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The assassination of the North Carolina film industry

Surprising absolutely no one, we’re finally catching up with the cumulative effects of lawmakers killing North Carolina’s film incentive. WRAL reports that film productions are drying up in North Carolina, duh-doy. Wilmington residents must now face saying goodbye to yet another successful network television production and farewell to the talented and wonderful cast and crew that will be forced to relocate. At this point, it should be obvious to all that the ‘promise’ of a $10M grant program is not enough to keep North Carolina film professionals working. If there are those that truly didn’t see this coming, idealists that perhaps hoped North Carolina could still compete in such a highly competitive arena where incentives are the de facto standard, then I’d sincerely be interested to make your acquaintance and hear what color the sky is in your world.

And to what end? What undoubtedly logic-fueled and well-informed decision making drives lawmakers to reject an entire industry, and throw away our large chunk of hard-won market share?

How is it, that North Carolina is okay with sending homegrown businesses, desirable jobs and significant tax dollars to other states?

Because know very well, that other states ARE gaining jobs and tax revenue that WAS ours.

Maybe there are some that believe that those who choose to work in the North Carolina film industry aren’t serious professionals. Entertainment is a leisure activity, yes? How could it possibly be real work? Perhaps these same people don’t know enough to fully appreciate the insane amount of overhead, man hours and skill it takes to put together the most meager of film or video projects. I suspect these people may believe: 1) that below-the-line folk can’t possibly be highly-skilled, hardworking stock who often spend grueling hours on call to make a living; or 2) that 99% of entertainment/production types are all above-the-line multimillionaires with lambos and drug-habits.

I find myself hoping that these film-dubious folks don’t understand the concept of below-the-line, because the alternative is that they absolutely do understand the concept and don’t care a whit that they’re aborting the livelihood of thousands of North Carolinians’. To these people I must suppose that the film industry is somehow a rather fly-by-night operation, much like a carnival show that sneaks in under the shadow of night and disappears just as mysteriously weeks later, having suckered locals with rigged carnival games and cheap cotton candy. Because it’s not like anyone would suspect that the U.S. film industry alone boasts $31B in revenue as the world’s most prestigious and sought-after international marketing platform. Oh, wait.

But hey, maybe we’re not losing all that much. Surely cutting the film incentive couldn’t close the door on anything like an $800-million annual contribution to the state gross product, or you know supporting over 10,000 full-time jobs. Let’s be judicious about this and examine the numbers. North Carolina has had a production spending credit program in place since 2005, but 2007 is when the Legislature actually passed a bill to set a tax credit of 15% for qualified costs. Then in 2010 they kicked it up to 25% which positioned us much closer to what our major competitors in the southeast have offered up- namely Georgia 30%, Louisiana 35%, Florida 30%.  So if you take a look and compare pre-incentive numbers with the growth post-incentive you’ll get a better picture of what we’ve thrown away:

year total production spend employed cost of credits
2005 $1,532,476 16 $229,871
2006 $71,126,522 8255 $10,668,976
2007 $117,028,643 8835 $17,554,297
2008 $75,818,236 9240 $11,538,071
2009 $50,379,744 8645 $7,701,758
2010 $47,572,997 8357 $9,331,955
2011 $130,542,303 11314 $32,635,573
2012 $334,554,290 18909 $83,386,046
2013 $244,772,363 13649 $61,193,093

Source: NC Department of Revenue

No doubt, $61M is a big chunk of change to just give away for gratuitous Lamborghini cocaine parties. And heck, the net positive contribution to the state is probably not all that much, only estimated at $85M from 2007-2012 total State and Local Revenues, which is only a mere $17M average per year! Complete chump change compared to the $5,067,823 allocated to the Veterans Administration for FY 2013 🙁

Now, obviously I’m not saying, nor suggesting, that your lawmakers are taking money from crippled Veterans to fund Lamborghini cocaine parties.

I just find myself curious about what sorts of parties they are into, since crippled Veterans and Lamborghini cocaine parties are off the table according to the the North Carolina Legislature.

So, what exactly are desirable jobs and significant revenues for North Carolina? The N.C. Department of Revenue shows that producers applied for $83.3 million in grants for 2012, and $62.2 million in 2013. That’s estimated at around 18,909 and 13,649 job opportunities, respectively. And according to WRAL “By comparison, North Carolina has committed to paying out $800 million in its JDIG and One North Carolina job development grant funds through the year 2027. That would work out to roughly $60 million a year for businesses involved in everything from financial services to heavy equipment manufacturing.”

For 400 new jobs, Lenovo, tech jewel of RTP gets: “$8.4 million in JDIG money. It also got a $750,000 One North Carolina grant, $1 million of worker training and $2 million of tax credits for research and development. Morrisville and Wake County each kicked in $1 million of incentives, bringing the total to the $14 million Lenovo wanted.”

For 1300 jobs, Metlife gets “up to $87.2 million over 12 years, a $2 million grant from the One North Carolina Fund and community college worker training programs estimated at $4 million” and goes to Charlotte, instead of say, a more economically-starved, but dynamically poised region like Rocky Mount.

Corporate welfare is an ugly phrase that no one likes, especially the bigwigs raking it in.

Computers and insurance, oh the prestige! But alas, there’s a fair share of disappointment too as we failed to recruit a luxury car maker here, because gosh dangit, we just don’t have enough incentives to compete! (And hey, it’s probably not even worth it to bother with taking a super long view and consider that maybe Google or someone is going to make car ownership superfluous in another decade, so subsidizing auto manufacturers may not be in our best interest, long term.)

What a conundrum it must be, crusading against corporate welfare from one side of your mouth while trying to reassure the profit-laden behemoths that you’ll still have the welcome mat out just for them from the other side.  It’s a very nice thought: eliminating all tax dodges and loopholes, and reduce everybody’s taxes while we’re at it, because it’s your money and you deserve to keep it! But buyer beware, that is a salesroom lie. Reducing corporate tax rates, eliminating the estate tax and cutting personal income taxes combined with removing effective business incentives results in not only the state hemorrhaging revenue, but also results in lost opportunities for new jobs, new businesses and new tax income. Lawmakers know this. Math is not some unfathomable mystery, but it is- they so desperately hope- rather too dry and convoluted for you and I to worry ourselves with.

Because here’s what’s going on: while the Governor begs the legislature to give him funds to lure businesses and help North Carolina stay competitive- funds that previously existed with JDIG- the Leg is busy further cutting budgets, eliminating resources and looking for any number of other things to kill (UNC HBCUs) to stopper that growing budget gap. Among the other bad things they eliminated last session were unemployment benefits, the historic preservation tax credit, the renewable energy tax credit, and the film tax credit- sacrificing things like the North Carolina film industry, the state’s culture and heritage, its ecology and natural resources and our low-income tax payers to the interests of wait, what? Yep, corporate welfare.

Why this short-sighted and politically motivated agenda makes little sense

Killing something and then rebranding with a new name has been a standard of political ingratiation since politicians climbed out of the primordial cesspool that was the beginnings of the human race. When reinventing tax structures and incentives and improving North Carolina, the strategy has essentially been: make things really bad, and then put them back the way they were and declare success! Thus ensuring the life-cycle continues.

Manufacturing is good ol’ business, like farming tobacco. Honest. Blue collar. You make something with your hands and your smarts and you put it out there on the free market. There’s a supply chain, quality and demand factors, you need a skilled workforce plus the infrastructure to support it, there’s established channels for distribution– oh wait, just exactly like the film industry.

Because duh, the film industry is a manufacturing industry.

It is mass production, 101. And really, how is the entertainment industry not privy to the biggest, most accessible customer base in the world? Do we anticipate that film and entertainment are fads that are going to eventually disappear as people go back to print books and radio dramas? Why have North Carolina lawmakers decided to shut the door on an industry that touches or consumes a large portion of almost every single American’s life?

It almost makes you wonder if maybe that’s not some other agenda at play here.

This is mostly okay for say, the tourism industry where we’d like folks to come in, spend money, pay sales and occupancy taxes and then leave. We don’t ask them their politics, we don’t tell them they HAVE to spend a certain amount or we block the at the border. Why then treat the film industry like that.

You think Georgia sweats having their logo on The Walking Dead because they’re worried people are going to assume Atlanta is overrun with the living dead? Every single film and episode that comes out of that state is a free commercial. A billion dollar marketing campaign that they get for a 10% bump to the 20% tax credit of APPROVED projects. So if they want to get all fascist about the type, message, or politics of a production looking to film there, then that’s their prerogative; and the damn peach doesn’t go on the product and world at large doesn’t have to associate it with Georgia whatsoever.

But here’s the thing, local and state agencies chiefs love it when a big name crew comes to town. That shit is news. And not the typical ‘Today 100 orphans were caught in the crossfire of gang violence…’ disaster porn they usually have to field. It’s fun news, news that sells papers because everyone loves to imagine running into their favorite celebrity at their favorite Starbucks. Self important honchos love to step in front of the camera and praise an industry they know absolutely nothing about beyond what they read in US Weekly. Some more saavy types may trot out the happy local economic impact anecdotes- like hey this  and would cut off their left arm for a photo op with Robert Downey Jr. or Gweneth Paltrow. So where’s the more sustainable solution promised by the Governor? What level of hypocrisy do we ascribe the formerly film industry friendly Mayor of Charlotte , who as internet legend has it, they couldn’t get rid of on the set of “Shallow Hal”?

You sit on a throne

One thing you don’t see in many of these stories is the impact it’s having on independent filmmakers. This is probably the aspect that I’ve seen closest– you know, beyond having my heart forcibly ripped out through my throat after ten years of loyal service. Knowing that kids who have worked their ass off to get into the North Carolina School of the Arts are now left out in the rain as the crew base and production houses move out of the state. As the North Carolina film industry hemorrhages talent and resources, the opportunities for new filmmakers the thrive dry up. Artists are drawn to the media that speaks to them, and now more than ever from birth to death, film and television are constant.

But what the assassination of the North Carolina film incentive says to the world at large is that front-end revenue generated from production spending no longer matters. We do not value you, your skills, your passion or your art. Henceforth, no community within the borders of North Carolina, big or small, shall benefit from purchased goods and services; employment & labor income; sales, occupancy, personal or corporate income taxes;  North Carolina does not value film-induced tourism, investment in production and post-production infrastructure, expanding or investment in support businesses and services.

This is an emotional post. I am probably attributing malice and ascribing nefarious motives where they are none, only misguided rationalizations and incomplete understanding. It is my opinion, based on observances, and my reaction to seeing something I was heavily invested in die and ignoble death. I’ve debated actually making this post live for several weeks, because I feel I’m probably not telling you anything you don’t know, I’m certainly not revealing information that isn’t available to the public, and I would hope that if you take a stance on film incentives within North Carolina, you’ve done your part to inform yourself about the entire fabric of the issue, and why the value of the incentive so much more than just $61M a year.

But I guess the only people concerned with artistic expression and emotional catharsis is a bunch of goddamned communists.