have more films shot here (although I get why not).
12
@11:

That's because Georgia has a robust film, TV, and commercials industry thanks to a very generous (and immensely lucrative) tax incentives program that offers up to 30% return for projects shot in-state. For a roughly $250mm annual investment, the ROI is conservatively calculated as putting about $3.1B back into the State's economy. Imagine if such an industry were established at that level here?
13
Oh yes @Comte! I keep looking at NY and their 91 TV series and $9 Billion return for their $420 Million investment annually. I've been here since 1994, and remember what it was like to have 3 TV series in production. We are asking for far less than we should, but renewal and our slight increase are what WA State's indigenous film industry are what we need to stay alive.
14
I think I'd be more fine if we weren't giving these to corporate productions. Giving a tax break to a SyFy show is the same as cutting costs for Comcast.

I totally get the incentive bit, and the return on investment, but it's the same reason I had issues with tax incentives going to Boeing. Yes, they provide a lot of jobs, but do we need to chop our balls off to do that?

I totally get where both sides are coming from. We don't have our own sizable industry here. And that makes it even harder to maintain our momentum. Tax incentives help that. But, it's also somewhat corporate welfare.
15
Our state is so arrogant w/ the explosion of the high tech economy that it believes it can get away with not investing more tax incentives to bring more TV and Film work to the Washington State. As long as the high tech gravy train continues, our state/city politicians will continue to ignore other avenues of bringing culture, work, and dollars to the puget sound and will be more than pleased with our name being used in TV show and film plots, even if the actual state and people aren't.
16
"Lucky Them" was a really good movie. It not only featured (the real) western Washington in a way that stand-in locations couldn't, but it showed a bittersweet alternate reality, in which an Elliot Smith or Kurt Cobain quintessential Northwest-type 90s musician side-stepped fame and its pressures to actually enjoy living an unremarkable life in this beautiful locale, instead of continuing to make money off of singing about the misery it can drive one to.
17
@10 - Exactly - "THEY most likely elected to go to another state that DID have funding." Their choice - not the state "turning them away."
18
But @17-Our state had exhausted all available funding so it could not be a valid choice. In effect, our state had to turn them away. Six projects that would have brought major dollars into our economy. They would have hired local cast and crew, stayed at our hotels, bought food at our grocery stores and restaurants and used our local vendors like Victory Studios, and Bad Animals. They would have spent their money in our state, and after they showed us proof of their expenses, then we would have sent them a rebate, pure and simple.
19
@8 The origin of "Last one out of Seattle, please turn out the lights" phrase, Was a 1971 billboard, meant as a joke, due to the national impression that Seattle had become a Ghost Town in the wake of the Boeing layoffs of the time,FYI.

http://mynorthwest.com/25015/turn-out-th…

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18

"In effect, our state had to turn them away"

No.

Declining to pay someone to do business in your state is in no way "turning them away".

They are/were free to make their movies here without the taxpayer subsidy.

Heaven forbid someone make a business decision based on what works best for the business and not based on free market- smothering government tinkering.

While we giving away taxpayer money lets be sure to build some stadiums for billionaires...

21
I love debating with anonymous people that have no idea how the business of film and TV production works. Please go to http://keepfilminwa.com/ and get actual info from our actual business that is not in Hollywood.
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@20:

Yeah, because the restaurants, taxi services, souvenir shops, bars, hotels, parking lots, et al in Pioneer Square & SODO don't make a lousy dime off those awful, awful stadiums. So sad they're all left out of the picture. And what, pray-tell is this "free market" of which you speak? I've heard the term, but never actually seen it practiced in the real world.
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21
We love the insights of people who seek personal financial gain from dipping into the pockets of taxpayers.

22
In Seattle we don't doubt that you haven't.
24
Since we are so incredibly smart and enlightened and special here in Seattle perhaps we could set a good example by refusing play this 'race to the bottom' competition with other states, a race that doesn't pay off as well as movie shills would like to pretend.

A study by the Massachusetts Department of Revenue found that:

Massachusetts lost $88,000 in tax revenue for every new job created by the Commonwealth’s film tax credit and filled by a Massachusetts resident.

Every dollar of state tax revenue lost because of the film tax credit generated less than 69 cents in income for the Commonwealth’s residents. The Commonwealth could have given its citizens a bigger financial boost at a lower cost by repealing its film tax credit, recouping the tax revenue, and sending them checks in the mail.

For every dollar of film tax credits awarded to film producers, the Commonwealth gained only $0.16 in revenue, mostly in the form of income tax revenues withheld from film company employees. The remaining $0.84 had to be financed by higher taxes elsewhere or cuts in public services. Independent studies of film subsidies in other states have estimated similar financial costs, ranging from $0.72 to $0.93 per awarded subsidy dollar.
25
A large portion of the jobs these projects create, especially those with the highest pay, are filled by non-residents. Most locations in the United States lack “crew depth” — an ample supply of workers possessing the skills needed to make a feature-length movie. However, movie-making is so mobile that producers import their own scarce talent, such as principal actors, directors, cinematographers, and screen writers. As Cathy Greenhalgh observes in her study of cinematographers, “Film making is extremely expensive and employees are hierarchically organized. Most crew members are hired locally, while top personnel travel extensively from job to job.” These non-resident “top personnel” enjoy the best jobs and a large chunk of the income created by feature film production.
The Massachusetts study noted above estimates that residents enjoyed only 16 percent of the compensation paid to employees working on Massachusetts-based major film productions.
26
And I will say this, the WA State Motion Picture Competitiveness Program is the model program, and it is very specific that to get any rebate, they must hire local actors, local crew at 85%, so yes they may have 2-3 major actors as well as a couple of key positions, but all the rest are from Washington. We live here. We pay sales tax. And some of us have to work survival jobs, supporting ourselves and our families, but we are all mostly local. In fact the Casting Director (also local) is determined to cast Z-Nation with local actors. Your Massachusetts "study" might be true, but my advice to them is to follow our program as well as it's merits.
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@24/25:

The Massachusetts study has significant flaws, not the least of which is its conspicuous failure to factor in "economic multiplier effects" on jobs and businesses not directly related to the film/television/commercials production industry, but which nevertheless derive substantial benefit when productions shoot in their localities; metrics that Washington's incentive program is specifically designed to capture in-detail. It also relies on measuring the total amount productions spend overall, whether within MA or elsewhere, rather than looking specifically at the in-state revenues they generate. This gives the false impression that money is flooding out of the state, when in point of fact, the total amount spent in-state greatly exceeds the amount incentivized.

In any event, it's an apples-to-oranges comparison; the WA film incentive is structured in a completely different manner from MA's program, particularly with regard to how production revenue in-state is tracked here, and the rather unique requirement that incentive reimbursement is awarded only AFTER productions provide verification of what they've already spent.
28
In the end, how can the ROI be so high -- why wouldn't other states play the game and compete the ROI down to a level comparable to other things states invest in?

If there's a reason we have some special lead in calculating multiplier effects, or all the other states are being dumb and leaving money on the table, I'll take the money. But without some identification of the reason, I'm skeptical there's so much free money to be picked up.
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For every dollar awarded in funding assistance, the approved production generates an estimated $10 of economic activity in our statewide economy, which is $10 of benefits for every $1 invested. **

**Using NAICS codes from project data, economists at Community Attributes Inc. verified this activity using a $2.75 multiplier for film.
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27

Check again, the Massachusetts study also estimated employment generated by the "ripple effects" of film subsidies.
Strangely, the studies that find the subsidies are a good idea are all funded by the industry or lobby groups.

Besides;
there is also an "economic multiplier effect"
if you hand out three and a half million bucks in $100 bills to random people on the street.
They spend the money,
then the people they spent the money with spend the money,
and so on,
and so on...

This program would require less paperwork and generate more direct benefit to the residents of city.
31
I'm worker at the bottom of the totem pole in Vancouver, Canada's film industry. I owe my life these days to this kind of subsidy, so colour my comments with that info.

In British Columbia, mostly Vancouver, the film industry (mostly American productions) contributes 2 billion dollars to the local economy. The Province spends about $250 million on filming incentives (subsidies, erroneously named "tax 'credits'").

Film is a great industry to attract. It's highly unionized. Pay is high. Productions spend all kinds of money everywhere - renting properties, filling hotels in February, renting tents, feeding everyone, pouring money into municipal coffers for permits and policing.

Film can also be a bit of a fickle mistress. another jurisdiction paying slightly higher incentives? productions rush there for a bit. Incentives aren't the only thing that are the deciding factor. You need to have the infrastructure and the labour-pool. A few years ago, Quebec and Ontario started handing out much higher incentives than BC and productions moved there for a bit until those provinces realized their incentives were unsustainable and they stopped them.

Incentives make the whole thing a bit of a break-even proposition for the province. They spend a lot of money, they get a little back in tax revenue (income and sales). The benefit is in creating an entire economic ecosystem - rental companies, back-office support, money for people who rent their properties, location equipment, cleaning companies, catering, lodging in remoter locations for entire crews in the low tourist season.

That's the benefit and it's a bit of a break-even proposition to the province. Also, it has to be a long term strategy. In Vancouver, we have film schools pumping out film worker professionals. You can't just throw money at productions for them to fill without having local crews. You can't have strong local crews unless you have constant work.

Film incentives can be great for the economy, but some things are overblown. "multiplier effects" are kind of BS. the idea is that I spend my salary and the places I spend it at also spend it and etc etc. However, if film were to disappear, I wouldn't. I'd have to get another job and then I'd spend money from that job on the things I spend today. It's not like if the film tax incentive went away, I'd disappear from the universe.

How this applies to Seattle.

Honestly guys... if you're deciding on whether to spend a few 10s of millions on a film incentive or not, I would say "don't bother". It's not really worth the money unless you really invest in the concept. If you throw 10 million, you're just gonna get a few productions that bring in all their own people and don't really have a big economic impact. Spend a few 100 million, invest in schools, set up film commissioners in every county, commit to a decades-long project or don't bother.

Also, you're next to Vancouver BC, that's also in the same time-zone as LA, offers 28% labour cash-back and, currently, has a 25% currency exchange advantage. It would be difficult to compete with Vancouver with it's similar scenery and well-entrenched infrastructure.
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oh... this is an old post. Maybe no one even reads what I just wrote :(