North Carolina Kills Film Incentives: Which States Benefit?

Shows including 'Under the Dome' and 'Sleepy Hollow' may relocate future production

When North Carolina killed its successful movie/TV incentive program Wednesday, there was immediate concern that other states would follow suit. That concern may not be warranted.

"That doesn’t appear to be the case for any state that is competitive and is attracting productions other than North Carolina," said Vans Stevenson, MPAA senior vp, state government affairs. "The only ones that have backed off are places where it hasn’t really been competitive or it was a unique situation like Iowa where they had a scandal."

Among the most competitive states offering incentives are New York, Louisiana and Georgia, all of which have maintained or expanded their programs in recent years. Other states with competitive incentives include New Mexico, Illinois and Massachusetts; despite some opposition in the states' legislatures, the incentives have been continued.

Florida, which also has been aggressive about seeking productions, failed to fund its program for the coming year. Stevenson says that the failure is due to an in-state political squabble, not an effort to kill the incentive program.

At present, California is close to passing a bill to quadruple the state financial incentives to $400 million. Even if that figure is cut as the legislature and Gov. Jerry Brown work out a final deal, California clearly sees incentives as key to keeping and attracting productions.

The North Carolina legislature did approve another incentive package that kicks in Jan. 1, 2015, when the current program that offers up to 25 percent incentives ends. The new plan provides grants to movie or TV productions of up to $5 million; but puts a cap on the annual expenditure of $10 million — less than what the state paid to Iron Man 3 in 2012. That makes the program nearly useless.

“It’s disappointing,” the MPAA said in a statement Thursday, “that the new grant program included in the budget agreement will prevent North Carolina from remaining competitive in attracting this prominent source of in-state economic activity.”

Johnny Griffin, director, Wilmington (N.C.) Regional Film Commission, said the new plan will “obviously have an impact on the amount of business we will be able to sustain.”

Griffin said they will see the real impact early next year when producers determine where to shoot pilots, and series decide whether to return to the state. He says this year, among others, CBS shot Under the Dome in North Carolina, while ABC made Secrets & Lies and Fox did Sleepy Hollow, but he worries none will return next year.

Spokespeople for ABC, CBS and Fox could not confirm their plans, but one studio executive said: “It definitely doesn’t bode well for future new production there, or for the terrific infrastructure of production, personnel and vendors they’ve built up in the state.”

In North Carolina, the first term Gov. Pat McCrory and the Speaker of the House Thom Tillis — a candidate for Senate —had both been vocal backers of film incentives until recently. However, as the state has seen a number of conservatives, Libertarian and Tea Party candidates elected, they have shifted to either a neutral position (the governor) or opposition (the speaker).

One big reason the North Carolina incentive legislation failed is because the Koch Brothers-backed nonprofit Americans for Prosperity bought radio commercials as the debate that slammed film incentives was going on. The ads were part of a larger campaign to eliminate a range of state-funded development programs.

"The money coming in from the outside has hurt the North Carolina programs for business development," said Rep. Susi Hamilton, a Democrat who fought to retain incentives. "The Americans for Prosperity spent a lot of money to try and end the program and unfortunately they have the ear or our leadership and appear to be successful."

Hamilton, however, doesn’t believe this means other Southern states will follow suit. In fact, she sees the opposite happening as North Carolina stands to lose more than 4,000 good jobs.

"The implications for other states," says Hamilton, "particularly in the Southeast, are that they are going to pick up the work that otherwise would have come to North Carolina. That’s good news for the other states."

Griffin says the irony is that there has been an influx of work into North Carolina in the past three or four years, and 2014 could be a record year.

Hamilton estimates that, in 2013, $360 million was directly spent by productions, while the state paid out $62 million in incentives. And that doesn’t count millions more spent on services and by workers who have moved to the state for jobs that pay an average of more than $65,000 per year.

"If productions are not here, those jobs have to go elsewhere," says Griffin. "If you work as a movie technician or a skilled artisan in the industry and there’s not a lot of jobs, you definitely look elsewhere."

Chris Cates, president of C3 Studios in Charlotte, which in recent years housed the pilot for Showtime’s Homeland, and has worked on eight films in the last five years, is considering moving his entire company to Georgia or another state.

“I know people that have lived here ten or twelve years and their only trade is related to filmmaking,” says Cates. “I have been told by them, ‘I am fixing up my house and putting it on the market. I’m going to have to go where the work is.’ ”

It’s not just workers either. A Hallmark Channel movie that was to start production late this year is moving to Canada because the work will spill over into January. It was the first of three movies by the same author. The first two shot in North Carolina.

“There’s a key location from the second movie that is only in North Carolina that is a big part of the third movie,” says Cates, “but because of the timing, and not being able to complete by year’s end, the consensus is that it’s going to Canada.”

Republican state Senator Paul Stam, who helped kill the incentives, was quoted in a local newspaper saying the movie business comes and goes and there is no point in giving them subsidies. That sentiment angers Cates.

"It’s not about the productions coming here," Cates said. "It’s about the businesses that support their effort that count on them coming here. We’re not here today, gone tomorrow. We’d love to stay but if the business is in other states, we have to look elsewhere."