Why the NC film industry will continue
Published January 10, 2015
by Jon Sanders, John Locke Foundation, January 9, 2015.
North Carolina's film tax incentives program has changed significantly. Formerly a refundable tax credit of 25 percent of qualifying production expenses capped at $20 million per production, the program now is a $10 million grant program.
In last year's extensive lobbying and PR campaign over the incentives, legislators and voters were repeatedly told that the fate of the entire industry here hinged upon the program continuing unchanged. "No incentives, no film industry," was how Rep. Susi Hamilton (D-New Hanover) once put it. Aaron Syrett, former commissioner of the North Carolina Film Office, put it this way: "The incentive goes away, the industry goes away."
Johnny Griffin, Director of the Wilmington Regional Film Commission, even said merely introducing a bill to change the incentives was "enough of a sign to production companies to possibly not come here."
While the presence of generous, refundable tax credits certainly made filming in North Carolina more attractive, it seemed too much to think that they were the only thing that made film in North Carolina viable. This idea was discussed in my Carolina Cronyism report on the incentives:
If North Carolina were to drop its film incentives and lower taxes and regulations across the board, how would it affect North Carolina's film industry? The industry would face competition for film production without targeted tax credits (or direct "rebate" payments). The other amenities that the state offers would still be active, however, and they would be heightened by the better overall business climate.For example, the home page of the Wilmington Regional Film Council opens with the following sales pitch:
When your location is in the Wilmington, NC region, you will find exactly what you need: experienced crew, production equipment and services, competitive incentives, a great climate, and the largest soundstage east of Los Angeles!
The Wilmington region has been an active production hub since the early 1980s and has the production infrastructure and experience to support big-budget feature films, TV series, independent films, commercials, and more. The Wilmington region accommodates on-location filming, with a variety of locations available. Let us show you our bridges, barns, small-town scenes, riverfront, shopping centers, beaches, playhouses, ocean, modern and traditional schools, marshlands, downtown buildings, turn-of-the-century architecture, college campuses, Victorian houses, fields, harbors, modern architecture, farms/farmlands, and more. For almost any type of production, you will find that Wilmington will meet your location needs.
In the reforms discussed in this section, the only change necessary would be from "competitive incentives" to "a highly competitive tax and regulatory climate."
A recent article in Triangle Business Journal had good news for the film industry here. In "EUE/Screen Gems exec: Here's why North Carolina's film community will live - incentive or no incentive," reporter Lauren K. Ohnesorge writes of her chat with Bill Vassar, executive vice president of EUE/Screen Gems. She offers a brief history of the industry in North Carolina, its ups and downs, and its future. Here is a brief snippet:
What outsiders might not understand is that the studios themselves aren't the draw to the state. It's the workforce, they argued. And that workforce, over the years, had been building."People moved here from California to be a part of it," [Vassar] says. "People would come here to do productions and they would see what a great place it was."
It's kept building, even as discussions to take away the tax credits got louder in Raleigh.
Six families moved after "Iron Man" introduced them to the state last year, he says.
"In this day and age, the industry is so transient that people know that if they're good they'll end up working anywhere," he says.
EUE/Screen Gems has been building its complex. Today, the studio has 10 stages with 150,000 square-feet of column-free shooting space. ...
But, over the summer, North Carolina eliminated the film incentive. Vassar wasn't surprised. Legislators have been publicly questioning the incentives for years.
But Vassar says it won't mean the death of film in North Carolina.
"We have to accept now that any sort of tax incentive for the industry in this state is over and we have to work with the legislature," he says. "We're getting encouraging signs from people in Raleigh that they want to work with the industry."
He's getting encouraging signs, too, from productions. While "Homeland" left Charlotte, some television shows are staying in the state, such as "Sleepy Hollow" and "Under the Dome," both of which have plans to shoot at Screen Gems in 2015.
It is clear, again, that North Carolina has a lot to offer film production companies. We're not just a pretty refund.
January 10, 2015 at 10:35 am
Norm Kelly says:
Let's look at who was claiming film was dead in NC if the incentives went away. Industry insiders who benefit from the bribes. Really? Who would imagine that those who benefit from a give-away program would want to keep the gravy-train going? This is unheard of. This has NEVER happened before in the history of the world! Or that's what these people expect us to believe. Who else supported, defended, wanted to increase/improve/extend these schemes? Lib pols, that's who! Why would lib pols want to pay anyone in the film industry to do business here? Probably a number of reason. One being that they get to pay their allies for working here. Two being that if pols get to play games with money, they are in control. If pols don't get to play games with money, they have no power/control. What's a major player in every scheme of lib pols? Simple: power, control, authority. Virtually everything lib pols have done, in this state, most other states, and certainly nationally, since the turn of the century has been to increase their power/control/authority over groups of people. The incentives programs, as they like to label it, are no more than their ability to play games with other peoples money and reward their allies.
What's the alternative to allowing libs to play favorites, play games with our money, and most importantly be honest with citizens of the state? Let me quote the article cuz it's stated so clearly: 'lower taxes and regulations across the board'. While this is a logical plan, a workable plan, an honest plan, it does not fit the lib narrative. Lowering taxes for everyone takes power away from pols. Lowering taxes for everyone removes the ability of pols to play games; they think it's their money and they get to spend it how they want, regardless of how much it negatively impacts anyone else. Reducing regulation? Both reducing taxes and reducing regulation are antithesis to the lib playbook. Every lib knows that without extensive, massive, regulation, the state will fall into chaos and anarchy will rule. Without extensive regulation, people will die. Without extensive regulation, environmental disaster will occur.
The best solution for the state, for every business in the state, and for every resident (legal and illegal) of the state is to eliminate ALL give-away programs, ALL crony capitalism schemes and take ALL politicians out of the business world. They are government hacks and not business people, so why would ANYONE want them to be in control of business? Pols have proven they are incapable of managing the budget, which is a major responsibility of theirs, so why would we expect them to be able to manage businesses and regulation of businesses. Take a look at coal ash problems. Did the lib pols, for nearly 100 years, not implement sufficient environmental regulations to control these disasters-in-waiting? Of course they did. The problem was that they CHOSE not to implement the regulations on the books; they played games with the regulations because it put the government hacks in a position of power & control. What's the typical lib response to the coal ash disaster that they created? MORE REGULATION! What a foolish response, but it's the typical politician response and almost always the lib pol response.
Eliminating every business incentive (read give-away scheme) is the best way fix the problem. This would allow intelligent politicians to revamp the entire state tax code to treat all residents fairly, to treat all businesses fairly, and to actually level the playing field for everyone. The challenge with this is the false narrative generated by socialists. They want to level the playing field according to their own rules. Rules that never create a level playing field, but reinforce the lib schemes of creating power, control, reward for allies and those who vote for libs. A major stumbling block for all lib pols is fairness. Remember, it's lib pols that tell us that private business does NOT create jobs. Their words, not mine! This attitude permeates every single thing libs do, every scheme they develop, every tax-payer subsidized reward program they come up with. A better overall business environment is good for the state, good for the economy, good for residents. The problem is that it's BAD for lib pols, and the agencies they create.
I find it extremely interesting that the Wilmington Regional Film Council web page lists incentives as the 4th item in the list of benefits. Equipment & services may be listed together but it really is 2 items, so give-away schemes actually comes in 4th place. If it were such a big deal, such a major player in the scheme, wouldn't it be more prominent. And the rest of the info extracted from that web page and included in the article highlights all the other (valid) reasons for film to be here, not the give-away programs. So even the advocates of continuing to pay out these rewards play down this aspect of the film industry.
Let's start with the film industry incentives. Then let's have the state legislature go through the rest of the budget and start eliminating every other give-away, reward, bribe scheme that has developed over the years. The more give-aways that are eliminated, the better it will be for EVERY citizen. And then the state needs to start going through business regulations and eliminate the nonsense ones. Which would encompass a very large number of them. I'll bet that coal ash pond regulations could fit on one single-spaced type written page. Easy to understand. Easy to implement. Easy to regulate. Easy to know when the regulation has been violated. More than likely this would apply to most government regulations.
The time to start removing regulation and eliminating 'incentives' is NOW. If not now, when?
