North Carolina lawmakers are haggling over how – and whether -- to preserve a now-controversial tax credit for the film industry.
It’s a program that was beefed up in 2010 to be more competitive with other states. Just last year, in-state spending by film companies exceeded $250 million. But leadership in Raleigh is divided over whether the tax breaks deliver a net benefit to the state.
Among members of the GOP majority, there is talk of restructuring incentives – with details yet to be released. Some members of the General Assembly are eager to let them expire at the end of this year.
With Part Two of our series on film in Wilmington, a trio of industry insiders explore the likely Wilmington landscape.
“The Conjuring, Iron Man III, We’re the Millers…”
Framed posters of films shot in the Wilmington area cover the walls of Johnny Griffin’s office at the Wilmington Regional Film Commission. Griffin is the Commission’s Director, and his office sits on the EUE / Screen Gems lot.
There’s virtually no argument in southeastern North Carolina about whether incentives are beneficial to the region; the debate hinges on whether the economic advantages extend to the state as a whole.
Thirty-eight other states, Puerto Rico, and countries around the globe currently offer tax breaks. Producers can find incentives from New Zealand and Australia to Uruguay to Lithuania to Mexico. The popularity of the tax breaks means the business has fundamentally changed, says Griffin. No incentive means no film.
"We know our clients and we know the way they do business and we know the way they work. And when our clients tell us that the only states that we do business in are states that have incentives -- that’s the number one deciding factor first.
"So they lay all those out and they say, 'okay, we’ve got five places we can make this movie.'
"Then from there, 'now what are the locations that are required?'
"We know that if the incentive goes away, then basically we come off the list and we are no longer a place to be considered."
Craig Fincannon is a Wilmington-based casting director with offices in Atlanta and New Orleans – two cities enjoying vigorous production -- thanks in large part to robust state incentive programs.
"There are employees at each of the studios now who get paid a lot of money and all they do is compare the world’s incentives. That’s all they do. They take every budget and they run it through computer programs to compare its impact at any incentive around the world."
Bill Vassar is Executive Vice President of EUE / Screen Gems in Wilmington. He’s generally optimistic about the outcome of the short session but is hardly a passive observer.
According to Vassar, Secretary of Commerce Sharon Decker, who has been publicly supportive of some form of tax incentive for film, has asked film industry representatives to offer proposals that would grow the industry in the state.
"We’ve provided her with a number of different ways that could happen. And we know that she’s made recommendations to the Governor. We’ll see if the Governor puts that into his plan.
"There are very few elected officials in this state that want to see the film industry leave. They understand that it’s important to economy – that there are a lot of people here who make their living from it."
Representative Susi Hamilton, a New Hanover County Democrat, introduced a bill yesterday that would repeal the sunset, or expiration date, on the current film incentive package. The proposal, co-sponsored by Republican Representatives Ted Davis and Frank Iler of New Hanover and Brunswick Counties, and Representative Betsy Carney, a Mecklenburg County Democrat, would also increase what productions must spend to qualify for the tax credit from $250,000 to $300,000.
Regardless of the outcome, though, Film Commission Director Griffin says North Carolina has missed this year’s TV season. That’s because the short session that started earlier this month is the only chance to do something about incentives before they expire in December – which is the same time-frame that most TV series get their green lights.
"Most television companies will tell you that unless they can run a budget analysis two or three years into the future, they can’t land somewhere. They can't go somewhere… If there’s a hope that there’s going to be a season two or season three, then they don’t want to take the chance to come here and set up, build sets, establish locations, establish a look, only to then, at the end of the first year potentially have the incentive go away and now have to pack up the series and move it somewhere else."
EUE / Screen Gems’ Bill Vassar, though, isn’t worried about the television traffic on the lot.
"Yes, there are television shows that perhaps would have been green-lit for North Carolina. We have two very popular shows here right now: Under the Dome for CBS and Fox’s Sleepy Hollow. Both of them are talking third season."
With the recent addition of Secrets & Lies, an ABC pilot that’s becoming a series, and FX’s Here and Now – another pilot…
"We think television’s pretty safe as long as the incentives are there to support it."
But what if the incentive died in North Carolina?
Craig Fincannon says even that wouldn’t cause him to move his home base out of Wilmington.
"You’re going to find me in this office being very sad about the fact that an awful lot of my friends are in New Orleans and in Atlanta. Because the crew will have to follow the work… And I will have scores, if not hundreds, of extremely close friends who will not be sleeping in their beds at night."
I ask Johnny Griffin to speculate on how the atmosphere at the busy Screen Gems lot might change if the incentive goes away. I wait, expecting him to describe a quieter place, less bustle, maybe a sound stage or two in use. That’s not what he says.
"I would say eventually it starts off as being empty. And then from there it’s up to the owners as to what they want to do with it. It’s a piece of property that they’ve invested in at that point. And they have to decide how to get their best return out of that piece of property. But, you know, it certainly can’t be a film studio unless you’re making movies here and television shows."
EUE / Screen Gems’ Bill Vassar won’t even entertain discussion about the prospect of incentives evaporating.
"We’re not giving up. We’ve had some very good feedback from people in the House that the present refundable tax credit has some legs. So we’re going to continue to work for it…"
With powerful members of the state House and Senate, the Governor, and members of the Commerce Department interested in strengthening film in the state, Vassar says he expects a competitive package to pass.
Casting Director Craig Fincannon:
"At the end of the day, the industry has America right where they want ‘em. They have them competing for their work. And you either decide to play the game or not. "