Budget & Tax

Film subsidy debate focuses on finances … and abortion

June 13, 2019

Ray Carter

This year Georgia lawmakers passed, and that state’s governor signed, a law banning abortion after a heartbeat can be detected from an unborn child, which is roughly six weeks into a pregnancy. Numerous officials in the entertainment industry who support abortion have threatened to pull projects out of Georgia in retaliation.

Now some Oklahoma officials suggest film projects may land in this state as a result. But a national expert says that’s unlikely due to financial considerations, and other officials are skeptical that vocal advocates of abortion will reject Georgia but embrace Oklahoma, where many abortion restrictions have advanced and much of the populace identifies as pro-life.

“In the grand scheme of things, I don’t think Georgia is worried about a significant or material part of their industry moving to Oklahoma,” said John Bails, executive vice president of Film Production Capital, a tax credit brokerage and consulting company based in Louisiana that specializes in state tax incentives for film and television.

Bails said financial reality is normally the major consideration in production-location decisions, and the state subsidies Georgia provides to film productions are far more lavish than Oklahoma’s subsidies.

This year, Oklahoma lawmakers doubled the cap on the state’s film tax-credit program, which provides direct rebates to entertainment companies. The new law raised the cap on the program from $4 million to $8 million and also allowed filmmakers to get additional funding from the state’s Quick Action Closing Fund for productions that cost more than $50 million. Bails noted those changes increased the program’s size to around $12 million total.

“For context, Georgia’s probably somewhere on the order of $800 million a year,” Bails said. “So certainly Oklahoma is not going to be absorbing a material portion of the production activity in Georgia, just by virtue of the size differences in the two programs.”

In May, following passage of Georgia’s abortion law, several entertainment officials suggested the state would lose entertainment business as a result. Netflix chief content officer Ted Sarandos told Fox News, “We have many women working on productions in Georgia, whose rights, along with millions of others, will be severely restricted by this law.” He said Netflix may “rethink our entire investment in Georgia.” Disney CEO Bob Iger told Reuters, “I think many people who work for us will not want to work there, and we will have to heed their wishes in that regard.” Similar comments were made by others.

This month, Oklahoma Film and Music Commission Director Tava Maloy Sofsky told Oklahoma City’s CBS affiliate that she’s heard from producers looking at options if they do leave Georgia.

But if entertainment figures are basing business decisions on how readily a state populace supports abortion, lawmakers are skeptical Oklahoma will be a preferred destination.

“From their vantage point, that’s a choice that wouldn’t seem to make sense,” said Rep. Jim Olsen, R-Sallisaw. “You could easily pick 10 states that would be more comfortable with their values than Oklahoma would, and you could probably spend a little time and come up with 20 or 30 that would be much more comfortable than Oklahoma’s general set of values.”

Senate Majority Floor Leader Kim David, R-Porter, is also skeptical.

“We’re extremely pro-life,” David said.

David noted Oklahoma has passed many laws restricting or regulating abortion over the last decade. While some of those laws have been struck down, she said that doesn’t mean those measures don’t enjoy broad support.

“Just because they weren’t upheld by our Supreme Court,” David said, “doesn’t mean we’re any less pro-life.”

In December 2018, a report by the Guttmacher Institute, which supports abortion, declared Oklahoma to be one of 21 states that were “hostile or very hostile to abortion rights.” At that time, before passage of the fetal-heartbeat law, Guttmacher ranked Georgia as a “middle ground” state.

Among other things, Guttmacher dinged states if they required in-person abortion counseling and a waiting period before an abortion, restricted taxpayer funding of abortion, and required parental notification of abortion for girls younger than 18. Such restrictions are broadly supported not only in Oklahoma, but across the nation, according to national polls.

Oklahoma’s political leaders have also indicated support for advancing additional restrictions on abortion.

Oklahomans for Life’s 2018 Candidate Survey asked, “Upon reversal of the U.S. Supreme Court’s Roe v. Wade decision, will you vote for a law that would protect the lives of unborn children and prohibit abortion except to prevent the death of the mother?”

The proposal gained widespread support from individuals now serving in office. Gov. Kevin Stitt and Lt. Gov. Matt Pinnell both answered in the affirmative, as did House Speaker Charles McCall, R-Atoka, and other key members of leadership in both the House and Senate.

That companies receiving millions in taxpayer subsidies are now trying to pressure their benefactors on unrelated social issues could increase opposition to film tax-credit programs, which are already under fire nationally.

A study published in 2016 in the American Review of Public Administration reviewed the motion picture incentive programs of 40 states, including the use of transferable tax credits and refundable tax credits. The study found, “Neither credit affected gross state product or motion picture industry concentration.”

A 2017 report by The Pew Charitable Trusts found Georgia was one of 23 states that lacked well-designed plans to evaluate whether its film credit was actually generating a positive financial outcome for the state. The report noted that Georgia “has provided hundreds of millions of dollars in film tax credits but has not rigorously studied the results of the program.”

In contrast, the 2017 Pew report praised Oklahoma, saying it was “leading other states because it has a well-designed plan to regularly evaluate tax incentives, experience in producing quality evaluations that rigorously measure economic impact, and a process for informing policy choices.” The report praised the work of the state’s Incentive Evaluation Commission.

Notably, consultants hired by that commission urged lawmakers to eliminate Oklahoma’s film tax credit.

“There is no evidence that the Oklahoma film industry has strengthened during the time period when the rebate has been available,” the consultants’ evaluation stated. “Documented job creation is neither stable nor sustainable absent state support. The effect on Oklahoma’s image nationwide is unclear, but likely limited.”

Rep. Tommy Hardin, R-Madill, said Oklahoma’s film credit doesn’t give him the “heartburn” some other credits do since recipients must “prove that they spent the money in Oklahoma, whereas these other credits that we give out, the money could leave Oklahoma and we’d never see any benefit from it.” But he still opposed doubling the film credit this year, saying the prior cap should be maintained. And he’s not persuaded by those who suggest film productions will never occur in Oklahoma without subsidies.

“It just seems like everybody’s got to be bribed to come do something,” Hardin said. “We’ve got bribe companies to come here.”

He noted those subsidies aren’t generated out of thin air.

“Ultimately,” Hardin said, “it’s the taxpayer who pays.”

And Olsen said the efforts of out-of-state officials to pressure Oklahomans to conform to the social views of Hollywood are not likely to succeed.

“The argument that, okay, Georgia just passed a strong pro-life bill and we’ve got that whole crowd mad at Georgia, and now they’re going to love us, well, I’ve got bad news for them,” Olsen said. “I’ve got a pro-life bill that should hit the floor next year and it’s every bit as strong as the one that passed in Georgia, maybe a little bit stronger.”