by Daniel Stefanski | Jan 22, 2025 | News
By Daniel Stefanski |
One of Arizona’s leading watchdog organizations is starting off the new year with a significant lawsuit.
Last week, the Goldwater Institute announced that it had challenged “Arizona’s unconstitutional tax subsidies for filmmakers.” The lawsuit, McEwen v. Arizona Commerce Authority, was filed in the Superior Court of the State of Arizona for Maricopa County.
In that lawsuit, attorneys for the Goldwater Institute wrote that “this case challenges the constitutionality of a state program that subsidizes the film industry and private film companies to the tune of millions of dollars in refundable tax credits each year.” The filing adds that “The Arizona Motion Picture Production Program violates the Arizona Constitution’s Gift Clause, both facially and as applied to two film production projects approved to receive taxpayer-funded subsidies.”
Parker Jackson, a Staff Attorney at the Goldwater Institute, wrote a blog post about the lawsuit after it was filed with the court. He said, “…In 2022, when the state legislature controlled a $5.3 billion surplus, film industry executives and lobbyists who for years had failed to revive a subsidy program seized their chance to get back in on the action. They cobbled together enough votes to enact the Arizona Motion Picture Production Program, which provides up to $125 million in refundable tax credits each year to qualified film production projects. ‘Refundable’ means that if a film company qualifies for more in credits than they owe in taxes, the state cuts them a check! That’s even worse than the old program, which only allowed for ‘transferable’ credits (meaning the recipient could transfer or sell the credit to someone else, but the state didn’t directly send them cash).”
Jackson shared that “After delays due to administrative rulemaking and recent strikes that rocked the film industry, the state is set to finally begin issuing the first round of credits this year. The Arizona Commerce Authority has begun the process of approving subsidies up to $1.2 million for a single project.”
The Goldwater attorney finished his piece, saying, “These types of abuses are exactly why the Arizona Constitution prohibits the state from subsidizing or otherwise giving out money for private purposes unless taxpayers receive direct benefits in return. That means that the state can contract with private companies to perform services or provide supplies at fair market rates, but donations, grants, subsidies, and other forms of corporate aid are not allowed.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
by Corinne Murdock | Feb 16, 2022 | News
By Corinne Murdock |
This week, the Senate Appropriations Committee passed a plan to attract the film industry to Arizona. SB1708, introduced by State Senator David Gowan (R-Sierra Vista), would offer a tax rebate to movie studios, called “Credit for Motion Picture Production Costs,” or “Tax Credits,” under an “Arizona Motion Picture Production Program.” The committee passed the bill overwhelmingly, 9-1; only State Senator Kelly Townsend (R-Mesa) opposed the bill.
The bill reads like a promotional deal for a store: if a company spends up to $10 million, then they get 15 percent in tax credits. If they spend between $10 and $35 million, then they get $17.5 percent. And if they spend over $35 million, then they get 20 percent. Companies could get more: an additional 2.5 percent for total production labor costs associated with Arizonan employees, an additional 2.5 percent of total qualified production costs associated with filming at a qualified production facility in Arizona or primarily on location, and an additional 2.5 percent of total qualified production costs if they filmed in association with a long-term tenant of a qualified production facility.
A day after the committee’s decision, Arizona Free Enterprise Club Vice President Aimee Yentes told “The Conservative Circus” that the credits would be lining the pockets of “woke Hollywood elites” making movies that oppose American traditions and values.
“It outtakes $150 million a year of tax credits for production companies and producers, that’s a really, I would call, generous tax credit program. Usually these move through the system and you’ll see them for, I don’t know, $7 million here, $12 million here, but $150 million a year going to woke Hollywood elites who are going to produce anti-American movies and documentaries like Michael Moore’s,” said Yentes. “So if that sounds like a good use of your taxpayer money, I shudder to think.”
Yentes explained further that the bill gifted movie companies with a “sweetheart deal” through refundable tax credits, which zero out liability after the threshold is met. If there are excess tax credits that haven’t been used, the government will pay the difference to the companies — a perk not afforded to small Arizonan business owners.
“That’s [a deal] a lot of other businesses would love but they can’t afford while down there to cut their own deals,” said Yentes.
According to Yentes, the deals wouldn’t stop there. She said that movie companies’ promises to film in Arizona over this legislation were mere sweet nothings; she insisted that those executives would go back on their word as soon as another state offered a better deal.
“It is an absolute race to the bottom,” said Yentes. “We will wind up bidding against ourselves — and lose.”
Arizona has a history with Hollywood that goes beyond the filming of the many Westerns that ruled the 20th century entertainment industry. The following movies filmed in various parts of Arizona: the original “War of the Worlds,” the original and reboot “Planet of the Apes,” “National Lampoon’s Vacation,” “Indiana Jones and the Temple of Doom,” the original “Karate Kid,” “Revenge of the Nerds,” “Can’t Buy Me Love,” “Bill & Ted’s Excellent Adventure,” “Wayne’s World,” “Forrest Gump,” “The Shawshank Redemption,” “Star Trek: First Contact,” “Star Trek Generations,” “Transformers,” “Transformers: The Last Knight,” and “Transformers: Revenge of the Fallen.”
More recently, Disney’s “The Lone Ranger” was filmed in Chinle.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
