Liberal Website Criticizes Amann Legacy

Article FROM Jon Kantrowitz MYLEFTNUTMEG

Connecticut's state subsidies for the entertainment industry are a money-losing proposition for the state. That is the conclusion of a new report, Fiddling While Rome Burns: Connecticut's Multi-Million Dollar, Money Losing Subsidy to the Entertainment Industry. The report is published by Connecticut Voices for Children.

The report is based on recently-released data from the Connecticut Commission on Culture and Tourism (CCCT). While intended to spark a home-grown entertainment industry in Connecticut, these data show that the tax credits have largely been subsidizing out-of-state personnel and businesses. The report finds that only 11% of the $113.2 million of state revenues lost through the "film tax credit" subsidized production expenses that were classified by CCCT as "actual Connecticut expenditures."

"Connecticut has been hoodwinked by the entertainment industry into paying for 30% of their production costs. But the glitz and glamour of this industry shouldn't blind us to the fact that these tax credits are big money losers for the state," said Shelley Geballe, Distinguished Senior Fellow at Connecticut Voices for Children and author of the report. "At a time when the health and well-being of our families and communities is threatened by severe state budget cuts and Connecticut must create new, permanent, full-time jobs, investing our scarce resources into schools, health care, and home-grown businesses in emerging fields like renewable energy makes far more sense than subsidizing the next horror movie or thriller."

The study found that eight productions received a total of $9.3 million in tax credit subsidies, though they reported no actual production spending to Connecticut entities at all. Presumably, these productions transported all production-related personnel, equipment and supplies into Connecticut from other states for the duration of the production. Overall, the state has awarded $2.73 in production tax credits for every dollar of actual Connecticut spending on the production of films, television shows, commercials, infomercials, and video games.

The report also cites evidence from independent analyses of state film tax credit programs in Connecticut and other states to show that the film tax credits lose money for states and do not pay for themselves through increased sales, income, corporate and other taxes. These studies estimate that states earn back in tax revenue between 15 cents and 23 cents for every dollar of tax credit issued, even taking into account any additional economic activity generated by the credits.

The report criticizes the unusually generous and open-ended nature of the film tax credits. The film production tax credit covers 30% of eligible production expenses. These entertainment tax credits do not operate like any other business tax credit in Connecticut, in that they do not simply reduce the taxes an entertainment production company owes Connecticut. Rather, production companies awarded the credits can sell the credits to other companies (even if they are unrelated to the entertainment industry) when they have no Connecticut tax liability to offset. So Connecticut is "on the hook" for 30% of a company's production costs, whether or not that company owes any Connecticut taxes. Further, there are no caps on the amount of credits that may be granted per production, or in total, so Connecticut can lose virtually unlimited amounts of revenues, even in a deficit year. The costs of Connecticut's entertainment industry tax credits far surpass the state's investment through tax credits in any other industry, and also exceed the total budget of the Connecticut Department of Economic and Community Development.

One huge give-away that hasn't happened yet: Blue Sky Studios.Their highly touted new headquarters at One American Lane, Greenwich, Connecticut 06831 is accessible only from New York State. No local CT businesses will benefit from this business. This is an animation company. All development work will be done in-house. The only possible benefit is to the Greenwich tax rolls - in desperate straights as we all know.

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