Film in flux: a new bill may limit movie filming in North Carolina

Robert Downey Jr. and Gwyneth Paltrow wined and dined in Wilmington for much of last year while filming the blockbuster Iron Man 3.

Members of the state’s film industry say North Carolina was able to lure the Marvel Studios production, scheduled to release May 3, away from other states with a lucrative incentive for production companies. The state has a history of drawing popular TV shows and films, such as The Last of the Mohicans and Forrest Gump.

But a bill filed last week at the N.C. General Assembly would alter the incentive package by eliminating the tax credit refund — sparking concerns among the state’s film advocates.

House Bill 994, sponsored by members of both parties at the state legislature, would instead waive the N.C. tax liabilities for companies in the next five years.

Legislators said they are concerned that the economic benefit of the film incentive does not outweigh its cost.

North Carolina’s current film incentive law, which took effect in January 2011, provides a 25 percent tax credit refund to companies spending more than $250,000 on a production, with a per-credit cap of $20 million.

Johnny Griffin, director of the Wilmington Regional Film Commission, said the incentive keeps North Carolina competitive with Louisiana, Georgia and other states with similar incentives.

“It’s a tool that is required,” Griffin said. “It’s how clients are making decisions on where to film.”

But a study done earlier this year by the legislature’s Fiscal Research Division questioned the job-creating credentials of films.

While film companies spent $220 million in the state in 2011, creating 3,300 crew positions, only 55 to 70 of those jobs resulted from the tax credit, according to the study.

By comparison, cutting business taxes by the same $30.3 million claimed under the credit in 2011 would have created 370 to 450 jobs.

The study also notes that the state sometimes has to refund the amount of the tax credit to companies that do not owe state taxes.

“There is little to restrain the potential growth of this tax expenditure,” the study says.

But Aaron Syrett, director of the N.C. Film Office, said production companies increased their spending by $156 million from 2011 to 2012 and created jobs in the state, adding to the more than 4,000 high-skilled, permanent jobs in the industry.

“We have a meaningful incentive that’s working,” Syrett said.

More than 20 productions are slated to film in North Carolina in 2013, and companies have already spent $184 million in the state in the past four months, he added.

Griffin said film companies spent $247 million in the Wilmington area alone last year and employed about 1,000 local crew members.

“If we do away with the incentive, we’re saying we’re fine with them leaving the state or becoming unemployed,” Griffin said.

Jason Rosin, business agent for Wilmington-based IATSE Local 491, a labor union for production technicians in the Southeast, said production companies are in the state for a short period of time and would not benefit from a long-term tax waiver.

The bill is currently in an N.C. House committee. Syrett said he is not concerned about the bill passing.

“(A challenge to the film incentive) goes through the legislative process every year,” he said. “We’re optimistic we’ll be successful in opposing it.”

Contact the desk editor at state@dailytarheel.com.