WASATCH FRONT NEWS: Salt Lake, Summit, Tooele, Utah, and Wasatch counties

How the film incentive actually helps Utah’s economy

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SALT LAKE CITY – Utah’s film industry took serious economic hits the last few years. Productions have left the state, and COVID-19 shut down the industry.  

Like every business in the country, Utah’s film community is trying to stand back up and rebuild. With changes in how the film industry does business worldwide and in the United States, Utah has found itself at a competitive disadvantage.

Utah’s beautiful and unique geography is no longer enough to get big movies made in the state

Film production companies now look for incentives to do business in various places. If managed right, film incentives do help local economies.

When it comes to incentives, states like Mississippi, Hawaii, New Mexico, Louisiana, and Georgia mop the floor with Utah competitively. Most of these states have caps. Georgia does not. Many of the Marvel movies are made in Georgia, along with other productions, including one that left Utah to go there.

‘Avengers: Infinity War’ has reportedly added $172 million to Georgia’s economy alone. 

This year, Utah’s legislators are being asked to increase the film incentive cap in Utah.

 Film incentives are very complicated, but do they really help a state? The answer is they help a lot.

ABC4 was sent data from a Gardiner Policy Institute study. We asked Kem C. Gardiner Policy Institute Research Economist Joshua Spolsdoff to help explain the impact.

In ABC4’s previous article, we used an example of an $80/$20 dollar split. Spolsdoff said he liked our example, but to add this:

 “When you think about 100 dollars coming into the State of Utah, that’s money going into Utah’s economy as a whole, that’s not 100 dollars going directly back to the state as revenue. A little bit is going back to the state in taxes, but most of it is going directly to Utah businesses and residents, via purchases from local businesses and wages paid to local residents. When you say the state will give back 20 dollars, you are looking at money that’s specifically coming from the state coffers.”

It is important to realize that the $80 benefits Utah as a whole.

Spolsdoff points out that from the film industry itself, 32 cents of every incentive dollar finds its way back to state coffers. For Utah as a whole, every dollar of value-added film industry spending generates 2.3 dollars of total GDP, according to the policy institute. This is the “multiplier effect” that you see in these economic impact studies.

Spolsdoff says, “We are talking about Utah’s economy as a whole when it comes to multiplier effects, but this benefits the state government as well. Take a hypothetical example, if Utah’s economy is worth $100 billion and then is suddenly worth $200 billion, the state will have more money in the economy from which to tax from.”

The first number we talked about is the Return of Investment (ROI). What happens when the film incentive is look at as an investment in Utah. What is the return?

The Gardiner institute reported it was 14 to 1. For every dollar spent, there was a 14 dollar impact on Utah’s economy.

Spolsdoff says, “If you are looking at the state level, for every dollar of incentive paid, it is associated with about $14 in new state GDP. (Gross Domestic Product).”

Gross domestic product is the value of total sales minus the cost of goods and services purchased to produce those sales.

In 2018, the film industry in the Beehive state created 2,554 new jobs

Rural Utah was also helped. Outside of the Gardiner Institute’s report, according to the Utah Film Commission’s annual report, “54.2% of business takes place in Rural Utah. The majority in Emery, Grand, San Juan, Summit, Tooele, Wasatch and Washington counties.”

There was $114.6 million in new state earnings and $201 million generated in in-state GDP.

The thing to remember about what the film incentive does is bring money into the state that would not exist here without it. It’s new money that comes into Utah. That’s why it helps the local economies.

Spolsdoff says, “It’s the same thing in Georgia, where they have these economic incentive programs that are stronger than ours. These programs are bringing in higher valued productions, which increase spending throughout Georgia. This is spending that could potentially be here in Utah, possibly helping out our rural economies. As a community, we need to decide if it makes sense to put more resources into film or something else, but you cannot say these film incentives do not bring growth to the state.”

The Film Incentive Bill SB 167 has been approved by the legislature and will go to the Governor to be signed. 1.6 million was added to the fund plus another 500,000 added to a fund for smaller productions. In total 2.1 million was added to the state incentive program.

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