• WisBusiness

Friday, April 17, 2009

Lights! Camera! Inaction? State film tax credits stir debate

By Tom Still
Mention Hollywood and politics in the same sentence and most people envision liberal screen stars lining up on Rodeo Drive to save a whale, rescue a polar bear or hug a Democrat.

That stereotype is flipped in Wisconsin these days, where a conservative Republican state senator has emerged as a leading defender of current state tax incentives for the film-making industry and the Democratic governor has cast himself as a major skeptic of doing business with Tinseltown.

Sen. Ted Kanavas, R-Brookfield, believes the film tax credits he championed in 2006 are creating jobs and bringing dollars to Wisconsin, while Gov. Jim Doyle thinks the program he signed into law that year has failed to live up to its hype and should be left on the cutting room floor. It may not be the biggest issue in the state budget bill -- but it illustrates the difficulty of targeting state economic development dollars, even when intentions are good.

The state Department of Commerce issued a report last month on the film tax credits and the conclusion was harsher than reviews of "Meet the Spartans." Simply put, Commerce believes the tax credits cost more than they're worth in economic benefits.

The report called the program "really expensive" because it's not a typical tax credit program, which is capped at a percentage of taxes paid, but a refundable tax credit program that can act almost like a blank check. If the refundable tax credit exceeds the recipient's actual tax bill, the state writes a check for the difference. In Louisiana, that very scenario may cost that state's taxpayers more than $20 million.

"The program's cost-benefit analysis compares poorly to other programs aimed at manufacturing, technology, and agriculture," the report concluded. "In fact, Commerce can offer much more assistance to a film or video game than a manufacturer, a biotech start-up, or a cheese plant."

Click here to read the rest of Still's piece.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


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