Commentary

New Evidence: Film Incentives Still Don’t Work

Research from Michael Thom analyzes a variety of programs

Last year Michigan lawmakers wisely did away with what was once the most generous film incentive program in the nation. Mackinac Center research showed that despite giving film producers half a billion dollars from 2007 to 2013, there were no signs that the film industry in Michigan was actually growing. Essentially, the program amounted to a taxpayer handout to a select few movie production studios. And now there’s new research that suggests these programs aren’t benefiting other states’ economies either.

The evidence comes from an article published in the American Review of Public Administration written by Michael Thom, a professor at the University of Southern California and graduate of Michigan State University. He analyzed 15 years’ worth of data from more than 40 states and found that film incentive programs, on the whole, have no significant impact on wages, employment, gross state product or film industry concentration in a state.

Thom also carefully analyzed the different types of film incentives offered by states, such as sales tax waivers, lodging tax waivers, transferrable tax credits and refundable tax credits, and tested each of these separately. In doing this, he found some positive effects for particular types of incentives, but the impacts were tiny. For instance, transferable tax credits had a small effect on film industry employment, but no effect on wages. And refundable tax credits had a positive effect on wages for film industry workers, but it was only temporary. Corroborating Mackinac Center research, there wasn’t any evidence that these types of incentives created new jobs.

Film incentives are a relatively new experiment among taxpayer-funded economic development programs. In 2003, there were only five states with such programs — now there are more than 40, and states are handing out close to $2 billion in subsidies to movie studios. Like Michigan, other states are beginning to wise up to the futility of film incentives, and this recent research should cause more states to rethink these programs.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

Deficits Loom, But Community College Launches Athletics Program Anyway

'We need to do something,' says president

Having eliminated some teaching positions and still facing a projected budget deficit, a community college in Michigan's Upper Peninsula plans to launch an athletics program. The move is stirring criticism from faculty members who question the administration’s priorities.

Bay de Noc Community College in Escanaba will add men’s and women’s cross-country in the fall of 2017, and then men’s and women’s basketball in the winter. The college president said athletics will be added — on a shoestring basis — as a way to attract students and offset a declining enrollment.

“We need to do something,” said Bay College President Laura Coleman.

Bill Milligan, a faculty member in the English department, criticized the timing of adding athletics when teachers are being laid off.

“We've essentially laid off one of the brightest instructors ever employed by Bay and hired an athletic director instead,” Milligan said in an email. “Enough said about the priorities at Bay right now.”

Enrollment at the college has fallen after a surge of individuals going back to school during the Great Recession. After peaking at 3,215 in 2010-11 enrollment has dropped every year since, falling to 2,074 in 2014-15, a decrease of 35 percent.

Coleman said the college eliminated 11 positions, two of which were faculty.

Bay de Noc also converted a recruiting position into the job of athletic director. The teams' coaches would be part-time employees and the college would play its basketball games at the local YMCA rather than on campus.

Coleman estimated the total cost of adding athletics (including travel) would be $100,000 a year, not including the position of athletic director.

The four sports teams would add as many as 50 students — but only if all the positions were filled by individuals who are not members of the current student body.

“We aren’t going out there and doing football or hockey,” Coleman said. “We want to run a program that will be successful. We didn’t want to do it on the cheap-cheap-cheap nor do we want to be a Big Ten school.”

Milligan was skeptical of claims athletics wouldn’t end up costing the college more money in the end. He expressed concerns about expenses, citing as one example the building where the basketball games would be played, saying the bleachers need to be fixed.

“What concerns me and others is the timing of adding cost into the budget via the sports program at a time the college is laying off full-time faculty and staff — and projecting a budget shortfall of over $1 million,” Milligan said. “The timing simply can't be justified. Period.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.