Pete Mitchell, who is also the executive vice president and chief operating officer of Vancouver Film Studios, noted that while this will not match the incentives available in Quebec and Ontario, it will help protect B.C. film’s industry.

If approved, Mitchell’s recommendation will raise the current tax credit on labour costs from 25 percent to 37.5 percent. In June, Quebec and Ontario jacked up their incentives to 25 percent on total budgets. Last Friday (August 4), Minister of Tourism, Culture and the Arts Kevin Krueger said in an interview with News 1130 that B.C. would not be matching the increases by the other two provinces.

To see the entire article, click here!

As demonstrated by Kentucky “landing” the Secretariat film (see previous blog entry), and a planned $4million expenditure (that’s it?? Perhaps much will be done in post/digital effects elsewhere?) film, very soon after enacting their incentive programs, it just goes to prove the fluidity and volatility in how movies will be made for the foreseeable future, and how important incentives have become to the industry.

In fact, I’d go so far as to say that incentives are the industry. Happy to be proved wrong, but I think its a long shot.

August 20, 2009 @ 03:02 PM

2009/The Herald-Dispatch

Herald-Dispatch.com

FRANKFORT, Ky.  —  Incentives for a major film production to be shot in Kentucky were approved today, the first under legislation approved during this year’s special legislative session.

The Kentucky Tourism Development Finance Authority approved an application for the film “Secretariat,” from Fast Track Productions, Inc., a subsidiary of Disney Studios, about the 1973 Triple Crown winner.

“This is a great way to kick off Kentucky’s new film incentive package,” said Gov. Steve Beshear. “I think it’s appropriate that a state known for thoroughbred racing be a part of a film about one of the most well-known horses in racing history.”

The film incentives were included in House Bill 3, which was proposed by Gov. Beshear during the special session in June.

“Films like ‘Secretariat’ will offer Kentucky communities and small businesses a great opportunity when it comes to film production,” said First Lady Jane Beshear, who testified in support of the film incentives. “I’m hopeful that the incentives we offer will prompt more filmmakers to follow and help us promote Kentucky’s beauty and economic development opportunities.”

Fast Track Productions’ application projected $4 million in expenditures, meaning the production is eligible for $800,000 in tax credits.

The bill makes the incentive available to companies that spend at least $500,000 to produce feature films or television shows in Kentucky and makes commercials and documentaries eligible with required spending levels reduced to $200,000 and $50,000, respectively.

Broadway Shows produced in Kentucky for national tour are eligible for incentives with at least $50,000 in qualified expenditures. The incentive is a refundable income tax credit of 20 percent of approved expenditures.

“Governor Beshear announced a new film industry incentives bill today. The bill will give production companies the option of taking a sales tax refund.

House Bill 3 was passed during the recent special session and went into effect on June 26, 2009. Already, film-makers have responded with great interest in making Kentucky the set for potential large feature movies.

// <![CDATA[
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// ]]>Gov. Steve Beshear, “This is free publicity of the highest value…By providing these incentives, we’re going to attract a new set of business to this state.”

The bill was passed as an investment in the film industry and will hopefully create new jobs and expand Kentucky’s state revenue.

There is currently a movie being filmed in Lexington. It is titled “Unrequited” and stars Michael Welch from the popular “Twilight” movie.”

Click here to see the full article.

In the same week that California begins writing IOUs to contractors, college students, welfare recipients and other people who expect a check from the state, film and television production companies can begin applying for tax breaks.

While it may appear insensitive to cut taxes for Hollywood moguls and corporate players while slashing services for the poor, this $100-million-a-year program may prove to be the kind of smart investment needed to help dig California out of its budget hole.

Consider the new tax credit program a small price to pay to help recoup some of the hundreds of millions of dollars lost when producers choose to shoot in one of the other 40 states that offer financial incentives to lure film, television and commercial productions.

California has been losing the incentives arms race, and the home of Hollywood, Los Angeles, has been hit particularly hard. Feature film production in metro Los Angeles hit a record low in 2008.

And only a handful of major films – those with budgets more than $75 million – are being shot in Los Angeles this year compared with more than 20 last year, and more than 100 major films in 2007.

That dramatic drop in local film production means fewer jobs for behind-the-scenes workers, including camera operators, grips, scenery makers and costumers, who make up a solid segment of the region’s middle class.

There’s no telling yet how big an impact the tax credit program will have -

But at least California can offer something now to producers debating whether to leave the talent-rich Golden State for greener (and cheaper) pastures.

NEW YORK — New York City has exhausted its budget for tax incentives for film and TV productions as of Tuesday, city officials announced Wednesday just ahead of the July 4 weekend. “New York City’s ‘Made in NY’ tax credit for qualified film and television production – the only one of its kind administered by a city in the U.S. — has reached its full allocation of $192.5 million and funds are no longer available for new applications,” the NYC Mayor’s Office of Film, Theatre and Broadcasting said.

Productions have been able to claim 5% tax credits from the city in addition to a 30% production tax credit from N.Y. state. “Any disruption in the process is not good, especially as we ramp up to the typical TV season,” said John Johnston, executive director of the New York Production Alliance, about the NYC funding situation.

He also once again urged lawmakers to pass new long-term incentives plans for NYC and N.Y. state. “Wavering does not instill confidence in the studios that N.Y. is committed to supporting a successful economic and job creating program,” Johnston said. “We continue to urge our legislators to take a long-term view and make a multiyear commitment with no annual cap.” The city recently proposed an extension of its incentives program using lower tax credits, but the entertainment industry proposed a continuation of the 5% program, while suggesting annual payout limits to allow the city to retain flexibility amid the recession and budget woes.

However, any legislation has been on hold in Albany amid a power struggle in the state Senate. The Mayor’s film office said Wednesday that productions can still send incentives applications to the city. “However, at this time, it is unclear whether new legislation will cover applications received during the interim,” it added. Stuart Suna, president of Silvercup Studios, said it is important for New York to continue production incentives, because film and TV are the only industry growing in the state besides health care. “We are optimistic that once the New York State Senate reconvenes it will take action to extend the (city) program as we are all requesting,” he told The Hollywood Reporter. “And in the interim, let’s remember that the main program — the 30% state program — is still in place.”

House Bill 250, sponsored by Rep. Helene Keeley, D-Wilmington South, was introduced Tuesday in the House but no vote was taken. Brian Sowards and Chris Stout, business partners who lobbied for the bill on behalf of their Delaware Film Initiative, vowed to push again for the legislation next year.

Based on a similar successful program in New Mexico, the bill would allow the state to offer loan guarantees for banks on film projects that have secured 70 percent of financing, international distribution and insurance. The loans would be designed for repayment by the films’ sales or through tax revenue generated by the production.

The bill also requires 80 percent of the movie be shot in Delaware and local companies be hired in the production.

Sowards and Stout said they had two movie projects on the hook for Delaware, including a Keanu Reeves vehicle being made by Firstar Films. Their next step is to pursue private investors to back the projects.

“They would like to build an investment in Delaware,” Stout said. “They are still very interested.”

Sowards said publicity and news reports generated from the bill helped.

“As disappointing as it is that the bill hasn’t been passed, this is a huge success for us.”

Wednesday, June 24, 2009
You Pay Millions for Secret Film Costs
By Thomas J. Cole
Journal Staff Writer

A production company for the motion picture “Wild Hogs” received
$8.5 million from the state as partial reimbursement for what it spent
in New Mexico to make the movie.
The payment was the largest made from July 1, 2007, to March 16
of this year under a government program to attract filmmakers to New
Mexico.
Although taxpayers picked up that $8.5 million tab, they can’t
review the paperwork showing what expenses were claimed by the biker
comedy. The state Taxation and Revenue Department says that’s secret
under New Mexico law.

Rep. Dennis Kintigh, a Roswell Republican who has questioned the
value of the film-incentive program, has a beef with that secrecy.
Kintigh says the contribution of the program to the state’s
economy can’t be fully judged without knowing what expenses are
reimbursed by taxpayers.

For example, expenses for wages for New Mexico residents are more
valuable to the economy than expenses for equipment rental.
“I want to assess this program,” Kintigh says. “Let’s put it all
out on the table for people to see.”

And it’s not like there hasn’t been abuse in the program.
A few years ago, a production company for “The Flock” received
$25,000 from the state for spending $100,000 to charter a jet for
actor Richard Gere. The aircraft just happened to be owned by Gere.
The payment only became public because of a complaint from a
travel agency in Albuquerque that was paid $200 to book the jet.
That loophole has been closed, but partial reimbursements are
still permitted for a wide range of film-production expenses,
including money to actors if New Mexico taxes are paid on that income,
in-state use of chartered aircraft, food and lodging.

Under the program, film producers can recover up to 25 percent of
what they spend in the state on allowable expenses.
The partial reimbursements are called “film production tax
credits” in state law, but the payments aren’t actually credits
against income earned in New Mexico or taxes due.
The Taxation and Revenue Department simply writes checks to the
producers after they submit claimed expenses and after the department
audits the claims.

In response to a query by Kintigh, the department released the
names of production companies that had received payments from July 1,
2007, to March 16 of this year, the amounts of the payments and the
approval dates of the payments. The payments to more than 70
production companies totaled $86.5 million. Tax and Rev declined to release further information on the
payments, saying it was prohibited from doing so because of a taxpayer
privacy-protection law.
Some companies on the Tax and Rev list, like Wild Hogs
Productions, have names similar to the movies they produced, but other
companies have names unrelated to their films, making it difficult —
at times impossible — to determine even which movies they received the
payments for. Kintigh says he doesn’t know whether he buys the legal argument
by Tax and Rev that it can’t legally release the claimed expenses for
the payments. We’re not talking about an individual’s personal income
tax form, he says.
Also, Kintigh says, there is more transparency in other economic
development initiatives funded by the state, including payments to
companies for on-the-job training of employees and targeted
investments in New Mexico companies.  “I would just like to get all the data out” on the film program,
he says. “I’m not trying to kill the industry.”
Kintigh says one solution to the secrecy in the film program is
to amend state law to explicitly permit disclosure of claimed expenses
by producers. But Eric Witt, deputy chief of staff to Gov. Bill Richardson and
the governor’s film adviser, is cool to that idea.

How could such a change in law be applied to one class of tax
beneficiaries and not another, such as recipients of child tax
credits? Witt asks. “That doesn’t mean anybody is trying to hide
anything,” he says.

In addition, how much film producers spend and what they spend it
on is proprietary information, Witt says. “That’s very closely held
information,” he says. The adviser also says that just because a private company
receives money from the state for on-the-job training of workers
doesn’t mean its financial records become public.

The state does survey film producers for information on wages paid.
Two studies released in the past year differed on whether the
film-incentive program is worth what it costs. Those studies looked at
the additional taxes generated in the state as a result of movie
productions in New Mexico.  Kintigh says release of the claimed expenses by production
companies would go a long way toward ending the he-said-she-said
debate over the effectiveness of the incentive program.
“I’m not making any allegations, but I am curious as to where the
money is being spent and how the public benefits,” he says. “This is a
chunk of money. It’s a huge chunk.”

Monday, June 29, 2009

Give Taxpayers a Peek at Expenses They Pay

The state Taxation and Revenue Department
says details on the $86.5 million New Mexicans have forked over to film
companies between July 1, 2007, and March 16 are private tax information. Gov.
Bill Richardson’s Office says what film companies like Wild Hogs Productions
spend their money on is secret proprietary information — even if they’re
reimbursed from your tax dollars 25 percent of what they spend.

Eric Witt, Richardson’s deputy chief of
staff and film adviser, justifies the secrecy as a privacy need similar to
taxpayers who get credit for dependents. Some in the film industry have gone so
far as to say the information is protected from disclosure under a
“constitutionally protected right of privacy.”

Hogwash.

These “tax credits” are really
plain old reimbursements for expenses, and the rationale for keeping them
secret as confidential tax information falls as flat as “Swing Vote”
did at the box office. (New Mexicans paid Swing Vote LLC $3 million.)

Rep. Dennis Kintigh, a Roswell
Republican, is right to question the secrecy. Tax and Rev can call the checks
it cuts — like the one for $8.5 million to Wild Hogs Productions — “film
production tax credits” under state law, but there’s no W-2 or 1099 or
1040 or any other tax form involved. Producers submit what amount to
expense-account claims, Tax and Rev audits them, and taxpayers cover the check.

Kintigh says he’s “not trying to
kill the industry. I would just like to get all the data out” on the
program. With dueling studies on the economic impact of the film industry on
New Mexico, he points out releasing the expenses claimed by production
companies would go a long way toward ending the debate by showing high-impact
expenses (like wages to New Mexicans) vs. low-impact ones (equipment rental).

“I want to assess this
program,” he says. “Let’s put it all out on the table for people to
see.”

Let’s. If it’s important for movie moguls
to keep the amount they spend on John Travolta’s trailer or Kevin Costner’s
hairdresser a state secret, then they shouldn’t ask for state money to pay
those bills.

This reimbursement program appears to be
an economic development incentive worth keeping. But the public deserves to
know how its money is spent.