Budget & Tax
Ray Carter | April 29, 2021
Review shows film subsidies a net drain on state government
Oklahoma lawmakers are considering a dramatic increase in state film subsidies, potentially funneling as much as $50 million a year to filmmakers, and have even proclaimed the subsidy program a “magical” economic-development tool.
But a recent independent review of the program, conducted by the state’s Incentive Evaluation Commission, shows the film-subsidy program is a net drain on state coffers and has produced just 145 net new jobs in the motion picture and video production industry in Oklahoma since 2005.
“For each $1.00 in rebates provided by the State, the Oklahoma tax revenue generated from filming and production spending within the state is well under $1.00,” the latest review of the film-subsidy program, conducted in 2020 by consultants hired by the Incentive Evaluation Commission, stated. “For the period 2013-2016 the state tax revenue generated was $.05 for each $1.00 of rebates provided. For the period 2017-2020 the state tax revenue return was $.52 per $1.00 of rebates.”
Other independent analysts say such numbers make it easy to sum up the effect of Oklahoma’s film-subsidy program.
“It’s losing money for the state and its finances,” said Byron Schlomach, director of the 1889 Institute, an education and research organization that has also reviewed the film-subsidy program.
Notably, the highest return-on-investment indicated in the report is from 2020, a year that includes projections based on the impact of “Killers of the Flower Moon,” a $200 million-budget production now being shot in Oklahoma and directed by Martin Scorsese.
Even with that production included in a four-year average, the report found the state was reaping just 52 cents in tax collections for each $1 in taxpayer subsidies provided to incentivize filmmaking.
And, in years when Oklahoma has attracted more typical film productions, the state’s return on investment is much lower.
The Incentive Evaluation Commission report showed that for every $1 in state film subsidies provided in 2019, the program generated just 13 cents in tax collections in 2019. In 2018, the return on investment was just 11 cents, barely changed from the 12-cent return in 2017. Prior-year returns were even lower with the state reaping just 6 cents in revenue for every $1 in film subsidies provided in 2016, just 9 cents in 2015, and 11 cents in 2014.
The lowest return on investment occurred in 2013, when the Oklahoma government reaped 3 cents in revenue for every $1 in taxpayer film subsidies provided.
Long-term job creation generated by the program has been limited.
The Incentive Evaluation Commission report said the number of Oklahoma motion-picture and video-production company employees is “increasing meaningfully,” noting that data from the U.S. Bureau of Labor Statistics show that 161 people in Oklahoma were employed in that industry in 2005, but 306 were by 2019. The report said that is a “level of annual growth” that is “significantly higher than employment growth in all industries across the state.”
However, Schlomach said the raw number of jobs—306—is more significant in this instance than the percentage growth over the past decade-plus.
“One hundred percent of a little number is still a little number,” Schlomach said. “That’s one of those examples where you’re not making a meaningful comparison to anything. The percentage is deceptive.”
U.S. Bureau of Labor Statistics data shows the number of Oklahomans employed as motion-picture and video-production company employees is still smaller than, and often dwarfed by, many other job categories that lack the perceived glamour of work in TV and movie productions.
According to federal data, 710 Oklahomans are employed as parking attendants; 670 as switchboard operators (including answering service); 360 as utility meter readers; 1,890 in tire repair and changing; 1,520 as bakers; 290 as power plant operators, 330 as locomotive engineers, 670 as crane-and-tower operators; 880 as septic-tank servicers and sewer-pipe cleaners; and 1,980 as water and wastewater treatment plant and system operators.
Supporters of Oklahoma’s film-subsidy program note that film productions often result in other forms of employment. The Incentive Evaluation Commission report includes data on those jobs, which break down into two basic categories: “above the line” jobs, referring to individuals credited on screen, and “below the line” jobs, referring to crew members and similar positions.
Many of those positions are short-term, part-time jobs that produce very little income.
For seven years highlighted in the report, from 2013 to 2019, the average “below the line” payment to Oklahoma residents by eligible productions was no more than $4,213 apiece and as little as $1,733.
The average payroll for “above the line” positions ranged from $1,497 apiece in 2015 to $19,575 in 2014, aside from the outlier year of 2017 when the average “above the line” job paid $52,215.
From 2013 to 2019, the number of “above the line” jobs associated with productions funded by Oklahoma’s film incentives ranged from none and one in 2013 and 2014, respectively, to 130 in 2019.
The Incentive Evaluation Commission report noted that total qualified payroll associated with incentive productions increased between state-budget year 2013 and 2019, but that the “average wage paid to below the line workers declined” by 8.5 percent over that period.
Schlomach said there are steps the Oklahoma government can take to encourage film productions in the state, but the film-subsidy program is not one of them.
“We’re trying to be something we’re not,” Schlomach said. “We’re not Hollywood, and we’re never going to be Hollywood. Now, to the extent that this is the ideal place to shoot a movie, like ‘Killers of the Flower Moon,’ please, let’s not put any impediments to them shooting movies—whether it’s dumb zoning laws or excessive permitting or whatever. Sure, let’s pursue policies to make it easy to shoot movies—to make it easy to do any kind of business in this state.”
But he said Oklahoma’s film-subsidy program has done little to generate genuine, lasting economic growth and instead appears to be maintained based on non-economic criteria.
“It’s almost like a slush fund,” Schlomach said, “for politicians to meet movie stars.”
Director, Center for Independent Journalism
Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.