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New data from the County Business Patterns shows a big loss in film jobs for Georgia since 2013. However, there has still been healthy growth overall since the state introduced up to 30% in transferable tax credits for film productions, with a 74% growth rate since 2010, and 29% overall since 2012.
In 2014, non-exhibition motion picture employment declined to 2,845 in 2014, a 1/3 drop from the record high of 4,282 in 2013. The reasons for this volatility are not yet clear, but the most likely explanation is just an anomalous growth rate in 2013, which was nearly double that of the previous year. And the average growth rate since 2010 is still quite healthy at over 26%/year, more than double that of the industry nationwide (11.6%), and also well above most other states, with one notable exception…
Utah, the Beehive State (yes, I had to look that up). My preliminary glance at the data showed that Utah’s growth rate, which was astronomical in 2013 (nearly quadrupling from 749 to 3,573), declined, but still showed healthy numbers, especially per capita. 2014 saw film employment at 2,821, nearly identical to that of Georgia, a much larger state, and an average annual growth rate of over 90% since 2010. What had previously appeared to be a bizarre anomaly is clearly becoming something of a trend. Is this a Sundance thing, or something more. Any Utahns out there, please post your thoughts in the Comments section below…
After over ten years of movie production tax incentives (MPIs), Georgia may finally be reaping the rewards of their generous tax credits in the way of a local film industry growth. MovieMaker magazine just named Atlanta the number one city for filmmakers to live and work, and the 2013 employment numbers showed a nearly 100 percent growth from the previous year.
Atlanta was just named first among the “Best Places to Live and Work as a Moviemaker 2016: Top 10 Big Cities,” up from sixth last year, according to MovieMaker magazine this month, with Savannah coming in first among the top ten small cities (“Best Places to Live and Work as a Moviemaker 2016: Top 10 Small Cities and Towns“).
So Atlanta beat out New York, Austin, Los Angeles and Albuquerque, in the following four spots respectively. Chicago, Seattle, Boston, San Francisco and Memphis rounded out the top ten.
Atlanta’s top position was, according to the article, based on several key factors: generous 30% tax credits; a growing talent pool that increasingly includes directors and producers, as well as talent for larger on-screen roles; a hip-hop scene to rival New York and L.A.; good restaurants; affordable housing; and the fact that “217 days of the year are pure sunshine.” Another oft-mentioned factor, overlooked here, is the city’s Hartsfield Jackson International Airport, the busiest in the world.
Maybe more importantly, film employment has increased dramatically in the state. According to recent figures released from the Bureau of Labor Statistics, Georgia saw a 94 percent growth in employment in motion picture production and distribution, and a 187 percent growth since 2010.
Looking at a comparison of Georgia and 11 other states with MPIs over this period, most have stayed rather steady over the 12-year period. Utah saw a large increase in 2013 as well, but this might be a statistical aberration, given the low-level of employment in all the previous years. California and New York were left off this intentionally, since both states’ much higher overall numbers obscure the differences in the smaller states, but neither showed anything like Georgia’s growth over the last few years.
This brings up a few questions: is this meteoric rise for Georgia due mostly to the state tax incentive, or are other factors at least as important? And given the success of the industry in recent years, are incentives still necessary going forward, or could they be reduced or eliminated? Time will tell, but as a recent Atlanta Journal Constitution article indicates, the state seems committed to continued support for the incentives.
Yesterday the California Legislative Analyst’s Office (LAO) issued a new report on the impacts of that state’s 10% tax credit for film and television production. This follows on the heels of a similar report from North Carolina. Both states are debating whether to continue the tax credit programs, and these reports are bad news for supporters of movie production incentives (MPIs) in both states.
The California LAO study avoided clear recommendations for lawmakers, but their key takeaways were:
- States shouldn’t compete for film productions using subsidies
- Since they do compete, California may need to protect its industry by doing the same
- But lawmakers should proceed with caution, since the subsidies are both expensive, and do not pay for themselves
Obviously the admonition to other states is somewhat predictable, given the fact that Los Angeles County alone is home to some 50% of film industry employment nationally. And it is true that film production has declined in the state, both because of general declines in the industry and losses to other states. But the last issue — that the high costs of MPIs are not offset by the economic benefits — challenges more rosy pictures painted by many previous studies, including one from the Milken Institute from February. According to that report:
California should not attempt to capture or keep productions that are looking for the highest possible incentives — that’s a game it can’t win. Instead, the state must facilitate the preservation of the core employment base and production infrastructure, as well as help local filmmakers restructure and adapt to the new age of digital production and distribution… California should ensure enough incentives to balance out its higher costs and the increasing aggressiveness of other states without sacrificing its future. (Klowden et al., 2014)
The LAO study revisits an earlier study by the Los Angeles County Economic Development Corporation (LAEDC), which suggested that “…every $1 of tax credit returned $1.11 in state and local revenue.” The LAO estimated that a more accurate figure would be %0.65 for every $1 spent. In addition to the cautions suggested above, the report points out that film and television production could decline in the state regardless of legislative actions, that subsidizing this industry both sets an awkward precedent and could stoke a “race to the bottom” with other states, and that the effectiveness of MPIs could be difficult to assess in any case.
The California study follows closely a memo by the North Carolina Fiscal Research Division (FRD), which itself was a response to an industry-supported study by researchers at North Carolina State University. Though the memo was more preliminary than the California LAO report, it did find several concerns with the more optimistic results of the NC State report. Similar to the California case, initial calculations suggest that instead of returns of $1.06 and $1.42 for state and state + local for each $1 of tax credit, the FRD found returns of $0.46 and $0.61 per $1 respectively. The 25% tax credit for North Carolina productions is set to sunset at the end of 2014, barring action by the legislature to extend it.
Look for more such dueling studies as increasingly states question the efficacy of MPIs as a tool for employment and economic growth going forward.
It’s been a busy few weeks for me…
First, I traveled to San Antonio for my fourth Urban Affairs Conference. My presentation was a comparative study of 22 states offering movie production incentives (MPIs) over the last 10 years, with a special focus on the metropolitan nature of film employment. [see the complete presentation here].
Film industry employment is metro employment
Besides showing that across states, an increase in film industry employment has a lot more to do with the level of existing employment — showing a path-dependent relationship — than with the level of tax incentives available, I was able to show that film jobs are heavily concentrated in metropolitan places. In a pooled sample from 2007-11, 94% of film industry workers lived in metro areas, with nearly half (43%) in the metros’ central cities. In addition, over half (53%) lived in the top 10 filmmaking cities, with nearly 40% of workers residing in the greater Los Angeles (*including Riverside-San Bernardino) and New York metros.
In Georgia, nearly 90% of film industry jobs were in the 4 central counties of the Atlanta metro (Fulton, DeKalb, Cobb & Gwinnett).
The rise of “Hollywood South”
Anyone who has lived, worked, or even visited Atlanta lately can easily recognize the signs: a line of white trailers, covered windows with adjacent scaffolding and lighting rigs, and the occasional celebrity/zombie sighting… all evidence of the recent growth in film & TV production in Atlanta and the surrounding area.
Yesterday I was fortunate enough to attend the Second Annual Atlanta Studies Symposium, held at the newly acquired and renovated Georgia State University Centennial Hall, formerly housing the Atlanta Life Financial Group. This is noteworthy because GSU has led the revitalization of downtown Atlanta, taking over former office towers and commercial spaces nearly as fast as their tenants could skedaddle to the northern suburbs. But I digress…
Amidst a great assortment of presentations on Atlanta past and present, I was on a panel that included research on the option of local, organic food for low-income urban families; and a look at the new trend in “open streets” programs in cities around the U.S. and beyond. I had tough acts to follow, but I persevered. Mine was the last panel presentation of the day, before the closing keynote by Regime Politics author Clarence Stone, so I felt some pressure to keep my audience awake so they wouldn’t miss hearing from this icon of urban politics. I was really wishing I could still make some changes to my PowerPoint, but I was forced to improvise a bit at the last minute when, just moments before the panel began, I received a tweet informing me of an article just released by The Hollywood Report entitled “How Georgia Toppled Louisiana in Attracting TV Productions.” Needless to say, I wanted to include this in my talk, so I found myself opening by reading quotes off my iPhone… [See my tweet/blog piece on this article shortly]
After giving a litany of recent productions shot in or near Atlanta in the last several months, including the Hunger Games series (all 4 films so far and counting); Anchorman 2, which had my beloved Manuel’s Tavern converted to a New York watering hole after replacing all the Atlanta sports memorabilia (and one naked portrait) with that of NYC teams; and of course The Walking Dead, whose popularity is such that after 4 seasons, it has spawned a cottage industry of TWD locations tours.
According to Georgia’s Film, Music & Digital Entertainment Office, nearly $1 billion was spent directly in the state in fiscal year 2013, generating an estimated $3.3 billion in economic impact. That’s an increase of $55 million from FY2012, and nearly a quarter of a billion since FY 2011, when the industry spent $689 mil. That is nothing to sneeze at. But of course they didn’t mention the cost of the program, which could be up to 30% of that direct expenditure, or upwards of $300 million from state revenues, since the tax incentives are based on the production budget, not the taxes owed. Producers are allowed to sell their excess credits, often heavily discounted, to other companies and individuals who owe Georgia state income taxes, which has spurred a new industry for brokers of such tax credits.
So given this growth in productions, what does that mean for the Georgia-based film industry? So far, it’s hard to tell. Based on the latest numbers I have (2011), film industry employment is at approximately the same level as it was in 2000, prior to the passage of a series of increasingly generous tax credits. There has been some growth since the bottom of 2004, following the passage of the first film tax credits in Louisiana, but the biggest spikes come immediately after increases in the credits, and then drop and/or level off (see the chart below).
Occupational data looked a bit more promising, but while the four major film & television occupations showed growth overall, only the largest and least production-specific group — Audio & Video Equipment Technicians — showed actual growth. (see the following chart).
In short, the last 2 years may in fact tell a different story, but in the mean time, I think we should be asking some tough questions about how this program is working, and whether it is really benefiting Georgia taxpayers, or even Georgia filmmakers.