Audit blasts Tennessee's film incentive boondoggle

Audit blasts Tennessee's film incentive boondoggle

January 29th, 2013 in Opinion Free Press

A pointed Free Press editorial that appeared in November warned against continuing a ludicrous state welfare program that handed cash to the rich Hollywood executives who produce the ABC drama "Nashville." At that time, state leaders had already given away $7.5 million in handouts to the producers to film portions of the show in Music City, and the producers were pushing the state for millions more.

The editorial argued that state giveaways to movie and television projects did little to benefit taxpayers.

It turns out that the editorial wasn't nearly critical enough of the state's Hollywood handouts.

On Monday, the state's Comptroller of the Treasury released an audit of the Tennessee Film, Entertainment and Music Commission -- the agency that passes handouts from the Departments of Revenue and Economic and Community Development to the entertainment industry. It was one of the most damning state audits in recent memory.

In fact, in their recommendations, auditors hinted that the Commission should be shut down -- and called for sweeping overhauls to the laws and policies related to the Film Commission and film incentive program if the bureaucracy survives.

What did state auditors find that was so bad?

For starters, the Film Commission authorized $12.5 million in state taxpayer-funded giveaways to film projects that did not meet the requirements necessary to receive the subsidies.

The Department of Revenue then sent as much as $7.5 million in handouts for TV and movie projects that were supposed to go to Tennessee-based businesses to out-of-state companies.

The audit also revealed that Perry Gibson, the former Tennessee Film, Entertainment and Music executive director, failed to disclose serious conflicts of interest which allowed her to direct more than half a million dollars to her husband's law firm. Auditors discovered "communication between the former executive director and her spouse that clearly demonstrates the spouse working for a law firm involved with at least three productions that received incentive payments."

According to the audit, "The communication suggests the connection [between Gibson and her husband] was advertised as a selling point to at least one or more producers."

In describing the actions of the Film Commission, the Department of Economic and Community Development, and the Department of Revenue, the audit used phrases such as: "exercised poor management and administrative oversight," "disregarded their statutory responsibility," "misrepresentation of ... information" and "general lack of due diligence."

What did Tennessee taxpayers get for the more than $20.5 million in tax money that state auditors determined was spent improperly?

Nothing at all, according to auditors.

The audit states, "We found little or no support that the headquarters incentive has led to new permanent film-producing facilities or new permanent and professional Tennessee jobs in the film industry."

This audit proves once and for all that there is no value to taxpayers in bribing rich movie and television executives to film their projects in Tennessee. The scheme fails to create jobs, does little to stimulate the economy and costs taxpayers tens of millions of dollars.

There is no doubt that the state should stop giving taxpayer-funded handouts to Hollywood. Film incentives were a bad idea from the start, and the audit proves it has been a much worse catastrophe than even staunch opponents of the plan expected. Now the question is, are state lawmakers wise enough to say "that's a wrap" on the state's failed experiment in film incentives.