Film Incentive Fix Stalls in State House

Wilmington, NC – Just about a year ago, Governor Mike Easley signed a state budget that authorized North Carolina's first film incentive package. The deal gave productions a 15% tax rebate on dollars spent in North Carolina on goods, services and labor.

New Hanover County Democrat Senator Julia Boseman sponsored the legislation.

Without it film would be dead. Without it Surface wouldn't have come here to film, without it I don't believe One Tree Hill would have stayed. With out it the Will Farrell film wouldn't have come to Charlotte.

As production companies examined the package, it became clear that state tax law considers the rebate taxable income and requires producers who file a return in the state to pay nearly 7% in corporate income taxes,slicing the incentive down to an 8-percent rebate.

Boseman's legislation to fix the loophole moved swiftly through the Senate this summer then landed in the House where it has been sitting for more than a month.

My understanding is that they're trying to reduce the credit from 15 - 12%. We really need the 15%. I've spoken with Rep. McComas and he supports 15%. I've spoken with Rep. Wright and he supports 15%. And I've spoken with rep. Justice and she supports 15%. So we're all going to keep fighting the fight together.

As Boseman fights to keep the 15% promised to producers last year,the state's film industry has been left figuring out how to market incentives.

It's left us a little bit in limbo.

That's Bill Arnold, director of North Carolina's Film Commission.

"While we got a bit of a bump from it in 2005 it didn't taken production companies on the west coast long to figure out that the 15% isn't really 15% and so the inquires from major production, while they're initially made, they don't seem to go anywhere this year. "

Arnold says Hollywood continues to look at North Carolina - there's a Harrison Ford action film scouting a location - and commercial production in Charlotte and the Triangle remain steady.

Between commercial television and independent film, we're holding our own at this point. But sooner or later blockbuster type features we used to get and thought were coming back is going to take a toll on us, I think.

And there's heated competition for those blockbuster productions. Georgia's film commissioner says its incentives package is attracting productions this year.

South Carolina's film commissioner Jeff Monks says while revenue generated from movie production remains less than $15-million, he's confident the now 30% rebate offered in South Carolina will boost production.

As soon as we had a good feeling of this program being passed we were out in L.A. talking with people, so we kind of primed to pump to generate that interest, unfortunately it didn't just turn on overnight.

Which begs the question: are film incentives as critical to a healthy film industry as supporters claim.

Monks thinks so. With Georgia, South Carolina and North Carolina all able to deliver coastal, historic and metropolitan landscapes, Monks says dollars and cents saved with incentives determine where a movie shoots.

But Joe Colletti with the Libertarian think tank the John Locke Foundation disagrees.

The film industry in North Carolina existed before we started giving incentives to companies. So there clearly is something attractive about the Wilmington area already that has brought people to North Carolina, to Wilmington to make films and to make television shows regardless of what kind of money they get.

Still North Carolina Film Commissioner Bill Arnold says it's frustrating to watch state lawmakers wrangle with fixing the loophole while production work travels to Georgia and South Carolina.

and New Mexico and Louisiana, and Rhode island and Connecticut even. So yeah, it's a little disconcerting.

Back in Raleigh, Senator Julia Boseman predicts severe damage to North Carolina's film industry if lawmakers go home without hammering out a fix to its incentive package.