For Tammy Hopkins, debate in Raleigh over film tax incentives isn’t just impacting her Brevard-based job.
It’s putting a couple of projects on pause.
The longtime actor, filmmaker and film liaison says she’s recently received calls from two film production leaders who want to bring their movies to North Carolina. But both are also waiting to find out the fate of the 25 percent refundable tax credit, set to expire at the end of this year.
“They are waiting to see what happens,” Hopkins, with Film Brevard, said, noting that one production is deciding between Virginia and North Carolina; the other between Georgia and North Carolina.
“We are the top choice, but they will go” elsewhere if the incentives disappear.
Incentive changes are expected to be part of the lawmakers’ upcoming budget negotiations to hammer out difference between the House and Senate plans.
The current law gives a 25 percent refund to productions that spend more than $250,000, with a payout cap of $20 million for most productions and no monetary limit on TV series.
In June, the Senate approved a bill that would replace the nearly decade-old tax credit by creating a fund to award grants to film companies that come to the state.
It would also trim state spending to promote films from last year’s $61 million down to no more than $20 million. The House budget included similar language.
Lawmakers aim to have a budget proposal in July.
In May, Gov. Pat McCrory proposed a cap on the payout at $6 million and would narrow the types of qualifying productions — removing talk shows and live sporting events — and substitute the 25 percent credit with tax breaks more closely related to film-related jobs and specific expenses. For example, a production company could receive a credit equal to employee income tax withholding payments, capped at a certain level. Like the current incentive, the proposal would pay out to companies even beyond what they paid in taxes.
Films made in North Carolina during the last fiscal year qualified for $61 million in rebates, according to state government figures.
Some critics have called the payments too rich when calculated against the number of jobs the industry creates and wanted the credit to expire. Others say the current incentives amended in 2010 should be made permanent because they’ve helped revive North Carolina’s film industry, which, they say, boosts business across industries, from caterers feeding the cast to gas stations fueling the crew trucks.
Incentives for film companies have bipartisan support among Buncombe lawmakers who responded to questions last week.
Rep. Tim Moffitt and Sen. Tom Apodaca, both Republicans, could not be reached.
Rep. Nathan Ramsey, R-Fairview, said, “I certainly think we need to be competitive with out neighboring states on film incentives.” He fears more business will go to places like Georgia if North Carolina can’t compete.
He said the incentive regulations passing the House keep them alive for negotiation during the legislative short session that is expected to end in July.
“It is my hope we reach a compromise soon and a good film tax incentive to go forward,” he said. “I don’t want to completely let it go away.”
But some legislators, he noted, are opposed to all tax credits.
Sen. Terry Van Duyn, D-Asheville, said the incentive programs works so she questions why it should end.
She noted “The Hunger Games,” which was filmed in Western North Carolina in 2011, brought $60 million to the local economy and, she says, it is still bring people here.
Van Duyn said film jobs are not temporary, as some critics of the incentives have said. She said people from electricians to location scouts are finding year-round work.
“We need to make sure the taxpayer is getting their money’s worth, but so far the impact on our economy has been 10 times the amount of the tax credits, and 4,000 permanent jobs have been created,” she said.
Van Duyn said switching to a grant program injects uncertainty to the production planning process, especially for big projects.
“TV and film production companies can take their work elsewhere, and they will,” she said.
Rep. Susan Fisher, D-Asheville, said the state Commerce Department is trying to put “a good face” on the grant proposal.
“We know that the film industry in North Carolina is strong and it means jobs for our people,” she said. “I have heard, and continue to hear, from many of my local constituents that they want the film incentives preserved in our state. Hopefully the Senate and House conferees will be listening as well.”
Amanda Baranski, director of the Western North Carolina Film Commission, says the agency has assisted seven projects since 2011 that have taken advantage of the tax incentive package.
The most well-known is the blockbuster “The Hunger Games,” released in 2012, but also includes “The World Made Straight,” an adaptation of a book by WNC-based author Ron Rash, as well as horror movie “Honeymoon,” which is being released this fall. Both titles were shot last year.
“One of the things we have seen with the passage of the current legislation is that it has created a positive business atmosphere for film in North Carolina,” said Scott Hamilton, president and CEO of AdvantageWest, a regional economic development group that operates the Western North Carolina Film Commission.
When the incentives were passed, it made North Carolina competitive, he noted. About 40 states have film incentives.
“When ‘The Hunger Games’ came around, we were really pleased and honored,” Hamilton said. “If the tax credit had not been passed at that time, they would not have looked at North Carolina.”
Baranski said the commission is “seeing the fruits of all of our labor with ‘The Hunger Games,’” noting a “forward momentum” when it comes to projects and inquiries.
“In this business, word-of-mouth is very important,” Hamilton said.
In 2012, the commission assisted with the completion of 14 projects; in 2014, it has helped with the 13 projects.
“Already in the first two quarters, we almost have what we did for the entire year of 2012,” she said.
The incentives, Hamilton said, “keep North Carolina competitive” and helps it “maintain its film-friendly atmosphere.”
Hamilton noted that “it’s a self-funded incentive,” meaning it is not paid until the film production company spends the threshold amount of money in North Carolina.
“It is coming back directly from what they have spent in North Carolina,” he said.
Baranski also noted that a state agency audits these spending claims.
“It’s very important that they have to come here, spend the money and audit the process,” she said.
The nonpartisan Tax Foundation, a Washington-based think tank, says the record year for film incentives among states was 2010, when 40 offered a combined $1.4 billion in payments.
Since then, the group said, states have started dropping the programs amid concerns they don’t really work.
In 2011, eight states dropped, eliminated or did not fund the programs. Nine states were considering scaling back programs. Others ramped up efforts. Seven states continued efforts and some, like Utah, made them more generous.
A more recent survey was not available from the center, said Tax Foundation economist Scott Drenkard.
The foundation, generally, doesn’t like film incentives, because they don’t pay for themselves, Drenkard said, and the jobs they create are temporary.
Massachusetts recently released a report showing the $14.6 million in tax credits given to filmmakers in 2010 generated just $800,000 in new state revenue, according to the foundation.
Taxpayers, Drenkard said, have to make up the difference between credits and revenue.
“I’d rather see that money go to something that increases competitiveness overall like lowering the corporate tax rates,” he said.
Beau Menetre, one of the partners of Polk County Film Initiative, the impact of the incentives expiring or becoming a grant plan is simple.
“The unfortunate side effect is that people will pack up and go to Georgia or Louisiana,” he said. “It’s just the reality.”
Menetre moved to Tryon about a year ago from Atlanta, seeking a better quality of life for his family. He launched Polk County Film Initiative with Kirk Gollwitzer and Lavin Cuddihee in January.
The organization aims to help communities in Polk County become “camera-ready,” he said.
“We are the middle man,” he said. “We represent the community, and we interact directly with the film company and production that is in town.”
Menetre saw the success of a film incentives in Georgia. One example: A small Georgia town transformed from no more than a truck stop into a tourist destination because it was a setting for the hit AMC show “The Walking Dead.”
Hamilton said Georgia has one of the most innovative film incentives packages for productions that spend at least $500,000. It starts with a 20 percent tax credit, but more tax credits can be added on if the final product includes a promotional logo for the state, for instance.
Opportunities for local actors, crew and filmmakers to work with larger film productions also offers creative currency, Menetre said.
“As far as local talent, the opportunity to be an extra, to see the behind-the-scenes is really important,” he said.
Hopkins has turned “The Hunger Games” into a money-making venture for her — even four years after the film production left.
She co-launched an unofficial fan tour guide and “Hunger Games” experience, which takes diehards into Dupont State Forest, for example, which was prominently featured in the first installment of the successful series.
“We started our ‘Hunger Games’ experience in April 2012,” she said, “and for two years we’ve been sold out.”
They’ve guided people from 48 states and eight countries to the spots where main character Katniss swam in a pool, or love interest Peeta disguised himself on a riverbank rock face.
As an actor and filmmaker, she also seen the lasting impact of major motion films in North Carolina. These companies often hirer local makeup artists or camera operators, she said. These jobs help artists and filmmakers stay in North Carolina, she said.
“I can think of 16 friends in the Asheville and Hendersonville areas,” she said, “who are not having to travel out of state. They are able to stay here because (these production companies) are hiring.”
As a film liaison, she said she’s also watched, firsthand, visiting film crew spend money at local businesses. “A ran a guy (working on a movie) to the Dollar Store and he spent $300 on just hair and makeup supplies in five minutes,” she said.
Another example: A television crew needed to feed 50 crew members. That meant a local eatery sold 100 sandwiches. She recently saw three crew members buying toys at a local shop, too.
Some of these visiting spenders become permanent North Carolina residents, she said.
“We are also seeing top professionals from film and music retire here,” Hopkins added.
The Associated Press contributed to this report.
Economic Impact of the North Carolina Motion Picture and Television Industry
These numbers are the results of “A Supply Chain Study of the Economic Impact of the North Carolina Motion Picture & Television Industry,” released this spring.
Robert Handfield, a professor with the N.C. State Poole College of Management, conducted the study, which was commissioned by a group of film commissions from across the state and the Motion Picture Association of America.
• The the film and television industry in North Carolina from 2007-12 is a $1.02 billion business. The cost of the credit was $112 million over the same period of time. Accordingly, the study says, the result is for every dollar of the credit issued, the industry spends $9.11 within the state.
• The projected tax revenue collected as a result of film and television productions from 2007-2012 is $170,330,307.
• For example, in 2012, the production tax incentive contributed a net positive cash flow of $25.3 million for North Carolina. This is the difference between the 2012 cost of the incentive — $60.14 million — and tax revenue collected by state and local government, which was $85.4 million.
• The incentive has allowed North Carolina to maintain a permanent crew base, providing 4,259 jobs at an average wage of $66,000, which is over a third higher than the national average for private industry ($41,750), the study says.
• “Using predictive modeling forecasts, the study finds that if the production incentive is allowed to expire, 4,046 jobs would be eliminated and the industry’s tax contribution would shrink to $4.3 million,” the study says. The research also predicts a loss of more than $164 million in business revenue to more than 1,000 small businesses in North Carolina.
Amount spent by the film and television industry within North Carolina for every dollar of the credit issued
Jobs provided by the tax incentive at an average wage of $66,000, allowing North Carolina to maintain a permanent crew base
Amount the industry’s tax contribution would shrink to if the production incentive is allowed to expire. The research also predicts a loss of more than $164 million in business revenue to more than 1,000 small businesses in North Carolina.
Projected tax revenue collected as a result of film and television productions from 2007-12
Amount the film and television industry brought to North Carolina from 2007-12
By Carol Motsinger and Jon Ostendorff