Interim Day: Panel hears reports on government-centric economic development

Photo Credit: Scott Catron

In today’s Economic Development and Workforce Services Interim Committee meeting at the Utah State Capitol, the committee heard reports from various state government economic development agencies, including reports from the Office of Tourism and the Film Commission.

The Office of Tourism reported that tourism trends have turned a corner from the lows of the recent recession and are moving in a positive direction. State and local tourism-related taxes and traveler spending are increasing, and the Office of Tourism believes part of the increased tourism in Utah is due to its marketing and advertising expenditures. As part of their presentation, they showed the economic return on investment from their efforts, supposedly due to increased tourism driven by their advertising.

A question that did not come up is how the Office of Tourism knows that its ads are actually driving tourism. For instance, do they survey tourists to find out what caused them to visit Utah? Or do they simply assume that their ads are being effective as part of their return-on-investment analysis?

The Film Commission stated that the 2011 expansion of the motion picture incentive program – which provides selective tax rebates and credits to specific movies chosen by the state – led to dramatic growth in Utah’s film industry in the last 18 months. According to the Film Commission representative, the larger and more consistent tax breaks that the state can now hand out to particular movie studios means that Utah can attract more and bigger film projects, including both movies and television series. For instance, the number of movies that received these special tax breaks grew significantly in the last year and a half.

One question that the claims of the Film Commission raises is whether it is a good thing that an entire industry in the economy is so dependent on special treatment from government for its success. If the Utah film industry requires ongoing and ever-larger tax breaks for particular film producers for its growth and success, does that mean that Utah taxpayers must be willing indefinitely to increase special tax deals for film producers, or risk the failure and collapse of the film industry in the state, and is that sustainable?

In other words, is it only a matter of time before Utah’s film industry fails because it cannot succeed without special tax rebates that must continually grow to remain “competitive” with other states’ rebates? And is that a wise economic policy to pursue for Utahns in the film industry whose jobs, by their government-dependent nature, will at some point disappear?

These are important questions for state government economic development officials in Utah to answer. Taxpayers’ wallets and Utahns’ livelihoods may depend on it.