Lights, camera, cash

The Tennessean (Nashville, Tennessee)
March 4, 2012 Sunday

By Bobby Allyn

If freelance production designer Bart Mangrum had more work in Tennessee, he wouldn’t have to skip to other states to maintain his livelihood.

For Mangrum, chasing jobs outside of Tennessee is a tiresome but familiar situation. In fact, he’ll travel at the end of the month to work on a film set in Baton Rouge, La., followed by one in Ocean City, Md.

“There’s a lot of films that should be shot in Tennessee that are going elsewhere,” said Mangrum, 35, a Nashville native. “If I was able to, I’d never go, but I have to follow the work.”

Even as states like Louisiana, Georgia and North Carolina sweeten the pot for filmmakersTennessee’s film fund, along with proposed legislation to expand incentives, is not gathering steam under Gov. Bill Haslam’s administration.

After a film fund was set up in 2006 and given $20 million through the end of the following year, it went largely untouched.

Whereas other states cover up to 30 percent of an in-state film’s production, sometimes without spending limits, Tennessee offers filmmakers a 17 percent production discount.

In Gov. Bill Haslam’s recent budget, he set aside a one-time, $2.5 million outlay for the fund. Film advocates are asking for $10 million a year, which would make Tennessee competitive with most states in the Southeast.

“We’re begging every year with our hat in our hands,” said Jan Austin with the Association for the Future of Film and Television. “Since the program started, we’ve been at the mercy of the legislature to get more moneyappropriated to the fund.”

24 projects get awards

The state of Tennessee has given out $7.2 million to 24 productions since the film fund started in 2006, with Hanna Montana receiving the largest subsidy, about $1.8 million. The companies that received grants spent nearly $44 million in the state, according to a report prepared by the Department of Economic and Community Development, which was obtained by The Tennessean.

In addition, the state has an additional $6 million committed but has yet to distribute the funds to film and television productions. Among them, a $1.5 million subsidy to Country Strong, the western melodrama featuring Gwyneth Paltrow.

By way of comparison, Georgia awarded $48 million to 260 filmmakers in the 12 months ending in August 2010. Among the success stories for Georgia: Its incentives helped attract the $25 million production of Footloose away from Memphis and to the foothills of northern Georgia.

In Louisiana, $390 million was shelled out to 150 film productions in 2011 alone.

Local film advocates maintain that film incentives can add striking returns to state coffers.

A review of state economic development data bears this out.

Tennessee’s film and TV productions the past five years have spent a total of $97.8 million in the state.

By the economic development agency’s own estimates, the investment return on film incentives is nearly a 5-to-1 benefit, according to the report sent to Gov. Haslam last summer.

When asked whether the state plans on ramping up its incentives for filmmakers, Economic and Community Development spokesman Clint Brewer said Tennessee officials are talking with the film community about how the program can be improved. There are, however, no “formal” plans to reshape it.

Legislation stalled

Austin, of the film association, helped shape the Entertainment Industry Investment Act, a legislative proposal by Memphis-area state Rep. Steve McManus.

Like Tennessee, Florida does not have an income tax, so Austin looked to that state’s film incentives package as a model.

Florida offers $242 million in transferable credits over five years and up to 30 percent tax credits for in-state spending.

Since the Sunshine State has more than double Tennessee’s population size and revenue, the bill here asks for $125 million over five years for excise, franchise and sales transferable tax credits.

But by all accounts, the bill is dead in its tracks.

“It would go behind the budget in a heartbeat,” Rep. McManus said. “There’s no way we’ll get our hands around it this year. The governor’s office has signaled that this is not a priority.”

Tennessee’s lack of competitiveness is “evident to people who work in the industry. They can feel the pain,” Austin said. “We’re going to be locked in and the walls are coming up all around us.”

“We can’t sit back and wait to see how every other state figures it out,” Austin said. “If we’re going to keep our film industry in Tennessee, this is going to have to be addressed.”

Tennessee has offered a piecemeal program, while mounting roadblocks to any long-term program to lure and keep filmmakers in the state, Austin contends.

“States have to be in it for the long haul, because the states that are just dabbling in it are losing lots and lots of money,” she said.

Incentives questioned

In Louisiana, filmmakers are offered a 30 percent transferable credit on all cash spent in the state. There is a minimum spending requirement of $300,000. But there is no cap on the amount of credits a production can receive.

The latest figures from Louisiana Entertainment, the state’s film division, show that 150 productions received incentives in 2011, which translated into $390 million in tax credits. Together, the productions spent about $1.3 billion in 2011.

Some states, though, are re-evaluating Hollywood spending sprees after some legislators questioned how effectively they create long-term jobs and revenue.

In Michigan, for instance, there has been controversy. In 2008, state lawmakers passed one of the most advantageous film packages in the country, subsidizing 42 percent of a film’s production.

Michigan Gov. Rick Snyder, facing a sizable budget gap, capped the incentives last year at $25 million.

In 2010, the state handed out $115 million in incentives. But since then, film incentive applications have dropped by two-thirds, Michigan’s film office reported this year.

Economists, moreover, are divided on whether film incentives are a smart investment for state governments.

Joseph Henchman, policy analyst with the Tax Foundation, a nonprofit research group, told Oklahoma lawmakers last fall that he’d like to see film incentives pared back, even eliminated.

He argued that such breaks shed government revenue without creating permanent jobs to offset the cost.

State governments, he said, typically recapture only between 8 cents and 28 cents in new revenue for every tax-credit dollar. “The benefits of film tax credits are often exaggerated and misunderstood,” he said.

But economist Ray Achintya with Tennessee State University said Tennessee’s 17 percent production subsidy amounts to a windfall for the state because it can attract spending by movie makers that otherwise wouldn’t have occurred here.

“The question is whether we could have collected the money otherwise,” Achintya said. “It should be looked at as an $83 gain on every $100, not $17 lost.”

In addition, film backers say that if more film business is drawn to Tennessee, sound stages, editing facilities and studio offices will begin to crop up, creating permanent work along with the mostly contract workers on film sets.

Small operators left out

Some state incentives, like New Mexico’s, do not have minimum budget requirements for film productions. That can be a draw to independent filmmakers with small budgets and hand-held cameras.

Tennessee’s budget requirement for incentives – at least $150,000 for in-state companies and $500,000 in spending by out-of-state movie companies – makes the tax benefits inaccessible to countless independent filmmakers whose budgets fall below that amount, according to film supporters.

The legislation that Austin helped craft proposes lowering the in-state eligibility threshold to $75,000.

If passed, it could provide a boost to independent filmmakers like Brooke Bernard, who founded the local production company Nomadic Independence.

Most of the films Bernard works on have “micro-budgets,” she said, thus they can’t dip into the state’s film incentives.

Although she said business has been steady, the 28-year-old Bernard takes production jobs outside of Tennessee that aren’t associated with her company to make ends meet.

“I’m in the position where if I get offered to produce a reality television show for six months, working 12-hour days, I have to take it,” she said from Florida, where she’s working as a line producer on the second season of the reality show Day Job. (It’s about country artists who revisit jobs they held before their music careers took off.)

Local movie director Curt Hahn, who produced the independent film Deadline, which debuted this year, says incentives are crucial to keeping Tennessee’s film community alive.

“If you can cross a state line to save a million dollars,” Hahn said, “well, that’s pretty compelling.”

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