Could movies be returning? Governor Roy Cooper’s budget would reinstate tax incentives

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Screen Gems studios, now largely quiet, was once the hub of east coast film activity and an popular destination for tourists.
Screen Gems studios, now largely quiet, was once the hub of east coast film activity and an popular destination for tourists. (Photo courtesy of Screen Gems)

RALEIGH — After making it a cornerstone of his gubernatorial campaign, Governor Roy Cooper was silent about the film tax incentive program for months. His budget proposal breaks that silence, suggesting a return to the program that has been widely credited with sustaining the area’s film industry.

Cooper’s budget calls for the conversion of the current grant program into a “Film & Entertainment Tax Incentive,” effective Jan. 1, 2018. The tax incentive program would provide a refund, based on qualifying expenditures. Those would include most in-state spending, from wages and food to hotel and equipment rentals. The program would return of up 25 percent of those expenses in the form of a tax credit.

Related: 5 things Wilmington wants from the North Carolina General Assembly

To qualify for refunds, a production would have to hit spending benchmarks: $5 million for feature films, $1 million per episode for television series and $250,000 for commercials. As with both the grant system and the previous tax incentive program, Cooper’s proposal would impose annual caps for refunds: $12 million for features, $9 million for television and $250,000 for individual commercial productions.

Cooper released his proposed 2017-2019 budget on Wednesday, March 1. (File photo)
Cooper released his proposed 2017-2019 budget on Wednesday, March 1. (File photo)

Cooper’s plan estimates the state will refund approximately $20 million in fiscal year 2018-2019, and $40 million in subsequent years.

The plan also calls for $15 million dollars in additional grant money to sustain the current grant system until the end of the calendar year. According to Noelle Talley, deputy communications director for Roy Cooper, the State Budget Office added the grant money to “smooth the transition until January 2018.”

Cooper’s budget will go next to the General Assembly, where it is likely to have an uphill battle. The very term “incentive” has, in the recent past, caused objections from Republican lawmakers who object philosophically with the idea.

At a meeting of Wilmington city leaders and state representatives, Republican Representative Ted Davis said he was in favor of an overhaul of the current film grant system, but noted that “it was not an incentive, it was a rebate, and that word, incentive, has unfortunately been at the root of a great deal of heartache in Raleigh.”

At the same meeting, Republican State Senator Michael Lee said a major failing of the current grant system was that production companies – in particular television – had to apply for a grant every year.

“These are companies that have to have some kind of bottom line before they decide to start shooting,” Lee said. “Not knowing that would mean they’re going into the unknown.”

Under the old incentive system, and Cooper’s proposed return to it, television production could count on the same refund annually.

Cooper’s full budget can be read here. Whether or not Republicans like Lee and Davis will consider Cooper’s plan, suggest their own, or leave the current grant system alone remains to be seen. Port City Daily reached out to local representatives, and will follow this story.

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