(The Center Square) – California Governor Gavin Newsom announced the awarding of another $58 million in film subsidies, which he claims will secure $386 million in in-state production spending. However, economic experts from across the political spectrum warn the value of film studies are highly overrated, and are difficult to justify as the state faces significant budget pressure.
“Through this tax credit program, we’re keeping thousands of jobs here in California and helping the industry expand in the state,” Newsom said in a statement.
California has spent billions of dollars on the state’s film subsidies since a national film subsidies arms race began in the 1990s when Hawaii launched the country’s first film and television subsidy program. But with a study cited by Newsom’s office finding half of projects that apply for but don’t receive film subsidies end up staying in the state anyway, the financial race-to-the-bottom as states compete for film spending through state spending could be doing California more harm than good.
“Peer-reviewed studies are unanimous that the incentives do not spur economic growth, nor do they create a sufficient number of jobs to justify the cost,” Professor Michael Thom of the University of Southern California told The Center Square in an earlier interview. “As California’s budget deficit balloons, taxpayers can scarcely afford to subsidize television shows.”
With Hollywood entering a financial downturn, the availability of state film and television subsidies sharply contrasts with the lack of state support for the technology industry, the state’s main driver of private sector growth. Employment in the combined tech and entertainment industries has declined 12% since peaking in January 2022, with the California-focused tech industry having shed hundreds of thousands of jobs in recent years, with 93,000 layoffs in 2022, 191,000 layoffs in 2023, and 56,000 layoffs thus far this year.
Earlier this month, California’s state-funded, non-partisan Legislative Analyst’s Office found the private sector lost 154,000 jobs and the public and public-supported sector has gained 361,000 jobs since the peak of the state’s labor market in September 2022. Though the LAO did not include the state’s entertainment industry in its count of publicly-supported jobs, continued reliance on film industries may force the organization to change course.
