Remember Ryan Kavenaugh and the folks from Relativity Media, LLC? They’re the ones who lobbied hard at the legislative last year for a huge new tax break to benefit themselves. In the process, they got in trouble for passing out expensive gift sets of DVDs to legislators and staff. The bills providing for their big tax breaks eventually got hung up and died in conference last year.
But Kavenaugh and company are back in town. They’ve got a web site (HawaiiFilmIncentive.com), and a fancy new presentation touting their tax proposal, and have reportedly been making the rounds at the capitol seeking support from legislative leaders and folks in the governor’s office. It looks like they are hoping to slide in under the radar and have their tax break emerge from an obscure conference committee at the last minute.
The company had been pushing HB 1308 and SB 318 as their vehicles, but those appear dead. I’ve got my eye on HB1551, which in its House version included similar tax breaks for digital media and film production. I’m sure they have other possible legislative vehicles that could be used in a last minute move.
What the company doesn’t have is any reported lobbyist expenditures since the end of April 2011, a quick check at the State Ethics Commission shows.
Relativity’s proposed tax breaks have drawn fire from StopRunawayProduction.com, a web site that collects information on “Runaway Production and state and international film incentives.”
Fortunately, Relativity’s efforts failed last year. But now they are back. They have a new presentation, and it’s a SPECTACULAR work of fiction. Hawaii taxpayers better pray the numbers in Relativity’s presentation are fictional, because if they are accurate, the cost of the proposed film incentive would be a staggering $2.38 billion (with a B) in just six years! And I thought Arizona’s new $2.1 billion film incentive legislation bill was costly!
What follows is a detailed assessment of the claims Relativity is making here in Hawaii.
In slide after slide, Relativity’s presentation cherry picks from various economic impact reports by highlighting impressive sounding job numbers and huge increases in production spending. Conveniently missing is any mention of CO$T. For example, Relativity cites some impressive sounding statistics from The Arrowhead Center Report prepared for New Mexico’s film incentive:
– Motion picture and video production industry businesses increased by over 50% in 5 years
– Jobs and wages in the motion picture and video production industry increased nearly 10x in 5 years
These statistics are much less impressive, however, when compared to the cost. The same Arrowhead Center report found New Mexico taxpayers recouped just 14-cents for each dollar spent:
During fiscal year 2008 the NM government granted $38.195 million in rebates. The resulting increase in economic activity generated $5.518 million in revenues. The implied return is 14.44 cents on the dollar. This means that for every one dollar in rebate, the state only received 14.44 cents in return.
Similarly, Relativity cited the ERA reports prepared for Louisiana and the huge increases in spending, jobs and wages. Again missing is any mention of costs also contained in those reports. From 2002-2010, the film incentive cost Louisiana over $795 million and returned just $106 million in new taxes from the increased production activity.
There’s a whole lot more there, and it should be required reading for anyone following the issue.
And, while you’re at it, check out the news about the lawsuit filed in California accusing the Relativity Media of fraud.