As dozens of states "right size" their budgets, one line item seems curiously immune from cuts: film subsidies. After New Mexico approved generous tax credits in 2002, more than 40 states followed suit, and today studios are showered with about $1.5 billion in annual benefits. In return, states get their scenery in lights, plus an economic boost that more than pays for the lost tax revenue--or so the thinking goes.
In actuality, according to a new report by the Center on Budget and Policy Priorities, states get little more than tinsel. The study, which the film industry blasted, found that subsidies do lure filmmakers--but most hiring is part time, and spending usually fails to cover the cost of the breaks. With a typical loss of more than 70 cents per dollar of subsidy, says Robert Tannenwald, who authored the report, states would be better off cutting residents a stimulus check or investing in infrastructure and education--pillars of growth, however unsexy.