MARYLAND GOV.-ELECT Larry Hogan (R), who campaigned on a platform promising extensive but gauzily defined spending cuts, has just been handed a small gift by the state’s nonpartisan legislative analysts. In a new report, they concluded that for every dollar in tax credits that Maryland has lavished on film and TV productions — $62.5 million over the past three years, most of it for HBO’s “Veep” and the Netflix production “House of Cards” — state and local governments have reaped just 10 cents in tax revenue.
If there’s a fatter target for Mr. Hogan’s budget-cutters, we don’t know what it is.
Of course, going to the mattresses over subsidies for TV hits may cost Mr. Hogan more political capital in Annapolis than he’s prepared to spend.
Last spring in the General Assembly, star-struck lawmakers swooned when they were personally lobbied to retain the subsidy by Kevin Spacey, who plays Frank Underwood, the amoral, supremely calculating star of “House of Cards.” Faced with a threat that the producers might pull up stakes, the legislature caved, diverting to the show funds that had been intended for arts programs. Score another victory for Frank Underwood.
Yet it is increasingly clear that, despite the star power that attends hit shows, the actual benefits for Maryland taxpayers are modest.
The shows do bring some business and revenue to local hotels, restaurants and gas stations frequented by production crews and others drawn to the enterprise. A study for the Maryland Film Industry Coalition made the inflated-sounding argument that TV shows and movies made in the state support nearly 700 full-time equivalent jobs and $86 million on an annual basis.
Still, notwithstanding the economic activity generated during production, the legislative analysts said the funds expended by the state in tax credits simply do not yield much in the way of return on investment. “It is clear that the film credit does not pay for itself,” they concluded.
What’s more, the benefits for the state cited by the industry last only as long as the TV shows and films themselves.
When the films are finished and the shows are canceled, the jobs and economic activity go away. In using tax credits to attract business, lawmakers should focus on “incentives that create permanent and lasting” jobs, not the flash-in-the-pan variety generated by TV shows, the analysts said.
No doubt, other states will continue to chase hit shows and filmmakers, making it difficult for Maryland simply to turn its back on the Hollywood flash and glitter. Still, at the least, Mr. Hogan could insist that Maryland drive a harder bargain. When National Geographic produced “Killing Lincoln” in Virginia, state officials there insisted that it also produce a commercial advertising the commonwealth’s tourist attractions. Score one for Virginia.