Paying TV productions to shoot in your state may be money poorly spent

Ever wonder why so many television series are filmed in New York or Vancouver, Canada? Well, you'd shoot there too, if they offered you the cornucopia of cash savings that these areas do. Why? Because most states and some countries embrace the common wisdom that television productions bring big bucks to the local economy. This is also why the host locations for two major television series (Law and Order in New York City, Lost in Hawaii) are singing the blues as these two series come to an end.

Hard numbers about the economic loss are difficult to come by (more about that later), but, according to Bizjournals, Hawaii estimates that Lost pumped $400 million into the state's coffers during its six-season run. It reportedly employed more than 2,000 people in the last shooting year, and bought airliners-full of food, paint, wood, and other set supplies as well as renting fleets of vehicles and paying for lodging.

The original Law & Order brought New York City approximately $1 billion during its 20-year run, according to the Mayor's Office of Film, Theater and Broadcasting as reported by New York Magazine.

Given these juicy figures, it's no wonder that 41 states, numerous local communities and other countries now offer financial incentives for American TV and movie productions. In a game of one-upmanship, these entities vie by offering rebates on local labor, sales tax, production venues and services, as well as cooperation in getting access to venues.

Obviously, the wisdom of extending such largess to the industry depends on measuring the return. Do these towns, states and countries eventually recoup the lost tax revenue from the local companies that benefited from the increase in business? If not, does the production provide jobs, or does the money it spends recirculate enough to offset the investment?

Not according to a recent paper by professor Susan Christopherson of Cornell University and Ned Rightor of MXCIX. They point out that good measurements of this economic impact are almost impossible to find. Those people in the business of promoting film bureaus find them using ephemeral mulitpliers to "prove" that the tax breaks were justified, while other branches of a state government, such as the tax collectors who run their own numbers, find just the opposite.

The pair cites a Connecticut government study that found that 8% of the money invested came back to the state as tax revenue. Another study in Louisiana found revenue returns were only 16-18% of the money paid out. The Wisconsin Department of Commerce published a study using the Johnny Depp movie Public Enemies, filmed in the state. It concluded that it cost the state $925,467 of incentive money for each job created. Shortly thereafter, the state ended the program.

Christopherson and Rightor also point out that many of the jobs created are transitory, gone as soon as the production ends, and that to secure repeated business, states and communities would need specialized support such as sound stages and video-savvy labor. How can the latter be maintained if the business is episodic? With state support?

There is a certain pride a community can derive from seeing itself featured in a movie or television program. As a job creation and economic development initiative, however, proponents my have gotten Lost in the numbers, and passed laws that are bringing disorder to local budgets.