One of Georgia’s top competitors in the arms race to land Hollywood movies and television series may put down its weapons.
North Carolina — home to “Iron Man 3” and Showtime’s “Homeland” — could allow its incentive program to expire at the end of next year. It would be a stunning reversal in the battle for megawatt movies and TV programs by a state that helped pioneer incentives to lure business.
Though some Georgia leaders salivate at the thought that more filming could come south, North Carolina’s potential move also raises questions whether the incentives are as good as advertised for other states — including Georgia.
Gov. Nathan Deal and others have praised film incentives for creating jobs and bringing investment here, but many Tar Heel state lawmakers say they aren’t worth the cost.
“The only people that win are the movie people,” said Sen. Bob Rucho, co-chairman of the North Carolina Senate’s Finance Committee and a critic of film incentives.
Republicans in North Carolina, who now control the executive and legislative branches for the first time since Reconstruction, passed a new two-year budget with tax reforms that would end many incentives and loopholes, including ones for Hollywood.
They argue lower tax rates for all residents and businesses will would do more to prime the state economy.
North Carolina’s move could send production business to Georgia, said Virginia Bonner, a film studies professor at Clayton State University.
“Georgia is picking up steam with (the movie industry) and has been running with it for a while,” Bonner said. She called North Carolina’s potential move “bad” for that state’s movie business.
North Carolina offers a 25 percent “refundable” tax credit for production spending in the state. The program basically works like a rebate system for 25 percent of qualified North Carolina spending that comes straight from the general fund. The tab to North Carolina taxpayers was about $70 million for 2012.
The North Carolina Film Office says the film and television business accounts for 4,000 jobs in the state, not including indirect jobs. Hollywood spent $376 million on productions in the state last year.
Some policy groups on both ends of the political spectrum have criticized such incentives and job claims. Critics say few permanent jobs are produced and the highest paying ones go to actors and others who live out of state. The perks, critics say, benefit a revenue-rich business that has little loyalty once incentives dry up.
In 2010, states spent about $1.5 billion in incentives for the film and television industry, according to the Tax Foundation, a right-leaning tax policy group in Washington, D.C. About 40 states nationwide offer such incentives.
The Charlotte Observer reported last month that the Motion Picture Association of America warned North Carolina leaders that the industry would skip the state if the incentive program isn’t renewed. That could cost the state hundreds of millions of dollars in spending and thousands of jobs, backers say.
Industry proponents in North Carolina hope the program will be renewed. Lawmakers there could take up the issue again when the Legislature reconvenes next May.
“I want North Carolinians working in North Carolina, I don’t want them working in Georgia or Louisiana,” said Aaron Syrett, the head of the North Carolina Film Office. “But if (the program) goes away, they will be working somewhere else.”
Georgia has seen film and TV spending soar in recent years since enacting one of the nation’s most lucrative benefit programs film and TV production.
The Republicans who control Georgia’s government shows no signs of altering course. Deal, Lt. Gov. Casey Cagle and House Speaker David Ralston are heavyweight backers of Georgia’s incentive program, and the governor has said there are no plans to change it.
Stephanie Mayfield, a spokeswoman for Deal, declined to comment on potential business shifts from North Carolina.
“But Georgia welcomes the film industry and would obviously welcome even more business on its soil,” Mayfield said.
Georgia revamped and sweetened its tax credits in 2008, with the goal of becoming more competitive with Canada and states like North Carolina. Production spending here tripled to $880 million in fiscal 2012.
Production companies can earn a credit in Georgia of up to 30 percent of what they spend on qualifying projects. What they can’t use to defer their own taxes — many aren’t based here and have little tax liability — they can sell for cash at upward of 90 cents on the dollar. Companies that buy the credits can then use them to reduce their Georgia tax bills.
Now developers are pitching massive movie making campuses in metro Atlanta, including one under construction in Fayette County that’s backed by the Cathy family of Chick-fil-A fame and Pinewood Studios, the British studio operator where James Bond films are made.
The sequel to “Dumb and Dumber,” the third “Hunger Games” installment and “Fast and Furious 7” are among the major projects slated to shoot in metro Atlanta this fall.
“Atlanta’s really become the Hollywood of the South,” actor and director Billy Bob Thornton said in a recent interview with the AJC regarding “Jayne Mansfield’s Car,” which filmed in Cedartown, LaGrange, Griffin and Decatur and hit theaters in limited release on Friday.
The state's film office estimates the industry employs as many as 30,000. It's unclear how many of these are full-time jobs.
But it’s come at a high cost: at least a $250 million hit to the state treasury from 2008 to 2011, according to state figures.
Credits issued for film and television production last fiscal year alone could total another $250 million.
Proponents say the proposed studio campuses are proof permanent infrastructure is coming.
Lee Thomas, who runs Georgia’s film office, would not directly answer if Georgia could gain business if North Carolina’s program ends, but the two states often compete.
“We’re usually on the same list as they are,” she said.
But North Carolina has significant filming infrastructure, too, and that alone might not save its industry if incentives are halted, critics say.
“(Hollywood productions are) leaving California and you couldn’t have more infrastructure and natural advantages than California,” said Joe Henchman, a vice president of state projects with the Tax Foundation, a right-leaning tax policy group in Washington, D.C.
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