RALEIGH — Gov. Roy Cooper’s proposal to try to lure the film industry to make movies, TV shows, and commercials in North Carolina by returning to an abandoned tax incentives program is meeting resistance.
Rep. Chris Millis, R-Pender, said the governor’s plan “shows how inconsiderate he is toward the taxpayers of our state by proposing to utilize the power of law to force the subsidization of a single industry.”
From 2011-14, the state tried to entice production companies to film in North Carolina by providing tax credits equal to 25 percent of their qualified expenses in producing the film. Qualified expenses included goods and services purchased, compensation and wages, production-related insurance, fringe benefits, per diem expenses, and living expenses. The tax credit was refundable, meaning the production companies would get the credit amount even if the total exceeded the taxes the company paid to the state. There was no cap on the total amount of incentives going to the companies statewide. But there was a cap of $20 million per project.
When the tax credit plan expired at the end of 2014, the state replaced it with a grant program. While the grants could still go to pay many of the same production company expenses, lawmakers placed a cap on the total grants awarded. That total is $30 million for the 2016-17 fiscal year. They also put a per-project cap on grants: $9 million for a TV series, $5 million for feature films, and $250,000 for commercials.
Cooper’s film incentives plan keeps the project cap of $9 million for a TV series and $250,000 for commercials in place, but increases the project cap for feature films to $12 million. It also has no annual total cap.
Sen. Jerry Tillman, R-Randolph, said he doubted the legislature would be in the mood to revisit the film tax incentive program. Tillman co-chairs the Senate Finance Committee, which oversees tax policy.
“I think we’ve got a little bit more assurance of having a program that’s clean and that will work the way it’s intended when we do it on the grant side,” Tillman said.
Rep. Nelson Dollar, R-Wake, and senior chair of the House Appropriations Committee, said the Cooper administration will have to sell the tax writers in both chambers on the proposal.
“When you have a fixed grant amount, you know how much you’re spending,” Dollar said. Dollar noted that tax writers have made a big effort to take special tax breaks out of the tax code so they could lower the overall tax rate.
Millis said he doesn’t like either the grant program or the film tax incentives.
“It is bad enough that a majority of lawmakers in Raleigh have been using the hard-earned tax dollars of our citizens to subsidize Hollywood through a grant program, but it is far worse to re-employ one of the highest levels of corporate welfare back within state tax law that requires the state treasury to cut a check to the film industry for a tax credit above their tax liability and with no limit,” Millis said.
Millis said businesses could be forced to subsidize potential competitors who receive work associated with the targeted tax incentive.