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Movie industry study is deeply flawed

Posted on April 6, 2015

The Louisiana Budget Project issued the following statement in response to a new report commissioned by the film industry:

This industry-funded report is a desperate attempt by Hollywood producers to justify the generous subsidies they get from Louisiana taxpayers at a time when college campuses and health care services are under unprecedented strain. But no amount of movie magic can obscure some basic facts about the taxpayer-subsidized Louisiana film industry:

  • Every single study of Louisiana’s film subsidies – including this one – shows that the program is a major net cost to taxpayers. The latest independent report from economist Loren Scott (commissioned by Louisiana Economic Development) said that the economic return on the program has actually been overstated. That’s because as much as 25 percent of film subsidies go to millionaire actors and directors, people who don’t live in Louisiana and don’t spend much of their money here. Economists agree that subsidizing the salaries of out-of-state millionaire actors does not boost Louisiana’s economy; the money just goes out the door to California or New York. Using the right assumptions, it seems the program actually creates fewer jobs than advertised.
  • Even by the film industry’s laughably optimistic assumptions, the subsidy is a net loss for state taxpayers. The report claims films generated $95 million in state tax revenues in 2013 – or far less than the $251 million state taxpayers certified that year.
  • The idea that movie subsidies are responsible for Louisiana’s tourism gains doesn’t pass the smell test given that many of the movies shot here do not actually depict our state. For every Treme or Duck Dynasty, there are a dozen Louisiana-shot productions that are set in a different location. A typical viewer of a typical Louisiana-based production doesn’t even know they’re watching a Louisiana movie.
  • The industry study acknowledges (on page 37) that its tourism numbers are inflated. The study attributes 14.5 percent of state tourist visits to film and TV production but says that “should be considered upper-bound estimates” and that there “may be other factors that contributed to their visitation and spending patterns.”
  • When you look at Louisiana’s tourism numbers over time, it is clear that over the last decade events like Hurricane Katrina and trends in the national economy like the Great Recession are chiefly responsible for the industry’s ups and downs.

The bottom line, confirmed by everyone who’s ever looked at Louisiana’s film subsidies, is that the program is a drain on state resources that compromises the state’s ability to fund more critical needs.

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