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Friday, Sep 19, 2014

Editorial: Nurturing a film industry


Florida lawmakers may have cause to regret not adopting legislation last session providing incentives to attract film projects.

North Carolina, which developed a $1 billion film industry, is abandoning its generous incentive program, and, no doubt, production companies will be looking for alternative locations.

Florida is unlikely to be in the competition.

We can’t fault state lawmakers for being cautious about incentives, which can easily be abused. Other states, including Michigan, have moved away from using such financial inducements to lure TV and movie productions.

Still, films and TV can generate high-paying jobs and valuable exposure. State leaders should attend the fallout in North Carolina closely.

North Carolina lawmakers’ controversial decision to abandon the incentive is aimed, as The Wall Street Journal reports, at leveling the playing field for all businesses, including manufacturers, which were not eligible for such aid.

But the measure proposed in Florida last session was not a lavish giveaway, and it provided taxpayers more safeguards than North Carolina’s program. Moreover, Florida offers incentives to other enterprises. Last year Florida adopted a sales tax exemption for manufacturers that buy new equipment.

We thought the failed proposal was prudent. It offered up to $50 million a year in incentives — and strict requirements.

Companies would receive a tax credit, which would not be given until a state auditor and independent accounting firm certified the project produced the jobs and economic impact that had been promised.

Significantly, a film would receive credit only for expenditures on goods and services in Florida, not for overall expenses.

The proposal included provisions that would have capped the state incentive for any one project at $8 million and required the local governments where filming occurs to also contribute 10 percent of what the state does, ensuring another layer of scrutiny.

The North Carolina program offered a 25 percent refundable tax credit up to $20 million for a project. That is now being replaced with a $10 million competitive grant program and a cap per production of $5 million.

As The Wall Street Journal said, the state had paid four times that amount in incentives to attract “Iron Man 3.” Film officials now say North Carolina will lose a major economic driver, with the industry migrating to states such as Louisiana and Georgia that still offer incentives.

A study completed this year by a North Carolina State University Poole College of Management professor found that eliminating the incentive program would result in the loss of an estimated 3,400 jobs. It also found that for every dollar the state spent in incentives, the industry spent $9.11 in North Carolina.

As The Charlotte Observer reports, the study found the incentives had enabled North Carolina to develop a permanent film crew base that provided more than 4,250 jobs at an average wage of $66,000. North Carolina lawmakers contest those findings, but other studies also have found a notable return on investment for film incentives.

It is easy to dismiss all incentives as giveaways, but as long as Florida is competing for jobs across state boundaries it needs to be clear-headed about the issue. The state routinely makes concessions to attract businesses likely to produce high-paying jobs.

State leaders, of course, should not be starry-eyed about films, but nor should they dismiss their potential for bringing jobs, investment and tourists to the state.

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