A brief history of NC Film Incentives
After some discussion at a recent Triangle Filmmaking Community Screenwriters Workshop meeting, I got into researchy mode and compiled the following for my own reference. So here, without commentary, is a overview of NC Leg action regarding the NC film incentive and grant programs since 2005.
**A first stab 2005-2006**
HOUSE BILL 918* Film Industry Jobs Incentives. Ref To Com On Finance 3/28/2005
SENATE BILL 1144 Ref To Com On Finance 06/22/2005
Amendment SENATE BILL 1213 Film Incentive Changes. Ref To Com On Finance 06/08/2006
Berger’s Senate Bill 1324 No Credit for Obscene Films. Ref To Com On Finance on 03/26/2007
HOUSE BILL 2511 Enhance Film Tax Credits.
Tried to increase tax credit to 20%; No vote, Ref To Com On Finance 05/26/2008
Senate Bill 1968 Expand Film Industry Credits Ref To Com On Finance on 06/26/2008
Nays: Allran; Apodaca; Blake; Brock; Brown; Brunstetter; East; Forrester; Goodall; Hunt; Jacumin; Berger, P.; Rucho; Smith; Stevens; Tillman
*The Studies Bill*
House Bill 2431 / S.L. 2008-181
PART XXX. NORTH CAROLINA FILM OFFICE OF THE DEPARTMENT OF COMMERCE TO DEVELOP PLAN TO CREATE FILM PRODUCTION FACILITIES IN THE STATE (Garrou)
SECTION 30.1. The North Carolina Film Office of the Department of Commerce shall, in consultation with the Film School of the North Carolina School of the Arts and industry leaders, develop a plan for the State to partner with the film industry to create production facilities in North Carolina. The Film Office shall report to the Joint Legislative Commission on Governmental Operations on the plan by January 1, 2009.
*Session Law 2006-162 Ratified 07/13/2006
Senate Bill 1453 | House Bill 1963
Prior to this law change, compensation and wages were qualifying expenses for purposes of the film production credit only if the production company remitted withholding. Pursuant to Article 4A, companies were required to withhold tax of 4% from payments in excess of $1500 to any nonresident entity unless that entity had obtained a North Carolina Certificate of Authority from the Secretary of State. If a “loan out company” had obtained a North Carolina Certificate of Authority, the production company did not withhold tax from the payment. As a result, the production company could not claim this as a qualifying expense. To remedy this situation, Session Law 2006-162 (House Bill 1963) was enacted so compensation and wages are qualifying expenses for purposes of the film production credit if withholding payments are remitted, whether withheld on the payments by the production company to the loan-out company or withheld from the payments by the loan-out company to the actor.
*Session Law 2008-107 Ratified 07/08/2008
House Bill 2436 Modify Appropriations Act of 2007.
Effective for tax years beginning on or after January 1, 2008, the cost of insurance coverage purchased in this State by the production company for production-related activities would be considered a qualifying expense. The insurance must be purchased from an unrelated entity to qualify. In addition, for productions that have production credits, the taxpayer must acknowledges in the production credits both the North Carolina Film Office and the regional film office responsible for the geographic area in which the filming for the production occurred.
**Incentive Passes 2009-2010**
Senate Bill 943 / S.L. 2009-529 Expand Film Credit.
Ch. SL 2009-529 on 08/27/2009
Effective for tax years beginning on or after January 1, 2010, a taxpayer may elect to take a credit against taxes equal to twenty-five percent (25%) of the production company’s qualifying expenses less the difference between the amount of tax paid on purchases subject to the tax imposed on mill machinery under G.S. 105-187.51 and the amount of sales or use tax that would have been due had the purchases been subject to the sales or use tax at the combined general rate. The taxpayer can elect to either claim the 15% credit without the sales or use tax reduction or the 25% with the sales or use tax reduction. The election is binding and is made at the time the return is filed to claim the credit.
House Bill 1973 / S.L. 2010-147 Various Economic Incentives. Ratified 07/10/2010
PART II: EXPAND TAX CREDITS FOR PRODUCTION COMPANIES § 105-130.47. Credit for qualifying expenses of a production company.
(b) Credit. – A taxpayer that is a production company and has qualifying expenses of at least two hundred fifty thousand dollars ($250,000) with respect to a production is allowed a
credit against the taxes imposed by this Part equal to <s>fifteen percent (15%)</s> twenty-five percent (25%) of the production company’s qualifying expenses. For the purposes of this section, in the case of an episodic television series, an entire season of episodes is one production. The credit is computed based on all of the taxpayer’s qualifying expenses incurred with respect to the
production, not just the qualifying expenses incurred during the taxable year.
(f) Limitations. – The amount of credit allowed under this section with respect to a production that is a feature film may not exceed seven twenty million five hundred thousand dollars ($7,500,000).($20,000,000). No credit is allowed under this section for any production that satisfies one of the following conditions:
(1) It is political advertising.
(2) It is a television production of a news program or live sporting event.
(3) It contains material that is obscene, as defined in G.S. 14-190.1.
(4) It is a radio production.
(k) Sunset. – This section is repealed for qualifying expenses occurring on or after January 1, 2014.”
**Undoing the incentive 2013-2014**
2013 HB 994 Make Film Credit Nonrefundable. Ref to the Com on Rules, Calendar, and Ops House 04/18/2013
Sponsors: Luebke; Catlin; Millis; Stam; (Primary)
Blackwell; B. Brown; Collins; Floyd; Fulghum; Harrison; Insko; Jackson; Jones; Jordan;
House Bill 1142 Modify Film/Historic Rehab Tax Credits. Never called to a vote, Ref To Com On Finance on 05/21/2014
Sponsors: Hamilton; Iler; Davis; R. Moore; (Primary)
R. Brawley; Carney; Cotham; Cunningham; Fisher; Glazier; Hanes; Saine; Torbett; Waddell; Wray;
**Establishing Film and Entertainment Grant program**
Senate Bill 744 / S.L. 2014-100 Appropriations Act of 2014. Ratified 08/02/2014
Establishing the FILM AND ENTERTAINMENT GRANT FUND
SECTION 15.14B.(a) Article 10 of Chapter 143B of the General Statutes is amended by adding a new section to read: “§ 143B-437.02A. The Film and Entertainment Grant Fund.
S 744 (SL 2014-100) – establishing legislation
H 97 (SL 2015-241) – modification to establishing legislation
Funds from the $10 million grant will serve as a rebate of up to 25% on qualified expenses/purchases of productions. The previous tax credit ended as of January 1, 2015.
S 257 (SL 2017-57) – changes funding to recurring (part of the state’s overall biennium budget)
S 582 (SL 2017-212) – eliminates the 01/01/2015 sunset date of the program
The NC Film Office has done a good job summarizing these changes, and on their site you can download a combined version of establishing legislation & modifications made since (as recent as Oct 2017). I started my search of the leg records with this document and sussed out a few other relevant and ‘banished to commitee’ attemptz digging through the archives. I think I snagged everything, but let me know if there’s anything relevant that I’ve missed.
Now below I have a few more links, and some may include a bit of commentary on my part. The impetuous of my digging was to see what parts of the state– and more specifically which lawmakers– were major opponents to NC’s film industry.
Coverage Before and After
In March, Sen. Julia Boseman, D-New Hanover, and Sen. Linda Garrou, D-Forsyth, each introduced bills to increase the percentage from 15 to 25 percent. In April, Rep. Pryor Gibson, D-Anson, Union, and Rep. Danny McComas, R-New Hanover, co-sponsored a bill for the same reason in the House.
Sen. Phil Berger, Rep.-Guilford, Rockingham is one of the legislators opposing the bill. He said he isn’t totally against incentives in general, but voted against the original film incentives bill.
“When they push through something that is in essence a direct taxpayer subsidy of the overhead for the film industry, it struck me that there was a huge unfairness in doing that if we’re not going to do that to every business in the state of North Carolina,” he said. “You know, there are people in the Piedmont of North Carolina and in the mountains where we have lost thousands of jobs that if the government paid 15 percent of the overhead of those companies, we might still have those jobs. I just saw that the way it was structured was inappropriate as far as taxpayer dollars are concerned.”
I find this a bit disingenuous because the film incentives were at one pointed tied directly to the Textiles industry, and again if you look at the economic impact numbers, the film industry positively impacts a lot of local small businesses and travel & tourism businesses state-wide. Plus, ya know, other industries in NC do get incentives that Berger has supported.
2010, the year before the new credits took effect, the film industry spent $78 million in North Carolina. Film and TV spending in the state jumped to $228 million in 2011 and $376 million in 2012.
Since 2010, North Carolina has offered a 25 percent tax credit as an incentive for production companies that spend a minimum of $250,000 in the state.
October 27, 2011 — http://www.wral.com/news/local/story/10304304/
By October 2011, 29 productions had set up offices throughout out the state and have spent more than $200 million while creating more than 3,000 crew, 500 talent and 21,000 background talent jobs.
Sen. Phil Berger, R-Guilford, Rockingham
Sen. Harry Brown, R-Onslow
Sen. Bob Rucho, R-Mecklenburg
Sen. Tom Apodaca, R-Buncombe, Henderon, Transylvania
Rep. Hugh Blackwell, R-Burke
Rep. Jeff Collins, R-Franklin, Nash
Having Now Left Office
Rep. Skip Paul Stam, R-Wake
Rep. Mike Hager, R-Rutherford
Rep. Rick Catlin, R-New Hanover
Rep. Chris Millis R-Onslow, Pender (resigned due to scandal)(impeach Elaine Marshall nutjob)
Rep. Paul Luebke, Durham (died Oct 29 2016)
Sen. James Forrester (died 2011) doc peddling false credentials about his qualifications, proposed the anti-gay marriage clause to NC Constitution.