Our long-time readers have read it here before: the best kind
of economic impact analysis is that which is forward looking,
charting not only what is or what has been an impact, but what
impacts could be and should be -- based on real data.
We've just seen the benefits of this. ArtsMarket worked side
by side this year with the Montana Film Office to see through
the passage of House Bill 584, The Big Sky on the Big Screen
Act, passing the Montana Senate and House on April 20,
with the strong support of the Governor. This new legislation
puts Montana's film industry incentive program among the top
five in the North America, competing with Canada, Louisiana, New
Mexico, Missouri and Pennsylvania. With this new package, the
state that was home to films such as A River Runs Through It and
The Horse Whisperer, will be able to win a number of
pending film projects that had been in danger of migrating to
Canada and in the process considerably strengthen its sizable
resident film industry.
For the Montana Film Office, ArtsMarket conducted a review of
the actual impacts of specific film activities, year by year,
going back to 1997. Then, based on that actual data, we created
a range of incentive calculations and options, and projected
forward to determine what the cost benefit of each option would
be based on different potential activities. We assembled an
advisory panel of top, nationally known producers to
double-check our numbers. Then we were present throughout the
legislative session, for committee meetings in the House and
Senate and working in the Governor's Office, providing fiscal
impact notes, updated calculations, and candid responses to
legislative questions.
According to Sean Becker, ArtsMarket's research director and
author of our economic impact analysis for the Montana Film
Office, the analysis "wasn't abstract or hypothetical. It
made sense to everyone on both sides of the political aisle. For
economic impact analysis to really work, you have to give people
a dynamic tool to work with."
Being dynamic meant that for every one of the sponsor's
fiscal notes, we recalculated impacts to determine
cost/benefits. "The on-going analysis was done to encourage
smart thinking about how a bill comes together," said
Becker. "That meant each component of our analysis had to
have severability from the others and stand up on its own --
each element had to have integrity on its own, be free standing.
All it takes is for one person to say, 'I don't believe this one
number,' and you can't do anything in a committee room. You need
to have totally defensible data."
To us, it isn't a surprise that the new Rand study
"Gifts of the Muse" faults many instrumental effect
studies of the arts (i.e. economic impact studies) for being
weak in methodology. As the report states, "many studies of
the arts' instrumental effects are based on weak methodological
and analytical techniques and, as a result, have been subject to
considerable criticism."
We agree. But that doesn't mean that we have to throw out the
tool of valuable economic calculations. The arts and culture do
provide economic benefits that can be realistically and
thoroughly calculated and weighed in cost/benefit analysis. What
is key is the development of actionable studies, studies
that propel public policy rather than those that are static or
historical references, and that don't stand up to scrutiny.
Just what is actionable? For the Big Sky on the Big Screen
Act, our goal was to make sure Montana would never pay out
more than it earned, so we were continuously calculating cost
benefits from our baseline. That meant manually going through
the calculations to correct for any new or pending tax
legislation; to take into consideration the devaluation of the
Canadian dollar; to examine the competitive edge that various
incentive packages might offer as compared to other states; and
to calculate non-incentive factors such as effective tax rates,
to make sure Montana could be highly competitive.
One of the great lessons we learned from our work with the
Film Office was how important and necessary our continuing
analysis was to support the passage of the Big Sky on the Big
Screen Act. It was a case study of research guiding policy
development, focused on results. If the Film Office had simply
received a report of past economic impacts and not continued to
ask for dozens of pro active calculations drawn from that
baseline, the case would have lacked real numbers and would have
had a tough time making it through a legislature that has never
been big on the use of incentive packages.
Begin with the end in mind. Just what are economic studies of
the arts intended to do? As believers in public support of the
arts and public policy that recognizes the impacts of culture on
our economy and society, we believe more cultural agencies
should take the action-oriented approach of the Montana Film
Office. Find the economic benefits of furthering cultural
activity in the years ahead. Prove them. Forecast them with
confidence.
For more on The Big Sky on the Big Screen Act, go to
www.montanafilm.com.
