One of the most prevalent narratives from many Republicans in North Carolina is that the GOP dominance in the General Assembly has been an economic boon for the state. While this is true, one issue that should have North Carolinians scratching their heads is ending the sunset proposal for film subsidies. The program was set to be killed off by 2020. Instead, the grant rebates were extended indefinitely by the General Assembly earlier this month, offering $34 million in breaks for this fiscal year and $31 million next year. Shockingly, Republican State Rep. Ted Davis of New Hanover decried that the subsidies are “not as much as I would have liked to have seen.”
While North Carolina is sometimes cited as the economic model for other states and Washington, our state is trailing behind when it comes to abandoning film subsidies. A little less than a decade ago, 43 states boasted incentive packages to lure film companies to their respected states. That number has dropped by 10 because lawmakers are starting to realize that the benefits do not outweigh the cost to the taxpayer. Jon Sanders of the John Locke Foundation reported in 2014 that film subsidies returned 19 cents to the economy for every dollar spent by the state, a pretty paltry return that should have even star struck proponents questioning their support.
Many states have either curtailed their credits or in the case of Florida, Michigan, and Alaska, nixed them all together. Even Louisiana, once the darling of film subsidies in the South, valued at hundreds of million annually, figured out it can no longer sustain its harmful impact to the state budget.
“It’s not the government’s role to pick winners and losers,” noted Andres Malave, who was speaking for Florida’s chapter of Americans for Prosperity in 2016. “The film industry is an important part of the economy, but the legislature should implement policies that benefit businesses across the board.” Malave makes an important point that legislatures often use subsidies and special corporate incentives to avoid a more holistic approach to tax cuts and deregulation. To do just that will attract a fair, more diversified, and robust economic climate.
North Carolina’s AFP Director Donald Bryson and other free-market advocates have rightly tagged the giveaways as “corporate welfare.” A recent study cited in the Washington Examiner last month noted that 70 percent of the tax incentives go to large companies and not small businesses. Bryson has wisely vowed that AFP will hold “some members accountable for their support of subsidizing Hollywood.”
One of the main arguments for increasing incentives is that North Carolina is losing business to neighboring states. Film lobbyists flex their muscle by threatening that economic development will be slowed by fleeing movie crews for more crony minded states. The point they are protesting reveals the validity of the argument of film subsidy detractors: The jobs are not a permanent fixture in the state but in most instances are gobbled up by temporary out of state workers. Not lost on some citizens, is the fact that Hollywood figures decry more taxes for the public, while simultaneously seeking out tax breaks for their own industry.
While the film and entertainment grant is an erroneous use of state funds, it’s a strong reminder that cronyism is pervasive in government. Another example fortunately receiving more pushback from citizens across the nation is the use of taxpayer funds to build athletic and performance venues. Many lawmakers depend on the fact that the citizenry blindly believe that the subsidies are an economic boon which creates jobs and revenue for the state.
Credit should be given to AFP and the John Locke Foundation for sounding the alarm for so long on film subsidies in North Carolina. Ultimately, it’s up to North Carolinians to be a leader on this issue instead of following the dwindling herd.
