Filmmakers flock to forum on state tax credits
Answer: Show them the latest hot information on film tax credits.Nearly 200 people crammed into an auditorium at the Landmark Theatre in West Los Angeles recently to learn the latest skinny on the kind of topic that would set an accountant's heart aflutter.
The filmmakers, production executives and bankers were attending the Spring Fling Production Incentives Symposium, hosted by the aptly named Incentives Office, a Los Angeles firm that helps filmmakers and lenders navigate the welter of tax credits and rebates.
Despite the economic downturn that has left many states with staggering deficits, the across-the-country rollback in state tax incentives that some anticipated has yet to occur. Although some states have reduced or even suspended their programs, others, such as Florida, have greatly expanded their programs. More than 40 states still offer some form of financial enticement to filmmakers.
"The fact that these states are continuing their programs is an indication they are working," said Jeff Begun, a partner in the Incentives Office.
Begun cited a recent study by a University of Rhode Island economist who found that the state's tax credit program for film and TV productions generated $8 in economic activity for every $1 invested between 2005 and 2009.
Beyond rosy economic projections, penny-pinching by studios has also accelerated the trend as executives face more pressure to cut costs. And with fewer banks lending, tax credits and rebates have become an increasingly vital means for financing movies and TV shows.
"For producers, tax incentives have become an absolutely essential component for financing pictures," said producer Andrew Sugerman during the symposium. Sugerman was a producer on the Sandra Bullock 2007 movie "Premonition," which was filmed in Louisiana, and "Betty Anne Waters," the yet-to-be-released Hilary Swank drama that was shot in Michigan.
Not that there aren't more headaches to deal with in the current climate. Sugerman noted that he and other filmmakers have experienced delays in getting rebates in Michigan, which has become one of the most popular states in which to shoot, thanks to a tax credit of as much as 42% of qualified production expenses in the state. Sugerman said he applied for a tax credit certificate in October and is still waiting to receive his rebate check for "Betty Anne Waters."
Michigan's Treasury department has been disqualifying some expenses that filmmakers were counting on.
"Some production companies aren't getting what they thought they were getting, and this is not good news for this office,'' said Janet Lockwood, director of the Michigan Film Office.Other states have soured on the film business altogether. Iowa suspended its film program last fall after allegations of abuse and mismanagement in the film office. New Jersey Gov. Chris Christie, facing a big budget deficit, has proposed eliminating the state's $10-million film tax credit program.
Even as some states pull back from the Hollywood game, others are expanding in a big way. The Florida Legislature, for example, recently approved a $242-million film tax credit program. Massachusetts earlier this year fended off an effort to impose a cap on its program, while New York has proposed boosting its incentive to a whopping $420 million annually.
Then there's California, which has approved $200 million in tax credits for dozens of films and TV shows since the state program took effect last year.
"A lot of independents that used to go to New Mexico and Arizona are now going back to California,'' said Bruce Deichl, a tax credit placement specialist based in New Jersey who spoke at the symposium. "It's noticeable."