Why States Have Spent Billions Subsidizing Hollywood

State governments use our tax dollars to build roads, fund schools and provide health care. In 38 states, they also ship money off to a high-gloss private industry: Hollywood.

And it’s a lot of money. My colleague Christopher Kuo and I found that those states had given out more than $25 billion over the past two decades to subsidize the making of movies and television. The idea is to lure businesses to spend money, employ locals and stimulate the economy.

The problem is, the programs are actually huge money losers for states. Studies show that these efforts typically return a quarter or even a dime on every dollar given to studios.

Yet lawmakers are not slowing their spending. Quite the opposite. Hollywood is playing states off one another, and the competition has them sweetening their deals to lure productions, economists say. Under mounting pressure from New Jersey, New York recently expanded its film incentive program by 67 percent, to $700 million. Oklahoma went from $4 million to $30 million in just three years, in part to stay competitive with Texas. Then, Texas decided to spend nearly seven times that amount.

“You could find almost an unlimited number of better uses for the same dollars,” said Michael Thom, a tax expert at the University of Southern California. “Who on earth would say, ‘Keep giving the money to Hollywood; my kid’s school doesn’t need new books’?”

My colleagues and I wanted to understand why these programs persist. This morning, we published the third article in our series about the topic. Here’s a quick look at what we found.