Thursday, March 17, 2011

Do NC Film Incentives Make Sense?

Let's take a look at how much the state is taking in vs. paying out.

In 2007, when the state offered a 15 percent incentive, film companies’ direct spending in the state totaled $160 million. Of that, $117 million was qualified expenses – items purchased in-state that production companies were allowed get a rebate on. And the state paid out $17.5 million in incentive money.
So, of $160M in spending, I don't see how the state could be getting more than 10% of that in sales tax, income tax of employees, etc.

In short, it seems like the state would be losing money on this.

This seems to be a recurring theme with "film incentives."  There is no state that offers a larger film incentive than Michigan that I know of.

They offer a 42% refund or tax credit on direct production costs in Michigan.  Spend $10 making a movie and you could get $4.2M back.

And it makes sense that the number of productions have boomed.  129 movies have been filmed there since 2008.

But the incentive has lost money for the state, massive amounts of it.  The State Senate Fiscal Agency stated that the state, which is in terrible financial shape in the union, gave out $150M in credits during a period when it took in $26.6M from filmmakers.

Can we compete with that incentive?  Well, if we do, it will only lose us money just like it's lost money for Michigan.

The general consensus seems to be that film incentives are responsible for the recent growth in the Wilmington film industry.

Firstly, it seems as if most of the new productions are 3D productions.  I simply wonder if Screen Gems has updated their studio to make it more attractive to producers, or if the current filmmaking environment (ie a push to 3D) makes a larger studio like Screen Gems more attractive.

Secondly, I question these job creation numbers.  The article states that 14,000 jobs will be created in the film industry this year in NC. 

Well, are these full-time jobs, or is a gaffer position on each new production being counted as a 'job?'  For instance, 10 productions could come to town and each production could offer a PA position.  Well, this might be counted as 10 new jobs even though the same person could be filling the same position on each production, meaning that only one real, full-time job was created.

Secondly, we need to look at the "jobs created" by the "incentives."  How many additional jobs are created by these incentives?  If it's anything like the federal stimulus bill, I'm guessing we're not getting our money's worth.

If government officials want to give away taxpayer money to film productions, I think they still have a long way to go to prove its effectiveness.

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