DENVER – A statewide audit shows that millions of Colorado taxpayer dollars have been going toward film incentives for productions that fail to meet minimum qualifications.
According to an audit of the Office of Film, Television and Media, presented to the Legislative Audit Committee on Monday, at least $1.9 million in incentives have been given to nine projects that were chosen for review by the Office of the State Auditor.
Of the projects audited, all either failed to meet the program’s requirements or lacked documentation showing they were qualified for the incentives.
The audit also showed the film office paid another $1.9 million to projects that did not have contracts in place before production began, $1.3 million of which went toward projects that had no contracts at time of payment.
Republican lawmakers have long criticized the office, saying it has produced little benefit for Colorado since it was created in 2012. GOP lawmakers this year tried to eliminate the program’s funding before whittling its $3 million budget to $750,000 for the fiscal year that begins July 1.
The State Auditor also found irregularities in the selection of which projects were given incentives. The audit said the film office was not able to show the economic benefits, specifically the lack of data on how many full-time equivalent jobs film incentives create. To qualify for taxpayer incentives, a Colorado-based production company must spend at least $100,000 and at least half its workers must be state residents. Non-Colorado companies have to spend at least $1 million for film, or $250,000 for commercials and other projects.
The film office reports that, between 2013 and 2016, its 31 projects created about 1,600 jobs and nearly $73 million in spending. The audit found it could not substantiate those figures. In 2016, the Office of Film, Television and Media said its work had a $17.6 million economic impact with 1,391 jobs created through the productions it paid. However, the jobs created by the film incentives are not distinguished by how long the employment lasts, so the numbers can be misleading.
The audit made recommendations for operating the film office, including improving management of the program to ensure wise use of taxpayer money.
“It’s of the highest priority that we implement stricter guidelines around the review of this,” said Stephanie Copeland, executive director of the Office of Economic Development and International Trade, of which the film office is division.
Copeland said that while the audit showed several irregularities, it did not include changes that have been made since she became director in January, or since she learned about the issues in a draft audit in March.
“There are many controls we’ve put into place that I think are not accurately reflected from the audit that exist today,” she said.
Changes include new policies to ensure incentives are not being paid without documentation showing productions meet requirements.
Copeland said the office is also in the process of creating standards for which projects are chosen so they are consistent in their selection process. It also is designing a strategic plan that will include provisions for how the film office will evaluate the economic impact of the incentive program.
State Sen. Tim Neville, R-Littleton, and member of the Audit Committee, said the lack of oversight on what projects qualifies for incentives, and how much they receive, is troubling for the Legislature and Coloradans.
“When we look at this audit it probably doesn’t add any confidence to what we’re hearing from my constituents regarding making film industry payments,” Neville said.
Lperkins@durangoherald.com. The Associated Press contributed to this report.