Do Film Incentive Programs Work?

"It would be easy to conclude that New Mexico's program of tax incentives for film and TV producers has been a big success. The state is hosting roughly 10 times as much film production as it did a decade ago. Albuquerque is now home to some of the largest soundstages in the world, and Sony Pictures Imageworks plans to move its special-effects operations to a new location there.

But a look at the numbers suggests that all this new activity has come at considerable cost. During the past fiscal year, according to a recent study, New Mexico granted $38.2 million in tax rebates for TV and movie production, but in return saw only enough increase in economic activity to generate $5.5 million in public revenue. "For every one dollar in rebate," the study concluded, "the state only received 14.44 cents in return."

Over the past five years, all but 10 states and some cities have created film-incentive programs. This has spread production around, but no one has come up with a formula that can be shown to provide a net economic benefit for the state or locality itself."