Incentivizing Creativity
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1 State Tax Incentives and the Growth of the Georgia Film Industry Ric Kolenda Georgia State University & Georgia Institute of Technology
2 State Movie Production Incentive (MPI) Monetary inducements for film production Biggest growth in tax credits for film production costs Credits from 5 to 40% of production costs Most are transferable and/or refundable (i.e., regardless of tax liability)
3 Rapid Expansion of MPIs MPIs proliferated in the 2000s From 4 states in 2002 to 44 states in 2010 A few have cancelled or deactivated since 2010 Cost to states $1.4 billion in 2010 Nearly $6 billion since 2001 Also expanded to related industries Music Recording & Production Digital Media Development
4 Growth of MPIs by State Source: Tax Foundation
5 Growth of MPIs by State Source: Tax Foundation
6 The Question of Industry Incentives Do they work in building sustainable industry clusters? Critiques: Race to the bottom Rent-seeking behavior Need to address supply & marketing chains Lack of accountability Corruption
7 The Film Industry: A Special Case? Unique modes of production (project-based) Unique location requirements (studio & remote) Unique labor organization (network of large & small firms and individual contractors)
8 Research Questions Can MPIs create a self-sustaining local industry? Do MPIs increase local industry employment? Do MPIs increase local industry establishments? Do higher MPIs perform better than lower ones? Can a local industry be sustained in light of competition from other states?
9 The Case of Georgia 40-year history of film production support First tax incentive package passed in % transferable base tax credit Additional 3% for hiring Georgia residents Incentives expanded in % transferable base tax credit Additional 10% for animated logo
10 Georgia Productions by Type Video TV series TV movie Movie Documentary
11 Georgia Feature Films Only
12 Georgia Film Employment 3,500 All Motion Picture and Video Employment 3,000 2,500 GA Employment 2,000 1,500 1,
13 Georgia Film Production Employment 3,000 Motion Picture and Video Production Employment 2,500 2,000 GA Employment 1,500 1,
14 Other Film Production Employment 600 Other Motion Picture and Video Production Employment GA Employment 300 Teleproduction and Other Postproduction
15 Georgia Below-the-Line Occupations 2,500 2,000 Audio and Video Equipment Technicians Camera operators, television, video, and mo?on picture Film and video editors Sound Engineering Technicians 1,500 1,
16 US Select Film Occupations, Employment by Occupation Thousands Television, Video, and Motion Picture Camera Operators and Editors Broadcast, Sound Engineering Technicians, Radio Operators & Other Media Equipment Workers Producers & Directors Actors Employment by Occupation Thousands Television, Video, and Motion Picture Camera Operators and Editors Broadcast, Sound Engineering Technicians, Radio Operators & Other Media Equipment Workers Producers & Directors Actors CA NY FL IL GA NC LA 0 CA NY FL IL GA NC LA
17 Share of US Below-the-Line Occupations, Share"of"US"Audio"&"Video"Technicians" Share"of"US"Camera"Operators" 25.0%$ 30.0%$ 20.0%$ 25.0%$ %"of"total"us"employees"in"occupa6on" 15.0%$ 10.0%$ CA$ NY$ FL$ GA$ IL$ NC$ LA$ %"of"total"employees"in"occupa4on"! 20.0%$ 15.0%$ 10.0%$ CA$ NY$ FL$ GA$ IL$ NC$ LA$ 5.0%$ 5.0%$ 0.0%$ 2000$ 2004$ 2008$ 2012$ 0.0%$ 2000$ 2004$ 2008$ 2012$ Share"of"US"Film"&"Video"Editors" Share"of"US"Sound"Engineers" 40.0%$ 35.0%$ 35.0%$ 30.0%$ 30.0%$ 25.0%$ %"of"total"employees"in"occupa4on"" 25.0%$ 20.0%$ 15.0%$ CA$ NY$ FL$ GA$ IL$ NC$ LA$ %"of"total"employees"in"occupa4on"" 20.0%$ 15.0%$ CA$ NY$ FL$ GA$ IL$ NC$ LA$ 10.0%$ 10.0%$ 5.0%$ 5.0%$ 0.0%$ 2000$ 2004$ 2008$ 2012$ 0.0%$ 1$ 2$ 3$ 4$
18 Georgia Film Industry Job Growth Industry employment peaked in 2002 This is the year other states, most notably Louisiana, began offering tax incentives Steady growth since 2004 The largest growth rates were in years of tax incentive packages being implemented (2005 and 2008)
19 Detailed Job Growth Production jobs have accounted for virtually all growth, & have surpassed the 2002 peak in 2011 Teleproduction and Other Postproduction declined sharply in 2004, and has been flat since Distribution and other motion picture industries have been flat since 2000
20 Summary of Findings Competing tax incentives seem to have a great impact The employment effects of tax incentives taper off noticeably after the first year Feature films increasingly dominate the production levels The growth in film production does not equate to similar growth in local employment
21 Policy Implications Caution in using MPIs Production and employment are affected by competing states Employment effects tend to be short-lived at best Lack of growth in post-production and other areas suggests potential problems for sustainability
22 Future Research Time-series analysis using ES-202 Establishment analysis combining ES-202 with IMDb Pro and Georgia Sourcebook Look at critical components in Georgia Social Network Analysis of Georgia film projects Qualitative analysis of Georgia as a potential production center
23 The End Ric Kolenda
Growing an Industrial Cluster Movie Production Incentives and the Georgia Film Industry
Growing an Industrial Cluster Movie Production Incentives and the Georgia Film Industry Ric Kolenda Georgia State University & Georgia Institute of Technology State Movie Production Incentive (MPI) Monetary
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