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Expanded film tax credit bill passes state Senate, bolstering hopes for industry

by Keith Barber

Expanded film tax credit bill passes state Senate, bolstering hopes for industry

Perhaps it was losing Hannah Montana to Georgia that spurred North Carolina lawmakers to action, but on June 24, the NC Senate passed SB 943 on its third reading by a 27-17 vote. The measure would increase the state’s film tax credit from 15 percent to 25 percent on film and television productions that spend at least $250,000 with a cap of $7.5 million per production. The bill, sponsored by Linda Garrou (D-Forsyth), now goes to the NC House for approval. Walt Disney’s decision to relocate the Miley Cyrus film, The Last Song, from Wilmington to Georgia in April represents the latest in a string of recent losses for the state’s film industry. A study commissioned by the NC Film Office reveals that film industry spending in the state hit $228 million in 2007, but is expected to fall below $90 million this year. The reason is simple — states like Georgia and Louisiana offer better film incentives, said Piedmont Film Commission Director Rebecca Clark. “In the late 1990s, we began losing projects to Canada. That’s what started this film incentive race,” Clark said. “All the TV movies were going up to Canada, then Louisiana started offering tax incentives in 2001. That affected us in the early part of the decade but then other states started catching on. The film industry is just like any other business — they’re going to go to states that want their business and their dollars.” The 2005 General Assembly passed legislation that offers a tax credit of 15 percent for film and television productions that meet the spending threshold of $250,000 with a cap of $7.5 million. A 2008 amendment to the bill allows some “above the line” expenses greater than $1 million, such as salaries of A-list actors and production insurance. Clark lauded US Senator Kay Hagan, who won her current office after serving in the NC Senate, for her efforts to lower the qualifying threshold from $1 million to $250,000. “I thought it was important we support independent films as well as studio films. They all create publicity, jobs and bring money into the region,” Clark said. More importantly, industry members argue, film projects coming to the region help keep talented film professionals in the area. Clark said the Piedmont Triad area had one of its best years for film productions in 2007, which she credited to the General Assembly’s action in 2005. “In 2007, we had 11 feature films shoot in the Piedmont Triad. They ranged from extremely low-budget all the way up to Leatherheads and Goodbye Solo,” Clark said. “It was such a busy year because our crew base was working constantly and that’s what I would like to see happen.” In 2008, the area’s film industry suffered a down year due to other neighboring states passing film tax incentives of 30 percent or greater, Clark said. The ripple effect is a “brain drain” at the area’s film schools. “Over the past five years, only 16 percent of the graduates from the School of the Arts are staying in the state,” Clark said. “And when you consider all the other film programs in the state — all these creative talented people we have leaving the state immediately after graduation. I’m personally committed to turning that around.” However, not everyone is thrilled about the increase in the state’s film tax credit. NC Sen. Phil Berger (R-Rockingham) said he voted against SB 943 because of the state’s current budget crunch. “We’re in the middle of a budget crisis, and we’re talking about increasing this giveaway by a significant amount of money when we don’t have enough money to pay for the programs we already have,” Berger said. “When you’re elected, you’ve got to make some hard choices. If you’re setting a priority, is that more important?” Berger said the state government shouldn’t be in the business of picking winners and losers by deciding which industries get a tax incentive. Wilmington Mayor Bill Saffo praised the legislature’s action, saying the passage of the bill makes sense because it protects the millions of dollars the state has invested in film industry infrastructure. Film schools at UNC School of the Arts in Winston-Salem, Greensboro’s UNCG and UNC-Wilmington are producing talented graduates every year, but if the state’s film industry cannot offer these young people work, they will relocate to find better opportunities, Saffo said. Saffo pointed to the Miley Cyrus film as a great example of revenue the state is losing because its film tax credit isn’t competitive. The film’s $17 million budget would’ve translated to $11 million going directly into the local economy. “When North Carolina needs highpaying, clean jobs, to lose these films to other states because of film incentive policies would be a tragedy,” Saffo said.

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