*Report: Film tax credits are not big job generators

That won't come as much of a surprise to LA Biz Observed readers, but at least word is finally getting around. A new report by the left-leaning Center on Budget and Policy Priorities finds that states issuing tax credits to lure filmmakers are having to forgo stuff like public safety and community services. Some findings from the report:

--Subsidies don't pay for themselves. The revenue generated by economic activity induced by film subsidies falls far short of the subsidies' direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies' positive economic impact.

--No state can "win" the film subsidy war. Film subsidies are sometimes described as an "investment" that will pay off by creating a long-lasting industry. This strategy is dubious at best. Even Louisiana and New Mexico -- the two states most often cited as exemplars of successful industry-building strategies -- are finding it hard to hold on to the production that they have lured. The film industry is inherently risky and therefore dependent on subsidies. Consequently, the competition from other states is fierce, which suggests that states might better spend their money in other ways.

--Supporters of subsidies rely on flawed studies. The film industry and some state film offices have undertaken or commissioned biased studies concluding that film subsidies are highly cost-effective drivers of economic activity. The most careful, objective studies find just the opposite.

Here's the conclusion:

State film subsidies are a wasteful, ineffective, and unfair instrument of economic development. While they appear to be a "quick fix" that provides jobs and business to state residents with only a short lag, in reality they benefit mostly non-residents, especially well-paid non-resident film and TV professionals. Some residents benefit from these subsidies, but most end up paying for them in the form of fewer services -- such as education, healthcare, and police and fire protection -- or higher taxes elsewhere. The benefits to the few are highly visible; the costs to the majority are hidden because they are spread so widely and detached from the subsidies.

So if film subsidies are such a bad idea, why did California of all states go after them a couple of years back? Because state lawmakers were cowed into believing that runaway film production would be the death of Hollywood. Malarkey.

*Update: The Motion Picture Association of America just released a statement on the study, calling the results "politically motivated" and "slipshod," and going on about the importance of film tax credits. Thing is, the think tank's report only confirms earlier studies by the Federal Reserve Bank, the state of Massachusetts, and others that seriously question the benefits of these giveaways.