Key Point: “Digital Domain Media Group Inc. closed its taxpayer-subsidized film studio and filed for bankruptcy protection on Tuesday, just a few short months after State Rep. Scott Plakon (R-Longwood) told skeptical Tea Party leaders that the Florida film industry provides a sterling example of why government officials should hand over taxpayer dollars to politically connected companies…Despite Plakon’s assertions, Digital Domain abruptly laid off approximately 300 Florida workers and returned none of the $135 million in taxpayer subsidies”
Heavily Subsidized Film Company Declares Bankruptcy in Embarrassment for Plakon
Digital Domain Media Group Inc. closed its taxpayer-subsidized film studio and filed for bankruptcy protection on Tuesday, just a few short months after State Rep. Scott Plakon (R-Longwood) told skeptical Tea Party leaders that the Florida film industry provides a sterling example of why government officials should hand over taxpayer dollars to politically connected companies.
Between 2009 and 2012, Florida’s Republican-dominated legislature and various local governments handed over $135 million in taxpayer subsidies to Digital Domain. Those subsidies included prime real estate and a lavish headquarters building in addition to direct cash payments.
In an April conversation with Tea Party leaders unhappy about legislation giving renewable energy companies $100 million in taxpayer subsidies, Plakon said state subsidies for film companies such as Digital Domain demonstrate why it is good for government to generously subsidize politically connected companies and industries.
“Plakon offered examples of other tax credits being used successfully in the State of Florida to create jobs and boost our economy – namely the film industry,” wrote Tea Party leader Carol Knighton of The Villages in an April 26 email to other Tea Party leaders.
In his conversation with Knighton and other Tea Party leaders, Plakon strongly objected to Tea Party leaders comparing Plakon’s renewable energy subsidies with the federal Solyndra scandal. When Plakon tried to distinguish his Florida-specific renewable energy subsidies from the federal government’s Solyndra debacle, Tea Party leader Norm Knighton pointed out that government should not be handing out subsidies in any form. Plakon then trumpeted state subsidies for film companies as a success story that should serve as an example for state subsidies for the renewable energy industry.
In his conversation with Knighton, Plakon said taxpayer subsidies for film companies “encourage investments,” “create jobs” and “boost our economy.”
Despite Plakon’s assertions, Digital Domain abruptly laid off approximately 300 Florida workers and returned none of the $135 million in taxpayer subsidies.
“The failure of Digital Domain, in particular, shares some of the same traits of the failed solar-panel manufacturer Solyndra, which received $535 million in federal loans before closing its doors and filing for bankruptcy in 2001,” the Tampa Bay Times reported.
At $135 million spread out over just 7 million Florida households, the Digital Domain bankruptcy costs the average household nearly four times more than the Solyndra bankruptcy. Solyndra milked taxpayers out of $535 million, but that money was spread out over 100 million American households.
In April of this year, Plakon and Agriculture Commissioner Adam Putnam applied immense pressure on Gov. Rick Scott (R) and successfully convinced him to not veto Plakon’s renewable energy subsidies. Key to Plakon and Putnam’s argument was the assertion that state government subsidies for the renewable energy industry would encourage investments, create jobs and boost the economy, as Plakon alleges they do regarding the Florida film industry.
Responding quickly to the Digital Domain bankruptcy, Scott ordered an investigation into how the company received such generous state subsidies and whether the state should give away similar subsidies in the future.
Putnam’s Agriculture Department is required to produce an economic report each year to justify continuation of the renewable energy subsidies. His next report is due in early 2013.