Governor proposes scrapping Mississippi’s film production subsidy


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If Gov. Phil Bryant has his way, Mississippi will follow the example of Florida and other states and scrap its film production subsidy program.

Bryant’s proposed budget for fiscal 2018, which begins July 1, proposes allowing the incentive program to expire with the new fiscal year, among other cuts. Bryant, as chair of the state’s bond commission, voted to change bond regulations last week to cut down on using the state’s credit for recurring expenses or projects of dubious long-term value.

The governor’s budget recommendation isn’t the last word on the film production subsidy program. The Legislature could re-authorize the program, which was created in 2004.

“While I support the jobs and attention that films bring to Mississippi, taxpayers should no longer subsidize the motion picture industry at a loss,” Bryant said in his budget recommendation.

Both House Speaker Philip Gunn, R-Clinton, and Lt. Gov. Tate Reeves told Mississippi Watchdog that the Legislature will closely examine the program’s overall effect on the state’s economy and decide on its fate accordingly.

“An incentive program that only returns 49 cents to the state for every taxpayer dollar invested definitely should be reviewed by the Legislature this session,” Reeves said. “Any incentive program should return more to the taxpayer than it takes away.”

According to a report released last December by the Legislature’s Joint Committee on Performance Evaluation and Expenditure Review, the state loses 51 cents for every dollar spent on the film incentive program.

The figure was calculated based on incentive outlays compared to the jobs and economic activity the film projects produced. The program, according to the report, created 1,094 direct and secondary jobs in fiscal 2015, or a cost of $3,575 per job, using the Department of Revenue’s original figure of $3.9 million.

Matt Mitchell, director of the Project for the Study of American Capitalism at the Mercatus Center at George Mason University, told Mississippi Watchdog that the trend toward reducing or even eliminating these programs is based on a lack of economic results.

According to the National Conference of State Legislatures, 10 states have shuttered their incentive programs since 2009.

“The experiment has run its course and I think people are realizing they are not leading to the widespread prosperity they were promised,” Mitchell said. “To some degree, it is a reflection in a new, populist trend that is suspicious toward elites. In the case of film tax credits, it’s a case of policymakers chasing shiny objects.”

The state’s film incentive program is administered by the Mississippi Development Authority. It gives filmmakers tax rebates of up to $10 million on a project filmed in the state. There are also rebates available for film producers on sales and use taxes on eligible rentals and purchases.

In fiscal 2016, state taxpayers spent more than $10 million on film production incentives.

Other budget moves

In addition to cutting the film subsidy program, the governor also wants to cut nearly every state agency by 1.8 percent for fiscal 2018, but would exempt K-12 education from those cuts.

He also wants the Legislature to go back to the 98 percent rule, under which the Legislature appropriates only 98 percent of the state’s general fund revenues. The last two fiscal years, the Legislature suspended that rule.

According to Bryant’s budget, tax revenues have increased from $1.48 billion to $1.76 billion from 2012 to 2016, an 18.9 percent increase. But general fund spending increased even more during that span: $1.1 billion or about 26 percent.

“That kind of growth in spending over such a short period is simply unsustainable, and must be addressed,” Bryant said in the budget.

Bond restrictions

The Mississippi Bond Commission, which consists of Bryant, state Attorney General Jim Hood and Treasurer Lynn Fitch, voted unanimously last week to prohibit the Legislature from using bond money to pay salaries or other recurring expenses. Each project must have a life as long as the debt, usually 20 years. Also, the commission will require projects to have documentation explaining their economic impact.

While the Legislature holds the purse strings, the Bond Commission has final approval over projects and rejected a few at its most recent meeting because of a lack of local support.

Michelle Williams, chief of staff for Fitch, told Mississippi Watchdog that using bond money to pay for personnel costs and other recurring expenses is an expensive way to do business and is something that could affect the state’s credit rating. She also said that this year’s $308 million bond bill, which was signed into law by Bryant, was one of the primary drivers behind the reforms.

http://watchdog.org/282081/film-production-subsidy/

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