Good morning, Chairman Orange and other members of the committee. My name is Jessica Fulton and I am here today representing the DC Fiscal Policy Institute. DCFPI is a non-profit organization that engages in research and public education on the fiscal and economic health of the District of Columbia, with a special emphasis on those policies that affect low- and moderate-income residents.
The Office of Motion Picture and Television Development (OMPTD) serves as a tool for diversifying the District economy through building our film industry. The proposed budget for fiscal year (FY) 2015 would set new limits on the size of film productions that can qualify for subsidies, limit the amount that these productions can receive, require an annual report and audit of each film subsidy grant, and reduce the size of the film incentive fund.
I am here today to testify in favor of the proposed budget. The costly and ever-increasing film production subsidies across the country raise serious doubts about this approach to economic development. The proposed budget will bring increased transparency and accountability, protect the District from entering into the costly and ineffective film subsidies, and allow the OMPTD to focus more on building local talent.
Film Incentives Are Costly and Unsustainable
States across the country offer incentive programs to filmmakers with hopes of further developing their film industry. Because of the competition between states for films, the cost of winning has risen as states outbid each other for films. This leaves jurisdictions vying for films at a disadvantage to filmmakers who can pit jurisdictions against one another for their own economic gain. The recent experience of the Netflix show “House of Cards,” in which the company threatened to move production from Maryland without very large subsidies or leave, suggests that film incentives are not an effective economic development tool. The film productions stay only as long as they receive large annual subsidies.
Moreover, this kind of job creation is not necessarily long-lasting or meaningful for local residents. Film companies often fill temporary and lower-paying positions with local residents. According to a study cited by the Center on Budget and Policy Priorities, “Most crew members are hired locally, while top personnel travel extensively from job to job[1].” This kind of economic development places a strain on workers desiring to staff projects and does not provide consistent work.
The District can take other steps to improve other factors to encourage filmmakers to come to the District, like streamlining processes and providing other technical assistance. This would improve the District’s film industry without entering into costly competition over subsidies with states whose budgets are many times larger than our own.