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Lights, Camera, Handouts? Challenging Arizona’s Unconstitutional Film Subsidies

McEwen, et al. v. Board of Directors of the Arizona Commerce Authority, et al.

Case Status

Date Filed

January 15, 2025

Last Step

Filed Complaint in Maricopa County Superior Court.

Next Step

Await response to complaint.

Case Overview

The Arizona Motion Picture Production Program (“Program”) subsidizes the film industry up to $125 million each year in refundable tax credits for films made primarily in state. “Refundable” means that if a film company qualifies for more in credits than they owe in taxes, the state cuts them a check for the difference.

The Arizona Constitution’s Gift Clause prohibits the transfer of public funds to private entities without a public purpose or without adequate consideration. Despite this constitutional prohibition, the Program 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. In fact, the primary “benefit” owed to the state for receiving a film tax subsidy is an acknowledgement in the credits that the movie was filmed in the state. But that sort of “benefit” is too speculative and amorphous to count as consideration under the constitution. What’s more, producers don’t even have to release or distribute their films to receive a subsidy, so these handouts may pay for films that no one will ever watch, or credits no one will ever see.

The Goldwater Institute represents two Arizona taxpayers in a lawsuit challenging the Program, and two of its largest pending subsidies, under the state constitution. Taxpayer dollars must be reserved for government functions, not movies or other private endeavors.

Case Logistics

The Goldwater Institute represents Arizona taxpayers Deborah McEwen and Jan Mittelstaedt.

The Board of Directors of the Arizona Commerce Authority and its members, in their official capacities, as well as the Arizona Department of Revenue are the defendants in this case.

The case was filed in the Superior Court of Arizona in and for Maricopa County on January 15, 2025.

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