Why government handouts to Hollywood are growing

WITH its deserts and its slight air of decay, New Mexico is a good place to shoot a post-apocalyptic action film. But the state’s natural charms alone would probably not have been enough to lure the makers of “The Book of Eli”. Broderick Johnson and Andrew Kosove, who are producing the Warner Bros film, say they were particularly enticed by New Mexico’s generous production subsidies and interest-free loans.

All but seven of America’s 50 states now offer incentives to lure filmmakers. Some states refund a portion of in-state production costs, which may include actors’ salaries. Others issue rebates against state taxes that can be sold to local residents. The club is growing quickly. California, which resisted subsidies for years, recently approved its first clutch of recipients. Kentucky is considering its first application. With banks and hedge funds virtually out of the game, state governments are now the most important external source of funding in the film business. …