The Road From Rhode Island: Tax Credits in Decline

“Body of Proof,” the ABC drama about Dana Delany’s legs, is relocating from Rhode Island to Los Angeles. The move comes in the wake of ABC receiving approval for a $7 million California tax credit for the series, and word that Gov. Lincoln Chafee wants to dismantle the teensiest state’s own production tax incentive program. If you’re an actor and live in L.A., congratulations—your prospect of finding work just got a little bit better. If you live in Rhode Island, well, hey, there’s always Massachusetts.

Rhode Island is hardly the first state to find itself staring into the gaping maw of budget crisis and thinking, “Let’s toss the entertainment people in there.” Gov. Rick Snyder of Michigan appears to have succeeded in scaling back his state’s program. In Hawaii, an incentive-boosting bill endorsed by Bill Clinton and Cuba Gooding Jr.—two guys who peaked in the mid-’90s and now are remarkable mostly for looking a lot older than they used to—died in the Legislature, despite promises by two companies to build new production facilities in the state if the plan passed. In New Jersey, Gov. Chris Christie has already killed his state’s program, and Gov. Susana Martinez of New Mexico wants to cap spending on hers. Bills to create or expand credits in Oregon, Nebraska, and Nevada have all been stymied.

The Tax Foundation’s Joseph Henchman, who has a great name for a conservative think tank employee, recently noted in The New York Times that while 50 states offered $1.4 billion in film incentives last year, those numbers will drop this year to 37 and $1.3 billion. “Fortunately, the trend seems to be on the wane,” wrote Henchman, who obviously isn’t a fan. The reason for the waning is that pretty much every state in the union is facing a gazillion-dollar budget shortfall, and while industry groups, including the Screen Actors Guild and the American Federation of Television and Radio Artists, contend that incentives make more money than they cost, many folks disagree. The progressive Center on Budget and Policy Priorities released a study in December that criticized film incentives as inefficient and accused their proponents of using flawed research to bolster their case.

Doomsayers will doomsay that the decline in incentives will send more productions abroad, where labor is cheap and the craft-services food isn’t as delicious. That may be. But it also will likely drive work back to traditional hubs such as New York, which last year committed hundreds of millions of dollars to incentives, and California, whose program is especially designed to lure productions from other markets (as with “Body of Proof”). It also bodes well for emerging markets such as Louisiana, which has nurtured the industry and made it a functioning part of the local economy. For those states, the pot gets bigger as others walk away from the table.

Pictured: Dana Delany in 'Body of Proof'

Comments

[B. Baker]

It's not all about the $$$. There is a non-disclosure clause in a lot of movie deals with actors/directors, and in California, all of the deals have to be disclosed, but in some states, like Georgia, they do not. I know of several productions that moved from California because they had non-disclosure clauses and were forced to shoot out of state to avoid violating these contract terms.