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Let’s not rush to judgment on Minnesota’s new film and TV production tax credits

The direct jobs the industry creates are the types of jobs we want in Minnesota: high-paying, mostly blue-collar, often union. Let the program get up and running, and let’s examine the economic outcome.

Productions have spent money in the state on wages, goods, and services – and paid all the applicable taxes on those expenditures – before the credits are issued.

While I appreciate Peter Callaghan’s attention to film and TV production tax credits, and the opportunity he gave me to weigh in on the new legislation in his July 19 article, I would like to offer some additional perspective.

portrait photo of melodie bahan
Photo by Tom Wallace
Melodie Bahan
To say that the production tax credit would “cost the taxpayers $5 million a year” is misleading. Tax credits are issued only after funds are spent, and those funds reflect new spending in Minnesota. That means that productions have spent money in the state on wages, goods, and services – and paid all the applicable taxes on those expenditures – before the credits are issued. The $5 million in tax credits are only awarded after a minimum of $20 million is spent on qualified expenses.

That’s millions of dollars that would not otherwise be spent in Minnesota but for the tax credit. But the return is usually greater. Even with our current small rebate program, we see spending in Minnesota that is not included in the incentive. For example, a project might have spent $5 million on expenses that qualify for the incentive, but they spent an additional $2 million in the state on things that don’t qualify for the program, such as entertainment and marketing.

Film production incentives (rebates and tax credits) are economic development tools used by U.S. states and countries worldwide to attract new spending and job growth. The effectiveness of these programs has been outlined in multiple economic impact studies, both those conducted by state government agencies (Massachusetts, Pennsylvania) or on behalf of states (Montana). The money spent by the industry is in the billions. The direct jobs it creates are the types of jobs we want in Minnesota: high-paying, mostly blue-collar, often union.

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Callaghan’s article implied that the film production tax credit was slipped into the tax bill in some sort of shady back-room deal. That’s ridiculous. This provision has been discussed and debated in the Legislature since 2019. This session it was introduced in the House and the Senate with bipartisan sponsorship and received public hearings in front of the Tax Committees in both chambers. Advocates for the legislation sent out multiple press releases and pitched stories to media outlets statewide in an effort to get public attention for the issue. It’s a bit disingenuous for the media to claim a lack of transparency on a piece of legislation simply because they declined to cover it while it was being debated.

I’ve personally followed up with reporters countless times over the years after seeing stories about films or series that should have been shot in Minnesota, or filmmakers who would like to work here. These stories often fail to explain the reason for these outcomes: the lack of a strong and stable incentive program.

Business incentives offered by government — whether they’re tax credits for film production, or subsidies for other types of industries — can be confusing, but I urge caution before a rush to judgment. Let the program get up and running, and let’s examine the economic outcome. I believe, as the majority of state economic impact studies show, that the benefits of a strong and stable production incentive program will be good for Minnesota’s economy and workers.

Melodie Bahan is the executive director of Minnesota Film and TV.

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