Does the OH film tax credit give Cleveland 'sex appeal'? One state lawmaker thinks so

Posted at 6:31 PM, Jul 13, 2017
and last updated 2017-07-13 18:34:40-04

Ohio lawmakers recently agreed to renew the Ohio Motion Picture Tax Incentive at $40 million for the 2017-2018 fiscal year.

OH Senator Matt Dolan (R-District 24) said he is a "proponent."  

"There's a sex appeal . . . if Cleveland starts doing films," he said. "If you want 25-year-olds to stay here, you have to invest." 

Since 2009, Ohio has given away close to $200 million dollars per year to lure film and television productions to the Buckeye State. 

Dolan helped create the credit when he was a member of the Ohio House of Representatives. 

"It is using taxpayers' dollars to subsidize an industry. It is, however, an investment," he said.

Last November, our exclusive On Your Side investigation revealed serious questions about that investment. 

Ohio not only fails to track how effective the credit is at creating jobs, it also censored public records that would allow us to figure out the true number of jobs created by the credit. 

Our search for answers led us to Candi Clouse, the Program Manager for the Center for Economic Development at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. 

“There's no perfect way to figure out how beneficial this is to the state of Ohio,” she said about the credit.

However, Clouse told us she believes her study comes close. 

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

At the request of the Greater Cleveland Film Commission, Clouse 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.  

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

However, 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.

Between 2011 and 2015, the credit created only 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 “goods 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.

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 some fell short.

For example, by filing two separate applications through two different production companies, "Captain America: The Winter Soldier" was awarded $8.2 million to film in downtown Cleveland. 

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

"Everything you're saying is true," said Dolan.

Dolan said he is not concerned Ohio doesn't track the number of jobs created by the credit.

Again, he said it's all about creating a new industry and "sex appeal."

"We want young people to stay here," he said. "You tell them they can be part of an exciting new industry, they'll stay."

We reached out to Greater Cleveland Film Commission President Ivan Schwarz for a comment on this story, but he did not return our call prior to our deadline.

In a news release Thursday, Schwarz said he plans to lobby lawmakers to raise the film tax credit to $80 million next.