The state is encouraging the city of Fayetteville to spend $500,000 in tax money to lure an undisclosed TV production to town for nine months of work, according to an article in the Fayetteville Flyer.
The promoters say, as is customary, that the $70 million budget will turn over many times in the local economy. The promoters, including the chamber of commerce boss Steve Clark, say some $19 million in purchases would be made and $38 million in payroll.
Well, just to throw out some numbers. The state sent $13 million in general revenue turnback to the cities in 2017 from a $6 billion budget A $38 million payroll, if realized and taxed in Arkansas might produce $1 million or so gross in taxes, with just a tiny bit winding back to Fayetteville. Remember, there is no local income tax. If all of the$19 million is spent on sales-taxable purchases in Fayetteville, the city’s 2 percent sales tax would produce $380,000. Yes, money would be spent, too, in restaurants. You can find the full pitch on the agenda of the council meeting. It projects more income from “induced” and non-direct spending. It does note some competing arguments on cost-benefit of welfare for film projects.
There’s something about the camera that makes governments want to throw money around. I’d hope the Fayetteville council at least gets an idea on the story line and participants before they invest tax dollars in some stinker of a production.
Note, too, that research has been done on the value of film incentives. It was such a loser for Louisiana, that it scaled its credit back. (Isn’t it just like Arkansas to get on the wrong end of a trend?)
A 2016 study, reported here in Variety, concluded tax incentives to lure film projects were a waste of money. They had scant impact on job growth. Said USC Professor Michael Thom, who did the study:
“If it’s such a successful industry and a profitable industry, you shouldn’t need a subsidy,” he said. “This is a multi-billion dollar industry.”
In the last couple of years, a handful of states have rolled back or eliminated their incentive programs. In the wake of a number of state-by-state studies showing that incentive programs don’t create benefits commensurate with their costs, Thom wondered why more states have not done away with their programs.
That led him to write another paper, titled “Fade to Black?”, that examines the “rise and fall” of motion picture tax incentive programs. He found that states generally enacted incentives as a response to high unemployment, and also because they were following the example of other states.
“Policymakers look around and say, ‘If five other states are doing something, they can’t all be idiots,’ so they have to do it to,” Thom said. “There’s a lot of peer pressure.”
Note the Flyer article says the state is pushing Fayetteville to act because other cities are competing, too. Wonder who? And what are they offering?
A city development officer says the city would benefit from attention to the area with long-lasting results. Steve Clark talks of how people are captivated by the Netflix series, “Ozark,” filmed in Missouri. I watched that. Murder, meth heads, organized crime and crappy motels. Let’s go!
PS: Most believe this is likely a handout for the third season of “True Detective” the HBO series guided by UA writing grad Nic Pizzolato. It had been reported previously the season would be set in Northwest Arkansas. At the time, it wasn’t reported that this was contingent on a tax handout. The show got rave reviews in its first season, set in Louisiana. Critics weren’t so enthralled with season 2.