Arizona’s $125 Million Film Subsidy Faces Legal Challenge Over Alleged Constitutional Violation

Movie shoot on location

The Arizona Motion Picture Production Program (AMPPP), which doles out up to $125 million annually in taxpayer-funded subsidies to filmmakers who produce their movies in the Grand Canyon State, is facing a significant challenge by the Goldwater Institute (GI). The right-leaning organization filed a lawsuit last week against the Arizona Commerce Authority (ACA), arguing that the program violates the Arizona Constitution’s Gift Clause by providing taxpayer money to private entities without adequate public benefit.

State Senator Wendy Rogers (R-Flagstaff), who voted against the bill that established the AMPPP, expressed her support for the lawsuit to The Arizona Sun Times. “Government should not pick winners and losers,” she said. “Goldwater Institute is right in line with how President Trump is hearkening back to our country’s ethos, which is merit-based, market-driven awarding success to those who earn it on a level playing field… instead of according to who you know, but what you know. We’re done with elitist backroom deals crushing the middle class.”

State Senator Jake Hoffman (R-Queen Creek), who was in the State House at the time the bill passed, opposing it, said, “They are sexualizing our children, they are degrading our culture, they are glorifying violence. Hollywood does not represent the people of Arizona. It is not the industry the people of Arizona want.’’

State Senator Shawnna Bolick (R-Phoenix), who was also in the State House in 2022, said, “We don’t need another carve-out for specific industries to attract woke Hollywood actors and studios to our state,” she said.

The Arizona Legislature passed the law establishing the AMPPP in 2022, and Governor Doug Ducey allowed it to become law without signing it. Many of the Republican legislators who co-sponsored the bill or voted for it are no longer in the legislature, which is now considered the most conservative legislature in years.

In its complaint, which was filed in Maricopa County Superior Court, GI said the program violates the Arizona Constitution’s Gift Clause, since that clause “prohibits the transfer of public funds to private entities without a public purpose or without adequate consideration.” The AMPPP “allocates substantial taxpayer resources to private companies without serving a valid public purpose and for which Arizona’s taxpayers do not receive direct benefits in return,” GI said. The only benefit taxpayers receive is “an acknowledgement in the credits that the movie was filmed in the state.”

GI pointed to the previous failure of a similar subsidy. “Two decades ago, the Arizona Legislature enacted an ‘incentive’ program for motion picture production that ended up costing the state millions, with little to show for it. After the state’s own reports showed that lavish Hollywood handouts failed to generate even enough indirect benefits to the state to justify the program, it was allowed to expire in the wake of the Great Recession.”

GI said since there was a surplus in the state budget in 2022, lawmakers brought the subsidy back. However, GI said the revived program is “worse” since “if a film company qualifies for more in credits than they owe in taxes, the state cuts them a check!”

Proponents claim that the AMPPP will lead to increased economic activity and tourism. However, GI said studies that reveal otherwise. GI cited a report from the Michigan Senate which found that film subsidies there “do not generate sufficient private sector activity to offset their costs completely. … Any probable impact from the film incentives is likely to have a negligible impact on economic activity in Michigan, particularly when the economy is viewed as a whole.”

The ACA has started the process already of “approving subsidies up to $1.2 million for a single project.”

GI has a record of successfully suing over taxpayer subsidies. The Arizona Supreme Court agreed and struck down a subsidy to developers, rejected a corporate subsidy that went to two businesses, and ended union “release time” on the taxpayers’ dime. All three were violations of the Arizona Constitution’s Gift Clause.

– – –

Rachel Alexander is a reporter at The Arizona Sun Times and The Star News NetworkFollow Rachel on Twitter / X. Email tips to [email protected].

 

 

Related posts

Comments