Film tax credits necessary

Editorial by Winston-Salem Journal, December 21, 2013.

Gov. Pat McCrory and state officials last week celebrated the job opportunities and near-record economic impact generated by the state’s film industry this year. But there was something floating in the pool at this party that was politely ignored.

That something is the pending demise of the state’s tax credits for film production companies – some of the most generous in the country – that industry observers say are responsible for much of the activity the state has experienced.

“I'm hoping that our state legislators recognize how important this lucrative and highly competitive business is to the state’s economy, and this region’s economy, and extend the film incentive in its current form,” Rebecca Clark, executive director of the N.C. Piedmont Triad Film Commission, told the Journal’s Richard Craver.

We do, too. A tax credit of 25 percent on in-state spending up to $20 million by film production companies no doubt contributed to the $254 million economic impact in 2013 cited by state officials – the second-highest level in history. Production companies also receive refunds if the value of their credit is more than their tax liability.

Production companies created 4,000 crew jobs and 25,000 other opportunities, such as film extras, the statement from McCrory’s office said. There were 5,700 film production days in more than 30 counties, including Forsyth County.

“The film industry continues to have a major impact on the state’s economy and provide job opportunities for thousands of North Carolinians,” said Sharon Decker, the state’s Commerce secretary.

Among the productions this year were two feature films — “The Ultimate Life” and “You Are Here” — that were filmed in the Triad. Television shows produced in the state include “Homeland,” “Sleepy Hollow,” “Under the Dome,” “Banshee” and “Eastbound and Down.”

Film industry observers say eliminating the tax incentive would mean the end of filming in North Carolina. Other states, including South Carolina and Georgia, offer incentives. The News & Observer of Raleigh reported earlier this year that the South Carolina legislature fast-tracked an incentives bill to ensure a TV series continued filming in Charleston. And New Mexico, which had a generous tax incentive similar to North Carolina’s, cut back its program and saw a drop in filming. As a result the governor and legislators came back with an even larger tax incentive.

Opponents of the tax credit say the film industry generates a limited number of full-time jobs. In addition, ending the tax credit was a trade-off for lowering corporate income taxes, which they believe will lead to broader job creation in the state.

We don’t disagree with tax reform in general. But the film industry is unique and part of the economic and social fabric of North Carolina. It’s in our DNA. We’re fortunate in Winston-Salem to be the home of one of the most prestigious schools of filmmaking in the country, the School of Filmmaking at the UNC School of the Arts.

The tax credits “are vitally important to the success of our alumni, and our ability to recruit the most promising students and faculty,” Susan Ruskin, the dean of the School of Filmmaking, told the Journal.

She’s right. We encourage legislators and the governor to reconsider the decision to eliminate the tax credit and instead extend it in a form that keeps North Carolina in the filmmaking game.