New report says film study wrong, NC loses money on incentives
 

WILMINGTON, NC (WWAY) -- A report by legislative staff says a recently-released study of the film industry in North Carolina is wrong about the state benefiting from tax incentives for movie and TV productions.

In the memo "Preliminary Review of Handfield Film Study" requested by Rep. Rick Catlin, a New Hanover County Republican, the General Assembly's Fiscal Research Division (FRD) concludes that Dr. Robert Hanfield's report that the Film Product Credit's net contribution to the state is positive "is based on a series of misunderstandings of the (s)tate's tax laws, invalid or overstated assumptions, and errors in accounting. Our analysis, which corrects for the most obvious errors in the Handfield report, shows that the Film Production Credit creates a negative return on investment."

"I stand by my study," said Handfield.

Film industry proponents pointed to the results of the Handfield study, commissioned by the film industry and film commissions across the state, as proof of the positive value of industry to North Carolina.

"They look at things through a certain lens, just different from the one I am looking at,” said Handfield.

The Handfield report found that the industry has a net contribution of $25.3 million. The study also found the industry is responsible for 4,259 jobs with an average wage of $66,000.

"I'm not against the film industry, but we need to have a program that show a positive return on investment," Catlin said. "Based on Fiscal Research, we have to make some changes and compromises."

The FRD analysis, though, says the fiscal impact is a net loss of at least $33.1 million. The authors of the FRD report say they have not received from Handfield "satisfactory responses" to explain his methodology and assumptions.

"The bottom line is just to look into the facts and trying to find a process that works for everybody,” said Catlin.

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...Justin Bieber (Thah Beebs) won't make it to Wilmington now?
It seems to me that for 66 Grand (per) for salaries...a film Corporation is going to hire (or import) experienced technical help for their particular expertise...and Wilmington was shown to have more Secretarial jobs/Travel Agent jobs in their 100 Grand report.
That ain't Key Grip/Best Boy/Sound/Light Director/etc. material...or is it?
"Hurray for Hollywood"

Please don't forget that UNCW has an incredible film program that educates students to sufficiently enter a career in the industry. From grip work, sound, editing, the University has one of the best programs in the country. How perfect is it for New Hanover County to encourage recent graduates to enter their field without having to leave the county (with their wages and taxes), to earn a living while paying their education debts. It isn't necessary to be so cynical.

Listening to some of the blogs makes me laugh, i am a actor just moved to wilmington from Los Angeles, now im not a super star but i work. People talk about how much money a movie loses, that has nothing to do with what it brings to NC, jobs is what it brings, the restaurants benefit, shops,hair salons,dry cleaners everyone, you take away the movies and shows people in filming industry will have to go where the work is , Atlanta, SC, LA and rest of southern states. The hosing market will open up and businesses will suffer. Now i like it here in NC i'm closer to my family and friends i like the weather, but you close the filming industry down i'll just go where the work is, so thats pretty much how it works in a nutshell somebody's gonna get their money why not NC

you could say that about ANY industry Frank. What it comes down to is state sponsored support and subsidies of one industry over another not matter how well intentioned they may be. What about print artists? Why not give them subsidies for their spaces and travel and other expenses? Maybe they'll have shows and draw people from all over the world to spend money in Wilmington. Why not the boat industry? People will come from all over the country to buy boats here because they are spectactularly made and cheaply sold thanks to tax incentives in NC. You could go on and on. My industry could use a couple of freebies too. For all of the supposed positives of the movie industry our residents suffer through closed public facilities and rerouted streets an we pay them for the privilege for movies many of us have zero interest in seeing. :/

You are absolutely right! We should encourage all of your above industries and more to bring their money to our community! Is your detour really such an inconvenience that you would pass on the increased revenue for New Hanover County? We could really benefit from more of everything.

I see you didn't put your real name on your comment. My brother works in the film industry in North Carolina for over 25 years. Our state gives incentives to all kinds of companies to move to our state like Metlife, Federal Express, and Google. The money the film industry brings to our state is incalculable.

As an actor, production designer and set decorator employed by many major motion picture companies I find it disingenuous to suggest that my importance and value to this city and state is limited to the amount of money I pay in taxes. Life is more than taxes. It is a warm beach, clubs and bars, attractive and entertaining people who actually project a far more appealing place to live and vacation than the red neck culture clinging to its last piece of swamp meat. We, those who have come to this area to build a culture of tolerance and enlightenment, are the new industry, the ones buying your homes, influencing your family to a real world in which shame is an evaporated glass full of scotch.

Yes I make twice the money you do sitting in your donut shop between ghetto round ups. You are the help. You're not the ones with the brains who have evolved and found a job like mine. Yes I work hard. I wake up at six and work late, sometimes don't even have time to stop for a good meal before the restaurant closes and I'm forced to eat pub food.

Look, there are differences between the thems and us. Differences that have value you can measure unless you know us and what we bring to this area.

Peace my brothers.

Man..this guy is an ahole of the 1st order. I am fromL.A. with over 40 years in the 'Biz' as both actor/writer/Director. I appreciate ( as most of us do) all who help us in our work. It is a fleeting and sporadic life and every person in it knows that. To demean anyone as to their station in life and work is pathetic and reprehensible. This jerkoff has no class or guts.. i even doubt his proclaimed work history. Pay no mind to mindless idiots who have to elevate their worthless lives by demeaning others...

Just wow. I work in LA and have worked with many actors. Most are Extremely arrogant, but this is staggering. Please be sarcasm for the love of god. What does any of what you're saying have to do with Film subsidies anyway?

So much for needing my support. If you represent the people my support in order to enable you to be the way you are then let me know if you need help packing.

Can't figure out if you're using sarcasm or just trolling but it's got to be one of them 'cause this is too stupid to be real.

Wow, that's a mighty arrogant attitude you have to go along with your obvious inflated sense of self worth. You say you work in the movies, so therefore you're more evolved? Get over yourself, brother.

Maybe if the politicians would stop lining their pockets and stop being over paid they will show a prophet

They already have a chaplain.

Even though Vog46's post, down the page a bit, explains incentive accounting in really simple terms, some of you just don't get it and apparently never will. Perhaps following the motive behind the two reports might prove helpful.

Film industry report: This one is pretty simple to explain. Tinsletown wants even greater profits and isn't afraid of putting out a biased report to extort it.

General Assembly's Fiscal Research Division report: There isn't a politician on the planet, good or bad, from either party, who would turn down an increased revenue stream into a government coffer. The more money they have to play with, the greater their chances of manipulating some of that revenue into helping themselves get re-elected. That's just the way most politicians are and we all know that. That leaves only one motive behind the FRD report: As much as all of the politicians would like the money, it just isn't there. The State is coming out on the short end of the stick. That being the case, a few of the more politically or financially savvy politicos are simply being prudent enough to tell the truth, not because they're great people, but because it just makes sense to do so.

When you compare motives, it comes down to only two; greed versus prudence. When it comes down to choosing how my taxpayer dollars are spent, I think I'll opt for prudence.

C'mon people, it aint exactly rocket science.

Is not being kind:

http://www.carolinajournal.com/exclusives/display_exclusive.html?id=1095...

That said - this is exactly what the film industry DIDN'T need just before the vote.
Catlin was right to call for the study. Film industry supporters are going apoplectic over it (to be expected) but hey cannot give ANY independent analysis of their own to refute the state study because there is none. There is ONLY MPAA funded studies to support their erroneous conclusions.

Vog

I find this "The study also found the industry is responsible for 4,259 jobs with an average wage of $66,000. " hard to believe. Unless the average is based on the Star's salary.

I can't believe we give tax credits to companies that make Billions. Yes, I am sure you will bring up GE and others in the area, but they provide full time jobs to many more that the movie industry.

If you do away with the incentives, the film industry will cease operations in NC. They'll move to one of the many other states that are BEGGING for their money, and that are willing to pay incentives to get it.
The notion that the state is somehow LOSING money is simply ridiculous and more than a little irrational. You can't lose what you never had. It's a REBATE, not an upfront payment - you know, like the ones we keep giving to places like GE.

For those who say the movie industry really isn't buying local, you have no clue what you're talking about. Call all your local construction and building supply stores and ask them if the studios spend much money with them. I can tell you they've spent millions with local businesses in the last few years on construction supplies alone. In fact, they go out of their way to buy as much as they can from local businesses. That's money being spent at businesses that have been hit extremely hard by the collapsed real estate market.I don't think it's an exaggeration to say the film industry has been the one thing that has kept several local businesses from going under.
There are a lot of local people working at the studios now making damned good money, who would otherwise have had to move away for work or who would have had to take some low paying job to get by - quite possibly leaving behind yet another foreclosed home.

It all boils down to one thing, 100% of 0 is still 0. Anyway you slice this thing the state should be concerned with keeping the money coming in, 75% of anything makes better sense than nothing! Would you rather have something coming in, or nothing?? Rest assured that without incentives the films will go elsewhere.

This is similar to the idiot school board out in Greensboro suing over fines from red light cameras. The income was smaller, but it was steady and had no end in sight. Then a greedy administrator said, "I think we should be getting more and we should sue to get it!" Well a dumb judge who can't recognize the spirit of the law awarded them a good one time payday and every town (except Wilmington, we the taxpayers fund them here) took down their cameras the next day. Nice one time payout, but a loss overall as now there is no steady income. My mother was a school administrator and laughed at the irony of intelligent people making such stupid decisions!

I feel that this film incentive issue is just a repeat of that situation. The films will no longer come here when then can go elsewhere and save money. Lets not try to oversell ourselves here, NC does not offer enough to demand full price when everyone offers the same product/landscape/etc at much better prices. I don't buy Cheerios at Harris Teeter when I can pay a dollar less per box at Walmart!

If there are two surveys with such a wide margin of difference, someone reputable, if there is such a person, or someone with nothing to gain, again, if there is such a person, should arrange for an independent survey of the actual facts. I also would like to agree with the comments regarding Duke Energy. That company is such a scammer, holding a monopoly on the people. How many tax breaks does that bazillion dollar company get each year. As my Grandma would say, it's a scandal and a shame, the way these companies are run and the weight that they put on society. But why punish those are people who benefit from the film incentives. Money is being made, businesses are keeping their doors open. Just let it be, I would rather my tax dollars go to that than into Pat McCrory's pockets, i.e., Duke Energy

first and foremost - you people totally misrepresent the true sutaion here.
If a film company spends $100 they get 25% back or $25.
The state does NOT get the other $75.
The company is SPENDING money and the state is giving back based upon SPENDING - not taxation.
So rethink this.
They spend $100. State takes in 5% (average between income tax and sales tax) the STATE gets $5 but pays out $25 !!!

Think about this. If you spend $100 at Home Depot how much does HD get to keep as profit? 95%? Yeah right.
HD pays its suppliers pays the gubmint and everyone else in between but keeps about 4 - 6% as PROFIT. Most of the money goes back to their suppliers.
Please tell me you folks aren't that dumb.

If the incentive were a rebate of TAXES PAID then I've got no problem with it - but it is not. Its a rebate based upon money spent - these are very separate things here.
The state TAXES film spending at 5% but pays out at 25%.
Get it?

Good grief

Vog

some in fact are that dumb and do not have a clue as to how business math works.

Others, like Johnny, have a very intense interest in keeping the flow coming. Let it stop and Johnny might have to enter the real job market.

They made Raw Deal, Firestarter, Last of the Mohicans, and Sleeping with the Enemy plus Dawson's Creek all without special incentives.

It can be done.

The Governor is trying to balance a state budget and pay back hundreds of millions of borrowed Fed dollars.

The teachers want more; oh and leave tenure alone so weak teachers who fail in the classroom do not have to worry about job security.

And NEVER, will these film advocates put forth a simple to understand report to back up their position. They can'nt; their position is full of holes.

Heck, Johnny is such a force in the industry, he is not included when the powers that be make their annual trek to Hollywood to beat the drum for business. He was excluded this year, 2014. Bev excluded him when she went out and frolicked with Arnold and Maria before she withdrew from public life.

You said:
"some in fact are that dumb and do not have a clue as to how business math works."

So if the Legislature continues incentives then you would call them clueless?
Just joking of course but after seeing the contentious debates in the SC and GA legislatures they then turned around and continued with incentives (OKlahoma did so as well recently).
There is a growing consensus nationwide that film incentives are not economically viable and are un-necessary.
WE shall see

Vog

Thank you for the clearest explanation ever of how these incentives work.

Okay - Show and Tell. I have in my mind five $20 dollar bills. You don't have to do a thing to earn it - here, I'm handing it over - BUT - there's one condition, I'm going to take one of the $20's back, leaving you the other $80. A show of hands - who's interested in that deal?

WHO stands to gain when/if the film industry abandons NC?

GEORGIA.

Who gets money from GEORGIA? Pat McCrory.

http://michaelplumides.wordpress.com/2013/12/04/governor-pat-mccrory-and...

"In essence, by including the spending of spouses, the Handfield report overstates the tax revenue associated with film workers’ consumer spending by 50%."

Hard to imagine anyone would believe there are 4,600 people making $66,000 per year each. Hard to imagine there are any more than 800 resident North Carolinians whose primary income is generated from working on films.

Most money earning a tax rebate is spent on outside Equipment and materials from outside NC. To qualify the check has to be written to a NC company. The loophole is a pass thru company registered in NC that receives a couple of percent of the actual cost. It may look on paper that a local vendor received a check for $100,000 but in reality because of the loophole, it's only $1,000-2,000. Handfield would have you believe the entire $100,000 stays here. It's a scam.

That's not completely true. Yes some business is done through pass through companies, but those are legislated by the state and completely legal. In their minds, pass thru companies create local jobs too. But by far most of the money that is spent on a production is local, because most of that money is spent in the form of local salaries. Under the Dome, for example, has a crew of about 150. About 10 of those, not counting the cast, are from out of town. But even the cast, when working here, pays state taxes.

That said, I think pass thru companies are probably going to be dropped from the updated changes when the new incentive package is legislated. That will cause a few businesses to open satellite offices here and be liable for state taxes as such.

If we were to do away with the sunset altogether though, you would see an influx of permanent support services - grip and electric rental houses, truck rental houses, post-production facilities, prop rental houses, film vehicle rental houses, camera rental houses, expendable supply houses, etc - that would completely negate any "cost" of the incentives through their tax exposure. And they would create hundreds if not thousands of real, full-time jobs. Folks don't realize that the sunset on the incentives is the biggest deterrent to the growth of real, permanent film-related infrastructure across the state. Charlotte is ripe for a film studio. So is Asheville. Even Wilmington could use another facility as Screen Gems often can't accommodate all the work that wants to come here. And none of those businesses or the jobs they create would receive incentives. But none of that growth will happen if the loming threat of the evaporation of film incentives threatens the loss of their livelihood.

I wish that they would hire more local people then bringing in people from out of state.... When you get incentives for something you should use local workers and talent/// Love that the movies and shows are filmed here and I know the areas on the movies and shows..... Keep the Film here but use LOCAL first..