Since the creation of the Florida Entertainment Industry Financial Incentive Program is
the centerpiece of Floridas commitment to help create a work force striving for at least
these kinds of wages, lets see what the $5.6 million in tax incentive reimbursements
given to 14 film companies in FY 2005-06 accomplished.
Here are the relevant numbers from the final report prepared by the State Film
Commissioner and submitted to the Governor, Speaker of the House and Senate
President on October 1, 2006, detailing the jobs and wage benefits to Florida workers as
a result of last years tax incentive. (4)
TOTAL FLORIDA WORKERS
4027
QUALIFIED EXPENDITURES
SPENT ON FLA WAGES
$18,654.525.00
It is a simple process to establish the average cost of creating each of these jobs: you
divide 4027, which is the number of jobs, into the $5.6 million of the tax incentive money
that was spent by Florida, and you get $1390.60, as the cost per job.
To establish the average wage for these jobs, you again divide the number of workers
4027, by the amount of wages paid, $18,654,525.00, and you get $4632.36, as the
average wage earned as a result of these jobs.
Thats right; Florida taxpayers spent $1390.60 to generate a $4,632.36 part-time, low
wage job in the film industry last year.
If you think thats bad, it gets worse!
Approximately 2430 of those jobs werent really real jobs in economic development
terms, but rather jobs as in movie extras, who were paid anywhere from $50 to $200
per day, and who in most cases only worked one or two days.
For those 2430 individuals, it cost the State of Florida $1390.60, to create a job
where these folks earned at best a couple hundreds dollars, and maybe got an
autograph or their photograph with a movie star.
It gets even worse. At least those 2430 folks got paid something for their efforts.
As part of the current round of tax incentives for FY2006-07, the Governors Office of
Film & Entertainment qualified, and supposedly awarded $156,209.00, to the company
that produced the annual Disney Christmas Parade TV Special, and they according to
the casting notice the company sent out to recruit extras, and from complaints from
actors in Orlando they recruited a whole bunch of folks to be extras in the show and
didnt pay any of them. (5)
Instead, after requiring them to act like happy parade goers for half a day, the unpaid
extras were, as the casting notices announced, allowed to enjoy the rest of the day in
the Magic Kingdom without paying park admission. Some of these folks became
unhappy when they learned that their tax money had been given to a company that
turned around and lured them for a freebie.
While the recruitment of freebie extras had been a long-standing practice by Disney,
the injection of tax dollars into the equation raises a valid question about payment for
work, especially since the tax incentive is predicated in part on generating paying jobs.
Before turning to other concerns, and in order to deflect any arguments that its not fair
to highlight the statistical anomaly associated with movie extras although the State
Film Commissioner and others who support these incentives continue to use these
employment numbers as a principle justification for larger incentives, and the
Commissioner continues to use this 4000 number even though hes been made aware of
this problem as well as to provide a fuller picture of the wages earned by crew people,
let us recalculate the job cost and average wage figures by excluding the 2430 movie
extras, to see what we get.
The number of jobs then would be 1597, the average cost per job would rise to
$3506.57. The average wage would become $11,680.97. While an average wage of
$11,680.97 is better than $4,632.36, the fact still remains that these are PART-TIME
JOBS for which the State of Florida is paying as much, if not more, than what it pays for
a high-wage, fulltime job under the Qualified Target Industry Business Program.
In addition, unlike the deliverables expected of the Scripps Research Project, there is no
expectation that any of the film or TV projects will result in creating a significant increase
of long-term, high wage ancillary jobs being created as a result of any of this activity.
In the end, to meet the US Census criteria of a median wage of $62,269.00, the costs to
create a comparably paying job through this tax incentive program would be
approximately $18,077.80.
So much for the creation of high-skilled, high wage jobs.
Economists traditionally calculate a multiplier affect through job creation and impact. To
establish such a multiplier effect, job creation and impact are divided into three main
categories: direct, indirect and induced.
The practice of using dollars alone as a way to establish a multiplier effect creates an
illusion that the dollars being counted have some magical or mystical power that other
dollars do not have. ALL dollars have the same intrinsic spending value: the dollars
spent by folks who work on a motion picture industry are no more special than the
dollars spent by legislative staff members, or those spent by teachers, or anyone elses
dollars when it comes to purchasing power. They might be spent at different grocery
stores, or gas stations, or dry cleaners, but their purchasing power is the same.
When it comes to the current tax incentive monies spent by the film industry, the one
glaring problem, beyond all the other glaring problems, is that none of this money can be
shown to have contributed in any significant way to residual value having been created
as a result of these expenditures. Besides having created short-term jobs, the overall
economic benefits have also been short term.
The process is much like a circus coming to town. The circus comes, they make a lot of
noise, they hire a bunch of local people to help put up the tent, and do other stuff, and
when they finish their run, they leave town taking their profits with them, and often
leaving a big pile of elephant dung in the middle of a vacant lot for someone else to
clean up.
Because of this, any claims of a conservative 3X multiplier making an impact on
Floridas economy are illusionary and delusional.
The latest and most egregious example, which has even upset some of those who have
been leading the charge for increased incentives was the award of the above mentioned
$156,209.00, to the production company that produced last Decembers Disney
Christmas Parade TV Special.
How could an annual TV Special taped on the grounds of Disney World in Orlando for
well over a decade, all of a sudden qualify for a tax incentive intended to lure film and
television productions to Florida?
Did someone threaten to take Cinderella and Mickey Mouse to Georgia and do the
Christmas Parade from Atlanta unless they received this incentive?
Another Florida project that received tax incentive money for filming in Florida was the
movie HOOT, based on a book by Miami Herald columnist, Carl Hiaasen.
The producers of HOOT received $1,016,279.00, as well as the benefit of having
Governor Bush tout the book as part of his Read, Florida program just before filming
began. (8)
Heres what Carl Hiassen had to say about having his book filmed in Florida: They
understood Florida, how weird and peculiar it can be, Hiaasen states. But, also, how
wonderful and photogenic and just spectacularly beautiful the place is. Why it's worth
fighting for. This is a movie about fighting for a place that you really, really care about. It
couldnt have been filmed anywhere else.(9)
If, as Carl Hiassen claims, the movie couldnt have been filmed anywhere else a claim
supported by Jimmy Buffet, one of the producers, and Will Shriner, the director then
why were Florida taxpayers required to cough up $1,016,279.00 in tax incentive
money?
The list of egregious misuses of these tax incentives, while not endless, also includes
the reality show featuring pro wrestler Hulk Hogan and his family: Hogan Knows Best.
The production company that produces the show has already received, or has qualified
this year for tax incentives totaling $632,941.00, to help cover the costs of following Hulk
Hogan and his family around Miami Beach as they settled into their new $12.5 million
house and set forth to make their mark on the South Beach social scene. (10)
Lastly, The Latin Billboards TV Special, which has been produced by Telemundo in
Miami for years, received a total, $586,622.00, for FY2004-05 & 2005-06. (Ibid)
We are delighted that this talented Florida filmmaking team has decided to produce
their project here in the Sunshine State, said Governor Bush. The new entertainment
industry financial incentive is an excellent addition to our economic development tool
chest and has already had a positive impact on the creation of more high-wage jobs for
Floridians.(11)
On December 13, 2005, the producers of Altered, posed for pictures with the State Film
Commissioner giving them a tax incentive check for $305,922.84, at a ceremony held at
Universal Studios in Orlando.
A few days later, these same producers, along with the director and others went to New
York to screen the film for their distributor. They went with some trepidation since their
distributor the previous April had informed them that the film had serious problems.
Here, from the Web Blog of the Director, Edwardo Sanchez, is what happened in New
York.
We headed to New York City (man, my palms are already starting to sweat) a few days
before December 20, a birthday shared by Rob, Jamie and me. We rented a screening
room at TECHNICOLOR and showed the film in the early morning, before the FOCUS
people arrived. Everyone was happy. Proud. The projectionist told Andy Jenkins that it
was one of the best films hed seen at this place. A good omen, we thought.
FOCUS arrived. I made my speech, thanked them for believing in us and helping us
make the film better with their solid notes. We headed out, went to a nearby restaurant
and waited. We were supposed to meet for lunch after the screening and discuss the
film. We were nervous and joked about who would be at lunch. If it was just a few
people, they didnt like the film. If it was the whole gang, we could expect some good
news.
The call came. There wasnt going to be a lunch. Big problems. They were going to hold
an emergency meeting at their offices in an hour or so. Jesus Christ. And we were joking
about a few people meeting us as a worse case scenario. This was a f**king disaster!
The meeting was short and sweet. The film didnt work. They called it a tweener. Not
enough horror, not enough drama, not enough action to categorize into any of those
genres. They felt it would not play to the basic horror crowd. They didnt know what the
hell they were going to do with it.(12)
On a personal level one can certainly sympathize with Edwardo Sanchez. He was, I
believe, ill served by his producers, who had the ultimate responsibility to make sure
that the script was viable, and the movie salable.
Movies, to those who make them, can be like children, and the distributors, as described
above, had just told Edwardo that his child was uglier than Cinderellas stepsisters, and
worse, was destined not to make him rich or famous.
In the world of movie making, not every film becomes a contender for an Academy
Award, and many have a hard time making back the money that they cost to produce.
Thats part of the crapshoot of making a movie, and central to the decisions that
producers make about which movies they choose to produce. The process is elective,
and there is more than ample evidence to support the claim that we are annually
bombarded with garbage attempting to pass itself off as art.
While there will never be any accounting for taste, when it comes to financing films and
TV shows with public money, there does need to be some accountability in the form of
reasonable deliverables to insure that the citizens of Florida dont end up funding the
equivalent of very expensive, very bad, home movies.
From the beginning, the expectations for Altered, were that this would be a movie with a
theatrical release. It wasnt. Thats the kind of unmet deliverable that, had it been a
concrete deliverable, would have disqualified a project like this from receiving public
money.
The fact that Florida taxpayers ponied up $305,922.84, for what essentially turned out to
be not much more than an expensive, bad movie, unlikely to recoup the money it cost to
make, underscores a serious problem that while the citizens of Florida should have no
expectation that their money be used to underwrite only award winning projects, they
should have an expectation that the projects that they subsidize at least have some
financial viability.
The same goes for TV pilots like Aquaman, which received a $734,435.00 tax incentive
(13), and sunk faster than a gangster thrown overboard with concrete boots, or the TV
series South Beach, which was so bad that it finished in 152 place out of 156 in the
Nielsen TV ratings, got cancelled after 8 episodes, and still waltzed out of Florida with
$1,204,280.00.(Ibid)
A deliverable requiring theatrical distribution is the minimum requirement that Floridas
taxpayers should expect for the giveaway of these millions of dollars for feature films,
and a pickup by a network should be the minimum deliverable for a TV pilot. As for a TV
series that gets cancelled in mid-season, they should not receive the full percentage
amount of the incentive. Florida citizens should not be expected to see their money
used to finance crap.
That doesnt mean that we should discourage producers from coming here with those
kinds of projects; it just means we shouldnt reward them for having such bad judgment.
The motion picture industry sector is a vital part of the Florida economy. The industry
comprises over 3500 establishments and over 39,000 full time employees. By including
freelance workers for every full-time employee, the industry is comprised of nearly
80,000 high skilled, high wage workers earning an average of over $50,000 per year. In
2000, the industry generated over $3 billion in economic impact in the state, from motion
picture, music videos, and television movie productions, to commercials, still
photography, and digital media. (15)
Somehow, according to the State Film Commissioner, in the course of a year, Floridas
film industry managed to lose 2099 businesses. How could that have happened?
Worse, while we lost a significant number of businesses. he also claimed that Floridas
film industry work force was now comprised of approximately 80,000 high-skilled, high
wage workers earning an average of over $50,000 per year.
Since the House Tourism report last year claimed that there were 33,897 workers, how
did we manage to increase our work force by almost 46,000 workers while at the same
time decrease our business base by approximately 35%?
And, most importantly, we are expected to believe that all of this was in part
accomplished with a tax incentive program that generated 4027 jobs with an average
wage of $4,632.36.
I have alleged in other writings that this effort to cook the numbers on the size of the film
industrys work force was a calculated and blatant attempt by the State Film
Commissioner to inflate the size of the work force to make it seem that any new and
increased tax incentive was going to provide benefit to a sizable number of individuals,
instead of the approximately 1500 film technicians and approximately 1000 real actors
that actually work on these projects.
Its a lot easier to consider giving $255 million to benefit 80,000 folks, than to 2500 folks.
IN CONCLUSION
Even a really bad incentive program can claim some successes, and there is no doubt
that Florida has benefited to some degree from the $137.25 million in tax dollars that has
been spent to date.
The big question is, has it benefited enough to justify another $255 million in tax credits
and approximately $74 million in tax exemptions?
I believe that any serious investigation will reveal that no matter what the short-term
impact on Floridas economy is as a result of the production of a feature film or TV
series, there is abundant evidence that there is no long-term residual impact on either
the film industry nor the states economy, and in fact there is a decided disadvantage in
supporting bigger and more expensive incentives, because there are those like the
Motion Picture Association Of America (MPAA) - who will turn around and use these
incentives numbers as a weapon against Florida by going to other states and demanding
that they match or increase our incentives, just like the supporters of this current attempt
are using the incentives in Louisiana, North Carolina, South Carolina and new York in an
effort to get the Florida legislature to support this incentive effort.
Everybody loves free money, and nobody loves free money more than market driven
capitalists. The big question for Floridians is do we need to be the ones required to pay
for ALL that love?
I believe there are simpler and cheaper solutions to supporting the film industry without
continuing to spend hundreds of millions of dollars.
First, Florida could do what New Mexico has done as part of their incentive program, and
that is create an equity fund which would LOAN money to producers, with the full
expectation that this money would be paid pack so that it could be loaned to other
producers. I provided a proposal supported by many in our industry to both the
Florida Film & Entertainment Advisory Council, and to State Representative Julio
Robaina last year. Representative Robaina, a long-time friend of the industry thought
that the proposal had some merit.
Secondly, Florida could create a $25 million dollar fund that would focus specifically on
providing an incentive for writers to write scripts about Florida. Everyone knows that the
critical first step in all film and television production is the script.
I would propose a fund that would give screenwriters whose feature film scripts are
produced in Florida, $100,000.00 on the last day of principal photography for feature
films SPENDING $10,000,000.00 or less in Florida, and $250,000.00 for any film
SPENDING over $10,000.000.00 in Florida.
I would give any screenwriter who write the pilot for a an hour-long TV series that gets
produced in Florida AND gets picked up as a series AND commits to filming in Florida
$250,000.00, on the last day of the first season of filming, and I would give that writer
another $100,000.00, per year, on the last day of filming, for every year the TV series
continues to film in Florida.
If you really want to create an incentive, then create an incentive that locks in film and
television productions to actually spend real time in Florida, while at the same time
doesnt drain the state treasury of these hundreds of millions of dollars that we so
desperately need for other problems. There are plenty of Screenwriter/Producers who I
believe would be very happy to write scripts with Florida as the principal location, and to
try and get those scripts produced.
The future belong to those who prepare for it, and I for one would rather spend money in
ways that attempts to face the future, than to look backwards at a past that is destined in
less time than we might imagine to become, less and less viable as an economic model.
Al Crespo
March 12, 2007
FOOTNOTES:
1. Florida Department Of Revenue, Florida Fax Facts, FS212.08(5)(f), 2002-2006
2. FY 2004-05, 2005-06, 2006-07 ENTERTAINMENT INDUSTRY FINANCIAL
INCENTIVE YEAR END LEGISLATIVE REPORT & LEGISLATIVE APPROPRIATIONS
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