Democratic Oregon Governor John Kitzhaber is encouraging state lawmakers to double movie subsidies from $6 million each year to $12 million, according to a report from Oregon watchdog group, The Northwest Watchdog.
Movie and television producers receive tax rebates just for filming in the state and proponents say it will generate more jobs since filmmakers would want to shoot in the Beaver State. Critics of the proposal argue that transferring money from taxpayers to line the pockets of Hollywood is not needed and could fund other programs in the state that would benefit its citizens.
The Oregon Film website explains that the state government gives producers a 20 percent rebate on each good and/or service purchased. For instance, if a production company buys $1 worth of stuff then it gets 20 cents back. An extra cash payment is doled out of 16.2 percent of wages paid to production staff.
“Unlike other states’ programs, these incentives are cash rebates as opposed to tax credits. This enables us to deliver you a check quickly and efficiently,” the website stated. “Additionally, Oregon’s lack of any sales tax on goods and services can immediately save you 7 to 8 percent.”
Oregon initiated the subsidies after it lost much of its attraction in the 1990s when Canadian provinces started to offer tax incentives in order to attract executives in the film and television industry.
It was noted told that the Oregon Production Investment Fund is running low on funds, even though officials negotiate with producers for a lesser sum of the alloted money. Therefore, it was concluded that the proposed $12 million budget for the film office would be gone quickly.
“As soon as they get a better deal somewhere else they’re gone. I’m kind of surprised Oregon taxpayers are willing to be blackmailed like that,” said Joe Henchman, vice president of legal and state projects at the Tax Foundation. “All it really does nationally is transfer $1.5 billion from taxpayers to move to other states. It’s not really in the best interest of taxpayers.”
The Portland Business Journal reported last week that Oregon would receive more than $130 million in spending collected compared to a year ago. Gordon Sondland, chairman of the Governor’s Film and Video Board, announced at the annual Oregon Film and Video meeting at Portland State University said the television productions of “Grimm,” “Leverage” and “Portlandia” employed roughly 900 people.
The governor said the motion picture industry is doing a lot to help tackle the 8.4 percent unemployment rate.
“I got to see what ($100 million-plus) of productions look like on the ground,” Kitzhaber said. “And the finished products are remarkable. For a state that had a 10.6 percent unemployment rate two years ago, this industry is helping us in a lot of ways.”
Last summer, “Grimm” received $2.15 million from taxpayers, “Leverage” got $3.35 million, “The A-List” garnered $73,753 and “Paranorman” was able to extract $750,000 from the state. Other shows are expected to obtain refunds after the final accounting measures are taken and submitted.
Charlie Carlsen, the business agent for the International Alliance of Theatrical Stage Employees, told Oregon Live that each time someone in Oregon travels to Los Angeles they are asked about local incentives.
“Would they have come here without those incentives?” asked Carlsen. “No. Not even close. We’d go to Los Angeles to meet people, and their first question was: ‘What’s your incentive program?’ It’s an accountant’s world now. As they say: We don’t make movies anymore; we make budgets.”
Subsidies provided to the film and television industry has long been debated, especially in 2011 when legislation was put forward to extend the state’s tax credit and rebate programs until 2017, The bill also included an expansion of tax credits from $15 million every two-year budget cycle to $40 million.
Another aspect that is harshly criticized by opponents is that the tax incentives benefit the wealthy more than the rest of the state, since the tax credits are auctioned off to the public, which Oregon Center for Public Policy says is being bought by the top one percent of earners.
An excerpt from the article:
“Buyers in recent years have included John and Joan Shipley of the Dennis Uniform Manufacturing Co., who netted $5,000 on a $45,000 tax-credit purchase; Greg Goodman, the Portland parking lot magnate, who made about $24,446 on a $220,017 purchase; and Ryan Finley, co-founder of the online site Survey Monkey, who got about $95,000 from a $1.8 million sale.
“Likewise, Sheketoff’s analysis of 2008 data found that 95 percent of the return to buyers, or $4.1 million, went to income earners in the top 20 percent. At the time, the credit was sold at 90 cents to the dollar, giving buyers a bigger return.”
Chuck Sheketoff, executive director, said if a movie was ever made called “Hollywood Welfare” then Oregon’s program “would be it.”
“That return is being paid for by us, and it goes to really wealthy people who don’t need it and have nothing to do with the film business,” added Sheketoff.
It was confirmed in November that the state budget deficit stands at $3.5 billion, while the state debt is nearly $36 billion. Out of a population of about four million, close to 100,000 are unemployed and 835,782 individuals are on food stamps.
The deficit is projected to rise, according to Republican State Senator Chris Telfer, because the Democratic leadership wants to increase spending in the next session.
More than 40 states have incentives totaling a record $1.4 billion and they justify it because, as The Economist puts it, “local politicians could pose with film stars.” The publication concluded that the only party that benefits is the film industry itself and not the taxpayers.
There are states, though, that are either scaling down the programs or ending them completely due to budget restraints. making the decision to invest in another program or letting the taxpayers make the final choice.
Arizona, Arkansas, Idaho, Kansas, Maine, New Jersey and Washington are the states to wind down movie subsidies.