Colorado Exploring Expanding Movie Production Incentives

Colorado HB 11-1207 garnered significant attention when it was introduced because it originally sought to raise the cost of movie tickets in Colorado to subsidize movie production incentives (MPIs). Nationally, MPIs are receiving pointed criticism from opponents who argue against subsidizing the movie industry when scarce taxpayer dollars are needed to fund core government services. A 2010 study by the nonpartisan Tax Foundation found that—when they work at all—MPIs lead to temporary jobs with limited opportunities for upward mobility at the expense of taxpayers.

In its original form, HB 11-1207 would have imposed a 10-cent fee on every movie ticket sold in Colorado, then transferred ticket fee revenue to the state’s “creative industries cash fund” that is maintained by the Colorado Office of Film, Television and Media. The bill’s original fiscal note found the state would have raised $2.5 million a year through the 10-cent per ticket tax, however the bill’s co-sponsor (State Rep. Tom Massey) told the Denver Business Journal he assumed it could have raised as much as $4 million a year from Colorado residents.

The Pueblo Chieftain reports that constituents were so vocal in opposing the bill that two committee members (Rep. David Balmer, R-Centennial and Rep. Kevin Priola, R-Henderson) promised they would vote against it regardless of any amendments or alterations.

In his testimony Rep. Massey explained that he received criticism from constituents over the bill’s original language. Critics argued the fee would have essentially been a tax, but was named a fee in order to circumvent Colorado’s Taxpayer’s Bill of Rights (commonly known as TABOR). Rep. Massey changed key language by amending the bill to allow voluntary donations from movie theaters to the “creative industries cash fund,” thus eliminating the proposed 10-cent movie ticket fee.

Last Thursday, after Rep. Massey amended the bill, it passed out of the House Economic and Business Development Committee on a 7-5 vote. Yesterday the Denver Post reported HB 11-1207 passed in the House on a 40-25 vote with bipartisan support and opposition. The bill is now headed to the Senate for further discussion.

Colorado’s decision on MPIs may contradict the actions of other as states with costly MPI programs (such as New Mexico and Michigan), which are pursuing scaling back MPIs to instead fund budget deficits in programs for education, healthcare and other public services.

Colorado taxpayers and businesses would be better served by policies that reduce the tax burden and improve the regulatory climate for all industries, not just politically favored ones. For innovative economic development policies being explored at the state level, see the American Legislative Exchange Council’s (ALEC) State Budget Reform Toolkit and Reason Foundation’s Annual Privatization Report 2010: State Government Privatization section.