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New York State Spends $1.4 Million on an Old Movie Theater To Create 6 Jobs

Many subsidies for the film industry cost taxpayers more and create even less.

Caro / Sorge/NewscomCaro / Sorge/NewscomA New York state agency meant to foster economic growth says spending more than $1 million to rebuild an old movie theater in one of the state's richest counties will create a mere six jobs.

Unfortunately, when it comes to subsidizing movies—whether making them or showing them—that's pretty typical.

On Saturday, New York state officials participated in the groundbreaking for the Sag Harbor Cinema Arts Center. The center will reportedly "restore the Sag Harbor Cinema and preserve the showing of independent, foreign and documentary films on the East End of Long Island."

The center is being developed by the nonprofit Sag Harbor Partnership, which pledged $13 million toward the project. However, they aren't the only investors. The Regional Economic Development Council awarded the Hampton theater a $1.4 million grant last December through Empire State Development. The result of that massive bill to the taxpayers? Six jobs, according to the government's own report. That's over $230,000 per job!

This isn't the first instance of Gov. Andrew Cuomo's cronies throwing money at the movie business and getting almost nothing back. Just a few weeks ago, Reason's Nick Gillespie pointed out that New York spent $15 million in 2014 to build a brand new film studio that was supposed to attract the entertainment industry to the Empire State. The studio was then sold to Onondaga County for a hefty sum of one dollar.

New York is hardly the only state engaging in these types of corporate handouts, which often take the shape of tax breaks or direct grants. There are 33 states (plus Puerto Rico and Washington, D.C.) offering some form of taxpayer-funded incentive to encourage film production. Supporters of these incentive programs claim the movies and television shows brought to their states will boost growth, help small production companies, and create jobs for locals. But study after study has shown quite the opposite. These programs do little to boost employment and end up wasting enormous amounts of taxpayer money.

"There's simply no objective evidence that incentives for film and television production create that many permanent jobs, if they create any at all," says Michael Thom, professor of public policy at USC, "the motion picture industry is skilled at convincing the public that something fake is actually real. That skill is not limited to what we see on televisions and in the movies. Sadly, it has spilled over into economic development policy."

Thom's research found no long-term wage growth or job growth created by film incentive programs. He also found that the short-term gains were realized almost exclusively by individuals already involved in the film business.

The idea that these incentives give a helping hand to small production companies is also a myth. In a piece for Reason in 2016, Jared Meyer, senior research fellow at the Foundation for Government Accountability, said that 98 percent of the film tax credit budget in Maryland went to the production of House of Cards and VEEP, hardly small productions that required the assistance of a benevolent state legislature.

In addition, film incentives don't create any revenue for the state. "Almost every other study has found film tax credits generate less than 30 cents for every $1 of spending," according to another study by the conservative Tax Foundation, discounting research paid for by the Motion Picture Association of America and economic development authorities. They also saw that adopting film subsidies simply shifted economic activity, instead of creating real, productive growth.

This is the sort of grave misallocation of resources that happens when governments make investments. Governments are immune to the price signals that dictate entrepreneurs to invest effectively, which means big bucks from the taxpayers, but no bang.

It's not just fiscal conservatives who are opposed to this big budget program. The left-leaning Center on Budget and Policy Priorities found themselves in agreement with their colleagues from across the ideological aisle. "State film subsidies are a wasteful, ineffective, and unfair instrument of economic development," reads their report.

Despite overwhelming evidence of their wasteful nature, film subsidies persist. Like many government programs, subsidizing film production through grants, fancy studios, or tax breaks, is yet another example of corporations in bed with the government.

Thom asserts that in those states that offer film incentives, "the motion picture industry and its labor unions lobby hard against any effort to cut or repeal incentive programs. Their efforts include funding shoddy research studies that policymakers then use to justify keeping the incentives in place." Crony capitalism, plain and simple.

State governments should not be expanding programs that cushion production for film producers with millions of dollars under their belt, who lobby for these incentives even though they clearly don't need them. Netflix, for instance, threatened to leave Maryland if they didn't bump up its incentive program, and even had Kevin Spacey show up at the governor's door, leading to a doubling of the program's budget. The list of big-budget films and television shows living off the taxpayer's wallet goes on: The Avengers, Split, Madam Secretary, all massively successful productions; successful enough to do without government handouts.

In a 2013 article for US News & World Report, Mercatus Center's vice president of policy research Eileen Norcross asked the right questions: "What's so special about film companies? Why not make the rules business-friendly for everyone?" If state legislatures are so keen on attracting businesses, all round tax cuts would be far more effective than handing out selective tax breaks to companies that need them the least in drawing businesses from across the country to invest and develop.

Photo Credit: Caro / Sorge/Newscom

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  • Rockabilly||

    Sounds typical.

  • Don't look at me.||

    How else are they going to get invited to the cool Hollywood parties?

  • Incomprehensible Bitching||

    How could people possibly see movies, without government support for the arts? And public spaces?

  • Earth Skeptic||

    Look, we all know that in our enlightened age that movie stars and Hollywood big shots are the true champions of right-think (at least until we catch them trying to get into somebody's pants). Bribing even a third-tier production or film showing so that they deign to share their presence in your podunk town is the best kind of modern media virtue signaling. Plus the whole pants thing.

  • perlchpr||

    (at least until we catch them trying to get force their way into somebody's pants)

    ;)

  • Dissertation Assistance||

    New York is hardly the only state engaging in these types of corporate handouts. Governments are immune to the price signals that dictate entrepreneurs to invest effectively, which means big bucks from the taxpayers, but no bang.

  • creech||

    Which is why every town needs a libertarian organization to stand up and protest. Do it loud enough and long enough and maybe, say, 10% of the taxpayers will get "woke" to what's happening to their dollars.

  • Cyto||

    And if Jusr ten percent..... if just ten percent of the voters were ti understand libertarian principles...

    Why that would be a movement.... and we could all walk in to the city council meeting, sing two bars of a Remy song and walk out.

    And they would all think we are nuts. And move away from us on the group W bench.

  • General_Tso||

    ...with the father rapers!

  • karvato54||

    This is great and unique new's there are some new's and other things make you think like last time i read that research papers for sale but it's available every where on internet.

  • Curly4||

    Yep every composition student knows about papers. In fact the purcher can even specify the grade that they want. That is so that a "D" student will not get a paper that rates a "A" and giving the instructor (if it matters) a clue that the student bought the paper. From my experience the instructors are more interested in the final paper than they are on the process that the paper was written so even the students that don't download a paper can go to the writing center and get all the mistakes corrected before handing it in.

  • Jerryskids||

    Damn, 1.4 mil doesn't sound like much, but that's at least a down payment on a minor league baseball stadium. Everybody knows professional sports stadiums are where the real economic jackpot is.

  • Trollificus||

    Pro sports stadiums have the most audacious "multipliers".

  • Longtobefree||

    So maybe these funds should come entirely from the legislator's pension money?
    Think there might be a change in the votes?

  • Earth Skeptic||

    Meh. Any pol who can't arrange for personal future wealth way better than their measly pension is not really trying.

  • MasterThief||

    And shouldn't have control over and be involved in planning the future for our money. Just another thing that divorces those in government from the population they "serve."

  • Curly4||

    At that rate the US would be bankrupted without providing enough jobs to employ just those in NY state.

  • Earth Skeptic||

    Math is patriarch!!!

  • lap83||

    said that 98 percent of the film tax credit budget in Maryland went to the production of House of Cards and VEEP
    beyond parody

    Netflix, for instance, threatened to leave Maryland if they didn't bump up its incentive program, and even had Kevin Spacey show up at the governor's door, leading to a doubling of the program's budget.
    Should we expect a #metoo from the governor in the near future, or was the governor the consenting one and Spacey the one who was #metoo-ed?

  • lap83||

    or I guess it's possible that Spacey moonlights as a thug for Netflix

  • Earth Skeptic||

    That's yet another exclusive Netflix series for the future.

  • Nardz||

    Veep is worth it

  • Ornithorhynchus||

    So restoring a single theatre in New York takes 14.4 million, and building an entire studio takes 15?

    That must be one super fancy theatre.

  • chemjeff radical individualist||

    Well, that old theater had a lot of asbestos to get rid of. And Mafioso bodies.

  • Shakes||

    Sounds like the cost/benefit ratio of an oil pipeline.

  • Dadlobby||

    But how is NY Governor Prince Andrew (Cuomo), the Clinton Clone and Duke of HUD (and the housing collapse), going to be made King, um, er, I mean President of the U.S. if he doesn't spend taxpayer money on self promotion? You guys just don't understand how "honest graft" works, https://www.interesly.com/tweed-day-boss-tweed/.

  • JunkScienceIsJunk||

    Old cinemas can support themselves. I know because I support two of them in my area through donations and membership. To my knowledge, they don't receive public money.

    Art is not a very lucrative business. Entertainment is. This is why children's movies do so well in the box office and why the comic book genres and children's fantasy are such a moneymaker for the film industry. At some point, however, artists need to come to grips with the fact that they have two options: sell out or remain an artist and get a part time job to support themselves and their art. The cinemas in my area do the same thing -- they show their art most days, and then they have events on weekends (usually with some popular movie) that appeal to families and make $$.

  • Shirley Knott||

    As Lily Tomlin observed years ago — they call it show business, not show art.
    Which, of course, is what the clerisy finds so objectionable about popular culture.

  • chemjeff radical individualist||

    Yeah the local orchestra in my city has wound up doing much the same thing.

    They have classical concerts of course, but then they also do things like show a screening of Back To The Future with the orchestra doing the music live. Which is kind of cool, but not at all classical. I imagine the movies subsidize the concerts.

  • C. S. P. Schofield||

    Ah, but if the Political Twerps weren't wasting that money on Movies they would probably be spending it in ways that would cause serious damage....like backing Light Rail projects that nobody with any sense wants.

    It's come this far; the best we can realistically hope for is that the Political Class will waste money, rather then spend it effectively on making the rest of us Serfs.

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