This session I am running a bill to provide more legislative oversight and more accountability for money that the state spends in promoting film production here in Utah. Currently, the Governor’s Office of Economic Development (GOED) has been granted permission from the Legislature to issue up to $6.7 million dollars in tax credits for film productions that the department deems worthy to receive them. Certain benchmarks and yardsticks are used to quantify which productions show the most promise for spending money and driving economic growth in the state.
The problem with tax credits, however, is that they typically receive very little legislative scrutiny once they are initiated. Our annual legislative budget process provides a great forum to debate how we should spend money the state receives in tax revenue. Unfortunately, there has historically been little opportunity to debate money that IS NOT received because it was excluded due to tax credits.
Thus, this lack of scrutiny creates a blind spot in regular policy discussion. So, to bring the film incentive back into the arena of regular policy discussion, my bill proposes to do away with the Motion Picture Tax Credit and instead appropriate those funds directly into an existing account that GOED also uses for the same purpose.
Another important change that the bill makes is how film productions report their economic impact. Current law allows for the filmmakers to report the impact their production has on the Utah economy. In other words, how much the production spent in Utah while they were here. The law also gives them the option of reporting how much new tax revenue they generated. My bill, instead, will make it a requirement that tax revenue reporting also be part of what filmmakers report back to GOED.
The benefits of this bill are many fold. First, we will have a chance to review performance of the funds with GOED each year as we do with other incentive programs they oversee. Legislative oversight and accountability are important parts of good stewardship of taxpayer dollars. Also, our Business, Economic Development and Labor (BEDL) sub-appropriations committee is tasked with placing money where it makes the most return on investment. Understanding how much tax revenue is generated by the incentives is absolutely important in making those judgments.
I will be working with GOED and staff to determine the best way to transition the film incentives out of the tax credit arena and into existing direct grants. As a member of the BEDL Appropriations Sub-Committee and as Vice-Chair of the Revenue and Taxation Committee, I believe we should be able to work through the details very quickly and effectively.
Here is the draft of the bill as it is currently written:
Originally posted at Mr Peterson’s Perspectives. Reposted with permission.