Sweeten incentive for films, some say
Posted on Sunday, May 6, 2007
Joe Glass wheeled his Dodge Intrepid around the parking lot at the Grande Maumelle Sailing Club, looking for a red sailboat that a movie producer could use to set a lake scene.
Glass grew animated as he peered through the windshield toward a small yacht with a red hull docked at a pier on Lake Maumelle. His goal, he said, was to find a boat and lure the filmmakers to Arkansas for a visit.
“If they’re coming in and we’ve got the sailboat, we’re all good,” said Glass, chief and sole employee of the state Department of Economic Development’s film office.
Glass, a sprightly, graybearded f ilm industry veteran, scouts locations, refers producers to local companies that can support film crews and, importantly, briefs producers on incentive subsidies the state offers film production companies.
“Every little location in this state can be the next location for the next big film,” he said. “The next craggy face could be the face Martin Scorsese says tells the story.” Arkansas boasts seemingly endless stretches of farmland, the rolling Ozark and Ouachita mountains and the rich culture of the Mississippi Delta. The state also has a relatively inexpensive but hardworking labor force, Glass said.
Yet when producers want to shoot in the South, they increasingly favor Louisiana, where 23 feature films were shot in 2005 to Arkansas’ one, according to a report by the Motion Picture Association of America. That’s because Louisiana offers filmmakers a tax incentive that’s far more generous than the Natural State’s, Arkansas economic development officials say.
Arkansas refunds a company’s sales and use tax if the company spends $ 500, 000 within six months, or $ 1 million within 12 months. The rate is 6 percent, plus additional city and county sales taxes.
Louisiana, cited by the film industry as the Southern state to emulate in terms of subsidies, offers a tax credit equal to 25 percent of a studio’s in-state spending, and an additional 10 percent of Louisiana residents ’ payroll.
If Arkansas hopes to win more film productions and the economic boost they bring — as well as sprout an industry infrastructure of film editors, camera operators, specialized set builders, electricians and other film crewmen — the state must offer richer subsidies, economic development officials and people in the film industry say.
“It’s useless,” said Jeff Begun of Arkansas’ subsidy. “It’s not enough money to make anybody interested. Why would you go to Arkansas when you can go to Louisiana and get 25 percent ?” Begun, of Axium Entertainment, a Los Angeles payroll services company, studies state film incentives.
Unlike large manufacturers, film production companies don’t need costly physical plants, don’t generate pollution and spend much of their money locally, said Kathy Deck, director of the Center for Business and Economic Research at the Sam M. Walton College of Business at the University of Arkansas at Fayetteville. “The requirements aren’t anything like a new Toyota plant,” Deck said. “The bar is fairly low for having different parts of film production done in your area.” SWEETENING THE DEAL Attempts to sweeten the state’s incentive program failed during this year’s legislative session and the 2005 session. People familiar with the proposed legislation said that they couldn’t complete negotiations on the bill fast enough to get it included in Gov. Mike Beebe’s budget proposal. The Beebe administration, meanwhile, questions whether a tax incentive is the best way to entice film producers.
This session, the Legislature enacted nearly $ 200 million in tax cuts, and Beebe said last week that left no money for breaks for the film industry. Beebe said he recognizes that motion-picture production would be “an arrow in the quiver” of economic development. But before he can commit to supporting production incentives, he would need a guarantee that the benefits to the state economy will outweigh the subsidies’ cost. “If it is a good deal for the state of Arkansas,” he said, “then we have to, you bet, compete with the other states.” All of the states surrounding Arkansas except Texas offer heftier subsidies, some recently enacted.
Since the Louisiana Legislature first enacted film incentives in 2002, the economic impact of film industry spending in the state soared from $ 7. 5 million in 2003 to $ 344 million in 2005, according to a report submitted to the Louisiana Department of Economic Development by Economics Research Associates, a Chicago firm. The increase in movie industry spending created more than 13, 000 jobs by 2005, according to the research. “There’s no question that [a subsidy ] brings in production,” Begun said. “If somebody says, ‘Hey, come to my state and I’ll give you a quarter of your budget and you don’t have to give anything back,’ that’s a good deal,” he said.
FUTURE ROADBLOCKS What brought Joey Lauren Adams to Arkansas was her stubborn insistence on shooting in her hometown, where she was familiar with the scenery and knew it would lend her film the authentic touch she sought.
“The setting was as big a character in the film as anything,” Adams said.
The film Come Early Morning, a story of a 30-something Southern woman’s trials in love, is replete with lush fields and treelined streets, and other action occurs on a darkened porch and a rough-edged back-road tavern.
The 39-year old actress, screenwriter and director filmed her movie in North Little Rock against the advice of Hollywood financiers who urged her instead to shoot in Louisiana.
“I could have made the movie sooner if I had shot it in Louisiana,” she said. The production earned $ 37, 000 in incentives from the state, compared with $ 700, 000 if she had filmed south of the state line. That makes her reluctant to return to Arkansas for future pictures, she said.
“If I were to direct a biggerbudget film there’s no way I would find any financiers that would let me shoot in Arkansas,” she said. “It’s not a smart financial move.” In recent years, much of the state’s economic development strategy centered on luring big industry — auto manufacturing, for example — but not the film business. “It just has not been the focus of economic development in the past few years,” said Joe Holmes, a spokesman for the Economic Development Department. “I don’t think we’re having requests from major productions, and we’re not recruiting major productions.” FINDING A WAY Arkansas’ current incentive is to expire June 30. To head that off, state Reps. Rick Saunders, D-Hot Springs, and Kathy Webb, D-Little Rock, filed bills during the just-ended legislative session that would have established a new subsidy. Economic development department officials backed Saunders’ bill, which would have extended a 20 percent income tax credit on most production expenditures made in the state by film production companies, and other subsidies. But, the overall amount of subsidies would be limited to $ 10 million a year.
John Theis, assistant revenue commissioner of the Department of Finance and Administration, questioned the incentive’s effectiveness.
The bill would make the tax credit transferable, because most film production companies aren’t located in Arkansas and so have no income-tax liability in the state. Theis said the credit would be sold at less than full value — 65 cents to 85 cents on the dollar, he predicted — so the state would be extending a benefit worth less than the depletion in revenue.
While Beebe and his economic development and budget team ponder what to do with the film office, Glass will continue promoting Arkansas’ natural bounties.
“We are so blessed with terrain. We have terrain that Texas and New Mexico would just drool over,” he declared recently as he scoured Little Rock for vintage Mercedes-Benz 240 D models a producer sought for a shoot. “The people here work just as hard, are just as smart and are just as crafty as anywhere else.”
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