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Posted 1 September, 2009 in TN News
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Posted 2 February, 2006 in TN News
An incentives package set to be proposed this week would keep the likes of Elvis and Bell Witch films here at home
by Jim Ridley
Great news about those Oscar nominations for Walk the Line, huh? Not long ago, a FOX executive told Tennessee’s film commission chief to enjoy the movie’s success–since it would be the last one the studio shot here.
“He said it with no malice,” recalls David Bennett, a 30-year industry veteran who now heads the Tennessee Film, Entertainment and Music Commission. “It was just business. But that’s how tough the playing field has become.”
The playing field, for Tennessee, is an every-state-for-itself slugfest with billions of dollars in film and TV production as the prize. It’s not level now, thanks to brutal competition both at home and abroad. Better deals drove the Bell Witch to Romania, turned Sheriff Buford Pusser into a Canadian and booted Memphis boy Elvis Presley to Louisiana. These and other mishaps cost Tennessee an estimated $69 million in production revenue over the past three years–and twice that in economic impact.
But on Wednesday, a committee created by the state legislature means to present Gov. Phil Bredesen with a bulldozer: a proposed incentives package that would put Tennessee’s film and TV industry on equal footing with every state in the Southeast.
“The first thing a producer asks me is, ‘what’s your incentive package?’ ” Bennett told a meeting of local film and TV professionals last fall at the Belcourt. “The second thing they ask me is, ‘how is your crew base?’ ”
If approved by the governor and the General Assembly, the proposed package would answer both questions. Dubbed “the Visual Content Act of 2006,” it hinges upon a convoluted fiscal maneuver known as transferable tax credits, a practice successfully adopted by Georgia, Louisiana and other states.
As it works, a movie company gets a percentage of tax breaks, or credits, for coming to the state and spending money. Since the movie company is not subject to state taxes, it sells the credits at a discount to local businesses and corporations–which can apply them toward their own taxes at full value. The movie company pockets the money; the local business pays lower taxes.
Under the Visual Content Act, production companies spending more than $500,000 in Tennessee would qualify for a 17-percent transferable tax credit. Additional incentives for local casting, crew and music would kick it up another 8 percent. By contrast, Louisiana, which has one of the most generous packages in the country, offers a 25-percent transferable credit on qualified expenditures within the state, along with other graded incentives.
“In the past, we’ve heard that the credits Tennessee offers are not meaningful without transferability,” says Tennessee Commissioner of Economic and Community Development Matt Kisber, who served on the committee. “What has to be considered is a reasonable arrangement that can close the deal.”
In addition, the act would implement a “studio mechanics” course at community colleges in East, West and Middle Tennessee, starting with Columbia State Community College in Franklin. Designed in part to offset the 88,000 manufacturing jobs lost in the state since 1998, the program would deepen the state’s crew base by training grips, gaffers and other technical positions.
The act also recommends aggressively recruiting videogame development, an $8 billion industry that spawns subsidiary companies such as effects houses. But it’s the tax credits that will draw the most attention–and, as Kisber and Bennett predict, some debate.
Why “give a sack of money to Steven Spielberg,” as Bennett puts it? For the same reason states send limos to greet car manufacturers, computer companies and pro-sports teams that want to relocate: jobs and money. In one year, after Louisiana passed its incentives package in 2002, film production spending in the state skyrocketed from $20 million to $335 million.
Using an economic multiplier of two to measure the impact, that’s two-thirds of a billion dollars rippling through the state’s businesses, from restaurants and tourism to car dealers.
“You know the difference between a Louisiana grip and a Tennessee grip?” Bennett asks, leaning forward in one of Portland Brew’s partitioned interrogation-room booths. “The age of his truck. A Louisiana grip drives a 2005 Durango. A Tennessee grip has an ‘87 Chevy. We want our guys to have the new trucks.”
Under the current system, Tennessee’s grips better have a good mechanic. Last summer, a provision red-stamped by the state legislature created an advisory committee to look into production incentives. Along with Bennett, the committee assembled a mix of industry veterans and state officials, including Kisber, miniseries producer Mitchell Galin (The Stand), longtime Shelby County film commissioner Linn Sitler, and Susan Whitaker, Tennessee’s commissioner of tourism development.
The study they plan to release this week finds that Tennessee’s current incentives package is “obsolete in today’s production market.” Some 15 years ago, under former Tennessee film commissioner Dancy Jones, the state passed one of the first such packages in the country: a tax rebate that kicked in after productions spent their first $500,000.
The trouble is that it mainly covers sales tax. Since a production’s main expense is usually labor, which isn’t taxable, it amounts at best to a 5-percent return. Given a choice between that and Louisiana’s largesse, the CBS miniseries Elvis left the building.
A similar choice sidelined the Adam Sandler vehicle The Longest Yard from Middle Tennessee to New Mexico, where it spent $17 million locally. A measly $1 million difference–the cost of a single episode–kept the Billy Ray Cyrus series Doc from shooting here and keeping a local crew in work for months.
Meanwhile, neighboring states such as Georgia and South Carolina have anted up a variety of budget-shaving perks that Tennessee doesn’t offer. In North Carolina’s case, those include direct tax-credit refunds paid by the state.
“There’s no way we would do that,” Bennett says flatly. The advantage to transferable rather than refundable credits is that the state pays no money out of pocket. “It’s not corporate welfare,” he explains. “It takes an effort on the production company’s part to get the money back.”
But Matt Kisber anticipates some questions as the governor’s office and the legislature consider the terms. “There’s a concern that some people might have about transferable tax credits,” he says. “Should someone have the ability to sell a credit for cash, and what effect would that have on the state?”
In some ways, though, the discussion couldn’t be better timed. With the Memphis-shot Hustle & Flow and Walk the Line both up for two major Oscar nominations, it’s like debating the merits of a stadium upgrade as the home team’s headed to the Super Bowl. The irony is that the Johnny Cash biopic would have bolted for Louisiana, if not for a feverish behind-the-scenes effort by state and local officials and prominent Memphians to keep the movie here.
Come March, if hometown sweetheart Reese Witherspoon takes the podium for Best Actress–as is more than possible–Tennessee can bask in the glow and prestige that are the movie industry’s intangible benefits. And if the lack of production incentives keeps the state from getting another movie of its caliber–well, as Johnny Cash would say, we can cry, cry, cry.
from:
http://www.nashvillescene.com/Stories/News/2006/02/02/Camera_Ready/index.shtml
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