Georgia and North Carolina said “lights, camera, action” to film production incentives in the mid-2000s.

North Carolina began in 2005 with up to a 15 percent tax credit for qualifying productions, raising it to 25 percent in 2009.

Meanwhile, Georgia began with a 20 percent tax credit in 2004 and padded it to 30 percent in 2008.

The incentives enabled the states to compete regularly, and relatively equally, for high-profile feature films from major studios, along with independent productions, television shows and commercials.

For example, in 2013, Georgia paid $231 million in film tax credits — nearly four times the $61 million from North Carolina.

Yet, North Carolina was able to gain productions during 2013 that included “Iron Man 3,” “Revolution,” “Homeland,” “Tammy,’ “Sleepy Hollow,” “Under the Dome,” “Banshee” and “Eastbound and Down.” Two feature films — “The Ultimate Life’”and “You Are Here” — were shot in the Triad.

Film advocates in both states could agree to “win some, lose some” while counting on an increasing industry spotlight on the Southeast to attract a steady flow of productions.

The competition, however, essentially ended in 2014.

That’s when the Republican-controlled N.C. legislature chose to let the film incentives legislation sunset as one piece of a larger plan to end most incentive funding, including historic mill rehabilitation tax credits, in favor of lower corporate income taxes.

Legislators also said they didn’t like that film tax credits aren’t earned over several years as required in business economic incentive packages.

The fallout was evident immediately.

Film productions — and hundreds of millions of dollars in industry-generated revenue — fled to Georgia, South Carolina and Louisiana, which maintained film incentives under Republican-controlled legislatures.

In response, the N.C. legislature approved providing $10 million in film grant funding in 2015. The state budgets for fiscal 2015-16 and 2016-17 included up to $30 million in performance-based grants.

Ricky Diaz, a spokesman for Gov. Pat McCrory’s re-election campaign, said having film grants in the two budgets reflect McCrory’s ability to negotiate with incentive opponents on a funding compromise.

However, many local and statewide film advocates worry that enough damage has been done to North Carolina’s reputation that it may be irreparable, even if the legislature were to agree to bolster the tax credits back to pre-2013 levels. Bills have been introduced, but did not advance, that would have established a base line of $66 million annually for film tax credits.

Mitch Kokai, a policy analyst with the libertarian think-tank John Locke Foundation, said some Republicans “believe that film incentives represent a good way to promote a good business. That must be the attitude among the majority of Georgia’s legislative Republicans.”

Kokai said it’s not surprising that the N.C. film production industry has declined with the curtailing of film incentives.

“For years, the film industry has played the game of playing states, and even countries, against each other in an effort to win film projects,” Kokai said. “This boosts the industry’s bottom line to the greatest extent possible at the expense of taxpayers.

“You can’t fault the industry for trying to reduce its tax bills. But more and more states are realizing that the benefits associated with the film industry don’t justify the cost of playing the game.”

Declining interest

Rebecca Clark, executive director of the N.C. Piedmont Triad Film Commission, said her goal since 2014 has been “trying to remain optimistic and have a Pollyanna attitude about our film industry’s chances to compete. I want to be allowed to do my job better.”

Yet, Clark acknowledges the shrinking of the film incentives nearly dried up interest in filming locally since “The Disappointments Room” wrapped production in 2014.

“The Disappointments Room” had a direct economic impact of nearly $10.8 million on the region, Clark said. That included nearly $2.7 million spent on goods, $6.5 million on wages, $1.4 million on employee benefits and $174,240 on services. The production company employed 411 crew members over four months.

Scene locations included Adamsleigh Mansion at Sedgefield, Elm Street and Greenhill Cemetery in Greensboro, and sites in Madison, Ramseur and Winston-Salem.

Altogether, the 2014 productions of "The Disappointments Room," "Max, "One and Town" and "The Longest Ride" had a combined economic impact of about $14 million, Clark said.

“Abundant Acreage Available,” a movie directed by Winston-Salem native Angus MacLachlan, was filmed in the East Bend area in February and March 2016 with no incentives involved.

Clark said another “very low budget” film, “Switching Gears,” was also filmed locally with no incentives. Those two films, at $1.8 million combined, represent all of the local economic impact for 2015 and so far in 2016, she said.

Of the five film grant recipients announced so far this year by the N.C. Commerce Department, two productions are being filmed in Wilmington, two in western N.C. and one in Charlotte.

“We stopped getting film requests in the fall of 2014, but things had been set in motion earlier when film industry trade publications began to report on the legislative debate to end film incentives,” Clark said.

Clark said she has not stopped her lobbying efforts.

She said at least 75 of the state’s 100 counties benefited from film production business from 2005 to 2013.

“Not all is lost,” Clark said. “We do still have commercial productions that film in the region that I assist, along with reality series “My Big Fat Fabulous Life” on TLC and “Toymakerz”on Velocity Channel.

However, Clark pointed out that reality shows “typically are not reliant on incentives, so we are just randomly lucky to have two in the area.”

Challenges

The main challenge to restoring film tax credits to their pre-2013 level is the debate about their economic impact vs cost, particularly from critics in the legislature and by right-leaning advocacy groups.

McCrory’s office said in December 2013 that production of network and cable TV shows “fueled one of the strongest years experienced” by the state film industry.

The statement said the $254 million economic impact and job opportunities for 2013 were at the second-highest level in the history of the state film industry.

Production companies generated more than 4,000 “well-paying” crew positions and nearly 25,000 job opportunities, including talent and background extra positions. There were more than 5,700 production days in more than 30 counties, including Forsyth.

By comparison, state Commerce officials have estimated a combined $181.5 million economic impact of the eight film productions announced since September 2015.

Jamal Little, spokesman for Democrat governor nominee Roy Cooper, said McCrory has put “political ideology ahead of the best interests of our state ... by allowing the film incentives to expire.

“Spending has declined since the film incentives expired, and we have seen the ripple effects as our communities lose jobs and opportunity. We must be driven by data and facts, not political agendas, and data has shown that film incentives in North Carolina were working. As governor, Roy Cooper will fight for the film incentives and work to bring the film industry back to North Carolina.”

Georgia, N. Carolina

McCrory and Commerce Secretary John Skvarla have touted the industry’s economic impact on state tourism when announcing the eight grant recipients since September 2015. They are:

  • Cable TV pilot “Good Behavior” in Asheville (up to $1.25 million in grant funding);
  • Reality show “Love it or List It” in the Triangle (up to $950,000);
  • Independent film “Untitled Jody Hill Project” in western N.C. (up to $2.8 million);
  • Cable TV Series “Good Behavior” in Ashevllle and Wilmington (up to $6.6 million);
  • Short-series History channel military drama “SIX” in Wilmington ($7.2 million);
  • Musical remake of “Dirty Dancing” in western N.C. (up to $4 million);
  • Independent film “Three Billboards Outside Ebbing, Missouri” in western N.C. (up to $3.1 million); and
  • Fox TV series “Shots Fired” in Charlotte (up to $9 million).

“Two of our grantees are returning to film in North Carolina, and that is exactly what we want — repeat business,” Skvarla said in a Feb. 26 statement. “We want to continue long-term relationships on both the big and small screen.”

Meanwhile, film incentive advocates point to Georgia Gov. Nathan Deal, a Republican, who vetoed an attempt by its Republican-controlled legislature to sharply curtail film incentive tax credits in 2015.

In 2015, Georgia surpassed New York and tied Louisiana for second place nationwide in terms of number of major motion pictures filmed in their respective states.

Deal has said the annual economic impact from the industry includes more than 79,000 jobs and $6 billion in spending, although Politifact claimed the spending is more like $3 billion.

“Whatever sacrifice we make in revenue on the tax credit, we more than make up for through the multiplier effect of economic development,” Deal said in 2013.

Unlike North Carolina, which caps at $1 million the tax credit that productions can take for the salaries earned by high-profile actors and actresses, Georgia doesn’t have a cap.

Brennen Dicker, a member of the executive board of the Georgia Production Partnership, told Creative Loafing in an April interview that qualified production crews, infrastructure and a supportive local business environment are key to a thriving film industry.

But there’s no question, Dicker said, that the incentive program has been a huge driver.

“Rather than playing favorites, Georgia is facilitating and encouraging investment that benefits our citizens. That is an appropriate role for state government to play,” Dicker said.

Next generation

Officials with the UNC School of the Arts said the sharp reduction in film tax credits, and accompanying reputation blow, has not caused a decline in enrollment for its film school.

“Enrollment has steadily increased over the past few years, from 296 in the 2013-14 school year to a current 345,” spokeswoman Lauren Whitaker said.

“This year, we launched two new master’s of fine arts programs in film, and we exceeded our expected enrollment in both programs — nine in creative producing and seven in screenwriting.”

Whitaker said what UNCSA is missing most from the exodus of the industry is “in-state internship opportunities for our students, and limited in-state career options for graduates.”

“We are working to leverage our assets — the expertise of our faculty and our production-experienced students — to attract smaller film projects that are not as dependent on incentives,” Whitaker said.

Clark agreed that the film industry is struggling to “keep this talent in North Carolina once they graduate.”

“Many of them have always left the state for California, but we were able to retain some.

Clark lamented the loss of professional crews to other states, particularly Georgia.

“One of the graduates of UNCSA, who is from Greensboro, wanted to keep his family here and have work opportunities ... he has relocated his entire family to Atlanta.”

Whitaker said the UNCSA film school is “excited to be at the forefront of a new frontier in digital media with virtual reality entertainment.”

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rcraver@wsjournal.com (336) 727-7376 @rcraverWSJ

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