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Arkansas is one of only two states not offering incentives for filmmakers (Delaware is the other), but legislation to change that is being prepared for the upcoming General Assembly.
The Arkansas Economic Development Commission (AEDC), governor's office staff and state lawmakers are looking at ways to lure movie makers to the state. The General Assembly goes into session Jan. 12.
Arkansas's “nickel rebate” — a 5 percent tax credit on expenditures for filmmakers — was one of the first in the nation when it was enacted in the 1980s. But the rebate expired in 2007. New incentive legislation failed to pass that year.
AEDC Film Commissioner Chris Crane said he hopes to get approval on the wording of an incentive package from the governor's office soon. The AEDC's legislative policy staff has been working on the bill for more than a year, studying programs in other states and speaking with film commissioners across the country. Crane said they have also worked closely with the Department of Finance and Administration.
“We want as many knowledgeable people to weigh in as possible so we can do what's best for the taxpayers of Arkansas,” Crane said.
Crane said it's now an “arms race” to see which state can offer the best package and Arkansas is falling behind its neighbors.
Reps. Rick Saunders, D-Hot Springs, and Kathy Webb, D-Little Rock, support tax incentives for filmmakers. Webb said the film industry has been a boon for neighboring states like Louisiana and Arkansas is missing out.
“We've seen our neighbors doing pretty well,” Webb said. “When they pay the salaries in-state and they spend the money in-state you've got the payroll taxes and the sales taxes, plus, they're promoting and supporting local businesses in the communities where they're filming.”
Proponents of the legislation expect it won't be easy to get it passed, given the current economic downturn.
“At this point I would say that almost every bill that's going to deal with tax issues — whether it's an incentive or a credit, or whatever — is going to be scrutinized with a fine-tooth comb just because of the economic situation we're facing,” Webb said.
According to AEDC's research, each dollar spent by the film industry would produce a $1.90 return.
“That is true economic development,” Crane said. “When a production company comes to town, they set up offices and hire local personnel, which brings jobs to the community. They spend several thousands of dollars, and oftentimes they go through a beautification process. So it's a good industry. They throw unforecasted, unbudgeted funds at a community.”
Some don't see it that way. In early December, Josh Barro of the Tax Foundation, a non-partisan think tank based in Washington, D.C., gave a presentation to legislators on Arkansas's tax policy. He said some states like Michigan, a state that offers a 42 percent tax credit, are hurting themselves by offering such lucrative bait for the film industry.
“It's so heavily subsidized in other states that I think it's not a good time for states to try to get involved in trying to attract the film industry,” Barro said. “So I would just encourage you to sit back and enjoy the subsidized movies you're watching at the expense of taxpayers in other states.”
Other critics argue that the film industry is too temporary — here today, gone tomorrow. But Crane said while film crews may come and go, the money they spend stays in the local economies and multiplies. Movies are being made in Arkansas already, but they're just not getting the support they need, Crane said.
“We've got some amazing content developers here. The problem is that we're educating these people and instead of following the basic economic model of exporting the content, we're exporting the content-makers. So all of these students that are in school right now learning about film, if we're not going to support the industry then they're going to go out of state. We really want to make sure we keep Arkansans in Arkansas,” Crane said.
Graham Gordy is one of those content-makers. After graduating from the University of Central Arkansas, he began his screenwriting career in New York. Gordy decided to move back to Arkansas shortly after shooting his first film in the northwestern part of the state.
“In my situation, incentives would help tremendously because everything I write is set here. But when you talk to producers who are interested in your work, the first thing they say is, ‘Can we shoot it in Louisiana?' And my response is always, ‘No, we can't,' ” Gordy said.
Gordy and others in favor of incentives say one unmeasurable benefit is the effect that movies made in Arkansas could have on tourism.
“Most people in this country haven't been to Arkansas,” Gordy said. “Nobody cared anything about Montana until they saw ‘A River Runs Through It,' and then everybody wanted to go there and go fly-fishing. So there's a benefit there, not just in terms of tourism, but in terms of our reputation and showing people what this state is like.”
Crane said he's guardedly optimistic that Gov. Mike Beebe will sign off on the package. Spokesman Matt DeCample said the office will base its final decision on solid economic analysis.
“We've got some great folks involved in the industry who would love to see more incentives and so would the governor,” DeCample said. “Having said that, you have to have some relative certainty that your investment as a state is going to have a return on it, so that's our focus.”