June 05--Without much fanfare, a state Senate budget committee Thursday morning passed a bill that would convert North Carolina's film tax credit program into a grant program.
While it's unclear if the plan will earn the support of the state's film industry supporters, it at least seemed to be a more palatable solution for lawmakers who had been reluctant to renew the incentives, which expire at year's end.
"Last week, I couldn't vote for a film tax credit and now I can," said state Sen. Tommy Tucker, R-Union.
State Sen. Thom Goolsby, R-New Hanover, called the legislation a "start." The film proposal was included in a larger bill that privatizes some job-recruitment functions of the N.C. Department of Commerce.
"Much more work will be done as the bill makes its way through the Senate, House and conference," Goolsby said. "At this early point, I'm glad that we have commitment to support film and the recognition of its value in our state. Film equals jobs, particularly in eastern North Carolina."
A bipartisan group of House lawmakers also have filed a bill to keep the incentives as they are and simply lift the sunset date. Gov. Pat McCrory has also floated a proposal that dramatically rewrites the way the incentive program works. Both chambers and the governor would have to work out their differences before any changes are enacted.
Still, some expressed concerns that the Senate proposal wouldn't be enough to keep the film industry afloat in North Carolina.
State Sen. Joel Ford, D-Mecklenburg, said he would support the measure Thursday but challenged the sincerity of the plan. He encouraged his fellow colleagues to "keep an open mind going forward" about the return on investment film production companies bring to the state.
"If we're going to get into the film business, I think we need to get into it in a meaningful way," Ford said.
The new program would have a $20 million budget for the 2014-15 fiscal year allocated from two state reserve funds. According to legislative staff, that compares to the roughly $60 million in tax credits paid out during the 2012-2013 fiscal year.
The current film incentives package allows production companies to claim 25 percent of their qualifying expenses up to $20 million for production companies that spend at least $250,000.
Under the plan that is now headed for a first reading on the Senate floor, film companies would still be eligible to recoup up to 25 percent of expenses. But the companies would have to spend more to qualify and payout caps would lower significantly.
For a major motion picture feature, the spending threshold would increase to $10 million and the grant payout would be capped at $5 million. For television production, companies would have to spend at least $1 million per episode to qualify, with a payout cap also of $5 million. For commercials, a qualifying company would have to spend at least $500,000, with a payout cap of $250,000.
Sen. Bill Rabon, R-Brunswick, who took the lead in crafting the plan, said Thursday: "I believe the grant program is the proper mechanism for us to be using at this time." Rabon is co-chair of the Senate Finance Committee.
Others noted that the plan seems to fit squarely with the state's shift away from tax credits as part of last year's massive tax reform package that lowered income taxes.
Check back later for more on this developing story.
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