Efforts by the state’s film industry to continue getting incentives from North Carolina taxpayers were revived Thursday when a Senate committee — and later the entire Senate — approved a new plan awarding grants to filmmakers.
The new fund, called the Film and Entertainment Grant Fund, would replace film tax credits, which are set to expire at the end of the year. “I believe that the grant program is the proper mechanism for us to be using at this time,” said Sen. Bill Rabon, R-Brunswick, who supports the proposal, during a Thursday morning committee discussion.
Later in the day, as the Senate took up the measure, Rabon reiterated his support. “It shows good faith between the legislature and the state and the film industry,” he said.
The Senate passed the bill on the first of two required votes, 38-6. A final vote in the Senate is expected on Monday. From there, it will go to the House, where its fate is uncertain. Members of the House leadership have said they had no appetite to continue the film incentives that are set to expire Dec. 31.
“I’m not sure how the House will accept it,” said Sen. Harry Brown, R-Onslow, who is the Senate’s majority leader and sponsor of the bill. “I think if they dig into this and compare it to what we did have with a tax credit with an unlimited cost associated with it, this makes more sense. It gives us a chance to see if it is working, if it makes sense for North Carolina.”
Earlier in the week, supporters of continued incentives for the film industry gathered in Raleigh to push for continued tax credits. The credits, which provide direct payments to from state taxpayers for 25 percent of spending by production companies on projects filmed in North Carolina, drained more than $84 million from state revenues over the past two fiscal years.
Rep. Susi Hamilton, D-New Hanover, who has introduced a bill extending refundable tax credits for film production expenses, held a news conference pushing the incentives. “The debate on extending the film credit is just heating up,” Hamilton said. “We will be making the case for keeping these clean, high-paying jobs in this state.”
Incentive supporters say that the film production industry provides 4,200 full-time jobs and 15,000 part-time jobs. However, those job counts have been challenged as being too high by the General Assembly’s Fiscal Research Division, the John Locke Foundation, and some media production companies.
Anthony Dowling, executive director of Eno River Media Production in Raleigh, said a more reasonable estimate is 1,500 full-time jobs. He said a group supporting a different type of incentives available to smaller production companies believe there may be 450 video production companies in the state, with a majority employing between one and three people.
“My group thinks that’s stretching it,” Dowling said of the 4,200 full-time jobs estimate circulated by backers of the current film tax credit.
John Demers, producer of “The Rusty Bucket” television series, also questioned the 15,000 part-time job figure. He it is based on the number of 1099 and W2 tax forms issued by the state Department of Revenue. Last year, Demers said, he received six 1099 or W2 forms for production work he was involved in.
“This comes back to transparency with facts and figures,” Demers said.
During floor debate Thursday, Sen. Andrew Brock, R-Davie, said he objected to the funding source for the $20 million for the film incentives — $10 million from the state’s repair and renovation fund, and $10 million from the state’s rainy day fund.
“These rainy days are coming,” Brock said. “And buildings are going to fall in on themselves because we don’t do our duty to take care of them.”
To qualify for film grants, a production company must spend at least $10 million for a feature-length film or $1 million per episode for TV series. Companies producing commercials for theatrical or television viewing would have to spend $500,000 to qualify.
Films or shows with “obscene” material, political or fundraising programming, or news programming (including weather, news, and financial content) would not be eligible. Nor would live sporting events, radio productions, talk shows, game shows, or awards shows.
If approved by both chambers of the General Assembly and signed into law by Gov. Pat McCrory, the grant program would begin Jan. 1, 2015, and expire July 1, 2020.
Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.