North Carolina’s grant program offers cash rebates for up to 25% of the qualified expenses of television shows and films, provided they hit minimum spending requirements. The grants don’t provide up-front capital; instead, they’re dispersed after post-production, following a state audit to confirm in-state spending. In its current incarnation, the film grant program provides reliable, recurring funding, and has helped support the film industry, particularly in southeastern North Carolina.
Over the last week, WHQR has received a number of messages and questions from residents and people who work in the film industry, alarmed at rumors that the state’s film incentive program is “out of money,” potentially through July 1, 2029.
It’s been difficult to get on-the-record comment about where the program is, and whether these fears are valid.
Johnny Griffin, director of the Wilmington Regional Film Commission, Inc., told WHQR that with the budget’s recent passage, “We're just waiting for sort of final definitions and clarifications and all that stuff. So we really don't have anything to say, right now.”
However, state officials familiar with the grant program, who agreed to discuss the situaiton on background, said the issue isn’t the recent budget — it is, to a certain extent, a symptom of how the film grant works and how successful it's been.
A quick history: for years, many Republicans in Raleigh opposed the existing film tax credit program, for a variety of reasons. In 2014, Republicans shifted to a grant system, which made drastic cuts to the program’s financial output — leading to pushback and protests (a lot of “Film = Jobs” bumper stickers started popping up around then). But attitudes in Raleigh changed, and by 2018 the grant program had been beefed up — and given recurring funding. The state guaranteed $31 million in annual funding, and unlike many of the state's other grants, anything left at the end of the year rolled over into a pool of funding that could be used in subsequent years.
For a variety of reasons, the grant program, administered by the state’s Department of Commerce, didn’t spend the full $31 million in the four years after 2018. Some have pointed to competition from other states, especially Louisiana and Georgia, or lingering economic backlash to Republicans’ unpopular HB ‘bathroom bill’ in 2016. There were also severe disruptions from the Covid pandemic.
According to public records from the North Carolina Film Office, in fiscal years ending in 2019 through 2021, the state put out $14 million, $20 million, and $22 million — significant funding, but far below the annual appropriation, or pre-2014 incentive levels.
However, by the 2021-2022 fiscal year, things were picking up, with nearly $38 million in grants. The following year, the state distributed almost three times the annual appropriation, with $92.6 million in grants. Things cooled off, possibly due in part to the writers' strike, but North Carolina still put out $41 million in grants in the 23-24 fiscal year, and nearly $35 million in the 24-25 fiscal year. Those grants were possible because the state still had plenty of money in its funding pool, which was “robust,” as one state official put it, because of rollover from years of coming in under the annual appropriation level.
The state film office hasn’t published grant totals for the 25-26 fiscal year that just ended, but at the end of the calendar year the state’s film industry was looking healthy, according to the Commerce Department.
All of that means that the state’s funding pool is now essentially zeroed out, according to state officials authorized to discuss the issue on background.
That doesn’t mean that the grant program is unfunded — it still received $31 million in the recent state budget, and will continue to receive that annually in future years.
Republican State Senator Michael Lee, who championed the 2018 update to the grant program which made the funding recurring, told WHQR, “I made it recurring so that they could count on that money every year, and so they could budget using that.”
Lee said the grant program is only in trouble if they’ve overcommitted.
“The only way they can run out of money is if they spend more than what they get, right? So, let's say they committed $100 million in grants next year, and they only had $35 million in the account, then [the grant program] would have a problem,” Lee said.
State officials confirmed that all current grant commitments are backed by existing funds, so reneging on the grants is not a problem.
The issue, officials and others familiar with the industry told WHQR, is that production companies approaching the state for a new grant might have to wait until there’s enough funding to disburse.
The most dire predictions are pegged to the beginning of the 2029-2030 fiscal year — July 1, 2029. State officials said that sounded a bit “doom and gloom,” but confirmed new grant distributions wouldn’t be happening this fiscal year, and would be at least partially limited next year.
Again, the distributions happen after a show or series wraps and the in-state expenditures are audited; so, in theory, a production wouldn't necessarily have to wait until then to get started.
Another concern was recent increases to the caps on individual grants. As the Greater Wilmington Business Journal reported, the recent budget nearly tripled the maximum grant for a feature film from $7 million to $20 million, and bumps the cap for a TV or scripted streaming show from $15 million to $25 million for each season.
In and of itself, that’s good news for the industry, but some have expressed concerns to WHQR that — now that the state’s pool of reserve grant funding has been drained — the higher caps mean the state will burn through its annual appropriation. Some have suggested the state should provide additional one-time funding to compensate. Governor Josh Stein’s proposed budget suggested $10 million in additional one-time funding (and, back in 2021, Senator Lee filed a bill to provide $34 million in one-time funding, although the legislation died in committee).
While the budget has passed into law, it’s possible lawmakers could revisit the issue as they briefly return to session at the end of this month. The budget, which was negotiated rapidly, likely needs technical corrections — but it’s not clear if a major additional nonrecurring appropriation would make the cut.
