Hollywood Hijacking: How movie producers make off with millions in Ohio tax dollars

Our exclusive On Your Side investigation uncovered serious questions about Ohio’s film tax credit. 

Since 2009, Ohio has given away $20 million each year in order to lure film and television productions to the Buckeye State. 

 

 

We found the state not only fails to keep track of how effective the credit is at creating jobs, it also censored public records that would allow us to figure it out. 

The Small Town Stuntman

“If you look at me long enough and you talk to me long enough, you'll start staring at me and you'll realize that (this) nose has been broken more than one time,” said Rick Fike. 

Fike is a stuntman who’s appeared in more than 50 films. 

“I feel like a little kid sometimes,” he said.

“Where else can you do this and get paid to jump out of  buildings and crash cars and flip vehicles and get into action fight scenes and shoot guns and blow up bridges . . . and do it safely? I got to tell you we enjoy every minute of it,” said Fike.

 

You might think he’s living in Los Angeles. 

Think again. 

Fike’s business, Stunt Predators USA, is based in Madison, Ohio.

“The stunt business has just tremendously grown because of the benefits of tax incentives in Ohio,” he said. 

A Multi-Million Dollar Mystery 

On Your Side Investigators wanted to find out how many other Ohio residents have benefitted from the state’s film tax credit. 

We discovered it’s a multi-million dollar mystery. 

From “The Avengers” to “Vanilla Ice Goes Amish”, we obtained state records listing how many Ohio jobs were created by every production awarded the film tax credit since 2012. 

But that doesn’t mean we got answers. 

On the majority of documents, information about the number of Ohio residents hired to work each production was completely blacked out. 

“It seems weird that it would be the job number information that would be redacted,” said Dalindyebo Shabalala. 

Shabalala is an intellectual property law expert and Visiting Assistant Professor at Case Western Reserve University School of Law.

“There's a strong public policy interest in this information that goes directly to the heart of the effectiveness of the tax credit policy,” said Shabalala. 

We asked Stephanie Gostomski, Public Information Officer, Ohio Development Services Agency, which manages the credit, why the information was redacted. 

She e-mailed us the following state statute:  

122.36 Confidential information.

Any materials or data submitted to, made available to, or received by the director of development services or the controlling board, to the extent that the material or data consist of trade secrets, as defined in section 1333.61 of the Revised Code, or commercial or financial information, regarding projects are not public records for the purposes of section 149.43 of the Revised Code.

However, Shabalala questioned how the state could use the statute to justify redacting records that should be public.  

"It doesn't threaten the viability and the economic future of the firm,” he said. “The public policy here, I think, weighs heavily on the side of disclosure.” 

 

Hollywood Heist?

On Your Side Investigators then asked Gostomski if the agency keeps track of the number of Ohio jobs created as a result of the state’s film tax credit.

After all, in order to obtain the credit, production companies must submit audits listing how many Ohio residents they hired.

Gostomski told us the agency does not track jobs.

In another e-mail to News 5, Gostomski wrote:

“The legislature has not made job creation a requirement of receiving this credit. Our agency does ask for the job numbers on the application, but it is not a condition that needs to be met in order to receive the credit.”

When we asked Ohio Senate Floor Majority Leader Tom Patton (R-Strongsville) if he knew about the state’s failure to track jobs, he was surprised.

Patton didn’t know the ODSA wasn’t calculating the total number of jobs created by the Ohio film tax credit. 

“I'm hearing firsthand about people getting hired or going to work. And I feel good about it. I think if the state wants to find out the information they will,” he said.

“Not evaluating the programs? That's a huge problem,” Chris Koopman said.

 

Koopman is a research fellow at the Mercatus Center at George Mason University, a conservative think tank in Washington D.C. 

The Cincinnati native studies the intersection of competition, innovation, and government favoritism. 

“I think the easiest way to understand these film tax credit programs is as a Hollywood heist."

“The idea that you're going to give tens of millions of dollars to Hollywood to come film and you're not going to do the homework to figure out whether the programs actually produce the type of economic activity promised when put into place, that's a big problem with regard to insuring policies are achieving their goals,” said Koopman. 

In fact, Koopman said Ohio should yell “Cut!” when it comes to film tax credits. 

“We're just in essence giving buckets of money over to production studios to film for a few weeks,” said Koopman. 

 “I think the easiest way to understand these film tax credit programs is as a Hollywood heist,” he said. 

 

Secrets Revealed

“There's no perfect way to figure out how beneficial this is to the state of Ohio,” said Candi Clouse, Program Manager, Center for Economic Development, Maxine Goodman Levin College of Urban Affairs at Cleveland State University. 

However, the economist believes her study comes close. 

Remember the records the state censored? After several months of requests, the ODSA gave some of the information we requested to her. 

At the request of the Greater Cleveland Film Commission, she studied the economic impact of the film tax credit. 

She found the credit yields a $2.01 return on investment. In other words, for every dollar Ohio spends, there is $2.01 boost to the economy.  

Ohio spent $32.6 million on the credit during the four-year period Clouse reviewed for her study. This means it cost taxpayers $38,137 per job created by the film tax credit.

“It shows that the credit is working,” said Clouse. 

However, measured other ways, the picture isn’t as rosy. 

An audit of the production found only 1,253 Ohio workers were hired.

Between 2011 and 2015, the credit created just 854 jobs “directly involved” in the film productions.  (However, Clouse calculated 1,729 jobs created by the credit, including employees who worked for industries selling “good and services” to film crews and their suppliers as well as employees working for industries that sell goods and services to Ohio households employed by the film industry.) 

Ohio spent $32.6 million on the credit during the four-year period Clouse reviewed for her study.

This means it cost taxpayers $38,137 per job created by the film tax credit.

In addition, Clouse found the tax impact from the productions filmed in Ohio only brought approximately $22 million in tax revenue to state coffers. 

Clouse said many productions hired as many Ohio workers as were promised on their applications for the tax credit, but others fell short. 

For example, on their application, the producers of the film Kevin Costner film “Draft Day” promised to hire 1,793 Ohio residents.

Even more troubling, we uncovered serious shenanigans surrounding “Captain America: The Winter Soldier.” 

By filing two separate applications through two different production companies, the movie was awarded $8.2 million to film in downtown Cleveland. 

What’s the problem? At the time, the cap imposed on each film was $5 million. 

 

Doubling Down 

“So far, it appears we're putting people to work and the state's getting a good return on their investment,” Patton said.

After reviewing Clouse’s study, Patton proposed quadrupling the Ohio film tax credit earlier this year. 

Ohio lawmakers eventually voted to double the credit to $40 million. 

When On Your Side Investigators noted ODSA doesn’t analyze the economic impact or track the numbers of jobs created, Patton said, “Well, the state might not know, but we can find that information out by going to the folks that actually get the credits and will these credits to be put forward.” 

Business has boomed for Fike. 

He not only appears in films, he also earns money as a stunt coordinator. 

Plus, the stunt workers he trains at Fike’s Combined Martial Arts Dojo in Madison are often hired for Ohio films.

“Out of my 35-40 stunt performers in here, I have to say over 50 percent will work each year which is a really good ratio for people who work full-time,” he said. 

However, the jobs are sporadic and short-term. 

“It’s the old story,” he said. “Don't quit your day job."