Bringing Hollywood to DC: Is it Worth It?

May 24th, 2012 | by Jessica Fulton

Movie stars, elaborate sets, directors screaming action— all in the midst of your morning commute to work. Sure, it would be fun to see Nicholas Cage in Dupont Circle or Clint Eastwood jogging down 18th Street in Adams Morgan, but spending millions of public dollars to attract the next National Treasure or In the Line of Fire might not be worth it in the end.

Attracting Hollywood to film on location in your city or state has become a competition of who can give the biggest tax subsidy. The District is trying to jump into the competition, but is it a race we want to win? 

A study of the economic benefits might be helpful. Indeed, such a $150,000 study appears as number 21 on the revenue contingency list for next fiscal year. Yet three spots up on the list, as number 18, is ten million dollars to the Film DC Economic Incentive Fund. This would be allocated before the $150,000 needed for a cost benefit analysis of film incentives. 

The FY 2013 budget already allocates $869K to the Office of Motion Picture and Television Development, including funding for a feasibility study. According to the Committee on Small and Local Business Development, this study intends to find funding alternatives for these tax incentives, which are currently funded by appropriations. Unfortunately, this study is not intended to find out if these incentives are beneficial. And evidence shows that these subsidies may not be worthwhile. 

Does this make sense? DCFPI doesn’t think so. Studies of the film incentives offered by many states show that they are not worth the cost. 

The competition to bring films into DC can be steep. As the District has already seen, many productions simply shoot background shots in the District and then move to other locations. Because so many jurisdictions are competing for the same films, incentives must be excessive in order to compete. States continue to bulk up their subsidy programs to become more attractive to the film industry. The increasing costs of these programs suggest that jurisdictions might be better served by investing valuable economic development resources in other ways. 

Yet those hoping that attracting films to DC will bring great gains in employment might be dismayed by the end to this story. Often, a majority of the highest paid jobs are skilled positions, and, as such, go to non-residents who are able to acquire the appropriate skill set. Moreover, studies show that the average revenue gains for each dollar of film subsidy claimed amounts to between $.07 and $.28. Given the needs of District residents, it certainly is unwise to put dollars into a program that tends to yield such a low return on investment. 

While the glitz and glamour of Hollywood in DC is attractive, it might be wise to remember that all that glitters is not gold. The District needs to invest in sound and effective economic development programs that benefit its residents instead of throwing dollars away to benefit film companies.

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