01 Feb Film Fund-amentals: The Vanishing Film Commissions

Death and taxes are life’s two certainties. However, death rarely changes its rules, while tax laws can be more fluid than the Mississippi during a flash flood. This is especially true with the system of tax incentives used by various states as an attraction for filmmakers. Various forms of tax breaks and rebates have been used by state film commission offices as a lure for bringing movie productions into their respective states. But what has previously been viewed as a nifty method for getting business into some states is now being spiked as an economic liability.

Overall, the current economic climate is causing a bumpy time for many state film commissions. Just a quick glance at the statistics for gross domestic product of each state from the US Department of Commerce is enough to tell you that a lot of states are hurting. Granted, the most recent annual analysis is from 2009 (2010 is due by the end of February), which means that it details what many view as the worse period of the current crisis. However, among the few states that were seen as doing well in 2009, most went into economic crisis during 2010 (for example, Oklahoma, where a 6.6 percent increase in GDP has not been effective against other economic losses). It’s a grim reminder that doing well is not the same as doing OK.

This means that almost every state in the union is scraping hard to find new ways to rob Peter in order to pay interest to Luke for the money borrowed from Paul based upon an incentive from Matthew. Public services are being cut to the bone and beyond. Ironically, most states are also run by legislators who are committed to not raising taxes (except in Illinois), which means that various state representatives around the country are busy plotting alternative means to increase state revenue. Though bank robbery would be one solution, I doubt if the average state politico could handle the task (just writing the stick-up note would be a problem for some of these folks).

Which leaves the whole concept of having a state film commission office in an odd pickle. It can be argued that a film commission office is important because it brings the state extra revenue from various major and indie production companies. This results in increased business for local individuals and companies who provide services for these productions (everything from production crew members to location services and local caterers). It also provides a form of back-door advertising for the state (golly, the scenery was real pretty in that movie, so let’s go visit). On paper, it sounds like a straightforward, win-win situation.

Unfortunately, a lot of politicians don’t see it that way. The business brought in by any production is narrowly defined and extremely specialized. Likewise, the benefits are short in duration and can be viewed as pretty meaningless in the overall employment scene. Since many movies film on locations other than where they’re suppose to be set (for example, Hamlet 2 takes place in Tuscon, Arizona, but was actually filmed in Albuquerque, New Mexico), the subliminal advertisement for tourism is somewhat mooted by the bait-and-switch nature of this reality.

Which brings up the other political problem currently facing most state film commissions. In order to attract productions to their state, most commissions offer various tax rebates and tax breaks (usually factored by the amount of filming and post-production work that the company will be required to do in that state). In theory, these tax incentives offer an extremely efficient (even cost-effective) way of encouraging movie productions to move to a particular state. It also encourages the development of local companies related to these productions. Again, it all sounds win-win.

But it is only win-win if you’re taking a Big Picture perspective. The average state politician does not take this perspective. Many of these folks (especially the newly elected conservative members) simply see lost tax revenue. This view may be extremely short-sighted (especially when viewed in light of the Motion Picture Association of America’s 2006 economic impact study concerning the benefits from various film commissions), but it is an easy viewpoint for politicians who are blinded ideologically.

One recent example is the resignation of the director and staff of the Ohio Film Commission. Since the new governor of the state is determined to “privatize” the entire Ohio Department of Development and wants it to become some type of profit-oriented job-producing entity, it is strongly suspected that the whole concept of a film commission will not have much of a place within this emerging concept. Since the new governor of Ohio has so far been opposed to anything that might involve public funding (such as state employee pensions and Medicaid costs), the future of the state film commission appears bleak.

Likewise, the recent resignation of Lisa Strout, director of the New Mexico State Film Commission, is directly related to the newly elected governor’s plan to drastically cut the tax incentive program in New Mexico. The Film Commission in New Mexico has produced an incredibly impressive track record, placing it in tight competition with California. The plan to reduce the New Mexico tax incentive from 25 per cent to 15 per cent will, in all likelihood, cripple the New Mexico film industry at the very moment that it was attempting to expand its production potential.

The bizarre and even misguided nature of these current political maneuvers may be best represented by the odd decision of the Texas Film Commission to deny Robert Rodriguez his tax incentive grant for the production of Machete. Rodriquez may be the biggest thing that Texas has going in the way of home grown production, but they will be damned if they will reward him for presenting Texas in a “negative light.” I actually thought state film commissions were not supposed to engage in content assessment (especially when it sounds like a very “political” rather than “content” assessment), but I appear to be wrong.

It’s a new age dawning, and not exactly a pretty one.

Update to Last Week’s Blog: With last weekend’s awards from both the Directors Guild and the Screen Actors Guild, the betting line for the Academy Award definitely favors The King’s Speech. So the Coen brothers are just out of luck with the Best Director award (it will undoubtedly go to Tom Hooper), and the Best Actor and, most likely, Best Supporting Actor trophies will follow suit.