Commerce study slams film incentives law
The Wisconsin Department of Commerce took another shot at the state's film incentives law, releasing a study Tuesday calling the program an "unlimited liability" for Wisconsin.
The 26-page "Cost Benefit Analysis of of Wisconsin Film Tax Credit Program" study not only reiterates the agency's stance that the film incentives law is flawed and costs too much, it also challenged the notion that the film industry can effectively create state jobs.
Once again, the Commerce Department trots out the much-hyped Johnny Depp project, "Public Enemies," as an example of how the program functions. The incentives program provides film makers and other creative industries with a 25 percent tax credit for dollars spent in Wisconsin on film production.
According to the agency's figures, the producers of "Public Enemies" were paid $4.6 million in tax credits for production shoots at various state locations, including Milwaukee, Oshkosh and Columbus, Wis.
Producers spent more than $18 million, but the department said most of that money went to out-of-state workers and for out-of-state services. Wisconsin's real economic impact — money spent here, wages to Wisconsin employees and tax revenue from those wages — equated to $5 million. At that level of spending, the $4.6 million in tax credits nearly wipe out the fiscal benefits of the tax incentives program.
The study also said that the film industry in ineffective at creating new jobs. When used for out-of-state film productions like "Public Enemies," Commerce said the film incentives are 75 percent less effective at generating jobs than other state programs and that each job created costs 20 times more than those created under other state programs. The department said the state's most expensive program, Community Development Zone, spends $5.96 in incentives for every hour of employment created. For "Public Enemies," the cost was $444.94 per hour of employment, according to Commerce.
To be sure, backers of the film incentives program have said that the "Public Enemies" project was atypical of the impact of the incentives legislation, but they also acknowledged that certain loopholes in the law should be addressed.
Since Doyle first proposed killing the program in his state budget, key legislators who backed the original law have been working to save the program by modifying and improving it to focus more on state job creation. Last week, the co-chair of the Wisconsin Legislature's Joint Finance Committee told WisPolitics.com that there is enough support among committee members to keep a modified version of the film incentives in the state budget.
The Commerce study was released the same day that Film Wisconsin, a nonprofit organization promoting the film industry in the state, said that the proposal to improve the film incentives package is picking up support from newspaper editorial boards across the state. In his proposed budget, Gov. Jim Doyle wants to replace the tax credit program with a $500,000 a year grant program.
“Citizens’ efforts to save the film incentives has a lot of momentum right now,” said Film Wisconsin executive director Scott Robbe. “We are gratified that so many editorial boards across the state back a plan to improve the film tax incentives, not kill them.”
The Milwaukee Journal Sentinel, Oshkosh Northwestern, Sheboygan Press, The Business Journal Serving Greater Milwaukee, Eau Claire Daily Telegram, Appleton Post Crescent, Racine Journal Times, Janesville Press Gazette and the Eau Claire Spectator all have published editorials in favor of maintaining the film incentives.
“In their first 14 months, the film incentives created 759 Wisconsin jobs and lured eight feature films, 16 television shows, three national commercials and two video games to Wisconsin,” said Robbe. “They have proven their ability to draw dollars and jobs to Wisconsin, to seed economic growth in a growth industry. Let’s not scrap them; let’s make them work better for our state.”